I’ve written an article on this decision for the Bloomberg BNA Patent, Trademark and Copyright Journal.  Click the image to have a read, and let me know what you think below.

• “National Use Neither Proves Nor Precludes Finding of Genuine Use of a Community Trade Mark,” Edwards Wildman Palmer LLP Client Advisory, July 2012.
• “Onel Opinion Sparks Debate On CTM Genuine Use,” quoted, Managing IP, July 2012.
• “European Union – taking the middle ground on genuine use – the advocate general has her say,” quoted, World Trademark Review, July 2012.
• “European Union Court’s Wintersteiger Ruling Puts Internet (Forum) Shopping On Ice,” Bloomberg BNA Patent, Trademark and Copyright Journal, 84 PTCJ 324, July 2012.

• “EU Court Ruling Chips Away At Software Copyrights,” quoted, Law 360, July 2012
• “Customers Can Resell Copies of Downloaded Software; Developers Can Try To Stop Them,” Edwards Wildman Palmer LLP Client Advisory, July 2012.
• “SAS Disarmed by Uncertain EU Ruling in SAS Institute Inc v. World Programming Ltd,” Edwards Wildman Palmer LLP Client Advisory, May 2012. This advisory has also appeared in IT Law Today, Vol. 20, No. 6, June 2012 and was quoted in an article by Society for Computers and Law under the Expert Comment section.
• “The Advocate General considers the principle of exhaustion of rights in downloaded software,” Edwards Wildman Palmer LLP Client Advisory, April 2012.  This advisory has also appeared in IT Law Today, Vol. 20, No. 6, June 2012.
• “Into the Tangled Web,” The Lawyer, April 2012 (submitted as “Copyright Pinfringement: Britons Beware!”).
• “Viacom v. YouTube: Second Circuit Plumbs the Depths of the DMCA Safe Harbor,” Bright Ideas, the Intellectual Property Law Section of the New York State Bar Association Newsletter, Vol. 20, No. 3, Winter 2011.

Original here: http://docs.dpaq.de/695-310_o_461-10__urteil_vom_20.04.12.pdf

Hanseat isches Upper maybe landesger
Ge r i c s p res s ht it t le el

Copyright obligations of a video portal operator
Judgment in the lawsuit against YouTube GEMA before the Hamburg District Court
20th April 2012

The operator of a video portal like “YouTube” is liable for copyright infringement by users of uploaded videos only when he informed the GE-infringement against certain behavior and control duties violates. The Hamburg District Court today in a dispute between the collecting society GEMA and the Vi-deoportal YouTube decided.
Only after a notice of copyright infringement hits the portal operators the obligation to immediately block the affected video and take in a reasonable manner appropriate measures to prevent new violations. A commitment to review all the previously uploaded video clips platform is not.

GEMA wanted to achieve with their complaint that the defendant is the operator of the internet video portal “YouTube” banned, twelve music still works, at which GEMA perceives the rights to make accessible via “YouTube” in Germany. The defendant declined to cease and desist, as they are not for any copyright infringement liable. First, they put their video platform only available to users and have the video in question does not even created yet uploaded. Second, they have taken all reasonable measures to address copyright infringement.

The competent rights Appeal sentenced the defendant on seven of the twelve-streitbe collected works of music for an injunction and dismissed the action for the rest. Contrary to the arguments of the applicant, the court denied, however, has a so-called “perpetrator liability” of the defendant regarding the copyright violations and only a so-called “disturbance liability” is assumed. Since the defendant has the infringing videos uploaded either themselves, or had their contents as its own, they do not stick as the perpetrator. However, they have done through the provision and operation of the video platform to contribute to the infringement. Because this article defendants träfen the behavior and control duties. This has hurt them and is therefore the applicant as a “disturber” obliged to refrain.
2
Thus, the defendant in the amount of conviction had violated the duty to con-cerned video clips to lock immediately after the applicant about the authorship rights violations had been informed. Regarding the question seven videos a lock only one and a half months after the notification was made by the applicant. In such a period could no longer speak of an immediate action.

On the question of what further meet audit and inspection duties, the defendant, the court pointed out the necessity of a proportionality test, in which the interests involved, and legal assessments were weighed against each other. The defendant should then no requirements are imposed, the more difficult principle to their work-permeable disproportionate. However, it is unreasonable to prevent egg-nes after receiving notice of copyright infringement through the use of future software uploads, the one reported by the music recording matching contained on recording. A suitable software’m the defendant in the form developed by its Content ID program available. The defendant had said program and could even apply but the application does not, as represented by her, left to right holders. In contrast, the defendant was not required to search through their entire database, using the Content ID program to copyright violations. The audit and inspection duties would begin as a disturber of undrawn per-son always only becoming aware of a specific infringement. An obligation to care therefore applies only to the future.

