Détente can be a beautiful thing.  However, as demonstrated by the recent settlement agreement between Mega-media giants Google and Viacom, achieving it can be very expensive.

In 2007, Viacom filed suit against YouTube (now owned by Google) in federal court in the Southern District of New York for more than a billion dollars in damages. The claim was that over 60,000 clips of Viacom programs were available on YouTube without authorization and that YouTube was aware of instances of copyright infringement, but failed to take appropriate action to stop it.  Google maintained it was immune from liability under the “safe harbor” provisions of the Digital Millennium Copyright Act (“DMCA”), which essentially provides that Internet Service Providers (“ISPs”) are not liable for infringing activity unless they had actual knowledge or the awareness of facts or circumstances demonstrating infringing activity (often referred to as “Red Flag” Knowledge) and failed to remove or block access to the material. Additionally, if the ISP receives a financial benefit directly attributable to the infringing activity where it has the “right and ability to control” such activity or, upon notification of claimed infringement (in the form of a “takedown notice”) fails to expeditiously remove or disable access to the claimed infringing material, the safe harbor is no longer available.

The specificity of the requisite knowledge that requires the ISP to take action, the applicability of common law principles of willful blindness and vicarious liability and the level of control required to remove an ISP from safe harbor protection are subjects of considerable debate.

Ruling in Google’s favor in the first instance, the District Court held that Google was entitled to DMCA safe harbor protection because it had insufficient notice of the particular infringements that Viacom claimed were illegally published on YouTube.  The Second Circuit on appeal affirmed the lower court’s determination that the safe harbor requires knowledge or awareness of specific infringing activity (as opposed to general knowledge that infringement was prevalent) but remanded the issue because a reasonable juror could potentially find that YouTube had such specific knowledge.  The Second Circuit further found that the District Court erred by interpreting the “right and control” provision as requiring “item-specific” knowledge.  In making these determinations, the Second Circuit provided some guidance on the issues of actual and Red Flag knowledge, willful blindness, vicarious liability and the “right and ability to control” exclusion to the safe harbor provisions.

Specifically, the Second Circuit held that “actual knowledge” is a subjective belief that infringing activity has occurred, while “Red Flag knowledge” is subjective awareness of facts and circumstances that objectively demonstrate that such activity has occurred.  Although Section 512(m) of the DMCA, states that an ISP is not required to monitor its service or affirmatively seek out infringing activity, the Second Circuit determined this merely limits the principle of willful blindness; it does not abrogate it.  Thus, a factual question regarding whether YouTube made a “deliberate effort to avoid guilty knowledge” remained.  With regard to the “right and ability to control” exception to safe harbor protection, the Circuit Court concluded that the statute requires “something more” than the ability to remove or block access to materials posted on an ISP’s website.  The Court noted that “the remaining and more difficult question” is just what “something more” is required, and remanded the matter.

Although the Second Circuit briefly revived Viacom’s lawsuit, its victory was short-lived. On remand, the District Court ruled in Google’s favor again, rejecting Viacom’s argument that Google was not entitled to the safe harbor affirmative defense because neither party had sufficient evidence to make a clip-by-clip assessment of the knowledge possessed by YouTube.  Rather than placing the burden on Google to prove it lacked the requisite knowledge, the Court instead determined that Viacom bore the burden to prove that Google had the requisite knowledge of infringement.  Because there was no evidence linking YouTube’s knowledge to specific clips, the Court reasoned there was no proof YouTube had actual or Red Flag knowledge, or was willfully blind to specific infringement.  The Court also held that an ISP must influence or participate in such infringement in order to forfeit safe harbor protection for exerting “something more” than the “right and ability to control” infringing activity.  Again, the Court found that Plaintiffs failed to demonstrate that YouTube induced its users to submit infringing videos.  For these reasons the Court ruled that Google was entitled to safe harbor protection.

Almost a year later, in a somewhat abrupt end to this epic legal battle, the parties announced settlement.  Viacom reportedly did not receive any money[1], but did strike a business agreement with Google that provides Viacom access to YouTube’s Content ID program, which can be used to scan for Viacom’s copyrighted materials in order to promptly address illegal use of its entertainment properties in the future.  Whether this settlement reflects a meaningful cease fire between the parties, or just the latest concessions in a continuing Cold War, is anyone’s guess.

Since Google’s District Court victory remains forever unchallenged, it has left the door open to bring suit against other ISPs for similar conduct.  While both copyright enthusiasts and free internet proponents alike still have many lingering questions regarding the applicability and efficacy of the safe harbor provisions, further development in the jurisprudence should provide some answers; and we may get those answers sooner than you think.

Following the Second Circuit opinion in Viacom, U.S. District Judge William H. Pauley III reconsidered his prior grant of summary judgment in favor of MP3 Tunes in a similar copyright infringement action brought by Capital Records.[2]  The case proceeded to trial this month on the issues of willful blindness, Red Flag knowledge, infringement of cover art and vicarious liability.

In the midst of this excitement, Congress held a hearing focused on perceived failings of the DMCA safe harbor provisions.  Critics of the law called the takedown process a “whack-a-mole” system, arguing that as soon as one infringing file is removed from an ISP pursuant to a takedown notice, another one is already uploaded in its place.  Witnesses also testified regarding the inability of most ISPs to implement a filtering system comparable to Google’s Content-ID program, the disincentive to ISPs to monitor their platforms in light of the court’s narrow interpretation of actual and Red Flag knowledge, the growing trend of fraudulent takedown notices which could chill free speech and expression, and the propriety of Google’s autocomplete search function (as a possible enticement to infringement).  On the heels of the debate, the jury returned its verdict in MP3Tunes last week, finding the now defunct music storage website and its former CEO guilty of copyright infringement to the tune of roughly 41 million dollars. The verdict demonstrates that the DMCA does not provide refuge to all who seek protection, despite the challenges presented by the court’s narrow definition of actual and Red Flag knowledge.

The future of the DMCA and the success of cooperative efforts amongst copyright holders and ISPs remains uncertain.  Time will tell if Google and Viacom’s settlement truly represents détente, or if the parties will continue to wage a Super-Cold War with each side placing their finger firmly on the red button.  While an appeal of the MP3Tunes verdict or Congressional action revising the DMCA safe harbor provisions could provide more clarity, such actions would take months, if not years.  In the meantime, bundle up.  And build a bomb shelter.


[1] Todd Spangler, Google and Viacom Settle Copyright-Infringement Lawsuit over YouTube,”  Variety, (March 18, 2014).

[2] Capitol Records Inc., et al. v. MP3Tunes LLC et al., 1:07-cv-09931 (S.D.N.Y. 2014).