Crazy for Fair Use

YouTube removed the video on June 5, 2007 and gave Lenz an opportunity to respond. Lenz' first response was incomplete and the video remained offline. Universal responded by pointing out the technical issues with the response and protesting the proposed reinstatement of the video, arguing that Lenz had no license to the music, but making no mention of fair use. After Lenz retained counsel, she submitted a second DMCA counter-notice, asserting the video qualified as fair use. YouTube reposted the video approximately six weeks later in mid-July, 2007. Later that month, Lenz sued Universal, alleging that she had suffered damages during the time that YouTube had removed her video. As of Oct. 2015, the video had over 1.7 million hits, although presumably some of its popularity is due to Lenz' legal action.

Lenz' 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 any event, Lenz did not suffer recoverable damages. The district court rejected both parties' summary judgment motions, and in September 2015, the Ninth Circuit panel affirmed the district court's decision.

Fair Use As a Right

The Ninth Circuit made it clear that Lenz's lawsuits had implications for more than her home video. Noting that Lenz's claim “boils down to a question of whether copyright holders have been abusing the extrajudicial takedown procures provided for in the DMCA,” the Ninth Circuit delivered a clear holding on the importance of a fair use analysis in the DMCA setting:

We hold that the statute requires copyright holders to consider fair use before sending a takedown notification, and that failure to do so raises a triable issue as to whether the copyright holder formed a subjective good faith belief that the use was not authorized by law.

The relevant statute is the DMCA 17 U.S.C. '512. Section 512c establishes the now commonly known “takedown procedures” under the DMCA. Section 512g establishes “put-back procedures.” Section 512f establishes liability for anyone who abuses the DMCA by “materially misrepresenting” that the subject of the takedown notice is an infringing work.

The main question for the Ninth Circuit was whether copyright holders must, under Section 512c, “consider whether the potentially infringing material is a fair use of a copyright ' before issuing a takedown notification.” To answer this question, the Ninth Circuit had to clarify whether fair use is an authorization for use under the United States Copyright Act or an exception to the statutorily granted monopoly rights of copyright. Looking to dictionary definitions of the word “authorize,” the Ninth Circuit emphatically stated that fair use is “wholly authorized” as a non-infringing use. In addition, the court cited Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 433 (1984), for the proposition that fair use is not an excused infringement. That court had concluded that “[A]nyone who ' makes a fair use of the work is not an infringer of the copyright with respect to such use.”

In short, the court rejected Universal's arguments and held that fair use is a right under the law, not a defense to copyright infringement. As a result, a copyright holder must consider whether a third-party use of its work is fair use before sending a DMCA takedown notice. In the instant case, the factual case record made it clear that Universal had never considered fair use. Universal's internal 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.

Next, the Ninth Circuit considered whether “a genuine issue of material fact exists as to whether Universal knowingly misrepresented that it had formed a good faith belief the video did not constitute fair use.” Here, the Ninth Circuit disagreed with the district court, saying: “Lenz may proceed under an actual knowledge theory, but not under a willful blindness theory.” The Ninth Circuit said that it would consider Universal's “subjective beliefs” about the Lenz video. If, as here, it could be proved that the copyright holder subjectively and in good faith believes that the allegedly infringing material is not a fair use, a jury must hear the case. Regardless, the Ninth Circuit ruled that Lenz had not demonstrated willful blindness by Universal. She had not shown that Universal “subjectively believed that there was a high probability that the video constituted fair use.”

Circuit Judge Smith, however, dissented from this portion of the majority opinion. He interpreted Section 512f as “prohibit[ing] misrepresentations that a work is infringing, not misrepresentations about the party's diligence in forming its belief that the work is infringing.” He also disagreed with the majority as to whether there was any material dispute as to whether Universal considered fair use. In his view, the record is clear that Universal had not considered fair use and therefore affirmatively misrepresented that the video was infringing. Consequently, according to this dissenting opinion, it was not necessary to even consider the willful blindness doctrine.

