The Great (Online Copyright) Compromise of 2012

YouTube was founded in 2005 in order to “allow[ ] people to watch, upload, and share personal video clips.” For the relative few who are still uninitiated, YouTube is a website that permits users to upload and view video clips free of charge. As explained by the court, uploading a video to YouTube triggers several software functions ' 1) the videos are transcoded into Flash format to render them viewable on most computers; 2) users are thereafter able to “stream” i.e., view ' the content, which is hosted on YouTube; and 3) a computer algorithm identifies “related” clips and displays links to them on the screen next to the selected video. Somewhat unsurprisingly, in addition to authorized homegrown viral successes like “Charlie Bit My Finger” and the 216 (and counting) videos of Maru the cat jumping into (and out of) boxes, YouTube's video catalog became home to unauthorized content that purportedly infringed content owners' copyrights.

Viacom filed suit against YouTube on March 13, 2007, alleging direct and secondary copyright infringement based on the public performance, display, and reproduction of roughly 63,497 allegedly unauthorized video clips posted on YouTube. Premier League filed a putative class action two months later alleging direct and secondary copyright infringement on behalf of all copyright owners whose material was copied, stored, displayed, or performed on YouTube absent the owners' authorization. YouTube argued that it was protected under ' 512(c)(1) of the DMCA, which provides a safe harbor for service providers only if the service provider:

(A)(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

(B) 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

(C) upon notification of claimed infringement [consistent with the requirements of ' 512(c)(3)], responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

The district court granted YouTube's motion for summary judgment, and in so doing, aligned itself with the vast majority of other courts that have considered the safe harbors by putting the burden of identifying potential infringement on content providers. The lower court held that “[m]ere knowledge of [the] prevalence of [particular infringing] activity in general is not enough.” But rather the defendant must have “actual or constructive knowledge of specific and identifiable infringements of individual items.” The district court likewise summarily rejected two additional claims: First, it rejected Viacom's argument that the replication, transmittal and display of videos on YouTube fall outside the purview of ' 512(c)(1) because the videos were not “stor[ed] at the direction of the user[ ]” on YouTube's servers; and second, it extended the “ item-specific” knowledge requirement to ' 512(c)(1)(B), holding that the “right and ability to control” infringing activity requires that “the provider must know of the particular case before he can control it.”

Actual or Constructive Knowledge of 'Specific and Identifiable Infringements' Required

The Second Circuit (the “court”) first addressed the question of whether general knowledge of a likelihood of infringement (and a failure to remedy it) may remove a service provider's claim to the ' 512(c)(1) safe harbor, or whether the service provider must have actual or constructive knowledge of specific infringing activity (again, with a failure to remedy the infringing activity) to be held liable. The court affirmed the lower court's ruling that actual or constructive knowledge of “specific and identifiable infringements” is required.

The court wrote that this conclusion was compelled by the text of ' 512(c). Specifically, the court found that the provisions of ' 512(c)(1) read together contemplate the service provider's knowledge or awareness of specific infringing material ' indeed, it would be impossible for the service provider to remove “the material” without knowing what “the material” is. ' 512(c)(1)(C). The court differentiated the knowledge level required under the “red flag” provision, ' 512(c)(1)(A)(ii) (the “red flag” provision is so-called because certain facts or circumstances may be so egregiously obvious that they wave a “red flag” in front of the service provider, presumably to say “Hey, look at me! I'm an infringing video!”), and the actual knowledge provision, ' 512(c)(1)(A)(i). Essentially, the court said, the provisions boil down to the difference between the classic subjective belief standard embodied in ' 512(c)(1)(A)(i) ' Did the defendant know in her own mind that specific, identifiable infringing activity was taking place on its services? ' and the classic objective belief standard embodied by ' 512(c)(1)(A)(ii) ' Would it have been obvious to a reasonable person, based on the facts and circumstances, that specific, identifiable infringing activity was taking place on its services?

