google/youtube vs. viacom: the dmca works

8/9/2019 Google/YouTube vs. Viacom: The DMCA Works.

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G L O B A L CA P I T A L

B L O G

GOOGLE/YOUTUBE V. VIACOM: SAFE HARBORS AND THE NEW POLICE.

(Author’s note: In this article, I get to use one of my favorite theories:

The Sergeant Schulz Theory. Read on. Also, I posted this initially at Tubefilter.tv.)

By now you probably know that Google won the most recent round of its legal battle withViacom (which initially sued YouTube, now owned by Google). A federal district court

judge in New York issued a summary judgment opinion that dismisses the $1 billionclaim of infringement against postings on YouTube that were, in the opinion of Viacom,infringing on their copyrights. It’s an opinion worth reading.http://i.zdnet.com/blogs/viacom-youtube-ruling.pdf If you are a legal wonk,

then you will appreciate the succinct manner in which Judge Stanton weaves together theholdings of previous DMCA cases. (Here’s a hint: The Coase Theorem.)

The judge bought the argument that Google made—namely, that it was protected under the “Safe Harbor” provisions of the Digital Millennium Copyright Act from the copyrightinfringement claims made by Viacom. More important, Judge Stanton said thatYouTube’s actions demonstrated that the “takedown” provisions in the DMCA actuallyworked. (Those provisions enable copyright holder to require that copyrighted material

to be removed from public view.)

There are some unintended consequences (the Sergeant Schulz Theory) that may arisefrom this opinion, but they are likely to be acceptable for the time being.

It is not over yet. Viacom has vowed to appeal the decision.

So What?

In a nutshell:

The burden of policing copyright infringement now squarely sits on the shoulders of the copyright owner (or

the one with the rights).

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http://i.zdnet.com/blogs/viacom-youtube-ruling.pdf

http://i.zdnet.com/blogs/viacom-youtube-ruling.pdf



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With a little more detail:

• The Safe Harbor Is Open. The DMCA safe harbor provisions areavailable for certain types of companies if they have and actually use thetakedown provisions of the DMCA.

• You Are Your Own Policeman. If you own (or hold rights in) acopyright, then you are responsible for policing the use of that copyright byothers.

The Details

Let’s go a bit deeper in what the opinion means. The merits of the positions of either sideare not relevant here. What is relevant is what the opinion means to players in the digitalcontent space.

1. Companies like Google Have a Safe Harbor. Companies that post digitalcontent can rely on the “Safe Harbor” provisions of the DMCA when that content is posted, provided that they are serious about taking down content that may be infringing

(more on that point below). This holding is important because there was some confusionas to whether or not a company like Google was actually permitted entry to that harbor.One view of the DMCA provisions holds that it applies almost exclusively to ISPs, butthis view now appears to carry little weight in the federal courts. Getting there was notwithout some abstruse legal reasoning to adapt the language of a statute written before places like YouTube existed, but it is probably solidly established by the various legalopinions on this point.

But be careful: It is not clear what sites would have this protection. Google made the(winning) argument that, in essence, it was just providing transmission, storage andindexing of the content—sort of like an ISP. Another UGC site might not be so lucky.

For sites that aggregate content from other sources, this opinion may incrementallystrengthen their position, but they would have to fight holdings going the other way inother courts.

2. The Safe Harbor Has Some Rules. Judge Stanton emphasize that the takedown procedures worked in this case. YouTube immediately responded to Viacom’s takedownnotice: Within 24 hours of receiving the notice, YouTube removed almost all of the morethan 100,000 clips that Viacom claimed were infringing.

So the implication is clear for companies posting digital content:

The Safe Harbor is available if and only if your takedown procedure

actually works.

3. Red Flags and Knowledge. The opinion also turned on the “red flags” of infringement that would be enough for YouTube to take down allegedly infringingcontent. It gets complicated but Judge Stanton accepted (and essentially paraphrased)Google’s argument in its court filings that there was no practical way to check every posting for infringement. The opinion essentially holds that a company in the position of Google’s YouTube basically has to have notice or actual knowledge of infringement of specific content. Although the judge did not say it, the standard for actual knowledge



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would be, say, that Eric Schmidt (head of Google) went to the YouTube site andwatched Iron Man the day after it was relased.

So the rule is:

If you receive a takedown notice about specific content or if you have a

really, really good reason to believe that it is infringing, then take it down. Immediately .

Then you’ll probably be OK. (True, taking something down can cause other problems but that’s outside of the scope of this article.)

4. Unintended Consequences: The Sergeant Schulz Theory. Remember Sergeant Schulz on the TV show, Hogan’s Heroes? He knew nuhzzeen, he saw nuhzzeen

and that way he did not get in trouble with his superior. Think about it for a moment: If the opinion says that if you don’t know about the infringement then you don’t haveliability. Therefore, if you don’t try to find out if something is infringing, then you’ll beOK. By definition, you see nuhzzeen if you don’t look too hard. And so you won’t.(Yes, I know there are risks with this approach, but the incentives do point in thatdirection.)

5. For Copyright Owners: Spend All Your Time Scouring the ‘Net. Theimplication of the opinion is that copyright owners (or the rightsholders) must now policethe use of their copyrights. Their first remedy for companies sitting in the position of Google’s YouTube is the “takedown” procedure specified in the DMCA. It’s a clunkysystem, to be sure, but it is pretty much all you have. Moreover, other recent opinions arenow shifting the burden of policing the use of IP rights to those who hold such rights.

There is some hope. First, as noted above, it is not clear that all sites can availthemselves of the Safe Harbor provisions. For example, one could argue that Facebook would not qualify (a tall order). However, the burden of proof now probably rests with

the plaintiff and judges now have a well-reasoned (though not necessarily correct)opinion on which to rely.

Second, the holding now opens up opportunities for companies (say, startups) to createInternet policing services. Whether they are automated (think “watermark”), manual(think outsourcing to foreign countries) or a combination, there is now a marketopportunity. There are already several such



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services out there. They aren’t foolproof but they are good.

To close, the decision is not exactly binding on anyone except those within the district of the New York court. Plus, Viacom’s vow of an appeal makes the permanence of theholding somewhat uncertain. Both of these points are largely legalistic, because the

opinion, as it now stands, will be used as an important bulwark in any argument in court by a defendant to a claim of infringement. The bottom line: Assume it applies.

James C. Roberts III is the Managing Partner of Global Capital Law

Group (www.globalcaplaw.com) and CEO of the strategic consulting firm, Global

Capital Strategic Group (www.globalcapstrat.com). He heads the international,

mergers & acquisitions and transactional practices and the industry practicesconcentrating on digital, media, mobile and cleantech technologies. He is currently

involved in opening the Milan office. Mr. Roberts speaks English and French and, with

any luck, Italian in the distant future. He received his JD from the University of Chicago Law School, his MA from Stanford University and his BS from the University of

California—Berkeley. You can reach him at [email protected].

The GLOBAL CAPITAL firms counsel domestic and international clients on strategic and

legal issues inherent in the deployment of intellectual & financial capital—a merger or acquisition, foreign market expansion, a strategic alliance, a digital content license, a

mobile deal, foreign and domestic labor and employment policies, starting a new entity

or raising capital. Clients range from global Fortune 100 corporations such as

Deutsche Bank and News Corporation and its subsidiaries, MySpace.com and Fox Interactive Media, to start-ups. Industries represented include digital media, Internet,

software, medical and biotechnology, nanotechnology, consulting firms, environmental

technology, advertising, museums and other cultural institutions and manufacturing.

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google/youtube vs. viacom: the dmca works

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