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December 2006Digital Media and U.S. Copyright Law: Is YouTube the Next Grokster?by Seann W. Hallisky Since its launch in February 2005, YouTube.com has rapidly grown to become one of the most popular sites on the Web. YouTube allows users to upload videos that others can view as streaming content from its website, all free of charge. With over 70 million videos viewed daily, YouTube is quickly becoming a cultural phenomenon. The problem for YouTube is that much of the video that is uploaded to and viewed through its site contains copyrighted material that is being posted without the copyright owner’s consent. In July 2006, a California video reporter filed suit in a federal district court, alleging that YouTube infringed on his copyright in news footage that he recorded. The lawsuit, Tur v. YouTube, Inc., No. 06cv4436 (C.D. Cal. filed July 14, 2006), could bring to light the legal uncertainty that has dogged YouTube from the outset. Will YouTube fare any better than the peer-to-peer file-sharing services that were ultimately shut down for their contribution to massive copyright infringement? The answer will largely depend on how the safe-harbor provision of the Digital Millennium Copyright Act (DMCA), codified at 17 U.S.C. § 512, and the U.S. Supreme Court’s decision in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 125 S.Ct. 2764, 162 L. Ed. 2d 781 (2005), are interpreted and applied to YouTube. Given the massive popularity and legal uncertainty surrounding YouTube, the time has come to revisit the state of U.S. copyright law as applied to digital media and analyze YouTube’s legal status. The DMCA’s Safe Harbor for Online Service Providers The DMCA was passed in 1998 to extend copyright protection to digital media by stiffening penalties for copyright violations on the Internet and criminalizing the use of technologies that circumvent copyright protections. The act, however, also limits the liability of online service providers under 17 U.S.C. § 512. A service provider is broadly defined as a “provider of online services or network access, or the operator of facilities therefor ....” 17 U.S.C. § 512(k)(1)(B). Service providers are granted a safe harbor from all copyright liability if they adhere to certain requirements. In addition to immunizing service providers that merely act as passive transmitters of users’ files, section 512 also gives safe harbor to service providers that store files and facilitate locating files, as long as they meet several requirements, including the following: • The service provider must not be aware of any infringing material, and in the event that it becomes aware, it must expeditiously act to remove or disable access to the infringing material. U.S.C. § 512(c)-(d), (i). Unfortunately, there is as yet no guidance as to how narrowly or broadly U.S. courts will read these requirements. Of particular interest is how the requirement of expeditious action to remove infringing material and the prohibition against direct financial benefit from the infringing activity will be interpreted by the courts. The Grokster Decision Beginning with the groundbreaking case of A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001), U.S. courts have come down hard on services that facilitate the sharing of computer files known to infringe copyrights. Most recently, the U.S. Supreme Court in Grokster strongly endorsed liability for inducing copyright infringement: We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties. Grokster, 125 S.Ct. at 2770. The Court explained the rationale for liability on the part of service providers by noting the impracticality of going after the direct infringers in such instances: When a widely shared service or product is used to commit infringement, it may be impossible to enforce rights in the protected work effectively against all direct infringers, the only practical alternative being to go against the distributor of the copying device for secondary liability on a theory of contributory or vicarious infringement. Id. at 2776. In Grokster, the defendants provided software that allowed users to locate and share files remotely via a peer-to-peer computer network. Critical to finding liability was evidence that the software was specifically marketed for infringement and the providers actively sought to profit from rampant infringement by people using their software. This form of liability based on active inducement vitiates any claim for immunity under the DMCA’s safe-harbor provision. The Case Against YouTube The recent complaint filed against YouTube alleges direct, contributory, and vicarious copyright infringement. Moreover, it specifically attempts to invoke the inducement theory of liability espoused in Grokster. Because the videos available through YouTube are uploaded onto YouTube’s servers and then streamed onto users’ computers via YouTube’s website, the argument can certainly be made that YouTube is in fact more culpable than the mere providers of file-sharing software. YouTube may in fact risk liability as a direct infringer for its role in actively distributing copyrighted video. At the least, YouTube may be a contributory infringer for materially contributing to the direct infringement of those uploading copyrighted videos. Inducement liability, as described in Grokster, would exist if it could be shown that YouTube promotes the infringing use of its services. There is also a case for vicarious liability. Vicarious liability for copyright infringement requires a right and ability to supervise, as well as a direct financial interest in, the infringement. Clearly, YouTube has the ability to police the videos shown through its own site, and it may be argued that it has a direct financial interest if YouTube can be shown that the infringing material draws more users to its site, which in turn creates more advertising revenue. This