The court brought itself into line with the Ninth Circuit, which held last year in UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022 (9th Cir. 2011) that the safe harbor “[r]equir[es] specific knowledge of particular infringing activity.” Thus, at least in the Second and Ninth Circuits, the burden of determining whether materials are actually infringing is placed on the content provider rather than the service provider. The court took a practical approach, as it stated that the content provider is in the best position to know whether a given use is licensed by the owner and whether the owner objects to its posting. Furthermore, the practice of sifting through the mass of uploaded material ' estimates of the amount of video uploaded to YouTube are in the range of 35 hours or more per minute and rising ' is likely more efficiently done by the copyright owner, which can use its reservoir of item-specific knowledge to ensure that its rights are protected.

Nonetheless, the court remanded the case for consideration of whether YouTube, based on the record, actually had such actual or constructive knowledge of specific infringing activity related to the clips-in-suit. The panel noted e-mails in which YouTube executives wrote of “clearly infringing, official broadcast footage” of Premier League soccer matches, removing known content ' including South Park, MTV Cribs and other television shows ' that is “blatantly illegal and likely to attract criticism,” and e-mails between YouTube's founders balancing the risks of leaving specific clips on the site even after the potential infringing character of the clips was made obvious by one of the founders.

Willful Blindness As a Plausible Basis for Constructive Knowledge

The court next reversed the district court on the issue of whether YouTube may be liable if it was “willfully blind” to specific infringing activity. As a general matter, courts have held that willful blindness ' shielding oneself from learning of infringing activity by looking the other way ' is tantamount to knowledge. See Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2070-71 (2011) (patents); Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93, 110 n.16 (2d Cir. 2010) (trademarks); In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003) (copyrights). The court did not see the DMCA situation as being any different. But the court nevertheless found that the DMCA partially abrogated the common law willful blindness test by providing that DMCA safe harbor protection cannot be conditioned on affirmative monitoring by a service provider. ' 512(m)(1). The court held that, although a service provider has no affirmative duty to monitor, the courts may apply the willful blindness doctrine, “in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.” The case was then remanded for a determination of whether, based on the record, YouTube made a “deliberate effort to avoid guilty knowledge.”

Again, the court focused on practicalities. Service providers ' think YouTube, Flickr, Pinterest ' can offer innovative services without risk of liability so long as they play fairly with content providers. If the content provider gives you notice of infringement, you take the content down ' easy. But where the service provider knows of a high probability of infringement and buries his head in the sand to avoid knowledge of specifics ' Remember Grokster? ' the content provider has recourse. The court saw its rule as encouraging those who play well with others while deterring the worst of the free-riders.

'Right and Ability to Control' Requires More Than the Ability to Remove Or Block Access

The court moved on to address ' 512(c)(1)(B), which requires as a prerequisite for claiming the safe harbor that, if the service provider “has the right and ability to control” infringing activity, it “does not receive a financial benefit directly attributable to the infringing activity.” The lower court, relying on the Ninth Circuit's analysis in Shelter Capital, held that “[t]he 'right and ability to control' ' activity requires knowledge of it, which must be item-specific[,]” thereby incorporating the rule from its ' 512(c)(1)(A) holding into its ' 512(c)(1)(B) analysis. By contrast, the plaintiffs proposed that the “ right and ability to control” language codified the common law doctrine of vicarious copyright infringement. See, e.g., Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 n.9 (2005). A wholesale adoption of the vicarious liability standard could mean that the service provider's ability to remove or block access is evidence of its right and ability to supervise ' such a rule would expose any service provider that allows the provider to remove a user's access (that is, every provider) to potential infringement liability.

Again, the court chose to split the difference. It held that the first construction was improper because it would render ' 512(c)(1)(B) superfluous ' “[n]o additional service provider would be excluded by ' 512(c)(1)(B) that was not already excluded by ' 512(c)(1)(A).” But it also found that adopting the second view would “render the statute internally inconsistent” ' indeed, a service provider must “remove, or disable access to, the [allegedly infringing] material” in order to avail itself of the safe harbor. ' 512(c)(1)(C). In the court's words, “the prerequisite for safe harbor protection under ” 512(c)(1)(A)(iii) & (C) would at the same time be a disqualifier under ' 512(c)(1)(B).” It's a Catch-22: What's required of one provision shouldn't disqualify you under another provision. On these grounds, both approaches were junked.

