It seems that the woes of production houses and television channels are not going to end anytime soon. In a judgment delivered yesterday, the United States District Court for the Southern District of New York held that YouTube was protected by the “safe harbor” provision for service providers in spite of the fact that almost every other song or video is available for viewing on YouTube. YouTube was acquired by Google for a staggering $1.7 billion but can it be said that its value was built largely on the unauthorized appropriation and exploitation of copyrighted works belonging to others, – at least Viacom thinks so!

In its complaint filed on March 13, 2007, Viacom alleged that YouTube knew and intended that a substantial amount of the content on the YouTube site consisted of unlicensed infringing copies of copyrighted works and had done little or nothing to prevent this massive infringement. With respect to YouTube’s duty to remove copyrighted material, Viacom argued that YouTube proactively reviews and removes pornographic videos from its library, but refuses to do the same thing for videos that obviously infringe Plaintiffs’ copyrights.

It is to be noted that the American Society of Composers, Authors and Publishers, Broadcast Music, Inc., Sesac, Inc., Disney Enterprises, Inc., NBN Universal, Inc., Warner Bros. Entertainment Inc., Association of American Publishers, Center for the Rule o f Law and a few others had filed an amicus brief in support of Viacom’s complaint against YouTube whereas Ebay Inc., Facebook, Inc., Interactive Corp, and Yahoo! Inc. had filed amicus briefs supporting the position of YouTube and Google in this case.

On April 30 2007, YouTube filed its response and argued that Viacom was trying to challenge the careful balance created by Congress when it enacted the Digital Millennium Copyright Act. All claims made by Viacom with respect to primary or secondary copyright infringement were refuted by YouTube and it moved for summary judgment. In that motion, YouTube even outlined the public service it had been doing by affording political candidates and elected officials a new way to communicate with the public; enabling first-hand reporting from war zones and from inside repressive regimes; allowing unknown performers, filmmakers, and artists to rise to worldwide fame; inspiring laughter at the antics of dancing babies and skateboarding dogs; letting students of all ages audit classes at leading universities; and giving creators of all sorts a powerful new way to promote their work to a global audience. Taking the ball back to Viacom’s court, YouTube alleged that Viacom had previously authorized many clips to be on YouTube and were now suing for hosting the same.

Section 512(c) of the DMCA sets out the safe harbor applicable to Internet sites hosting user-submitted content and it was argued that YouTube, which had pioneered efforts to protect copyright while maintaining an open environment for creative, political, and personal expression, was exactly the kind of service that Section 512(c) was enacted to protect. The motion for summary judgment read:

“At the heart of the safe harbor was a notice-and-takedown procedure that required cooperation between content owners and service providers. To claim the safe harbor, a service provider like YouTube must remove purportedly infringing materials when notified of their existence and location on its service. This regime gives copyright holders a quick and efficient way to stop any misuse of their content, while protecting service providers against the fear of crushing liability that could stifle technological innovation and free speech. In this way, the DMCA balances the interests of copyright holders with those of online services and the First Amendment rights of their users.”

The Section 512(c) safe harbor presumptively applies to a service provider that meets the threshold “conditions for eligibility” set out in Section 512(i) and designates an agent to receive “notifications of claimed infringement” (§ 512(c)(2)). The agent’s role is to facilitate the notice-and-takedown regime at the heart of the safe-harbor. Using the procedures described in the statute, copyright holders can avoid a costly and time-consuming judicial process by notifying service providers that certain material stored on their systems is not authorized to be there. § 512(c)(3). The copyright holder must identify the work that it owns and believes to be infringed, identify the location of the allegedly infringing material on the service provider’s system, and certify its claims under penalty of perjury. § 512(c)(3). Service providers in turn must respond expeditiously by taking down or blocking access to that material. § 512(c)(1)(C). The DMCA also gives the users who posted the material subject to a takedown notice an opportunity to contest the copyright-owner’s claim by filing a counter-notice confirming that they have the authority to upload the work in question. § 512(g)(3).

The critical question to be decided in this case was the determination of “actual knowledge” and “facts and circumstances from which infringing activity is apparent” as mentioned in § 512(c)(1)(a)(1) and (2). The Court looked into the legislative history of the provision and noted that the above mentioned phrases described knowledge of specific and identifiable infringement of particular items and not a general awareness or knowledge of prevalence of such activity in general.

Talking about the burden of notifying the infringement, the Court reiterated that the burden of notification under the DMCA was on the copyright owner and could not be shifted to the provider. (See Perfect 10, Inc. v. CCBill Inc. 488 F.3d 1102). The Court also noted that the “safe harbor” protection was unconditional and was not limited to a pro-active provider who took affirmative action to remove infringing activity.

It was held that the DMCA provisions were effectively followed by YouTube as it had removed virtually all the content mentioned in the take down notice sent by Viacom. Summary judgment was granted to YouTube.

While many would argue that this would promote more copyright infringement and work as a legal approval for service providers to turn a blind eye to the same, it needs to be seen that the world at large would suffer in the absence of such services. However, it will be unfortunate if this law is applicable to all kinds of service providers through a straight jacketed formula. Websites providing access to movie torrents, which are again uploaded by individuals, cannot be put with YouTube on the same pedestal. Such cases need to be decided on their individual merit and while the Court seems right in upholding YouTube’s safe harbor protection, judges should look at the nature of the website and the overall content that is available to the users before determining whether availability of copyrighted materials is just a small part of the game or is it the game itself!

Written by: Ashish Arun and Rajni Ghosh

About the Authors: Ashish Arun is the Managing Partner at ORP while Rajni Ghosh is an Associate at ORP