Lenz Lawsuit Dances to a Fair Use Tune and Heads for Trial

Lenz's lawsuit alleges a violation of the DMCA's 17 USC ' 512(f). Her second amended complaint claims that Universal is liable for knowingly and materially misrepresenting that her online video infringes Prince's copyrights. The complaint also asserts that Lenz incurred damages as a result of Universal's actions. Both parties filed for summary judgment. Lenz asserted that Universal did not consider adequately whether her video constituted a fair use of the “Let's Go Crazy” song before issuing its takedown notice, thus making a material misrepresentation in violation of the DMCA. Universal, on the other hand, asserted that the DMCA is inapplicable and in the alternative, Lenz did not suffer recoverable damages. Neither party's arguments prevailed at summary judgment.

The district court first examined whether the DMCA applies to the dispute, since Universal argued that its YouTube Takedown Notice was not a “notification of claimed infringement” that could give rise to any question of misrepresentation under the statute. Because YouTube required that Universal invoke DMCA procedures to request removal of any video from YouTube, Universal had no other option in seeking removal. Universal also pointed to the language in its Takedown Notice that stated, “our use of YouTube's required notice form does not indicate we believe the above referenced copyright infringement is within the scope of the [DMCA] ' and is not meant to suggest or imply that YouTube's activities and services are within the scope of the DMCA safe harbor.” With this evidence, Universal argued that its Takedown Notice was not sent “pursuant” to the DMCA.

To further support its claim on summary judgment, Universal argued that YouTube was ineligible for the DMCA's safe harbor provision because it was not storing Lenz's video “at the direction of the user” as required by ' 512(c)(1). While Universal acknowledged the Second Circuit's rejection of this argument in Viacom Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012), it pointed out that the issue was still outstanding in the Ninth Circuit after a petition for rehearing from UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022' (9th Cir. 2011). The Lenz court declined to await disposition of that petition for rehearing and instead ruled based on the “current state of the law.” The district court “conclude[d] that YouTube qualifies for protection under the DMCA safe harbor and that Universal's Takedown Notice constituted a 'Notification of claimed infringement' under the DMCA.”

The court then turned to Lenz's assertion that Universal's Takedown Notice contained a “knowing, material misrepresentation” under ' 512 (f) because Universal's procedures for identifying Lenz's video did not allow it to consider whether the video constituted fair use. In 2008, the court had issued a ruling in this case declaring that “an allegation that a copyright owner acted in bad faith by issuing a takedown notice without proper consideration of the fair use doctrine thus is sufficient to state a misrepresentation claim pursuant to Section 512(f) of the DMCA.” See Lenz v. Universal Music Corp., 572 F. Supp. 2d 1150, 1154-55 (N.D. Cal. 2008).

Lenz's video ended up on Universal's Takedown Notice after one person at Universal had reviewed the video. He had included the video based on its title, the fact that the song was easily recognized, and after viewing the whole video. He had also noticed that Lenz asked the children in the video if they liked the music. The reviewer did not testify that he considered fair use at all in his analysis, and Universal admitted in a request for admission that it had not instructed any consideration of fair use during internal review of the video. The court, therefore, concluded that “Universal issued its Takedown Notice without considering fair use.”

Universal countered, however, that the reviewer had considered factors that would be similar to a fair use determination. The district court noted the “remedial purposes” of the DMCA and that a “full-blown fair use analysis” might not be necessary. At the same time, the court “disagree[d] that it is sufficient for a copyright holder to consider facts that might be relevant to a fair use analysis without making any effort to evaluate the significance of such facts in the context of the doctrine itself.” The court concluded that a copyright owner must do “at least some analysis of the legal import of the facts ' and at least an initial assessment” in order to make a good faith representation that the use is not “authorized by law.”

At the same time, “Lenz ' must demonstrate that Universal had some actual knowledge that its Takedown Notice contained a material misrepresentation.” While previous case law had looked for a showing of bad faith by the copyright owner, Lenz argued that Universal had a “willful blindness,” even if not bad faith, because Universal only had a single reviewer of the video and the fair use was “self-evident.” The district court was not persuaded that Universal had a “subjective belief that there was a high probability that any given video might make fair use of a Prince composition.” Accordingly, in the absence of a showing of bad faith by Universal, the district court declined to impose ' 512(f) liability on summary judgment.

