Viacom v. YouTube

More than 150 years ago, Supreme Court Justice Joseph Story found that copyright and patent cases come 'nearer than any other class of cases belonging to forensic discussions, to what may be called the metaphysics of the law where the distinctions are, or at least may be, very subtile [sic] and refined, and, sometimes, almost evanescent.' See, Folsom v. Marsh, 9 F. Cas. 342, 344 (C.C.D. Mass. 1841).

It is likely that the type of issues Justice Story had in mind will be at the center of the lawsuit Viacom, and related entities ('Viacom'), initiated against YouTube, Inc., YouTube, LLC and Google Inc. ('YouTube') on March 13, 2007. In February of this year, Viacom provided YouTube with 'take down notices' for removal of all of its copyright protected content after the two parties failed to reach a distribution agreement following months of negotiation. The suit that followed alleges, among other things, that 'YouTube has harnessed technology to willfully infringe copyrights on a huge scale, depriving writers, composers and performers of the rewards that are owed for effort and innovation, reducing the incentives of America's creative industries, and profiting from the illegal conduct of others as well.' Moreover, the suit states that 'YouTube's brazen disregard of the intellectual property laws fundamentally threatens not just Plaintiffs but the economic underpinnings of one of the most important sectors of the United States economy.' Viacom alleges that it has identified more than 150,000 copies of infringing materials posted on YouTube which have collectively been viewed over 1.5 billion times. Google Inc., recent YouTube acquirer, has not historically been a stranger to claims that it engages in copyright infringement by the likes of its Google Web Search, Google News, Google Video, Google Image Search and Google Book Search projects, and it appears that its YouTube acquisition has engendered more of the same comments about its cavalier attitude toward others' intellectual property rights.

The concept of legal protection for intellectual property can be traced back to Ireland in the sixth century. At that time a renegade bishop, who would later become St. Columba, snuck into a library and copied, by hand, a psalter (which is essentially a book containing various psalms) and thereafter provided copies for free to various local churches. This incensed the owner of the library and he filed a claim against St. Columba in King Diarmait's royal court. This was very interesting since there was no reference to the library's owner being the author of the psalter, merely the owner of the book. Regardless, the King decreed 'To every cow its calf, to every book its copy,' and fined St. Columba 40 head of cattle for making an unauthorized copy. St. Columba rallied his kinsmen and went to war against King Diarmait over the decision. This event, referred to as the 'Battle of the Books', led to King Diarmait's defeat in 560 or 561. While fining an infringer 40 head of cattle is nowhere to be seen in the current federal statutory copyright damages, the concept of going to war to vigorously protect a rights-holder continues to persevere in our court system even to this day.

The generalized claims by Viacom are that YouTube allows users to upload pirated, infringing material to the YouTube Web site, which is then saved on YouTube's own servers and which may be played from the YouTube Web site or easily embedded by a user in another Web site. Viacom alleges that YouTube has 'actual knowledge and clear notice of this massive infringement.' Moreover, Viacom argues that given the quick response YouTube is capable of in removing postings it considers pornographic, YouTube has the capability to monitor the Web site for copyright infringing postings, but chooses to do nothing due to the profits it gleans from traffic to the site. Additionally, Viacom argues that by allowing certain videos to be accessible only by a poster's 'friends,' YouTube is actually secreting these videos and making it impossible for a copyright holder to actually identify the infringing posts for the purposes of requesting their removal. The Complaint raises a panoply of alleged YouTube misconduct by the following claims: Count I is for public performance, Count II is for public display, Count III is for reproduction, Count IV is for inducement of copyright infringement, Count V is for contributory copyright infringement and Count VI is for vicarious copyright infringement. The specific legal theory that Viacom is espousing in raising these various Counts is that under section 106 of the Copyright Act of 1976, 17 U.S.C. '101 et seq., it has the exclusive rights to 'reproduce, publicly perform, and publicly display their copyrighted works.' Not surprisingly, the relief requested by Viacom is a declaration that YouTube's service willfully infringes its copyrights, a permanent injunction against YouTube for engaging in or otherwise facilitating copyright infringement of Viacom's properties, statutory damages under the Copyright laws or actual damages plus YouTube's profits, as well as other fees and costs. The calculation of damages, regardless of which theory is used, is potentially in the billions of dollars.

