paidContent » safe harbors

Pinterest locked in stalemate with image owners

Jeff John Roberts — Wed, 30 May 2012 12:28:36 +0000

Image-sharing site Pinterest has been in negotiations for months with photo service Getty. A breakthrough could dispel some of the copyright questions hanging over the hot startup — but one expert says not to hold your breath.

According to Bill Rosenblatt, an engineer and authority on digital rights issues, the two sides are likely in a logjam over how — or if — Pinterest should use Getty’s image detection software, PicScout. Getty acquired PicScout, which tracks images across the Internet, last year for $20 million.

Rosenblatt speculates that Getty wants Pinterest to license the technology. This would allow Pinterest to take on a role similar to YouTube, a company that responded to copyright criticism by offering rights owners a tool to track and monetize their content:

If you make that analogy, someone like Pinterest, if they feel they’re getting a significant amount of legal threats, it would be reasonable to adopt that technology as a prophylactic against legal action.

The problem is that Pinterest, which is now valued north of $1 billion, might be equally inclined to tell Getty and other image owners to jump in the lake. The site has claimed in the past that it is protected by “safe harbor” rules that protect websites from being liable for users’ activities as long as they comply with takedown requests. If the rule holds, Pinterest should be no more responsible for someone posting a copyrighted picture than a search engine should be for listing a file-sharing site in its search results.

Getty could, of course, go to court and try to evict Pinterest from its safe harbor by showing it controlled the user content — maybe by pointing out that Pinterest fiddles with links attached to the photographs. But that’s not a slam dunk case. Likewise, Getty could try to affect the Pinterest user experience by taking down as many pictures as possible, but, as Rosenblatt notes, Getty isn’t large enough to have that big an impact.

The upshot is a stalemate. Getty and other image owners can huff and puff about infringement, but the reality is they may not have much legal leverage. In the meantime, Pinterest is taking steps to improve its relationship with photographers by, for example, making attribution easier and offering “do not pin” options.

Surely there is a way for the sides to find a viable business model before someone pulls the lawsuit trigger.

For now, Getty would only repeat its claim of four months ago that it’s “discussing it” with Pinterest. The the latter is saying nothing at all.

See also: “Pinterest: Is it a Facebook or a Grokster?“

(Image: Cora Reed via Shutterstock)

Exclusive: Publisher sues Tumblr over porn pics

Jeff John Roberts — Mon, 07 May 2012 14:29:26 +0000

Updated: It’s finally happened. In a case with big implications for the booming market in photo-sharing, a publisher is suing popular blogging site Tumblr for copyright infringement.

In a complaint filed Friday in Manhattan, Perfect 10 claims Tumblr failed to remove unauthorized photos posted by its users. The company, which sells nude model photographs through a magazine and website, says Tumblr not only turned a blind eye to copyright infringement but that its staff uploaded images themselves to jumpstart the business.

Update: Perfect 10 President Norm Zada claims the company has sent 6 detailed takedown requests to Tumblr but did not receive any response.

“I’m not sure anyone’s checking that email,” said Zada. “Twenty-five other Internet Service Providers have taken down material that Perfect 10 has identified in our DMCA notices, Tumblr did not.”

The case is significant because lawyers have been waiting for a case to test the legality of popular new image sharing sites like Tumblr and Pinterest. It is also important because of the companies involved.

Tumblr is one of the web’s hottest social sites while Perfect 10 has a long history of fighting in court to control its images. The company sued Google in 2004 for using thumbnail images in its search results. In a famous 2006 decision, a court ruled that the search giant’s use of thumbnails was fair use under copyright law.

A similar fair use ruling is unlikely in the Tumblr case because pictures on the site are typically not thumbnails but full size images.

Ordinarily, sites that host user-uploaded content are protected from copyright lawsuits under “safe harbor” laws (these make a user liable but not the site itself).