However, the middle course provided by the court still leaves much to the vagaries of argument. The court, citing Capital Records, Inc. v. MP3tunes, LLC, 2011 WL 5104616, at *14 (S.D.N.Y. Oct. 25, 2011), held that the “right and ability to control” pursuant to ' 512(c)(1)(B) “requires something more than the ability to remove or block access to materials posted on a service provider's website.” As the court readily recognized, just what constitutes that “something more” is a question fraught with uncertainty. However, the court did give two examples that “might” rise to the level of control required by ' 512(c)(1)(B) ' 1) where the service provider institutes a thorough monitoring program; and 2) inducement of copyright infringement, which requires intentional conduct. In these two examples, the panel found that the service provider “exert[ed] substantial influence on the activities of users,” despite the absence of item-specific knowledge. The district court was ordered to consider whether the plaintiffs could provide evidence sufficient to permit a reasonable jury to conclude that YouTube had the right and ability to control infringing activity and whether it received a financial benefit directly attributable to that activity.

'By Reason of' Storage and YouTube's Software Functions

The court made its final major holding on the question of whether YouTube's software functions satisfy the ' 512(c)(1) safe harbor's requirement that the infringement occur “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.” Without belaboring the details too much, the panel affirmed the lower court's ruling with respect to three functions ' transcoding, playback, and the “related videos” function ' and remanded for a determination of whether any of the clips-in-suit were involved in YouTube's third-party syndication program.

In the case of each of the first three functions, the court agreed with the lower court that to exclude YouTube's automated functions from the safe harbor “would eviscerate the protection afforded to service providers” under ' 512(c). In each case, the functions were fully automated, with the user providing the only intentional action ' that is, uploading, playing, and providing information by which the “related videos” algorithm displayed videos. In the latter, the court seemed hesitant to say that YouTube's provision of 2,000 handpicked videos to Verizon Wireless (and other companies) for display on mobile devices was equally absent of intentional action. The issue was avoided by remanding for further fact-finding.

Other Arguments

The court summarily dismissed Premier League's argument that YouTube failed to comply with ' 512(i), which requires that service providers institute a repeat infringer policy, by refusing access to YouTube's internal content identification tools to all but designated “partners.” Premier League had failed to argue that YouTube's internal tools were “standard technical measures[,]” which are excepted from the DMCA's general rule against affirmative monitoring. The court likewise affirmed the district court's holding that a finding that the safe harbor applies “ necessarily protects a defendant from all affirmative claims for monetary relief.”

Conclusion

Although neither service providers nor content providers can claim a complete victory, the Second Circuit's Viacom opinion represents a pragmatic, middle-of-the-road solution to several issues at the heart of the new user-centered Internet experience. In the court's view, service providers retain the latitude to develop user-centric products and services without the threat of potential billion-dollar liabilities, and content providers are now assured that service providers who act in bad faith will not be suffered gladly. While it may not be win-win, nor is Viacom fully lose-lose ' maybe we'll just call it a compromise.

Timothy Denny Greene is an associate in the Technology Transactions Group at Morrison & Foerster LLP in San Francisco. He can be reached at 415-268-7568.

In perhaps the most important online copyright case since the Napster-Aimster-Grokster cases of the early 2000s, the Second Circuit recently issued an opinion in Viacom Int'l, Inc., Football Ass'n Premier League Ltd. v. YouTube, Inc., No. 10-3342-cv (2d Cir. Apr. 5, 2012). The Viacom opinion takes steps to clarify the uncertain scope of the service provider safe harbors under the Digital Millennium Copyright Act (the “DMCA”). The case involves claims brought by Viacom, among others, alleging massive copyright infringement by YouTube; YouTube has defended its service by seeking refuge in the DMCA's ' 512(c) safe harbor.