type of argument for finding financial benefit was supported by the Supreme Court in Grokster. Although YouTube falls squarely within the definition of a “service provider” under the DMCA, it cannot invoke the safe-harbor provision if it is found to actively induce copyright infringement as suggested in the Grokster opinion. YouTube could also be precluded from claiming safe harbor if a court finds it did not act quickly or effectively enough to stop distributing infringing material that it has become aware of, or if it is found to be receiving direct financial benefit from infringement. The continued access to large quantities of copyrighted material through YouTube’s website could support an allegation that it is not making a good-faith effort to disable access to infringing material, and, as mentioned above, the infringing material could be providing a direct financial benefit in the form of increased advertising revenue. The Case for YouTube YouTube has, on the other hand, taken several measures to ensure that it is shielded from any liability for infringement on the part of the users of its site. Its “Terms of Use” and “Copyright Infringement Notification,” both available on its website, carefully track and specifically reference the provisions of the DMCA for copyright owners to provide notice of infringement. YouTube also has a policy for terminating the accounts of repeat infringers. The providers of Napster and Grokster were both stung for not removing copyrighted material from their website or banning repeat infringers. Moreover, it does not appear that YouTube has promoted the sharing of infringing material using its service. To the contrary, YouTube has marketed itself as a place for people to share homemade videos. It recently set a 10-minute limit on the length of any video, in order to prevent the uploading of full-length copyrighted shows and films. The fact that videos are streamed over the Internet, as opposed to being downloaded onto users’ computers (where they could not be retrieved), also lessens the potential damage to copyright owners and discourages infringement. Hackers have made available simple ways to get around this limitation and allow files to be saved to a user’s hard drive, but YouTube, for its part, has not endorsed this practice and has even adjusted its system to prevent at least the simpler hacks. YouTube has also attempted to structure its business model to minimize the appearance of directly benefiting from infringement. Whereas Grokster’s only substantial source of revenue was from advertising that was clearly linked to the huge flow of infringing material over its network, YouTube has broadened and actively promoted legitimate uses of its network as possible revenue generators. It recently began streaming promotional videos paid for by advertisers, and it partnered with NBC to show previews of upcoming NBC shows. YouTube is even reportedly in talks with music industry executives to make available on YouTube entire libraries of music videos.1 Perhaps most favorable for YouTube, however, is the fact that many people use its services for legitimate purposes. There seems to be a desire in many people to share their amateur videos, and YouTube’s services have allowed millions of users to do just that. Whereas Grokster’s overwhelming use as an aid to copyright infringement defeated any concern for protection of technological innovation, YouTube can make a much stronger case. This brings to mind the Supreme Court’s stance in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 104 S.Ct. 774, 78 L. Ed. 2d 574 (1984), in which the Court found that the substantial, noninfringing uses of the VCR were sufficient to prevent Sony from secondary liability for copyright infringement when customers used it to infringe. Although the non-infringing uses of the VCR were at that time minimal — the market for home video rentals was not even considered at the time — the Court gave weight to the potential for future legitimate uses of the technology. The Court has so far refused to directly revisit and clarify the Sony holding, and it is unlikely that the current case against YouTube will make it that far. Nonetheless, the Court’s attempt to balance the prevention of copyright infringement with the need to protect technological innovations that have lawful uses seems relevant, and as digital media continues to expand, a similar balancing will likely be needed. Conclusion In spite of its best efforts to protect itself, YouTube appears to be the next target as copyright holders seek to limit the damage caused by the increasingly widespread sharing of copyrighted digital media. While the merits of Tur v. YouTube, Inc. are not yet clear, it is possible that this will turn out to be the first significant test of the DMCA’s safe-harbor provisions for service providers. If YouTube prevails, it could be a major victory for supporters of file-sharing who are in need of good news following the rebuke of Grokster, whereas a victory for the plaintiff could open the door for massive liability, possibly dooming YouTube to be the next Grokster and raising the question of whether a file- or media-sharing service can ever feel safe from copyright infringement liability. Either way, this case and any similar copyright lawsuits will be interesting to watch, as the interaction of U.S. copyright law and the sharing of digital media continues to evolve. Seann W. Hallisky is an intellectual property attorney at Stoel Rives LLP. He heads the Seattle office’s Technology and Intellectual Property group and can be reached at swhallisky@stoel.com or 206-386-7661. Contributions to this article were made by Michael P. McMahon. Michael was a summer associate at Stoel Rives LLP’s Seattle office and is a student at the University of Chicago Law School. He can be reached at mmcmahon@uchicago.edu. NOTES
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