Perfect 10′s complaint, however, appears crafted to attack a safe harbor defense by Tumblr. Websites can lose the safe harbor protection if they fail to remove infringing material or if they have an active role in hosting unauthorized images:

Upon information and belief, Tumblr employees have posted infringing content to Tumblr servers, to help start the business, including content which infringes upon Perfect 10′s Copyrighted Works [...] Tumblr’s services also permit its subscribers to search for images. An example of the search results of a Tumblr search for model Luba Shumeyko, which includes infringing copies of Perfect 10 Copyrighted Works [...] Tumblr turns a blind eye to the extensive copyright infringement taking place through its services.

As Tumblr has gained prominence, some have argued that it must shake up its business model to rely less on pornography and unauthorized photos.

Others have directed similar questions at female-dominated Pinterest, another darling of the start-up set. Pinterest doesn’t have a reputation for porn but is being pressured by Getty Images and photographers to pay royalties.

The Tumblr lawsuit and the $1 billion acquisition of Instagram by Facebook are indications of how popular image sharing has become in recent years.

Update: Tumblr spokesman Katherine Barna declined to comment at this time.

Here’s a copy of the lawsuit:

Perfect 10 v Tumblr

Thumbnail image courtesy of Shutterstock user [jwblinn].

The YouTube Decision: What it means and what happens next

Jeff John Roberts — Thu, 05 Apr 2012 21:56:06 +0000

Today’s appeals court ruling in YouTube v. Viacom is the biggest copyright decision of the year and already both sides are proclaiming victory.

The case is about much more than the $1 billion that Viacom says it is owed for Jon Stewart and South Park clips that appeared on YouTube years ago.

Here’s a plain English guide to what the decision really means:

Why is this case such a big deal?

Content owners have fumed for years that so-called “safe harbor” laws make it too easy for sites like YouTube to avoid responsibility for copyrighted material uploaded by users. They hoped the appeals court would force those sites to take on a greater role in copyright enforcement. The decision shapes the rules for sites like Grooveshark and MP3 Tunes that offer new ways to store or distribute content.

So what happened today?

The Second Circuit is an influential appeals court. Today, they said a lower court made a mistake when it dismissed the case in YouTube’s favor in 2010. It vacated and remanded the earlier decision — meaning it sent the Viacom case back to the lower court with instructions on how to try again. The ruling also applies to a parallel suit brought by the English Premier League and other content owners.

So who won?

Viacom and content owners say the court’s decision to revive the case proves that YouTube and others should pay for being in cahoots with copyright infringers. Google and its allies say the remand order is a technicality and that the overall decision vindicates the existing safe harbor rules.

That sounds like spin. Who really won?

The truth is somewhere in the middle. The decision means that Google could be on the hook for at least some of the YouTube clips. But it doesn’t dramatically change the existing safe harbor regime.

The appeals court wrote a narrow, specific decision and not a wide and sweeping one. And, critically, the Second Circuit took care to be consistent with a similar recent case (involving Veoh video) from California’s Ninth Circuit. If the New York case had disagreed with its “sister circuit,” the case would have been teed up to go the Supreme Court — and possibly set off big changes in the safe harbor law. Now, the Supreme Court is a longshot.

Does the case change the law at all?

A little bit. The appeals court confirmed the meaning of “red flags.” These are situations when a host loses “safe harbor” immunity because they should have known that someone was putting copyrighted content on their site — even if a content owner can’t prove they had actual knowledge.

The dispute turned on technical language in the safe harbor law over when a host had “actual” knowledge versus “apparent” knowledge.

The legal details are pasted below but, in this case, the court decided that the lower court should have taken a closer look at what seem like damning emails about what the YouTube founders knew.

Content owners may also be encouraged by the court’s guidance on “willful blindness” — situations where a website deliberately looks the other way when the site is used for piracy or counterfeiting.

Well, so what’s so important about the YouTube emails?

Emails between the YouTube founders suggest they knew or should have known about specific clips of copyrighted tv shows and sports games but chose to leave the clips up all the same — if this is the case, they forfeited their safe harbor shield and are liable for damages.

