The DMCA Safe Harbor Provision Is Stronger Than Ever

Even as the economy continues to slowly recover from this recession, online sales are still booming, accounting for more than $200 billion over the past year. As the marketplace shifts from the sales counter to the desktop, counterfeiting and software piracy have also shifted to the virtual world.

For copyright and trademark owners, this creates a constant stream of newly evolved infringing activities to monitor. Although intellectual property owners have sought to hold online service providers liable for the infringing activities of their users, courts have repeatedly found them not liable so long as they adhere to the guidelines for the Safe Harbor Provision found in the Digital Millennium Copyright Act (“DMCA”). While online service providers like YouTube and eBay rely heavily on the safe harbor to operate, the protection provided by it remains a point of frustration among the entertainment industry and other copyright and trademark holders looking to protect their intellectual property rights.

Viacom, YouTube, eBay and Tiffany

Intellectual property holders are having a difficult time monitoring and controlling piracy with the threat of civil litigation.

The Safe Harbor Provision is codified in the DMCA Title II, the Online Copyright Infringement Liability Limitation Act (see, www.law.cornell.edu/uscode/html/uscode17/usc_sec_17_00000512—-000-.html). This provision creates a safe harbor for online service providers (“OSPs”), including Internet service providers (“ISPs”), against copyright liability. In order to receive the benefit of the safe harbor, OSPs have to implement their own policing measures for counterfeiting. They must promptly block access to allegedly infringing material if they receive a notification claiming infringement from a copyright holder or the copyright holder's agent and they must take active steps to prevent repeat infringers. Most recently, this safe harbor provision was tested in high profile cases in the Southern District of New York, Viacom Int'l Inc. v. YouTube Inc., 540 F.Supp.2d 461 (2008), and Tiffany v. eBay, 576 F. Supp. 2d 463 (S.D.N.Y. 2008).

Viacom v. YouTube

In Viacom, Viacom sued YouTube (now owned by Google) for $1 billion in damages, alleging widespread copyright infringement of Viacom's content. (See, “Federal Judge Hands Google Victory in Viacom's $1 Billion Suit Over YouTube Content” at www.ljnonline.com/issues/ljn_internetlaw/8_6/news/153922-1.html.) Viacom is a media giant owning such television channels as MTV, VH1, Nickelodeon, and Comedy Central. YouTube did not contest that it hosted the infringing content. YouTube users had posted thousands of hours of Viacom-owned videos. However, YouTube, as an online service provider, relied on the Safe Harbor Provision, arguing that it did not know of any specific infringement, and upon notification of infringing content, it immediately removed the content.

Viacom argued that YouTube's general knowledge of infringing content violated the requirements for the Safe Harbor Provision and opened YouTube up for liability. In his opinion, Judge Louis Stanton rejected Viacom's argument and placed the burden on the copyright owner, stating: “[I]f a service provider knows (from notice from the owner, or a 'red flag') of specific instances of infringement, the provider must promptly remove the infringing material. If not, the burden is on the owner to identify the infringement. General knowledge that infringement is 'ubiquitous' does not impose a duty on the service provider to monitor or search its service for infringements.”

Based on this case, it can be said that a high burden is placed on the defendants to prove actual knowledge of specific infringing content.

Tiffany v. eBay

Tiffany v. eBay involved a suit by the famous jeweler against a popular auction Web site. Frustrated by eBay's perceived tolerance of counterfeit goods sales, Tiffany filed suit alleging contributory trademark infringement, among claims for false advertising and trademark dilution, in an attempt to be compensated for the abundance of counterfeited Tiffany jewelry being sold on eBay. Tiffany's estimates indicated that about 75% of “Tiffany” jewelry available for sale on eBay were counterfeit goods, the opinion said.

Like Viacom, Tiffany argued that eBay knew or had reason to know that counterfeit goods were being sold on their Web site due to the sheer volume of transactions involving counterfeit Tiffany jewelry. According to the opinion, Tiffany filed thousands of notices of claimed infringement forms (“NOCIs”) prior to bringing suit and noted numerous complaints brought by consumers informing eBay that their purchased Tiffany items were counterfeit. Again, the court rejected the general knowledge theory advanced by Tiffany and ruled in favor of eBay. The court held that Tiffany failed to demonstrate that eBay was supplying its service to sellers who it knew, or had reason to know, were selling counterfeit goods. (The Second Circuit affirmed the decision in April, remanding the false advertising issue. See, “Tiffany v. eBay” in the May 2010 issue of Internet Law & Strategy, available at www.ljnonline.com/issues/ljn_internetlaw/8_5/news/153682-1.html.)

