Advertising Law Blog

In Viacom Int'l, Inc., et al. v. YouTube, Inc., et al., the United States Court of Appeals for the Second Circuit recently reversed a district court's holding that defendants were entitled to safe harbor protection under §512(c) of the Digital Millennium Copyright Act.

In March 2007, Viacom sued Google and YouTube for $1 billion alleging that the site had engaged in copyright infringement by allowing users to post and view over 150,000 videos that were copyrighted and owned by Viacom. Viacom claimed that YouTube infringed on its copyrighted works by performing, displaying, and reproducing them on the site and allowing others to view them. Viacom further alleged that youtube.com "engage[d] in, promote[d] and induce[d]" infringement by others to increase Youtube.com's traffic and advertising revenue.

In 2010, the United States District Court for the Southern District of New York ruled in defendants' favor finding that their actions were protected under the safe harbor afforded under the Digital Millennium Copyright Act (the "DMCA"). The DMCA provides for a safe harbor for online service providers for copyright infringement committed by a third-party where the provider designates an agent with the copyright office and promptly takes down infringing content after receiving notice from the copyright holder. Here, the court found that YouTube did not post the content, but rather acted as an online service provider. Moreover, the court found that YouTube acted promptly after receiving a broad take-down notice from Viacom.

On appeal, the Second Circuit reversed the district court's findings. In its ruling, the appellate court held that a reasonable jury could find that YouTube possessed actual knowledge or awareness of specific infringing activity on its website due to internal communications between YouTube employees referencing such activity, and remanded the case for a specific determination of knowledge. Importantly, the court also noted that the common law doctrine of willful blindness may be applied in appropriate circumstances to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.

The court found that the safe harbor provision requiring a service provider not to have received financial benefit from the infringing activity where such provider has the "right and ability to control" such activity (§512(c)(1)(B)) does not require "item-specific" knowledge of the activity. A provider may be held liable even if it has no knowledge of the particular case of infringing activity if it "exert[s] substantial influence on the activities of users." The court did however, uphold the district court's findings that three of defendants' software functions fell within the DCMA's safe harbor requirement because the infringing activity occurred "by reason of storage" at the direction of its users, and remanded as to a finding for a fourth software function.

Take away: Online service providers must not assume that the DMCA safe harbor protections will apply merely because they do not post the infringing content and otherwise comply with the take down requirements. Importantly, online providers must consider their exposure to a charge of willful blindness and thus should be cognizant of third-party postings.