Does this mean Google has to pay the $1 billion?

No, because the appeals court ruling addresses the handful of clips in question, not all 79,000 of them. As Stanford’s Mark Lemley explains:

The court found evidence that YouTube’s founders might have had knowledge of a few specific instances of infringement, and it remanded to determine whether YouTube could be liable for those specific instances. But even if they are liable, the liability is just for the few mentioned postings, assuming Viacom owns them and they were identified as the works in suit. Any such liability would likely be measured in the hundreds of thousands of dollars, not the billions Viacom was seeking.

(Lemley has represented Google in the past but his view is consistent with text in the judgment as pasted below).

What happens now?

The case returns to the original court which will have to reconsider it in light of the appeals court’s instructions. Google will then move to have it dismissed all over again. The parties will fight like cats and dogs over the emails and the case will be back in court later this year.

It’s also possible that both sides will declare victory and quietly settle the matter.

I can’t get enough of this stuff. Where can I read more?

You can check out the excerpts below. Or you can read smart sources like Public Knowledge who says Google wins or Eric Goldman who says Viacom wins.

And finally, here’s a loose collection of the legal highlights from the judgment itself:

The difference between actual and red-flag knowledge is thus not between specific and generalized knowledge, but instead between a subjective and an objective standard. In other words, the actual knowledge provision turns on whether the provider actually or “subjectively” knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement “objectively” obvious to a reasonable person. The red flag provision, because it incorporates an objective standard, is not swallowed up by the actual knowledge provision under our construction of the § 512(c) safe harbor. Both provisions do independent work, and both apply only to specific instances of infringement.

The limited body of case law interpreting the knowledge provisions of the § 512(c) safe harbor comports with our view of the specificity requirement. Most recently, a panel of the Ninth Circuit addressed the scope of § 512(c) in UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022 (9th Cir. 2011), a copyright infringement case against Veoh Networks, a video-hosting service similar to YouTube.8 As in this case, various music publishers brought suit against the service provider, claiming direct and secondary copyright infringement based on the presence of unauthorized content on the website, and the website operator sought refuge in the § 512(c) safe harbor. The Court of Appeals affirmed the district court’s determination on summary judgment that the website operator was entitled to safe harbor protection. With respect to the actual knowledge provision, the panel declined to “adopt[ ] a broad conception of the knowledge requirement,” id. at 1038, holding instead that the safe harbor “[r]equir[es] specific knowledge of particular infringing activity,” id. at 1037. The Court of Appeals “reach[ed] the same conclusion” with respect to the red flag provision, noting that “[w]e do not place the burden of determining whether [materials] are actually illegal on a service provider.” Id. at 1038 (alterations in original) (quoting Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1114 (9th Cir. 2007)).

Although Shelter Capital contains the most explicit discussion of the § 512(c) knowledge provisions, other cases are generally in accord. See, e.g., Capitol Records, Inc. v. MP3tunes,

[...]

At least some of the TV shows to which Karim referred are owned by Viacom. A reasonable juror could conclude from the March 2006 report that Karim knew of the presence of Viacom-owned material on YouTube, since he presumably located specific clips of the shows in question before he could announce that YouTube hosted the content “[a]s of today.” A reasonable juror could also conclude that Karim believed the clips he located to be infringing (since he refers to them as “blatantly illegal”), and that YouTube did not remove the content from the website until conducting “a more thorough analysis,” thus exposing the company to liability in the interim.

