Viacom v. YouTube: Will the Red Flags Defeat the DMCA Shield?

November 28, 2011

Recently a panel from the Second Circuit Court of Appeals heard oral argument in the Viacom v. YouTube case, and the forthcoming decision is expected to have vast implications for both content owners and online service providers. In addition, because of the ubiquity of online activity in today’s economy, including by companies that are not traditional content creators or online service providers (ISPs), it is important for corporate counsel across a range of industries to keep up-to-date with developments in this area.

At issue in the case is the standard for shielding internet services providers from liability for the infringing activities of their users. The DMCA shields ISPs from liability for storing third-party infringing material if the ISPs act expeditiously to remove the material after becoming aware of it.

Viacom and YouTube disagree over what level of knowledge is required to trigger the ISP’s duty to take action with respect to infringing content on its service.

Viacom contends that generalized knowledge of widespread infringing activity is sufficient to trigger the duty under the DMCA. Viacom alleges that YouTube did not take action despite having such knowledge, and to support its position points to statements of YouTube employees demonstrating their knowledge of widespread infringement on their site.

YouTube counters that the DMCA requires knowledge of specific and identifiable infringement before the duty arises.  YouTube claims that it fully complied with the DMCA and removed all infringing content that it had specific knowledge of, and points to the fact that it promptly removed virtually all of the 100,000 videos that Viacom claimed were infringing within one business day of receiving a take-down notice from Viacom.

The District Court agreed with YouTube, and ruled that “knowledge of specific and identifiable infringements of particular items” is necessary before the service provider is required to take action.

The primary issue on appeal is whether the District Court’s interpretation of the “knowledge” standard was correct. According to published reports, during oral argument the Second Circuit judges asked detailed questions about the evidence concerning YouTube’s founders’ knowledge of widespread infringing activity, and the steps they took in response thereto. And about a week after oral argument, the Second Circuit ordered the parties to submit letter briefs addressing certain questions, including:

  • whether and how the red-flag provision of the DMCA would apply under YouTube’s “specific knowledge” construction of 512(c)(1)(A) .

This question relates to the two standards articulated in the statute for triggering the duty to take action (i.e. actual knowledge of infringing material vs. awareness of facts or circumstances from which infringing activity is apparent). It is clear that the Court is carefully considering how the apparent knowledge provision, which is also referred to as the “red-flag” provision, should be applied.

Unfortunately, the text of the DMCA does not provide a definitive answer. Therefore, the Court must decide whether the apparent knowledge provision was intended by Congress to be a narrow extension of the actual knowledge provision (i.e. to prevent ISPs that don’t have objective proof that certain material is infringing from claiming that no action is required even if the circumstances provide sufficient subjective awareness that the material is infringing) or a broader category that stands shoulder-to-shoulder with the actual knowledge provision (i.e. extending the duty to take action where the ISP is aware of some general level of infringing activity)

It is difficult to predict how the Second Circuit will rule. There have been surprisingly few decisions that have addressed the “red-flag” provision of Section 512(c).  However, courts have generally set a high bar for overcoming the protections of the DMCA before imposing liability on ISPs. It will be interesting to see if the Second Circuit continues this trend or moves in the opposite direction. However, no matter which interpretation the Court adopts, in-house counsel will need to be cognizant of the decision and the resulting impact on the responsibilities and risks associated with hosting content online.