The DMCA Defense

The likelihood is that YouTube will quickly raise as a defense to Viacom's lawsuit that is has no liability given the protections contained in the Digital Millennium Copyright Act of 1998 ('DMCA'). From the skillful way that the Complaint was drafted, Viacom is well aware of this potential defense and is attempting to bolster its argument that it is inapposite to this case. Ultimately, this defense
may well highlight the debate over whether the DMCA, which was originally designed to adapt copyright protection and limit copyright infringement claims involving Internet Service Providers ('ISPs') such as AOL, extends to the various Web sites and virtual worlds allowing users to post potentially infringing materials.

Under the DMCA, 'a service provider shall not be liable for monetary relief, or ' for injunctive or other equitable relief, for infringement of copyright: [a] by reason of the provider's transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections '; [b] by reason of the intermediate and temporary storage of material on a system or network controlled or operated by or for the service provider '; [c] 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 '; [or [d]] by reason of the provider referring or linking users to an online location containing infringing material
or infringing activity, by using information location tools, including a directory, index, reference, pointer, or hypertext link.' These four major categories that qualify for the DMCA 'safe harbor' protections can otherwise be referred to as:

1. Transitory Digital Network Communications. Include the transmission and routing of information, such as an e-mail or ISP, that store the material only temporarily on their networks. [Sec. 512(a)];
2. System Caching. Refers to the temporary copies of data that are made by service providers in providing the various services that require such copying in order to transfer data. [Sec. 512(b)];
3. Information Residing on Systems or Networks at Direction of Users. Refers to services that allow users to store information on their networks, such as a Web hosting service or a chat room. [Sec. 512(c)]; and
4. Information Location Tools. Refer to services such as search engines, directories, or pages of recommended Web sites that provide links to the allegedly infringing material. [Sec. 512(d)].

The first task in determining whether YouTube benefits from any of these 'safe harbors' is to determine if it meets the 'service provider' definition. As used in the DMCA, 'the term 'service provider' means an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user's choosing, without modification to the content of the material as sent or received.' Moreover, 'the term 'service provider' means a provider of online services or network access, or the operator of facilities therefor '.' A strict reading of the 'service provider' definition would seem to include the YouTube business model. However, depending on which of the four above-referenced categories of 'service provider' YouTube would claim its services fall within, the 'safe harbor' provisions require specific compliance with various issues. These issues include, but are not limited to, that the 'service provider' does not have actual knowledge that the material or activity is infringing; 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 posts the material without modification to its content from the manner in which the material was transmitted. Therefore, the argument could be made that YouTube is in violation of some of the exemption categories discussed above. Specifically, YouTube arguably receives a direct financial benefit from making the infringing content available. Likewise, by monitoring and policing its own Web site to remove material YouTube finds offensive, it may violate the other exemptions by having actual knowledge of infringement and engaging in some form of the selection or modification of the material shown on the Web site. While these possible violations may not be the death knell to YouTube's DMCA claims, they definitely muddy the waters somewhat that YouTube's policy of removing infringing content only upon notice was sufficient to grant their actions a shield from
copyright liability under the DMCA provisions.

Furthermore, the argument will also likely be raised that the DMCA was enacted to protect companies such as AOL, since it was virtually impossible at the time the DMCA was enacted for such a company to proactively monitor every e-mail communication, chat room, Web site, etc., for any and all content which may be infringing. Viacom's attorneys have already insinuated that they will argue that YouTube's business model is much different, and that they have the capability, and therefore the responsibility, to monitor and police any infringing content posted by its users. Moreover, the Viacom Complaint seems to anticipate the lack of knowledge or monitoring capability defense with allegations concerning how YouTube catalogs, tags, and permits forwarding of its various videos.

