Viacom Wins Partial Victory Against YouTube On Appeal

Court Says 'A Reasonable Jury' Could Find Video-Sharing Site Knew About Infringement

A federal appeals court dealt a setback to YouTube in a copyright-infringement suit by Viacom and other content owners, ruling that a "reasonable jury" could conclude the video-sharing site knew certain pirated content was being illegally shared by its users -- although it also affirmed that YouTube didn't need to actively monitor users to comply with the law.

The U.S. Appeals Court for the Second Circuit, in a ruling Thursday, said it was clarifying "the contours" of the Digital Millennium Copyright Act. Enacted in 1998, the DMCA grants online service providers immunity from liability if they remove unauthorized content after receiving a "takedown" notice from the copyright holder.

In its ruling, the appeals court overturned part of a lower court's June 2010 ruling, which granted summary judgment in favor of YouTube based on the DMCA's fair-harbor exemption. The Second Circuit vacated that portion "because a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website," Circuit Judge José Cabranes wrote in the decision. Viacom and the other plaintiffs in the case had appealed the U.S. District Court for the Southern District of New York ruling.

The Second Circuit Court of Appeals also said the lower court erred by interpreting the "right and ability to control" infringing activity provision of the DMCA to require "item-specific" knowledge -- but said that part of the statute requires a service provider to have "something more" than simply the ability to block or remove content. It remanded that portion to the lower court.

The appeals court affirmed that three of the challenged YouTube software functions fall within the safe harbor for infringement that occurs "by reason of" user storage. It remanded a fourth software function -- involving the third-party syndication of videos uploaded to YouTube -- for further fact-finding to the lower court.

"We are pleased with the decision by the U.S. Court of Appeals," Viacom said in a statement. "The court delivered a definitive, common sense message -- intentionally ignoring theft is not protected by the law."

YouTube said the appeals court ruling that overturned the summary judgment of DMCA protection affects only a small number of videos, which were removed several years ago.

"The Second Circuit has upheld the long-standing interpretation of the DMCA and rejected Viacom's reading of the law," YouTube said in a statement. "All that is left of the Viacom lawsuit that began as a wholesale attack on YouTube is a dispute over a tiny percentage of videos long ago removed from YouTube. Nothing in this decision impacts the way YouTube is operating. YouTube will continue to be a vibrant forum for free expression around the world."

Viacom, whose properties include MTV, Nickelodeon and Paramount Pictures, filed suit against YouTube and Google in 2007, alleging they engaged in deliberate copyright infringement designed to boost traffic to YouTube. Viacom's suit was seeking more than $1 billion in damages. Other plaintiffs in the case include the Football Association Premier League Limited, the National Music Publishers' Association and other copyright holders.

Public-interest group Public Knowledge said it was pleased with the appeals court ruling, agreeing with YouTube that the Second Circuit had upheld the basic principles of the DMCA.

"Crucially, the court rejected Viacom's attempt to create a new duty of those hosting content to monitor actively for infringement in order to qualify for the law's safe-harbor provisions," PK deputy legal director Sherwin Siy said. "The court upheld the need for knowledge of specific instances of infringement in the DMCA, and that a general awareness of possible infringement is not sufficient."

NetCoalition, a consortium whose members include, Bloomberg, eBay, Google, IAC, PayPal and Yahoo, also called attention to the fact that the Second Circuit found that Internet companies are not liable for damages when they do not have actual, specific knowledge of the infringing content in question.

"The decision allows Internet companies to continue to rely on a legal framework that has fostered unprecedented growth and innovation, creating one of the truly bright spots of the U.S. economy," NetCoalition executive director Markham Erickson said in a statement.

The Second Circuit Court of Appeals ruling is available here.