Furthermore, in a July 4, 2005 e-mail exchange, YouTube founder Chad Hurley sent an e-mail to his co-founders with the subject line “budlight commercials,” and stated, “we need to reject these too.” Steve Chen responded, “can we please leave these in a bit longer? another week or two can’t hurt.” Karim also replied, indicating that he “added back in all 28 bud videos.” Similarly, in an August 9, 2005 e-mail exchange, Hurley urged his colleagues “to start being diligent about rejecting copyrighted / inappropriate content,” noting that “there is a cnn clip of the shuttle clip on the site today, if the boys from Turner would come to the site, they might be pissed?” Again, Chen resisted:

but we should just keep that stuff on the site. i really don’t see what will happen. what? someone from cnn sees it? he happens to be someone with power? he happens to want to take it down right away. he gets in touch with cnn legal. 2 weeks later, we get a cease & desist letter. we take the video down.

And again, Karim agreed, indicating that “the CNN space shuttle clip, I like. we can remove it once we’re bigger and better known, but for now that clip is fine.”

Upon a review of the record, we are persuaded that the plaintiffs may have raised a material issue of fact regarding YouTube’s knowledge or awareness of specific instances of infringement. The foregoing Premier League e-mails request the identification and removal of “clearly infringing, official broadcast footage.” The March 2006 report indicates Karim’s awareness of specific clips that he perceived to be “blatantly illegal.” Similarly, the Bud Light and space shuttle e-mails refer to particular clips in the context of correspondence about whether to remove infringing material from the website. On these facts, a reasonable juror could conclude that YouTube had actual knowledge of specific infringing activity, or was at least aware of facts or circumstances from which specific infringing activity was apparent. See § 512(c)(1)(A)(i)–(ii). Accordingly, we hold that summary judgment to YouTube on all clips-in-suit, especially in the absence of any detailed examination of the extensive record on summary judgment, was premature.9

We hasten to note, however, that although the foregoing e-mails were annexed as exhibits to the summary judgment papers, it is unclear whether the clips referenced therein are among the current clips-in-suit. By definition, only the current clips-in-suit are at issue in this litigation.

9 (Footnote: We express no opinion as to whether the evidence discussed above will prove sufficient to withstand a renewed motion for summary judgment by YouTube on remand. In particular, we note that there is at least some evidence that the search requested by Walker in his February 7, 2007 e-mail was never carried out. See Joint App’x III:256. We also note that the class plaintiffs have failed to identify evidence indicating that any infringing content discovered as a result of Walker’s request in fact remained on the YouTube website.)

[...]

On appeal, the parties advocate two competing constructions of the “right and ability to control” infringing activity. 17 U.S.C. § 512(c)(1)(B). [..]

Accordingly, we conclude that the “right and ability to control” infringing activity under § 512(c)(1)(B) “requires something more than the ability to remove or block access to materials posted on a service provider’s website.”

[...]

CONCLUSION

To summarize, we hold that:

(1) The District Court correctly held that 17 U.S.C. § 512(c)(1)(A) requires knowledge orawareness of facts or circumstances that indicate specific and identifiable instances ofinfringement;
(2) However, the June 23, 2010 order granting summary judgment to YouTube isVACATED because a reasonable jury could conclude that YouTube had knowledge or awareness under § 512(c)(1)(A) at least with respect to a handful of specific clips; the cause is REMANDED for the District Court to determine whether YouTube had knowledge or awareness of any specific instances of infringement corresponding to the clips-in-suit;
(3) The willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under § 512(c)(1)(A); the cause is REMANDED for the District Court to consider the application of the willful blindness doctrine in the first instance;
(4) The District Court erred by requiring “item-specific” knowledge of infringement in its interpretation of the “right and ability to control” infringing activity under 17 U.S.C. § 512(c)(1)(B), and the judgment is REVERSED insofar as it rests on that erroneous construction of the statute; the cause is REMANDED for further fact-finding by the District Court on the issues of control and financial benefit;
(5) The District Court correctly held that three of the challenged YouTube software functions—replication, playback, and the related videos feature—occur “by reason of the storage at the direction of a user” within the meaning of 17 U.S.C. § 512(c)(1), and

the judgment is AFFIRMED insofar as it so held; the cause is REMANDED for further fact-finding regarding a fourth software function, involving the syndication of YouTube videos to third parties.