Alternatively, YouTube's counsel has stated its confidence that its activity is not something that will subject them to copyright liability since it fully complies with the notice and takedown procedures outlined in the DMCA. Moreover, it is possible that Viacom's reliance on the argument that the DMCA was enacted merely to protect services such as AOL is ultimately misplaced. As discussed above, the DMCA provided different definitions of a 'service provider' in sections 512(k)(1)(A) and 512(k)(1)(B) of the Act. If the DMCA was ultimately intended to cover merely one type of business model or ISP, there would seemingly not be the need to have two different definitions of what being a 'service provider' entails.

While it is not beyond the realm of logic that a court could find that YouTube has followed the letter of the law in terms of the DMCA, YouTube may still have run afoul of the intent of the Act. In A&M Records, Inc. v. Napster Inc., the Ninth Circuit refused to extend the safe harbor provisions to Napster, leaving open the question of whether any peer-to-peer network may qualify for the 'safe harbor' protections under the Act. Likewise, Metro-Goldwyn-Mayer Studios Inc. et al. v. Grokster, LTD., et al., where the U.S. Supreme Court opined that 'one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties,' left open the full scope of the 'safe harbor' provisions. The issues being raised by Viacom in this suit will likely mirror the arguments found meritorious in these two suits. Moreover, in arguing liability, I would think that the judge and the attorneys for the parties would do well to review the legislative history of the DMCA to determine if YouTube, and the like, were at all what was contemplated by the definition of a 'service provider' ' or if the intent was really limited merely to an Internet portal such as AOL.

Conclusion

This suit is potentially dealing with a very important issue that goes way beyond YouTube's actions or inactions ' the scope of the DMCA in today's Internet. The technology being utilized by YouTube was not even imagined a decade ago when the DMCA was enacted. An ISP such as AOL has a business model and infringement monitoring capabilities that is markedly different from that of YouTube. Therefore, it may be comparing apples to oranges to argue that they both are protected by the same Act. Moreover, with file sharing recently under fire, and with the growth of user-generated content on social networking sites such as MySpace and within various developing virtual worlds growing at an enormous pace, the scope and impact of the DMCA to these areas and activities is also of vital importance. Fortunately, or unfortunately depending on your viewpoint, the current state of technology is advancing at rate that was unheard of in previous decades. The legal field is failing to keep pace with the technology race and as a result there are few legal theories or precedents that seem to be exactly on point with the issues raised by many technological or business method advances. Therefore, lawyers, judges and businesspeople are left with a set of statutes, acts and case law that potentially can shed light on the legality of the new technology or methods, but only when expanded, contracted or otherwise tweaked in some way by the courts or legislature. The result is that the legality of these new methods or technologies is generally not being determined until it has become a mainstream success, resulting in huge damage to an enterprise if the law is interpreted in a way that restricts their advances.

Moreover, by the time the law ultimately catches up with and polices the infringing technology at issue, there have already been other advances to take its place that generally make the new legal positions obsolete. Justice Story hit the nail on the head when he opined on IP being the 'metaphysics of law,' but that should not stop us from attempting to craft a legal system that fully protects the valuable rights of both the copyright holder and the legitimate user.

Regardless of all of the aforesaid descriptions and possible legal conclusions, it is open for speculation that this suit, coming such a short time following a negotiations break-down between the parties on entering into a licensing arrangement, is just a negotiation strategy, gambit or ploy by Viacom for a more favorable deal. (YouTube has already reached content partnerships with CBS, Universal Music Group, Warner Music and Sony BMG Music Entertainment.) If this is ultimately the motivating factor for the suit, it is not likely that this case will provide the precedential guidance to the industry on the scope of the DMCA before it is ultimately settled by the parties.

(Editor's Note: As this issue was going to press, News Corp. and NBC Universal announced plans to launch a joint online video site this summer to compete with YouTube. News Corp. owns Fox television and movies as well as MySpace. Other distribution partners include Yahoo!, Microsoft and AOL. Although Viacom declined an invitation to join the new venture, it did issue a statement in support of the new video site, calling it 'a welcome addition to the industry,' and adding: 'The venture supports our view that upholding the rights of content creators is the only logical and legitimate path for the creative and technology communities to come together and bring great new online experiences to consumers.')