In order to reduce the number of the software the defendant has acquired rights violations, the defendant was also required to install a word filter. The new word filter should filter out selected videos, with titles both the title and the artist in a video that contains offending music recording. This was necessary because it would identify with the Content ID program, only recordings that were identical with reference to the stored image. Different recordings (eg, live performance rather than studio recording) do not recognize the software.

With regard to five of the twelve nominated by the applicant’s musical works is not clear that it has come to the notice of the applicant to the defendant on the violations still further Teren uploads. This could not be established that the defendant’s breach of duty of other law violations has become the cause, and accordingly the action was dismissed in respect of these musical works.

The verdict is not yet final. Where the decision appeal should be lodged, would be the Hanseatic Higher Regional Court in this jurisdiction.

The decision is below.  Commentary will follow in due course.

Viacom v. YouTube – Second Circuit Opinion

 1. The Controversial Indemnity Language Has Been Expanded, Not Limited.

This is the section most Users have expressed concern about, despite equivalent provisions appearing in most social network terms and conditions.  Nonetheless, after the attention brought to them by Kirsten Kowalski’s blog post last month, Pinterest founder Ben Silbermann called Ms. Kowalski and reassured her of the company’s bona fides.  Many had expected that to translate into a more limited indemnity provision when new terms were published, but they will be disappointed: the new language (clause 8 ) replaces the obligation to “defend” Pinterest (and its officers, directors, employees, agents) with an obligation to indemnify those same people for all the old situations as well as, now, for “suits, proceedings, disputes, demands, liabilities” and, of course, “costs”.

2. Commercial Use Of The Site Is Now Banned Completely.

Under the new Terms of Service, Pinterest only licences Users to even view the Pinterest website if they are doing so for personal, non-commercial use, which is then said to mean “to express yourself, discuss public issues, report on issues of public concern, engage in parody and as expressly permitted by the features of the Service [whatever that means]” (clause 2(a)).  It’s repeated in the Acceptable Use Policy.  Previously the restriction on commercial use applied only to use of the Mobile Software, so its extension to the Site might be for consistency only.  Either way, it seems odd to ban viewing of the Site if someone thinks it’s going to be helpful to them making money.  Looking for feedback on your photography?  Want to find out which aspects of your new fashion line are popular with consumers?  Apparently you’re not allowed to visit pinterest.com to do so.  Pinterest is still working on how to monetize their Site, and this doesn’t really seem to help them.

3. Users Must Forfeit Their Rights To Fair Use Of Pinterest Content, But User Content Is Fair Game.

When seeking to justify the Pinterest business model, commentators have pointed to two factors:  the DMCA (see below); and fair use.  Leaving aside the fact that these protections only extend as far as the US border and no further, you would think that Pinterest would like to engage the fair use argument.  Not so much.  In order to continue using the Service after April 6, 2012, Users must “agree not to use, modify, reproduce, distribute, sell, licence, or otherwise exploit the Pinterest Content without [Pinterest's] permission” (clause 2(b)), even though fair use would allow Users to do so in many circumstances.  In case this restriction isn’t clear enough, the point is made again in the Acceptable Use Policy, where Users agree not to “engage in” the “use” or “display” of any part of the Service, the Pinterest name, trademark, logo, the layout and design of “any” page without Pinterest’s “express written consent”.  Users can’t even mention the Pinterest name or URL in the meta data of their website unless Pinterest has given its express written consent.  That’s a remarkable set of restrictions on User’s rights.

Fair use is only a defense to copyright infringement, not breach of contract; so by continuing to use the Service after April 6, you become contractually bound to give up most of your fair use rights.  Is it reciprocal?  Does Pinterest similarly waive its right to fair use of your Content.  No.  Furthermore, Users specifically grant Pinterest a license to use, display, reproduce, re-pin, modify, rearrange and distribute User Content anywhere in the world and to allow others (including other Users) to do the same.  (This is more or less the same position as under the old Terms.)  Even if you delete your Content, Pinterest can still do all of these things (except “use”, oddly) for any Content that has been re-pinned by even a single User.  Once User Content has been re-pinned, it’s gone and you’ll likely never regain control over it.