Rather than affirm the lower court's grant of full summary judgment in YouTube's favor, the Court of Appeals split the difference. The court held in YouTube's favor on the pivotal issue of whether general awareness of infringing material satisfies ' 512(c)'s knowledge requirements, finding that ' 512(c)(1)(A) requires actual knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement. But the court remanded for a determination of whether, on the record before the court, YouTube either had actual knowledge or was aware of such facts or circumstances. Further, the Second Circuit accepted Viacom's argument that the willful blindness doctrine may be applied in appropriate circumstances to demonstrate knowledge or awareness of specific instances of infringement. While we can imagine that neither side was jumping for joy on its release, the court's opinion does much to safeguard what the court deemed the wide latitude granted service providers in the interest of promoting Internet innovation inherent in the DMCA, while providing the content industry with a potentially powerful weapon.

Setting the (Virtual) Stage

YouTube was founded in 2005 in order to “allow[ ] people to watch, upload, and share personal video clips.” For the relative few who are still uninitiated, YouTube is a website that permits users to upload and view video clips free of charge. As explained by the court, uploading a video to YouTube triggers several software functions ' 1) the videos are transcoded into Flash format to render them viewable on most computers; 2) users are thereafter able to “stream” i.e., view ' the content, which is hosted on YouTube; and 3) a computer algorithm identifies “related” clips and displays links to them on the screen next to the selected video. Somewhat unsurprisingly, in addition to authorized homegrown viral successes like “Charlie Bit My Finger” and the 216 (and counting) videos of Maru the cat jumping into (and out of) boxes, YouTube's video catalog became home to unauthorized content that purportedly infringed content owners' copyrights.

Viacom filed suit against YouTube on March 13, 2007, alleging direct and secondary copyright infringement based on the public performance, display, and reproduction of roughly 63,497 allegedly unauthorized video clips posted on YouTube. Premier League filed a putative class action two months later alleging direct and secondary copyright infringement on behalf of all copyright owners whose material was copied, stored, displayed, or performed on YouTube absent the owners' authorization. YouTube argued that it was protected under ' 512(c)(1) of the DMCA, which provides a safe harbor for service providers only if the service provider:

(A)(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

(B) 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

(C) upon notification of claimed infringement [consistent with the requirements of ' 512(c)(3)], responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

The district court granted YouTube's motion for summary judgment, and in so doing, aligned itself with the vast majority of other courts that have considered the safe harbors by putting the burden of identifying potential infringement on content providers. The lower court held that “[m]ere knowledge of [the] prevalence of [particular infringing] activity in general is not enough.” But rather the defendant must have “actual or constructive knowledge of specific and identifiable infringements of individual items.” The district court likewise summarily rejected two additional claims: First, it rejected Viacom's argument that the replication, transmittal and display of videos on YouTube fall outside the purview of ' 512(c)(1) because the videos were not “stor[ed] at the direction of the user[ ]” on YouTube's servers; and second, it extended the “ item-specific” knowledge requirement to ' 512(c)(1)(B), holding that the “right and ability to control” infringing activity requires that “the provider must know of the particular case before he can control it.”

Actual or Constructive Knowledge of 'Specific and Identifiable Infringements' Required

The Second Circuit (the “court”) first addressed the question of whether general knowledge of a likelihood of infringement (and a failure to remedy it) may remove a service provider's claim to the ' 512(c)(1) safe harbor, or whether the service provider must have actual or constructive knowledge of specific infringing activity (again, with a failure to remedy the infringing activity) to be held liable. The court affirmed the lower court's ruling that actual or constructive knowledge of “specific and identifiable infringements” is required.

The court wrote that this conclusion was compelled by the text of ' 512(c). Specifically, the court found that the provisions of ' 512(c)(1) read together contemplate the service provider's knowledge or awareness of specific infringing material ' indeed, it would be impossible for the service provider to remove “the material” without knowing what “the material” is. ' 512(c)(1)(C). The court differentiated the knowledge level required under the “red flag” provision, ' 512(c)(1)(A)(ii) (the “red flag” provision is so-called because certain facts or circumstances may be so egregiously obvious that they wave a “red flag” in front of the service provider, presumably to say “Hey, look at me! I'm an infringing video!”), and the actual knowledge provision, ' 512(c)(1)(A)(i). Essentially, the court said, the provisions boil down to the difference between the classic subjective belief standard embodied in ' 512(c)(1)(A)(i) ' Did the defendant know in her own mind that specific, identifiable infringing activity was taking place on its services? ' and the classic objective belief standard embodied by ' 512(c)(1)(A)(ii) ' Would it have been obvious to a reasonable person, based on the facts and circumstances, that specific, identifiable infringing activity was taking place on its services?