The court finally considered Universal's claim that “even if its Takedown Notice did contain a material misrepresentation sufficient to give rise to liability under the DMCA, it nonetheless is entitled to summary judgment because Lenz cannot demonstrate that she suffered any damages.” While the court rejected Lenz's arguments for damages based on loss of YouTube's hosting services and chilling of her free speech, the court noted that Lenz requested compensation equal to the minimum wage for at least 10 hours of time she had spent on restoring her video to YouTube. The court also noted that she “must have incurred at least minimal expenses for electricity to power her computer, internet and telephone bills, and the like,” that potentially could be recoverable under ' 512 (f). While these damages might be minimal, the court reminded the parties of its prior holding that' requiring a plaintiff under the DMCA to prove “economic and substantial” damages “would vitiate the deterrent effect of the statute.” Finally, the court noted that Lenz has a claim for attorney's fees as well and refused to hold that “counsel's prelitigation work was so intertwined with the litigation that the fees are not recoverable.”

Rejection Is Instructive

The court's rejection of both parties' summary judgment motions is instructive. The decision suggests that fair use, one of the thorniest doctrines under U.S. copyright law, is alive and well. Copyright owners must show evidence of a fair use analysis before leveling copyright infringement accusations. Depending on how the case concludes, the Lenz case could end up being a key precedent in fair use law.

In addition, while the court deferred to other pending case law regarding the DMCA, it tacitly upheld the concept that Internet service providers may be exempt from copyright infringement. Finally, the decision upholds the notion that even minimal financial damage is sufficient to allege damage under the DMCA, possibly opening the door for more DMCA litigation.

Kyle-Beth Hilfer, a member of this newsletter's Board of Editors, specializes in advertising, marketing, promotions, intellectual property and new media law. She is of counsel to the law firm Collen IP. She advises clients regularly on protecting their copyrights. For more information about her law practice, visit www.kbhilferlaw.com. ' Kyle-Beth Hilfer, P.C. 2013.

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A California district court has denied cross summary judgment motions in a case that has implications for fair use analysis under copyright law and DMCA litigation. The motions arose out of a 2007 lawsuit between plaintiff Stephanie Lenz (“Lenz”) and defendant Universal Music Corp. (“Universal”), concerning Lenz's use in a home video of the song “Let's Go Crazy” by the artist formerly known as Prince.

Lenz had made a 29-second video showing her toddler dancing' to “Let's Go Crazy.” Lenz had titled it “Let's Go Crazy #1.” Universal, a music publishing company that administers the copyrights to the song, identified the video through its daily copyright review procedures and sent a Digital Millennium Copyright Act (“DMCA”) takedown notice to YouTube, which removed the video, giving Lenz an opportunity to respond. Lenz's first response was incomplete, and the video remained offline. After Lenz retained counsel, she submitted a second DMCA counter-notice, asserting the video qualified as fair use. YouTube re-posted the video approximately six weeks later. In 2007, Lenz sued Universal, alleging that she had suffered damages during the time that YouTube had removed her video in response to Universal's takedown notice. As of January 2013, the video had more than 1.2 million hits, although presumably some of its popularity is due to Lenz's pending legal action.

The Lawsuit

Lenz's lawsuit alleges a violation of the DMCA's 17 USC ' 512(f). Her second amended complaint claims that Universal is liable for knowingly and materially misrepresenting that her online video infringes Prince's copyrights. The complaint also asserts that Lenz incurred damages as a result of Universal's actions. Both parties filed for summary judgment. Lenz asserted that Universal did not consider adequately whether her video constituted a fair use of the “Let's Go Crazy” song before issuing its takedown notice, thus making a material misrepresentation in violation of the DMCA. Universal, on the other hand, asserted that the DMCA is inapplicable and in the alternative, Lenz did not suffer recoverable damages. Neither party's arguments prevailed at summary judgment.

The district court first examined whether the DMCA applies to the dispute, since Universal argued that its YouTube Takedown Notice was not a “notification of claimed infringement” that could give rise to any question of misrepresentation under the statute. Because YouTube required that Universal invoke DMCA procedures to request removal of any video from YouTube, Universal had no other option in seeking removal. Universal also pointed to the language in its Takedown Notice that stated, “our use of YouTube's required notice form does not indicate we believe the above referenced copyright infringement is within the scope of the [DMCA] ' and is not meant to suggest or imply that YouTube's activities and services are within the scope of the DMCA safe harbor.” With this evidence, Universal argued that its Takedown Notice was not sent “pursuant” to the DMCA.