More than 150 years ago, Supreme Court Justice Joseph Story found that copyright and patent cases come 'nearer than any other class of cases belonging to forensic discussions, to what may be called the metaphysics of the law where the distinctions are, or at least may be, very subtile [sic] and refined, and, sometimes, almost evanescent.' See, Folsom v. Marsh , 9 F. Cas. 342, 344 (C.C.D. Mass. 1841).

It is likely that the type of issues Justice Story had in mind will be at the center of the lawsuit Viacom, and related entities ('Viacom'), initiated against YouTube, Inc., YouTube, LLC and Google Inc. ('YouTube') on March 13, 2007. In February of this year, Viacom provided YouTube with 'take down notices' for removal of all of its copyright protected content after the two parties failed to reach a distribution agreement following months of negotiation. The suit that followed alleges, among other things, that 'YouTube has harnessed technology to willfully infringe copyrights on a huge scale, depriving writers, composers and performers of the rewards that are owed for effort and innovation, reducing the incentives of America's creative industries, and profiting from the illegal conduct of others as well.' Moreover, the suit states that 'YouTube's brazen disregard of the intellectual property laws fundamentally threatens not just Plaintiffs but the economic underpinnings of one of the most important sectors of the United States economy.' Viacom alleges that it has identified more than 150,000 copies of infringing materials posted on YouTube which have collectively been viewed over 1.5 billion times. Google Inc., recent YouTube acquirer, has not historically been a stranger to claims that it engages in copyright infringement by the likes of its Google Web Search, Google News, Google Video, Google Image Search and Google Book Search projects, and it appears that its YouTube acquisition has engendered more of the same comments about its cavalier attitude toward others' intellectual property rights.

The concept of legal protection for intellectual property can be traced back to Ireland in the sixth century. At that time a renegade bishop, who would later become St. Columba, snuck into a library and copied, by hand, a psalter (which is essentially a book containing various psalms) and thereafter provided copies for free to various local churches. This incensed the owner of the library and he filed a claim against St. Columba in King Diarmait's royal court. This was very interesting since there was no reference to the library's owner being the author of the psalter, merely the owner of the book. Regardless, the King decreed 'To every cow its calf, to every book its copy,' and fined St. Columba 40 head of cattle for making an unauthorized copy. St. Columba rallied his kinsmen and went to war against King Diarmait over the decision. This event, referred to as the 'Battle of the Books', led to King Diarmait's defeat in 560 or 561. While fining an infringer 40 head of cattle is nowhere to be seen in the current federal statutory copyright damages, the concept of going to war to vigorously protect a rights-holder continues to persevere in our court system even to this day.

The generalized claims by Viacom are that YouTube allows users to upload pirated, infringing material to the YouTube Web site, which is then saved on YouTube's own servers and which may be played from the YouTube Web site or easily embedded by a user in another Web site. Viacom alleges that YouTube has 'actual knowledge and clear notice of this massive infringement.' Moreover, Viacom argues that given the quick response YouTube is capable of in removing postings it considers pornographic, YouTube has the capability to monitor the Web site for copyright infringing postings, but chooses to do nothing due to the profits it gleans from traffic to the site. Additionally, Viacom argues that by allowing certain videos to be accessible only by a poster's 'friends,' YouTube is actually secreting these videos and making it impossible for a copyright holder to actually identify the infringing posts for the purposes of requesting their removal. The Complaint raises a panoply of alleged YouTube misconduct by the following claims: Count I is for public performance, Count II is for public display, Count III is for reproduction, Count IV is for inducement of copyright infringement, Count V is for contributory copyright infringement and Count VI is for vicarious copyright infringement. The specific legal theory that Viacom is espousing in raising these various Counts is that under section 106 of the Copyright Act of 1976, 17 U.S.C. '101 et seq., it has the exclusive rights to 'reproduce, publicly perform, and publicly display their copyrighted works.' Not surprisingly, the relief requested by Viacom is a declaration that YouTube's service willfully infringes its copyrights, a permanent injunction against YouTube for engaging in or otherwise facilitating copyright infringement of Viacom's properties, statutory damages under the Copyright laws or actual damages plus YouTube's profits, as well as other fees and costs. The calculation of damages, regardless of which theory is used, is potentially in the billions of dollars.