So how were YouTube and eBay able to avoid liability? They instituted policies to allow copyright or trademark holders to request the removal of infringing material. For example, eBay instituted a Verified Owner's Rights (“VeRO”) program (http://pages.ebay.in/help/confidence/programs-vero.html). VeRO was deigned to allow eBay to work with IP owners to “develop and enforce policies and procedures for protecting intellectual property.” VeRO invites eBay users to submit a NOCI form to eBay if the users have a good faith belief that there is a listing on eBay that infringes their copyright.

Similarly, YouTube has a Copyright Complaint Webform that allows a copyright owner to quickly file a complaint at which point the disputed material is removed until the complaint is investigated (www.youtube.com/t/copyright_notice?gl=CA&hl=en). For all intents and purposes, this absolves the online service provider of liability while removing a specific infringing item. However, to the third party posting the infringing activities, the account used to post the content may be shut down, but this rarely results in the seizure of goods, arrest or fine. The third party can open another account under another name and try again to post the infringing content. In practical terms, this may not have a strong deterrent affect on a third party that posts infringing content or offers counterfeit goods for sale.

'Operation in Our Sites'

However, the White House's newly announced Joint Strategic Plan on Intellectual Property Enforcement offers some hope to IP owners. In releasing the plan, U.S. Intellectual Property Enforcement Coordinator Victoria Espinel said: “Now, more than ever, we need to protect the ideas, artistry, and our reputation for quality, provide our businesses with the incentives to make each new product better, reduce crimes related to intellectual property infringement and keep dangerous counterfeits out of our supply chain to protect our citizens. Strong intellectual property enforcement will help us to accomplish that.” (See the announcement at www.whitehouse.gov/blog/2010/06/22/releasing-joint-strategic-plan-combat-intellectual-property-theft; includes a link to the Strategic Plan).

Within a week after the plan was announced, an anti-piracy initiative named “Operation in Our Sites” was launched as a joint effort by U.S. Immigration and Customs Enforcement and the U.S. Attorney for the Southern District of New York (see, www.ice.gov/pi/nr/1006/100630losangeles.htm). Operation in Our Sites is aimed at sites that stream or offer downloads of copyrighted television shows and movies. All assets from the sites are seized, including PayPal and advertising accounts.

Operation in Our Sites is not only shutting down Web sites accused of airing pirated programming, but is also seizing the domain names. During the initial press conference announcing the operation, U.S. Immigration and Customs Enforcement officials announced that they would also be monitoring sales of counterfeit products over the Internet, including pharmaceuticals, software, electronics and “products that threaten public health and safety.” This proactive initiative serves as a clear indication that the current administration is willing to perform large takedowns of organizations suspected of profiting from counterfeit goods on the Internet.

This initiative undoubtedly offers some comfort to the Motion Picture Association of America and the Recording Industry Association of America in their ability to eliminate the rogue Web sites that exist almost exclusively to host copyrighted materials like first run movies.

But will the government crack down on individuals posting large amounts of copyrighted material on YouTube, or counterfeit goods on eBay? Practical problems persist in policing the mainstream OSPs that have primarily non-infringing content. Because of the structure of the Internet, it remains relatively easy for virtually anonymous individuals to share or otherwise disseminate IP.

Going forward, IP owners would be wise to adhere to the lessons from Viacom and Tiffany. The burden of policing copyrights is on the owners rather than the OSPs and the likelihood for success in litigation is small. However, as there is little chance for any type of monetary judgment against mainstream OSP, efforts to monitor infringing activities should be bifurcated.

First, companies must assign resources and develop a policy to monitor the mainstream OSPs for infringing activities, to identify the third-party source of the infringing activity and to send a DMCA cease and desist letter. Second, companies must identify the rogue sites that exist for primarily infringing activities and seek criminal charges against them. OSPs should be aware that courts are less likely to offer them protection from contributory infringement when they make little to no showing of active policing measures to prevent or stop the sale or streaming of infringing goods. OSPs should also be diligent in creating a clear and effective policy to allow IP rights owners to notify the OSP of potentially infringing activities.

For example, the infringing videos frequently uploaded by users on YouTube are substantially similar to the infringing videos available on the Web sites targeted by Operation in Our Sites; however the major legal difference between the two sites is the policing measures employed by YouTube.

Conclusion

While current policies strongly favor the rights of the online service provider over the IP rights holder, IP rights holders feel they are losing control of the ability to police their property. In the coming years it will be interesting to follow whether the Joint Strategic Plan to combat IP theft gives some control back.

