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Red flag, or  is it?

YouTube admitted that it could be a flag, but said only Viacom could confirm its color

YouTube does not cite the relevant DMCA language in its latest series of arguments because it has no answer to it, according to the reply letter brief filed yesterday in the Second Circuit by Viacom and The Football Association (et al.).   In October, the parties in Viacom’s $1bn copyright lawsuit against YouTube for historic infringements of its audio-visual works were ordered by the Court to submit further arguments on: 1) whether “storage” under the DMCA includes syndicating files to third parties on commercial terms; and 2) how knowledge of “specific” URLs can be mandated in the DMCA’s “red flag” regime, and they have now completed their filings (here and here).  Viacom is seeking reversal of a 2010 decision in which District Judge Louis L. Stanton, sitting in the District Court for the Southern District of New York, sent Viacom’s lawsuit to the cutting room floor without a trial.

The briefs make for interesting reading, and this was certainly Viacom’s most aggressive submission to date.  There was plenty in both sides’ filings that I have not found persuasive, or have wholeheartedly disagreed with, but two points have clearly come out.  The first is that YouTube’s arguments are much stronger and more persuasive than Judge Stanton’s summary judgment opinion would have you believe.  They are subtle and credible, even if (in my view) they rely too much on policy and too little on the law.  Secondly, I found Viacom’s strongest arguments came when they took YouTube’s arguments to their logical conclusions and compared those with what Congress thought it was doing when it passed the DMCA.  Again, I don’t think the District Court did the plaintiffs’ legal arguments justice, and I think they have justified reversal and a remand for a trial.

The Court asked two questions:

 1.  “Whether and how the red-flag knowledge provision would apply under the Defendants’ ‘specific’ knowledge construction of § 512(c)(1)(A)”

Good question.  There are three occasions in which a service provider such as YouTube has a choice to remove material or be removed from the safe harbor:  when it has actual knowledge that the material, or activity using the material, is infringing;  in the absence of such actual knowledge, it is not aware of facts or circumstances from which infringing activity is apparent (i.e. red flags);  it receives a compliant takedown notice.

In its appellate brief and at oral argument, YouTube argued that in order for there to be a “red flag” for the purposes of the DMCA, a service provider such as YouTube needs to have not just generalized knowledge that there is infringement somewhere on its site, but needs to have knowledge of specific URLs that identify the particular apparently infringing file.  Viacom disputes what it calls YouTube’s “extreme view”, saying that such a construction equals actual knowledge of material, not awareness of facts and circumstances regarding activity, and identifies “willful blindness” among the genuine disputes regarding material facts.

The parties were limited to 10 pages to answer both questions, and YouTube spent just over half of its allowance on this question.  I didn’t find that there was anything new in their filing, nor did I find it particularly persuasive overall.  A couple of specific points jumped out at me:

  • The cases cited to support YouTube’s contention that Viacom bears the burden of disproving YouTube’s affirmative defense don’t refer to red flags but to actual knowledge.  A small point, granted, but worth noting.
  • One of YouTube’s arguments boils down to: Because Nimmer says the red flag must be “brightly red” and “waving blatantly” (how exactly do you “wave blatantly” anyway?) in the service provider’s face, YouTube should prevail.  There are a couple of missing steps in logic there, particularly since Viacom’s argument is that the flags were in fact bright red and waving blatantly in YouTube’s face;  YouTube just chose to close it eyes, saying that only Viacom can tell them if what they might see if they opened their eyes is indeed both red and a flag.
  • YouTube cites the following from UMG II: “if investigation of ‘facts and circumstances’ is required to identify material as infringing, then those facts and circumstances are not ‘red flags'”.  Again, Viacom says that the facts amply demonstrate the existence of red flags, so this doesn’t really help YouTube in a summary judgment context.
  • The reference to the Sony Betamax case is also surprising.  YouTube relies on it to say that the provider of a product capable of substantial noninfringing uses cannot be held liable merely because he knows, generally, that his product will be used by some for infringing purposes.  True enough, but hasn’t the Supreme Court in Grokster already dealt with this issue by holding that secondary liability can be found even when a product has substantial noninfringing uses?  Secondly, even knowledge of specific infringing activity in the Betamax case wouldn’t necessarily have been enough for a finding of liability, so it’s not clear what YouTube is trying to say here.
  • YouTube proffered that documents quantifying how much “copyrighted” material was on the site didn’t necessarily mean to refer to how much “copyright infringing” material there was.  I don’t think I need to explain this one.