To further support its claim on summary judgment, Universal argued that YouTube was ineligible for the DMCA's safe harbor provision because it was not storing Lenz's video “at the direction of the user” as required by ' 512(c)(1). While Universal acknowledged the Second Circuit's rejection of this argument in Viacom Inc. v. YouTube, Inc. , 676 F.3d 19 (2d Cir. 2012), it pointed out that the issue was still outstanding in the Ninth Circuit after a petition for rehearing from UMG Recordings, Inc. v. Shelter Capital Partners LLC , 667 F.3d 1022' (9th Cir. 2011). The Lenz court declined to await disposition of that petition for rehearing and instead ruled based on the “current state of the law.” The district court “conclude[d] that YouTube qualifies for protection under the DMCA safe harbor and that Universal's Takedown Notice constituted a 'Notification of claimed infringement' under the DMCA.”

The court then turned to Lenz's assertion that Universal's Takedown Notice contained a “knowing, material misrepresentation” under ' 512 (f) because Universal's procedures for identifying Lenz's video did not allow it to consider whether the video constituted fair use. In 2008, the court had issued a ruling in this case declaring that “an allegation that a copyright owner acted in bad faith by issuing a takedown notice without proper consideration of the fair use doctrine thus is sufficient to state a misrepresentation claim pursuant to Section 512(f) of the DMCA.” See Lenz v. Universal Music Corp. , 572 F. Supp. 2d 1150, 1154-55 (N.D. Cal. 2008).

Lenz's video ended up on Universal's Takedown Notice after one person at Universal had reviewed the video. He had included the video based on its title, the fact that the song was easily recognized, and after viewing the whole video. He had also noticed that Lenz asked the children in the video if they liked the music. The reviewer did not testify that he considered fair use at all in his analysis, and Universal admitted in a request for admission that it had not instructed any consideration of fair use during internal review of the video. The court, therefore, concluded that “Universal issued its Takedown Notice without considering fair use.”

Universal countered, however, that the reviewer had considered factors that would be similar to a fair use determination. The district court noted the “remedial purposes” of the DMCA and that a “full-blown fair use analysis” might not be necessary. At the same time, the court “disagree[d] that it is sufficient for a copyright holder to consider facts that might be relevant to a fair use analysis without making any effort to evaluate the significance of such facts in the context of the doctrine itself.” The court concluded that a copyright owner must do “at least some analysis of the legal import of the facts ' and at least an initial assessment” in order to make a good faith representation that the use is not “authorized by law.”

At the same time, “Lenz ' must demonstrate that Universal had some actual knowledge that its Takedown Notice contained a material misrepresentation.” While previous case law had looked for a showing of bad faith by the copyright owner, Lenz argued that Universal had a “willful blindness,” even if not bad faith, because Universal only had a single reviewer of the video and the fair use was “self-evident.” The district court was not persuaded that Universal had a “subjective belief that there was a high probability that any given video might make fair use of a Prince composition.” Accordingly, in the absence of a showing of bad faith by Universal, the district court declined to impose ' 512(f) liability on summary judgment.

The court finally considered Universal's claim that “even if its Takedown Notice did contain a material misrepresentation sufficient to give rise to liability under the DMCA, it nonetheless is entitled to summary judgment because Lenz cannot demonstrate that she suffered any damages.” While the court rejected Lenz's arguments for damages based on loss of YouTube's hosting services and chilling of her free speech, the court noted that Lenz requested compensation equal to the minimum wage for at least 10 hours of time she had spent on restoring her video to YouTube. The court also noted that she “must have incurred at least minimal expenses for electricity to power her computer, internet and telephone bills, and the like,” that potentially could be recoverable under ' 512 (f). While these damages might be minimal, the court reminded the parties of its prior holding that' requiring a plaintiff under the DMCA to prove “economic and substantial” damages “would vitiate the deterrent effect of the statute.” Finally, the court noted that Lenz has a claim for attorney's fees as well and refused to hold that “counsel's prelitigation work was so intertwined with the litigation that the fees are not recoverable.”

Rejection Is Instructive

The court's rejection of both parties' summary judgment motions is instructive. The decision suggests that fair use, one of the thorniest doctrines under U.S. copyright law, is alive and well. Copyright owners must show evidence of a fair use analysis before leveling copyright infringement accusations. Depending on how the case concludes, the Lenz case could end up being a key precedent in fair use law.

In addition, while the court deferred to other pending case law regarding the DMCA, it tacitly upheld the concept that Internet service providers may be exempt from copyright infringement. Finally, the decision upholds the notion that even minimal financial damage is sufficient to allege damage under the DMCA, possibly opening the door for more DMCA litigation.

Kyle-Beth Hilfer, a member of this newsletter's Board of Editors, specializes in advertising, marketing, promotions, intellectual property and new media law. She is of counsel to the law firm Collen IP. She advises clients regularly on protecting their copyrights. For more information about her law practice, visit www.kbhilferlaw.com. ' Kyle-Beth Hilfer, P.C. 2013.

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