Viacom recently asked a federal court to order YouTube to pay it more than $1 billion in damages for about 150,000 videos that Viacom claims it owns and YouTube users have shared.  It accused YouTube of harnessing video-sharing technology permitting users to infringe copyright on a massive scale, harming not only Viacom but also “one of the most important sectors of the United States economy.”  While YouTube prevailed on summary judgment in the district court, the Second Circuit’s decision in the matter effectively breathed life into Viacom’s plea.

The case centers around the 1998 Digital Millennium Copyright Act (DMCA).  Specifically, safe harbor provision Section 512(c), which protects online service providers such as YouTube from copyright liability for materials posted or stored at the direction of users.

The Second Circuit decision arose from an appeal of a June 2010 decision in the Southern District of New York.  The Southern District there held that generalized knowledge of copyright infringement is insufficient to deny safe harbor protection to online service providers under the DMCA with respect to those providers’ storage of user-provided content.  In granting summary judgment, the district court held that there was no triable issue of fact on whether YouTube had actual knowledge of specific infringing items uploaded by its users.  Finally, the Southern District held that such item-specific knowledge of infringing activity is required for a service provider to have the right and ability to control infringing activity under the safe harbor provision of the DMCA.

The Second Circuit partially disagreed.  The panel there held that although the DMCA safe harbor provision requires knowledge or awareness of specific infringing activity, the district court erred by interpreting the right and ability to control to require such item specific knowledge.  Rather, the Second Circuit explained that services providers had to act upon both actual knowledge, where the provider knows of specific infringement, and also red flag knowledge, which arises when the provider learns of facts that make the specific infringement objectively obvious to a reasonable person.  Notwithstanding this two-part test, the Second Circuit determined that based on the evidence a reasonable jury could find that YouTube had actual knowledge of specific infringing activity on its website.  Additionally, the Second Circuit held that the district court erred in failing to examine whether YouTube was willfully blind to specific infringing video clips.  For these reasons, it partially vacated the district court’s summary judgment order for YouTube and remanded the case back to the district court.

Notably, the appellate decision marked the first instance where the Second Circuit commented on whether the willful blindness doctrine could be used to find a service provider liable for copyright infringement.  Willful blindness, noted the panel, arises when one is aware of a high probability of the fact in dispute and consciously avoided confirming that fact.  The Second Circuit concluded by noting that the DMCA safe harbor protections should not be conditioned solely on a service provider’s affirmative monitoring of user uploaded content.

The Second Circuit’s decision provides insight for future DMCA litigants.  Legally, the decision enables copyright holders to create triable issues of material fact in future DMCA oriented lawsuits.  As for service providers, they face the corresponding increased difficulty of prevailing on summary judgment motions in such suits.  But the Second Circuit’s decision does in fact signal to service providers that they can ultimately rely on the DMCA safe harbor provisions, notwithstanding a general awareness of infringing activity on their websites.  As long as there exists no general awareness of specific infringement, service providers will remain protected against copyright infringement claims.

Despite such insight, the Second Circuit did not elaborate on the requisite factual showing a copyright holder must make to establish an inference of specific knowledge based on the willful blindness doctrine.  Such direction will hopefully be provided to copyright litigants in the upcoming proceedings before the Southern District upon remand.

The Second Circuit decision is Viacom International v. YouTube, No. 10-3270 (2d Cir. Apr. 5, 2012).

For further discussion on the Second Circuit’s decision see the Data Privacy Monitor Blog here.