4. Users Cannot Sue Pinterest, Either Individually Or As Part Of A Class Action.

One of the most significant changes is the introduction of an Arbitration Clause in clause 11.  Put simply, Users are now required to forewarn Pinterest of any dispute (limiting the ability of Users to secure favorable jurisidction outside California by suing somewhere else first) and must agree “to resolve” (not simply to try to resolve) any claim, dispute or controversy by arbitration.  Pinterest will pay your fees, but if their aggregate liability is limited by clause 10 to only $100 (that’s right, one hundred US dollars) most Users will probably decide that trying to enforce your rights is hardly worth the effort.  If your claim is for an injunction or some other equitable relief, but not for damages, then you can petition a Court for that limited purpose, but you must forfeit your right to join in a class action or any other representative action, and you agree to waive your right to a jury trial.

In two places, Pinterest requires Users to agree that it is “passive”.  First, in clause 11(b), it is to try to make the argument that Pinterest operates only in California and therefore no other Court has jurisdiction to hear any dispute involving Pinterest (in effect giving California exclusive jurisdiction even though the word “exclusive” is no longer used).  Second, in clause 9 (Disclaimers), Users must agree that Pinterest is a “passive conduit”.  This would appear to be directed at establishing Pinterest’s eligibility for the DMCA (and possibly the European E-Commerce Directive) safe harbor, which is lost if the service provider is not “passive” (although I don’t see why they’ve said “conduit” instead of “host”).  I also don’t see the DMCA argument being as watertight as some others do, particularly until the Second Circuit gives its opinion in Viacom v. YouTube, but that’s for another post another time.

5. There Are Some Hints At Future Innovations.

The current Terms include a warning that “your visual collection will be publicly viewable by all visitors to the Site and the [iTunes] Application”.  In the new Terms, there is a reference in clause 1(c) to “public or semi-public areas of the Service”.  Is Pinterest planning Diaspora*-style groups, as Google did with Circles?  Some Users have expressed an interest in being able to make some of their pins available to restricted groups, so it would appear that Pinterest is at least considering it.

Another new reference is in the provisions regarding the Mobile Software (which, by the way, you can only install on a single mobile device – clause 7(a)).  This identifies “security-related features of the Mobile Software, features that prevent or restict use or copying of any content [not Content] accessible through the Mobile Software, or features that enforce limitations on use of the Mobile Software”.  Perhaps this is to protect Pinterest Content, but it would be interesting if User Content was going to gain more protection if viewed on a mobile device than on the Site.

6. Conclusion

The big takeaway from 1, 3 and 4 above is that Users are in a worse position than non-Users when it comes to the misuse of content on Pinterest.  If a non-User owns content and wants to make a claim against Pinterest, they can do so under normal rules:  they have a right to sue for damages, they can assess where to sue, they can claim Pinterest is active in the infringement and therefore cannot hide behind the safe harbor exemptions from liability, they do not have to limit their damages claim and they owe no indemnity.  A User, however, has given up all of these rights.  So if you are a User and your artistic works are being infringed on Pinterest, you have agreed not to sue them for damages – you must arbitrate.  You have agreed to limit your recovery to $100, in total.  You have agreed not to argue that any Court other than one in California can assert jurisdiction over Pinterest.  You have agreed to a broad indemnity.

Will these new Terms take the sting out of the User criticism that has recently been directed at Pinterest?  I doubt it.  But what many netizens don’t realize when criticizing Pinterest, is that most social networks have similar, or worse, terms and conditions.  It is harsh for so many questions to be asked of Pinterest when they are simply following the beaten track.  Nonetheless, if it means the Site and Services improve and become more popular, then all the better in the long run.

A quick note to mark the passing of 2011 and the start of 2012. Thank you all for reading and commenting here (and on Twitter) on the stories that have been reported on these pages. I’m looking forward to posting much more in 2012.

There has been plenty to contemplate in the last 12 months and we look forward to new challenges and opportunities in the months that lie ahead.  Several big IP cases look likely to make their mark next year, including Viacom v. YouTube, The Authors’ Guild v. Google and NLA v. Meltwater, and we may begin to see the fallout of the (UK) Supreme Court’s ruling that foreign copyright claims can be adjudicated in the English courts.

Whatever plans you have for next year, I hope they will be realized, that you enjoy the chase, and that you will be challenged by the work that you do.

Zediva was sued by the MPAA for the unauthorized streaming of movies after it began taking “rental” orders for DVDs which its employees would pick off a shelf and stream online to the customer that had “rented” it.   That way, argued Zediva, it was only providing a physical rental, which doesn’t require permission provided that the physical copy being rented has been lawfully made and purchased.  The parties have settled the dispute, but not on terms that will please Zediva’s investors, with the result that if Zediva wants to continue streaming movies it will have to obtain streaming licenses, and, presumably, compensate the movie studios for past infringements.

None of this is surprising, and this is the only conclusion the Court could have reached.  No doubt, though, there will be some tough questions being asked by Zediva’s investors.

Movie studios win lawsuit against Zediva.

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?

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.