The DMCA Defense

The likelihood is that YouTube will quickly raise as a defense to Viacom's lawsuit that is has no liability given the protections contained in the Digital Millennium Copyright Act of 1998 ('DMCA'). From the skillful way that the Complaint was drafted, Viacom is well aware of this potential defense and is attempting to bolster its argument that it is inapposite to this case. Ultimately, this defense
may well highlight the debate over whether the DMCA, which was originally designed to adapt copyright protection and limit copyright infringement claims involving Internet Service Providers ('ISPs') such as AOL, extends to the various Web sites and virtual worlds allowing users to post potentially infringing materials.

Under the DMCA, 'a service provider shall not be liable for monetary relief, or ' for injunctive or other equitable relief, for infringement of copyright: [a] by reason of the provider's transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections '; [b] by reason of the intermediate and temporary storage of material on a system or network controlled or operated by or for the service provider '; [c] 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 '; [or [d]] by reason of the provider referring or linking users to an online location containing infringing material
or infringing activity, by using information location tools, including a directory, index, reference, pointer, or hypertext link.' These four major categories that qualify for the DMCA 'safe harbor' protections can otherwise be referred to as:

1. Transitory Digital Network Communications. Include the transmission and routing of information, such as an e-mail or ISP, that store the material only temporarily on their networks. [Sec. 512(a)];
2. System Caching. Refers to the temporary copies of data that are made by service providers in providing the various services that require such copying in order to transfer data. [Sec. 512(b)];
3. Information Residing on Systems or Networks at Direction of Users. Refers to services that allow users to store information on their networks, such as a Web hosting service or a chat room. [Sec. 512(c)]; and
4. Information Location Tools. Refer to services such as search engines, directories, or pages of recommended Web sites that provide links to the allegedly infringing material. [Sec. 512(d)].

The first task in determining whether YouTube benefits from any of these 'safe harbors' is to determine if it meets the 'service provider' definition. As used in the DMCA, 'the term 'service provider' means an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user's choosing, without modification to the content of the material as sent or received.' Moreover, 'the term 'service provider' means a provider of online services or network access, or the operator of facilities therefor '.' A strict reading of the 'service provider' definition would seem to include the YouTube business model. However, depending on which of the four above-referenced categories of 'service provider' YouTube would claim its services fall within, the 'safe harbor' provisions require specific compliance with various issues. These issues include, but are not limited to, that the 'service provider' does not have actual knowledge that the material or activity is infringing; 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 posts the material without modification to its content from the manner in which the material was transmitted. Therefore, the argument could be made that YouTube is in violation of some of the exemption categories discussed above. Specifically, YouTube arguably receives a direct financial benefit from making the infringing content available. Likewise, by monitoring and policing its own Web site to remove material YouTube finds offensive, it may violate the other exemptions by having actual knowledge of infringement and engaging in some form of the selection or modification of the material shown on the Web site. While these possible violations may not be the death knell to YouTube's DMCA claims, they definitely muddy the waters somewhat that YouTube's policy of removing infringing content only upon notice was sufficient to grant their actions a shield from
copyright liability under the DMCA provisions.

Furthermore, the argument will also likely be raised that the DMCA was enacted to protect companies such as AOL, since it was virtually impossible at the time the DMCA was enacted for such a company to proactively monitor every e-mail communication, chat room, Web site, etc., for any and all content which may be infringing. Viacom's attorneys have already insinuated that they will argue that YouTube's business model is much different, and that they have the capability, and therefore the responsibility, to monitor and police any infringing content posted by its users. Moreover, the Viacom Complaint seems to anticipate the lack of knowledge or monitoring capability defense with allegations concerning how YouTube catalogs, tags, and permits forwarding of its various videos.

