May 01, 2012
Appellate Litigation, Intellectual Property, Internet & E-Commerce Alerts

Viacom Revives $1 Billion Copyright Infringement Lawsuit Against YouTube
by Cyrus Wadia

The Super Bowl of copyright disputes is back. Last year, a U.S. District Court Judge in New York ruled that YouTube's compliance with the Digital Millennium Copyright Act's notice and takedown procedures insulated it from Viacom's claims for over $1 billion in copyright infringement liability. The U.S. Court of Appeals for the Second Circuit just overturned that decision and remanded the lawsuit for further proceedings to determine if YouTube's business practices truly meet the conditions for DMCA "safe harbor" protection. Viacom Int'l, Inc., Football Ass'n Premier League Ltd. v. YouTube, Inc., __ F.3d __ (2nd Cir. April 5, 2012).

At issue in the case is whether Google-owned YouTube service is liable for massive copyright infringement by allowing users to post nearly 80,000 video clips of copyrighted works owned by various media industry players. Under DMCA safe harbor provisions, an online service provider is not liable for copyright infringements that occurs “by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.” 17 U.S.C. § 512(c).  The service provider must also meet the following conditions for immunity:

(A)(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

(B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and

(C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

The District Court granted summary judgment in favor of YouTube for compliance with DMCA, but the Second Circuit found the decision premature. The Court of Appeal held that a reasonable jury could find evidence such as internal communication on certain unlicensed clips to constitute actual knowledge of infringement, thus precluding safe harbor protection. In addition, the court allowed Viacom to pursue the question of whether YouTube’s actions amount to “willful blindness” of infringing activity, such that YouTube would be considered to have actual knowledge under the DMCA.

The Second Circuit also disagreed with district court's interpretation that "item-specific" knowledge of infringing activity is required to trigger a service provider's "right and ability to control" that activity. The panel also remanded to determine whether a YouTube software syndication function constituted storage of materials at the direction of a user (versus YouTube itself).

**Mr. Wadia recognizes Jong Cho's assistance in the preparation of this alert.

Back to Alerts