Even as the economy continues to slowly recover from this recession, online sales are still booming, accounting for more than $200 billion over the past year. As the marketplace shifts from the sales counter to the desktop, counterfeiting and software piracy have also shifted to the virtual world.

For copyright and trademark owners, this creates a constant stream of newly evolved infringing activities to monitor. Although intellectual property owners have sought to hold online service providers liable for the infringing activities of their users, courts have repeatedly found them not liable so long as they adhere to the guidelines for the Safe Harbor Provision found in the Digital Millennium Copyright Act (“DMCA”). While online service providers like YouTube and eBay rely heavily on the safe harbor to operate, the protection provided by it remains a point of frustration among the entertainment industry and other copyright and trademark holders looking to protect their intellectual property rights.

Viacom, YouTube, eBay and Tiffany

Intellectual property holders are having a difficult time monitoring and controlling piracy with the threat of civil litigation.

The Safe Harbor Provision is codified in the DMCA Title II, the Online Copyright Infringement Liability Limitation Act (see, www.law.cornell.edu/uscode/html/uscode17/usc_sec_17_00000512—-000-.html). This provision creates a safe harbor for online service providers (“OSPs”), including Internet service providers (“ISPs”), against copyright liability. In order to receive the benefit of the safe harbor, OSPs have to implement their own policing measures for counterfeiting. They must promptly block access to allegedly infringing material if they receive a notification claiming infringement from a copyright holder or the copyright holder's agent and they must take active steps to prevent repeat infringers. Most recently, this safe harbor provision was tested in high profile cases in the Southern District of New York, Viacom Int'l Inc. v. YouTube Inc. , 540 F.Supp.2d 461 (2008), and Tiffany v. eBay , 576 F. Supp. 2d 463 (S.D.N.Y. 2008).

Viacom v. YouTube

In Viacom, Viacom sued YouTube (now owned by Google) for $1 billion in damages, alleging widespread copyright infringement of Viacom's content. (See, “Federal Judge Hands Google Victory in Viacom's $1 Billion Suit Over YouTube Content” at www.ljnonline.com/issues/ljn_internetlaw/8_6/news/153922-1.html.) Viacom is a media giant owning such television channels as MTV, VH1, Nickelodeon, and Comedy Central. YouTube did not contest that it hosted the infringing content. YouTube users had posted thousands of hours of Viacom-owned videos. However, YouTube, as an online service provider, relied on the Safe Harbor Provision, arguing that it did not know of any specific infringement, and upon notification of infringing content, it immediately removed the content.

Viacom argued that YouTube's general knowledge of infringing content violated the requirements for the Safe Harbor Provision and opened YouTube up for liability. In his opinion, Judge Louis Stanton rejected Viacom's argument and placed the burden on the copyright owner, stating: “[I]f a service provider knows (from notice from the owner, or a 'red flag') of specific instances of infringement, the provider must promptly remove the infringing material. If not, the burden is on the owner to identify the infringement. General knowledge that infringement is 'ubiquitous' does not impose a duty on the service provider to monitor or search its service for infringements.”

Based on this case, it can be said that a high burden is placed on the defendants to prove actual knowledge of specific infringing content.

Tiffany v. eBay

Tiffany v. eBay involved a suit by the famous jeweler against a popular auction Web site. Frustrated by eBay's perceived tolerance of counterfeit goods sales, Tiffany filed suit alleging contributory trademark infringement, among claims for false advertising and trademark dilution, in an attempt to be compensated for the abundance of counterfeited Tiffany jewelry being sold on eBay. Tiffany's estimates indicated that about 75% of “Tiffany” jewelry available for sale on eBay were counterfeit goods, the opinion said.

Like Viacom, Tiffany argued that eBay knew or had reason to know that counterfeit goods were being sold on their Web site due to the sheer volume of transactions involving counterfeit Tiffany jewelry. According to the opinion, Tiffany filed thousands of notices of claimed infringement forms (“NOCIs”) prior to bringing suit and noted numerous complaints brought by consumers informing eBay that their purchased Tiffany items were counterfeit. Again, the court rejected the general knowledge theory advanced by Tiffany and ruled in favor of eBay. The court held that Tiffany failed to demonstrate that eBay was supplying its service to sellers who it knew, or had reason to know, were selling counterfeit goods. (The Second Circuit affirmed the decision in April, remanding the false advertising issue. See, “Tiffany v. eBay” in the May 2010 issue of Internet Law & Strategy, available at www.ljnonline.com/issues/ljn_internetlaw/8_5/news/153682-1.html.)