The court brought itself into line with the Ninth Circuit, which held last year in UMG Recordings, Inc. v. Shelter Capital Partners LLC , 667 F.3d 1022 (9th Cir. 2011) that the safe harbor “[r]equir[es] specific knowledge of particular infringing activity.” Thus, at least in the Second and Ninth Circuits, the burden of determining whether materials are actually infringing is placed on the content provider rather than the service provider. The court took a practical approach, as it stated that the content provider is in the best position to know whether a given use is licensed by the owner and whether the owner objects to its posting. Furthermore, the practice of sifting through the mass of uploaded material ' estimates of the amount of video uploaded to YouTube are in the range of 35 hours or more per minute and rising ' is likely more efficiently done by the copyright owner, which can use its reservoir of item-specific knowledge to ensure that its rights are protected.

Nonetheless, the court remanded the case for consideration of whether YouTube, based on the record, actually had such actual or constructive knowledge of specific infringing activity related to the clips-in-suit. The panel noted e-mails in which YouTube executives wrote of “clearly infringing, official broadcast footage” of Premier League soccer matches, removing known content ' including South Park, MTV Cribs and other television shows ' that is “blatantly illegal and likely to attract criticism,” and e-mails between YouTube's founders balancing the risks of leaving specific clips on the site even after the potential infringing character of the clips was made obvious by one of the founders.

Willful Blindness As a Plausible Basis for Constructive Knowledge

The court next reversed the district court on the issue of whether YouTube may be liable if it was “willfully blind” to specific infringing activity. As a general matter, courts have held that willful blindness ' shielding oneself from learning of infringing activity by looking the other way ' is tantamount to knowledge. See Global-Tech Appliances, Inc. v. SEB S.A. , 131 S.Ct. 2060, 2070-71 (2011) (patents); Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93, 110 n.16 (2d Cir. 2010) (trademarks); In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003) (copyrights). The court did not see the DMCA situation as being any different. But the court nevertheless found that the DMCA partially abrogated the common law willful blindness test by providing that DMCA safe harbor protection cannot be conditioned on affirmative monitoring by a service provider. ' 512(m)(1). The court held that, although a service provider has no affirmative duty to monitor, the courts may apply the willful blindness doctrine, “in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.” The case was then remanded for a determination of whether, based on the record, YouTube made a “deliberate effort to avoid guilty knowledge.”

Again, the court focused on practicalities. Service providers ' think YouTube, Flickr, Pinterest ' can offer innovative services without risk of liability so long as they play fairly with content providers. If the content provider gives you notice of infringement, you take the content down ' easy. But where the service provider knows of a high probability of infringement and buries his head in the sand to avoid knowledge of specifics ' Remember Grokster? ' the content provider has recourse. The court saw its rule as encouraging those who play well with others while deterring the worst of the free-riders.

'Right and Ability to Control' Requires More Than the Ability to Remove Or Block Access

The court moved on to address ' 512(c)(1)(B), which requires as a prerequisite for claiming the safe harbor that, if the service provider “has the right and ability to control” infringing activity, it “does not receive a financial benefit directly attributable to the infringing activity.” The lower court, relying on the Ninth Circuit's analysis in Shelter Capital, held that “[t]he 'right and ability to control' ' activity requires knowledge of it, which must be item-specific[,]” thereby incorporating the rule from its ' 512(c)(1)(A) holding into its ' 512(c)(1)(B) analysis. By contrast, the plaintiffs proposed that the “ right and ability to control” language codified the common law doctrine of vicarious copyright infringement. See, e.g., Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. , 545 U.S. 913, 930 n.9 (2005). A wholesale adoption of the vicarious liability standard could mean that the service provider's ability to remove or block access is evidence of its right and ability to supervise ' such a rule would expose any service provider that allows the provider to remove a user's access (that is, every provider) to potential infringement liability.