On Oct. 20, 2015, Lenz petitioned for rehearing en banc before the Ninth Circuit. Lenz asked “whether Congress, in drafting safe harbor provisions of the [DMCA] intended to grant private parties the practical power to censor speech based on an unreasonable belief that a copyright has been infringed, as long as that belief is ' subjectively held.” Lenz asks the Ninth Circuit to overrule or limit the underlying precedent set in Rossi v Motion Picture Association of America, 391 F.3d 1004 (9th Cir. 2004), asserting that Rossierroneously held that a good faith belief could be subjectively held when sending the DMCA takedown notice.'In the alternative, Lenz requests a panel to rehear the issue of whether Universal had a good faith belief that the video infringed is an issue of law or fact.

After the majority opinion rejected the summary judgment motions, it next examined whether Lenz could pursue a claim for nominal damages under Section 512f of the DMCA. Rejecting Universal's arguments emphatically, the court ruled that Lenz may seek nominal damages because the DMCA is “akin to a statutorily created intentional tort.” A jury would first need to find in Lenz's favor at trial, and then Lenz could seek damages, including expenses, costs, and attorneys' fees.

Universal has also filed a petition for rehearing on the basis that Lenz did not suffer sufficient injury to give her standing to bring the lawsuit. Universal continues to assert that nominal damages and attorneys' fees and costs are insufficient to establish the necessary basis for the lawsuit. Universal argues that the Ninth Circuit decision''has to the potential to authorize any person subject to a takedown notice to bring suit, and potentially to be part of a class action, without regard to whether that individual suffered any actual harm.' In other words, the Ninth Circuit decision as it stands could open the floodgates of litigation. Universal also requests some minor textual changes to the Ninth Circuit decision if it does not reverse course.

Decision Impact

Undoubtedly, after this decision, copyright holders must be more alert to fair use in their analyses before issuing takedown notices. The decision did not evaluate, however, whether Lenz's use of Prince's song was a fair use, only whether Universal had considered it. If the case proceeds, we may see some elucidation of the thorny doctrine of fair use under copyright law. Generally, there are four factors in determining whether a fair use exists: the purpose and character of the taking, the nature of the underlying copyrighted work, the amount and substantiality of the portion used in the taking work, and the taking's effect on the underlying work's potential for exploitation in the marketplace.

Whether the case has a chilling effect on DMCA takedown notices remains to be seen.'In dicta, the court commented on the burdens of the Internet age. 'We are mindful of the pressing crush of voluminous infringing content that copyright holders face in a digital age.”While the court was sympathetic to the difficulties of policing copyrighted works, it still required at least a subjective consideration of fair use before filing take down notices. That consideration would require human analysis and not complete reliance on computer algorithms. Certainly, after this round of the Lenz case, copyright holders will be sharpening their internal review processes to include fair use analyses. The Ninth Circuit decision upholds the notion that even minimal financial damage is sufficient to allege damage under the DMCA. Accordingly, it has certainly opened the door for more DMCA litigation.

Kyle-Beth Hilfer, Esq.,'specializes in advertising, marketing, promotions, intellectual property and new media law. A member of this newsletter's Board of Editors,'she is Of Counsel to the law firm Collen IP. She advises clients regularly on protecting their copyrights. For more information, visit www.kbhilferlaw.com.

The Ninth Circuit has held that fair use is an exception to copyright law and not a defense, in the first federal appeals court ruling on this issue. Lenz v. Universal Music, No. 13-1606 (Ninth Cir Sept. 14, 2015). The decision is the latest in the ongoing battle between plaintiff Stephanie Lenz and defendant Universal Music Corp. and affiliated companies (Universal). Starting in a rural kitchen in Pennsylvania, the case is now a landmark decision in copyright law that protects many home videographers.