Alternatively, YouTube's counsel has stated its confidence that its activity is not something that will subject them to copyright liability since it fully complies with the notice and takedown procedures outlined in the DMCA. Moreover, it is possible that Viacom's reliance on the argument that the DMCA was enacted merely to protect services such as AOL is ultimately misplaced. As discussed above, the DMCA provided different definitions of a 'service provider' in sections 512(k)(1)(A) and 512(k)(1)(B) of the Act. If the DMCA was ultimately intended to cover merely one type of business model or ISP, there would seemingly not be the need to have two different definitions of what being a 'service provider' entails.

While it is not beyond the realm of logic that a court could find that YouTube has followed the letter of the law in terms of the DMCA, YouTube may still have run afoul of the intent of the Act. In A&M Records, Inc. v. Napster Inc., the Ninth Circuit refused to extend the safe harbor provisions to Napster, leaving open the question of whether any peer-to-peer network may qualify for the 'safe harbor' protections under the Act. Likewise, Metro-Goldwyn-Mayer Studios Inc. et al. v. Grokster, LTD., et al., where the U.S. Supreme Court opined that 'one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties,' left open the full scope of the 'safe harbor' provisions. The issues being raised by Viacom in this suit will likely mirror the arguments found meritorious in these two suits. Moreover, in arguing liability, I would think that the judge and the attorneys for the parties would do well to review the legislative history of the DMCA to determine if YouTube, and the like, were at all what was contemplated by the definition of a 'service provider' ' or if the intent was really limited merely to an Internet portal such as AOL.

Conclusion

This suit is potentially dealing with a very important issue that goes way beyond YouTube's actions or inactions ' the scope of the DMCA in today's Internet. The technology being utilized by YouTube was not even imagined a decade ago when the DMCA was enacted. An ISP such as AOL has a business model and infringement monitoring capabilities that is markedly different from that of YouTube. Therefore, it may be comparing apples to oranges to argue that they both are protected by the same Act. Moreover, with file sharing recently under fire, and with the growth of user-generated content on social networking sites such as MySpace and within various developing virtual worlds growing at an enormous pace, the scope and impact of the DMCA to these areas and activities is also of vital importance. Fortunately, or unfortunately depending on your viewpoint, the current state of technology is advancing at rate that was unheard of in previous decades. The legal field is failing to keep pace with the technology race and as a result there are few legal theories or precedents that seem to be exactly on point with the issues raised by many technological or business method advances. Therefore, lawyers, judges and businesspeople are left with a set of statutes, acts and case law that potentially can shed light on the legality of the new technology or methods, but only when expanded, contracted or otherwise tweaked in some way by the courts or legislature. The result is that the legality of these new methods or technologies is generally not being determined until it has become a mainstream success, resulting in huge damage to an enterprise if the law is interpreted in a way that restricts their advances.

Moreover, by the time the law ultimately catches up with and polices the infringing technology at issue, there have already been other advances to take its place that generally make the new legal positions obsolete. Justice Story hit the nail on the head when he opined on IP being the 'metaphysics of law,' but that should not stop us from attempting to craft a legal system that fully protects the valuable rights of both the copyright holder and the legitimate user.

Regardless of all of the aforesaid descriptions and possible legal conclusions, it is open for speculation that this suit, coming such a short time following a negotiations break-down between the parties on entering into a licensing arrangement, is just a negotiation strategy, gambit or ploy by Viacom for a more favorable deal. (YouTube has already reached content partnerships with CBS, Universal Music Group, Warner Music and Sony BMG Music Entertainment.) If this is ultimately the motivating factor for the suit, it is not likely that this case will provide the precedential guidance to the industry on the scope of the DMCA before it is ultimately settled by the parties.

(Editor's Note: As this issue was going to press, News Corp. and NBC Universal announced plans to launch a joint online video site this summer to compete with YouTube. News Corp. owns Fox television and movies as well as MySpace. Other distribution partners include Yahoo!, Microsoft and AOL. Although Viacom declined an invitation to join the new venture, it did issue a statement in support of the new video site, calling it 'a welcome addition to the industry,' and adding: 'The venture supports our view that upholding the rights of content creators is the only logical and legitimate path for the creative and technology communities to come together and bring great new online experiences to consumers.')