Again, the court chose to split the difference. It held that the first construction was improper because it would render ' 512(c)(1)(B) superfluous ' “[n]o additional service provider would be excluded by ' 512(c)(1)(B) that was not already excluded by ' 512(c)(1)(A).” But it also found that adopting the second view would “render the statute internally inconsistent” ' indeed, a service provider must “remove, or disable access to, the [allegedly infringing] material” in order to avail itself of the safe harbor. ' 512(c)(1)(C). In the court's words, “the prerequisite for safe harbor protection under ” 512(c)(1)(A)(iii) & (C) would at the same time be a disqualifier under ' 512(c)(1)(B).” It's a Catch-22: What's required of one provision shouldn't disqualify you under another provision. On these grounds, both approaches were junked.

However, the middle course provided by the court still leaves much to the vagaries of argument. The court, citing Capital Records, Inc. v. MP3tunes, LLC, 2011 WL 5104616, at *14 (S.D.N.Y. Oct. 25, 2011), held that the “right and ability to control” pursuant to ' 512(c)(1)(B) “requires something more than the ability to remove or block access to materials posted on a service provider's website.” As the court readily recognized, just what constitutes that “something more” is a question fraught with uncertainty. However, the court did give two examples that “might” rise to the level of control required by ' 512(c)(1)(B) ' 1) where the service provider institutes a thorough monitoring program; and 2) inducement of copyright infringement, which requires intentional conduct. In these two examples, the panel found that the service provider “exert[ed] substantial influence on the activities of users,” despite the absence of item-specific knowledge. The district court was ordered to consider whether the plaintiffs could provide evidence sufficient to permit a reasonable jury to conclude that YouTube had the right and ability to control infringing activity and whether it received a financial benefit directly attributable to that activity.

'By Reason of' Storage and YouTube's Software Functions

The court made its final major holding on the question of whether YouTube's software functions satisfy the ' 512(c)(1) safe harbor's requirement that the infringement occur “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.” Without belaboring the details too much, the panel affirmed the lower court's ruling with respect to three functions ' transcoding, playback, and the “related videos” function ' and remanded for a determination of whether any of the clips-in-suit were involved in YouTube's third-party syndication program.

In the case of each of the first three functions, the court agreed with the lower court that to exclude YouTube's automated functions from the safe harbor “would eviscerate the protection afforded to service providers” under ' 512(c). In each case, the functions were fully automated, with the user providing the only intentional action ' that is, uploading, playing, and providing information by which the “related videos” algorithm displayed videos. In the latter, the court seemed hesitant to say that YouTube's provision of 2,000 handpicked videos to Verizon Wireless (and other companies) for display on mobile devices was equally absent of intentional action. The issue was avoided by remanding for further fact-finding.

Other Arguments

The court summarily dismissed Premier League's argument that YouTube failed to comply with ' 512(i), which requires that service providers institute a repeat infringer policy, by refusing access to YouTube's internal content identification tools to all but designated “partners.” Premier League had failed to argue that YouTube's internal tools were “standard technical measures[,]” which are excepted from the DMCA's general rule against affirmative monitoring. The court likewise affirmed the district court's holding that a finding that the safe harbor applies “ necessarily protects a defendant from all affirmative claims for monetary relief.”

Conclusion

Although neither service providers nor content providers can claim a complete victory, the Second Circuit's Viacom opinion represents a pragmatic, middle-of-the-road solution to several issues at the heart of the new user-centered Internet experience. In the court's view, service providers retain the latitude to develop user-centric products and services without the threat of potential billion-dollar liabilities, and content providers are now assured that service providers who act in bad faith will not be suffered gladly. While it may not be win-win, nor is Viacom fully lose-lose ' maybe we'll just call it a compromise.

Timothy Denny Greene is an associate in the Technology Transactions Group at Morrison & Foerster LLP in San Francisco. He can be reached at 415-268-7568.