So how were YouTube and eBay able to avoid liability? They instituted policies to allow copyright or trademark holders to request the removal of infringing material. For example, eBay instituted a Verified Owner's Rights (“VeRO”) program (http://pages.ebay.in/help/confidence/programs-vero.html). VeRO was deigned to allow eBay to work with IP owners to “develop and enforce policies and procedures for protecting intellectual property.” VeRO invites eBay users to submit a NOCI form to eBay if the users have a good faith belief that there is a listing on eBay that infringes their copyright.

Similarly, YouTube has a Copyright Complaint Webform that allows a copyright owner to quickly file a complaint at which point the disputed material is removed until the complaint is investigated (www.youtube.com/t/copyright_notice?gl=CA&hl=en). For all intents and purposes, this absolves the online service provider of liability while removing a specific infringing item. However, to the third party posting the infringing activities, the account used to post the content may be shut down, but this rarely results in the seizure of goods, arrest or fine. The third party can open another account under another name and try again to post the infringing content. In practical terms, this may not have a strong deterrent affect on a third party that posts infringing content or offers counterfeit goods for sale.

'Operation in Our Sites'

However, the White House's newly announced Joint Strategic Plan on Intellectual Property Enforcement offers some hope to IP owners. In releasing the plan, U.S. Intellectual Property Enforcement Coordinator Victoria Espinel said: “Now, more than ever, we need to protect the ideas, artistry, and our reputation for quality, provide our businesses with the incentives to make each new product better, reduce crimes related to intellectual property infringement and keep dangerous counterfeits out of our supply chain to protect our citizens. Strong intellectual property enforcement will help us to accomplish that.” (See the announcement at www.whitehouse.gov/blog/2010/06/22/releasing-joint-strategic-plan-combat-intellectual-property-theft; includes a link to the Strategic Plan).

Within a week after the plan was announced, an anti-piracy initiative named “Operation in Our Sites” was launched as a joint effort by U.S. Immigration and Customs Enforcement and the U.S. Attorney for the Southern District of New York (see, www.ice.gov/pi/nr/1006/100630losangeles.htm). Operation in Our Sites is aimed at sites that stream or offer downloads of copyrighted television shows and movies. All assets from the sites are seized, including PayPal and advertising accounts.

Operation in Our Sites is not only shutting down Web sites accused of airing pirated programming, but is also seizing the domain names. During the initial press conference announcing the operation, U.S. Immigration and Customs Enforcement officials announced that they would also be monitoring sales of counterfeit products over the Internet, including pharmaceuticals, software, electronics and “products that threaten public health and safety.” This proactive initiative serves as a clear indication that the current administration is willing to perform large takedowns of organizations suspected of profiting from counterfeit goods on the Internet.

This initiative undoubtedly offers some comfort to the Motion Picture Association of America and the Recording Industry Association of America in their ability to eliminate the rogue Web sites that exist almost exclusively to host copyrighted materials like first run movies.

But will the government crack down on individuals posting large amounts of copyrighted material on YouTube, or counterfeit goods on eBay? Practical problems persist in policing the mainstream OSPs that have primarily non-infringing content. Because of the structure of the Internet, it remains relatively easy for virtually anonymous individuals to share or otherwise disseminate IP.

Going forward, IP owners would be wise to adhere to the lessons from Viacom and Tiffany. The burden of policing copyrights is on the owners rather than the OSPs and the likelihood for success in litigation is small. However, as there is little chance for any type of monetary judgment against mainstream OSP, efforts to monitor infringing activities should be bifurcated.

First, companies must assign resources and develop a policy to monitor the mainstream OSPs for infringing activities, to identify the third-party source of the infringing activity and to send a DMCA cease and desist letter. Second, companies must identify the rogue sites that exist for primarily infringing activities and seek criminal charges against them. OSPs should be aware that courts are less likely to offer them protection from contributory infringement when they make little to no showing of active policing measures to prevent or stop the sale or streaming of infringing goods. OSPs should also be diligent in creating a clear and effective policy to allow IP rights owners to notify the OSP of potentially infringing activities.

For example, the infringing videos frequently uploaded by users on YouTube are substantially similar to the infringing videos available on the Web sites targeted by Operation in Our Sites; however the major legal difference between the two sites is the policing measures employed by YouTube.

Conclusion

While current policies strongly favor the rights of the online service provider over the IP rights holder, IP rights holders feel they are losing control of the ability to police their property. In the coming years it will be interesting to follow whether the Joint Strategic Plan to combat IP theft gives some control back.