Case Background

On Feb. 7, 2007, Lenz uploaded to YouTube a 29-second video showing her toddler bopping happily in her kitchen to Prince's song, “Let's Go Crazy.” Lenz entitled it “Let's Go Crazy #1.” During the video, Lenz asks her toddler: “What do you think of the music?” Universal, a music publishing company that administers the copyrights to the song, identified the video through its daily copyright review procedures and concluded that the copyrighted work was the “focus” of the video based on its duration, volume, the title of the video, and Lenz's question about the music during the video. As a result, Universal sent a Digital Millennium Copyright Act (DMCA), 17 U.S.C. '512 (1998), takedown notice to YouTube for Lenz' video. The DMCA notice included the required “good faith belief” statement, averring that Lenz's use of Prince's song was “not authorized by the copyright owner, its agent, or the law.”

YouTube removed the video on June 5, 2007 and gave Lenz an opportunity to respond. Lenz' first response was incomplete and the video remained offline. Universal responded by pointing out the technical issues with the response and protesting the proposed reinstatement of the video, arguing that Lenz had no license to the music, but making no mention of fair use. After Lenz retained counsel, she submitted a second DMCA counter-notice, asserting the video qualified as fair use. YouTube reposted the video approximately six weeks later in mid-July, 2007. Later that month, Lenz sued Universal, alleging that she had suffered damages during the time that YouTube had removed her video. As of Oct. 2015, the video had over 1.7 million hits, although presumably some of its popularity is due to Lenz' legal action.

Lenz' 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 any event, Lenz did not suffer recoverable damages. The district court rejected both parties' summary judgment motions, and in September 2015, the Ninth Circuit panel affirmed the district court's decision.

Fair Use As a Right

The Ninth Circuit made it clear that Lenz's lawsuits had implications for more than her home video. Noting that Lenz's claim “boils down to a question of whether copyright holders have been abusing the extrajudicial takedown procures provided for in the DMCA,” the Ninth Circuit delivered a clear holding on the importance of a fair use analysis in the DMCA setting:

We hold that the statute requires copyright holders to consider fair use before sending a takedown notification, and that failure to do so raises a triable issue as to whether the copyright holder formed a subjective good faith belief that the use was not authorized by law.

The relevant statute is the DMCA 17 U.S.C. '512. Section 512c establishes the now commonly known “takedown procedures” under the DMCA. Section 512g establishes “put-back procedures.” Section 512f establishes liability for anyone who abuses the DMCA by “materially misrepresenting” that the subject of the takedown notice is an infringing work.

The main question for the Ninth Circuit was whether copyright holders must, under Section 512c, “consider whether the potentially infringing material is a fair use of a copyright ' before issuing a takedown notification.” To answer this question, the Ninth Circuit had to clarify whether fair use is an authorization for use under the United States Copyright Act or an exception to the statutorily granted monopoly rights of copyright. Looking to dictionary definitions of the word “authorize,” the Ninth Circuit emphatically stated that fair use is “wholly authorized” as a non-infringing use. In addition, the court cited Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 433 (1984), for the proposition that fair use is not an excused infringement. That court had concluded that “[A]nyone who ' makes a fair use of the work is not an infringer of the copyright with respect to such use.”

In short, the court rejected Universal's arguments and held that fair use is a right under the law, not a defense to copyright infringement. As a result, a copyright holder must consider whether a third-party use of its work is fair use before sending a DMCA takedown notice. In the instant case, the factual case record made it clear that Universal had never considered fair use. Universal's internal 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.

Next, the Ninth Circuit considered whether “a genuine issue of material fact exists as to whether Universal knowingly misrepresented that it had formed a good faith belief the video did not constitute fair use.” Here, the Ninth Circuit disagreed with the district court, saying: “Lenz may proceed under an actual knowledge theory, but not under a willful blindness theory.” The Ninth Circuit said that it would consider Universal's “subjective beliefs” about the Lenz video. If, as here, it could be proved that the copyright holder subjectively and in good faith believes that the allegedly infringing material is not a fair use, a jury must hear the case. Regardless, the Ninth Circuit ruled that Lenz had not demonstrated willful blindness by Universal. She had not shown that Universal “subjectively believed that there was a high probability that the video constituted fair use.”