There is one argument that, if correct, would blow Viacom’s entire case out of the court:  that it failed to present any evidence that YouTube was “aware” that any of the individual clips in suit was even on YouTube.  Yet this is tucked in at the end of the arguments.  Of course, if you’ve been given 10 pages to expand on your oral argument you’d be foolish not to use all of it to promote as much of your case as you can even if you think one point is a slam dunk, and YouTube certainly did the rounds in getting to this point, but the fact that this is not a prominent point makes me think they may not have been fully confident in it.  Indeed, Viacom says this is “a wish, not a plausible reading of the summary judgment record”.  Genuine dispute about a material fact, anyone?

YouTube’s arguments also have three consequences that persuade me that they go too far:
  1. A service provider can have actual knowledge that only one of its thousand / million / billion files is non-infringing, but the DMCA allows them to commercialize all of them because since there would have to be a modicum of investigation (contra § 512(m)) to determine which file was the permissible one, there is no brightly red, blatantly waving flag in the provider’s face in respect of any of the remaining clips.
  2. Because it can never know when a clip might have been licensed or uploaded for promotional purposes, a service provider can always evade red flag knowledge and never fall foul of § 512(c)(1)(A)(ii).
  3. Pirate sites can exhibit mala fides and prosper financially, and still benefit from immunity from damages because that’s what Congress intended.

2. “Whether YouTube’s ‘syndication’ of videos to third parties falls outside the scope of safe harbor protection for activities that occur “by reason of . . . storage at the direction of a user” under § 512(c)(1)”

The fact that the Court is asking this question only of acts of syndication indicates that they have already decided that all the remaining acts are at least eligible for DMCA protection.

YouTube asserts that syndication is merely another software function that facilitates access to uploaded material and as such it is protected.  But whether an act facilitates access to material and involves a software implementation cannot be the litmus test, for two pretty obvious reasons.  First, all commercialization of material facilitates access.  Have you ever heard of a business deal to make content less accessible?  Second, the fact that the acts in question involve “software functions” adds nothing:  everything done online has to involve a software function.  The result of YouTube’s argument is that all commercialization of material online is covered by the “storage” requirement, even if it is completely irrelevant to the service provider’s actual storage function.  The argument concludes by saying that everything that a service provider does with uploaded material, whether co-branding, displaying, preparing derivatives etc, is “by reason of storage” since without the storage the acts in question could not have taken place.  (YouTube says it satisfies even Viacom’s proximate causation argument and says that even if “at the direction of users” means the acts, and not just the storage, must be at the direction of users, this too is satisfied since its Terms and Conditions are wide-ranging (a loop-hole so big that it renders the requirement completely meaningless in practice)). Viacom, however, says a user’s decision to upload a video:

“is in no sense the proximate cause of infringement that occurs by reason of YouTube’s intervening and superseding decision to enter into independent business deals”.

I find fault with YouTube’s argument for a number of other reasons too.  The main fault, though, is that it gives “storage” an unwarranted secondary meaning.  Whatever the proximate causation required by the phrase “by reason of” in the DMCA, the predicate is that the files are being “stored” on the service provider’s network.  But YouTube does not offer “storage” and it certainly does not act like the web hosts that were predominant when the DMCA was passed (in fact, the legislative history makes clear that it is the copies of files made by hosts in creating a more efficient network that were intended to be protected by the legislation, so not like YouTube at all).  No, YouTube is a publisher.  There are several reasons for believing that what YouTube does is not “storage”.  First, users who upload files to YouTube cannot access them at a later point in time.  Second, a user cannot stop YouTube exploiting their uploads even after they remove them from the network since YouTube uses its own copies of the files.  Third, it is impossible to link to a user’s files by any means other than via YouTube’s branded platform:  normal Internet protocols on linking to hosted material do not apply.  Fourth, the user cannot chose to upload files without them being published.  So these files have not been “stored” but rather than have been contributed to further YouTube’s commercial publishing efforts.

YouTube asserts another slam-dunk-if-true argument, namely that Viacom has failed to provide evidence of any clips in suit actually having been syndicated by anything other than mere re-encoding for different platforms, reminding the Court that it cannot render an advisory opinion.  Again, this is left to the last paragraph of argument, which makes me wonder how well it stands up to the record (Viacom disputes it, though oddly doesn’t identify relevant clips).

So now we wait.  A ruling is not expected for several months, but  I’ll post any new developments here.  If you want to stay up-to-date, you can either subscribe, using the link on the right, or follow me on Twitter.