Published by LawTechie - November 6, 2013 - LawTechie

youtube_logoAs promised, Viacom again appealed its loss against YouTube back in April 2013, this time arguing that the lower court should have done more than analyze whether YouTube had sufficient evidence of users’ infringing use of its website. This time, Viacom argues that the court should have analyzed whether the evidence would support a theory that YouTube induced its users to infringe.

Short Refresher.

Recall that in April 2012, the Second Circuit “sort of” ruled in Viacom’s favor by sending the case back to the Southern District of New York to decide whether Viacom had raised sufficient evidence of “red flag” activity. Such evidence would potentially show that YouTube was or should have been “aware of the facts and circumstances from which infringing activity is apparent,” which would kill YouTube’s DMCA immunity defense.

Under DMCA 512(c), service providers like YouTube are immune to claims of copyright infringement arising out of the infringing actions of their users so long as the service provider was not an active participant (or in this case willfully blind) in the infringing activity.

YouTube Keeps Winning, Viacom Keeps Appealing.

So then in April of this year Viacom lost again, with the SDNY finding no evidence of “red flag” activity.

Now Viacom has appealed again, arguing that evidence of inducement is sufficient evidence of “red flag” activity. Recall my colleague Eric Goldman’s note that the Circuit rulings are making the 512 safe harbors increasingly messy to invoke by tacking on more and more factors that the courts must analyze (guess he was right).

EFF Articulates the Best Standard for Inducement.

In my opinion, the latest amicus brief filed by the Electronic Frontiers Foundation (EFF), supporting YouTube, makes the best law and policy-based argument for why Viacom’s inducement theory is a no-go:

Simply put, the inducement liability threshold is stricter for products and services that have substantial non-infringing uses versus ones that don’t. Liability in such cases is strictly limited to circumstances of “acute fault” from the service provider. Grokster, 545 U.S. at 932-33.

Only “one who distributes a device with the object of promiting its use to infrigne copyright, as shown by a clear expression or other affirmative steps taken to foster infringement” can be found liable for inducement. Id. at 936-37.

IP Rights v. Innovation.

At the end of the day, this is an IP rights v. innovation lawsuit. The EFF correctly points out that the legislative purpose behind the DMCA was to legislate the Grokster-based policy of balancing between protecting IP rights owners while giving innovators sufficient leeway to design new products and services without the threat of getting sued for every little thing.

As the EFF noted, inducement is not meant to be a “thought-tort” and should be carefully applied when it comes to products and services that have significant non-infringing potential (like YouTube).

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.

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