Circuit Judge Smith, however, dissented from this portion of the majority opinion. He interpreted Section 512f as “prohibit[ing] misrepresentations that a work is infringing, not misrepresentations about the party's diligence in forming its belief that the work is infringing.” He also disagreed with the majority as to whether there was any material dispute as to whether Universal considered fair use. In his view, the record is clear that Universal had not considered fair use and therefore affirmatively misrepresented that the video was infringing. Consequently, according to this dissenting opinion, it was not necessary to even consider the willful blindness doctrine.

On Oct. 20, 2015, Lenz petitioned for rehearing en banc before the Ninth Circuit. Lenz asked “whether Congress, in drafting safe harbor provisions of the [DMCA] intended to grant private parties the practical power to censor speech based on an unreasonable belief that a copyright has been infringed, as long as that belief is ' subjectively held.” Lenz asks the Ninth Circuit to overrule or limit the underlying precedent set in Rossi v Motion Picture Association of America, 391 F.3d 1004 (9th Cir. 2004), asserting that Rossierroneously held that a good faith belief could be subjectively held when sending the DMCA takedown notice.'In the alternative, Lenz requests a panel to rehear the issue of whether Universal had a good faith belief that the video infringed is an issue of law or fact.

After the majority opinion rejected the summary judgment motions, it next examined whether Lenz could pursue a claim for nominal damages under Section 512f of the DMCA. Rejecting Universal's arguments emphatically, the court ruled that Lenz may seek nominal damages because the DMCA is “akin to a statutorily created intentional tort.” A jury would first need to find in Lenz's favor at trial, and then Lenz could seek damages, including expenses, costs, and attorneys' fees.

Universal has also filed a petition for rehearing on the basis that Lenz did not suffer sufficient injury to give her standing to bring the lawsuit. Universal continues to assert that nominal damages and attorneys' fees and costs are insufficient to establish the necessary basis for the lawsuit. Universal argues that the Ninth Circuit decision''has to the potential to authorize any person subject to a takedown notice to bring suit, and potentially to be part of a class action, without regard to whether that individual suffered any actual harm.' In other words, the Ninth Circuit decision as it stands could open the floodgates of litigation. Universal also requests some minor textual changes to the Ninth Circuit decision if it does not reverse course.

Decision Impact

Undoubtedly, after this decision, copyright holders must be more alert to fair use in their analyses before issuing takedown notices. The decision did not evaluate, however, whether Lenz's use of Prince's song was a fair use, only whether Universal had considered it. If the case proceeds, we may see some elucidation of the thorny doctrine of fair use under copyright law. Generally, there are four factors in determining whether a fair use exists: the purpose and character of the taking, the nature of the underlying copyrighted work, the amount and substantiality of the portion used in the taking work, and the taking's effect on the underlying work's potential for exploitation in the marketplace.

Whether the case has a chilling effect on DMCA takedown notices remains to be seen.'In dicta, the court commented on the burdens of the Internet age. 'We are mindful of the pressing crush of voluminous infringing content that copyright holders face in a digital age.”While the court was sympathetic to the difficulties of policing copyrighted works, it still required at least a subjective consideration of fair use before filing take down notices. That consideration would require human analysis and not complete reliance on computer algorithms. Certainly, after this round of the Lenz case, copyright holders will be sharpening their internal review processes to include fair use analyses. The Ninth Circuit decision upholds the notion that even minimal financial damage is sufficient to allege damage under the DMCA. Accordingly, it has certainly opened the door for more DMCA litigation.

Kyle-Beth Hilfer, Esq.,'specializes in advertising, marketing, promotions, intellectual property and new media law. A member of this newsletter's Board of Editors,'she is Of Counsel to the law firm Collen IP. She advises clients regularly on protecting their copyrights. For more information, visit www.kbhilferlaw.com.