On remand, the District Court shall allow the parties to brief the following issues, with a view to permitting renewed motions for summary judgment as soon as practicable:

(A) Whether, on the current record, YouTube had knowledge or awareness of any specific infringements (including any clips-in-suit not expressly noted in this opinion);
(B) Whether, on the current record, YouTube willfully blinded itself to specific infringements;
(C) Whether YouTube had the “right and ability to control” infringing activity within the meaning of § 512(c)(1)(B); and
(D) Whether any clips-in-suit were syndicated to a third party and, if so, whether such syndication occurred “by reason of the storage at the direction of the user” within the meaning of § 512(c)(1), so that YouTube may claim the protection of the § 512(c) safe harbor.

We leave to the sound discretion of the District Court the question of whether some additional, guided discovery is appropriate in order to resolve “(C)” (“[w]hether YouTube had ‘the right and ability to control’ infringing activity”), and “(D)” (“[w]hether any clips-in-suit were syndicated to a third party”). As noted above, for purposes of this case, the record with respect to “(A)” (“[w]hether . . . YouTube had knowledge or awareness of any specific infringements”) and “(B)” (“[w]hether . . . YouTube willfully blinded itself to specific infringements”) is now complete.

Court Revives $1 Billion YouTube-Viacom Lawsuit

Jeff John Roberts — Thu, 05 Apr 2012 16:52:05 +0000

An influential New York appeals court has resurrected an epic copyright case over whether Google should be liable for movies and tv shows uploaded to YouTube during the video-sharing site’s early days.

A lower court judge had thrown out the case in 2010 on the grounds that Google was protected by a “safe harbor” law that protects hosting sites from being responsible for infringing content uploaded by third parties.

Studios led by Viacom argue that YouTube and other such rights forfeited that safe harbor protection because they ignored red flags that should have warned them about infringing content.

The YouTube videos are also the subject of a parallel class action suit led by the English Premier League.

Viacom claims it is owed $1 billion dollars as a result of Google showing over 79,000 clips of shows like “John Stewart” and “South Park.”

The appeals court ruling means that the case will go back to Manhattan District Court where a judge will now have to consider the red flag issue in detail.

This means that it could be years before the case is resolved.

Pinterest: Is It A Facebook Or A Grokster?

Jeff John Roberts — Sat, 11 Feb 2012 01:43:06 +0000

Copyright clouds are gathering around Pinterest. And that could make the dreamy image site an unlikely successor to other innovators — from Grokster to the Beastie Boys — who walked a fine legal line between sharing and theft.

In recent months, Pinterest’s soaring popularity has led media outlets to dub it the “next Facebook.” The site, which already has millions of users, has also won a 2011 start-up of the year award and significant venture capital. (To see who is using Pinterest, see this excellent account by my colleague Laura Owen).

Unfortunately for Pinterest, all the hype has also brought attention from another quarter: angry copyright owners. On sites like iStock, photographers are complaining that their pretty pictures are being used without permission in users’ collages. And to judge by Pinterest’s voicemail, the photographers are not the only ones upset. When I called the number listed for copyright complaints, a recording said the mailbox was full.

Pinterest said by email that it doesn’t disclose how many copyright complaints it receives. The company added that it actively responds to notices sent by email, and that it’s “building more tools to make it easier for rights holders to file a report.”

In the bigger picture, the copyright questions echo disputes from an earlier era that pit legal rules against new forms of culture. These include a long-running lawsuit over a short flute sample in the Beastie Boys hit ‘Pass the Mic’ (the Beasties won) and a 2005 Supreme Court decision that shut down music-sharing site Grokster.

For Pinterest, the legal issues are not cut and dry. On one hand, its notification scheme should grant it a “safe harbor” under copyright law. It is this law that protects sites like Facebook or YouTube (NSDQ: GOOG) from being sued when a user uploads copyrighted material.

But on the other hand, Pinterest’s business is based almost entirely on using images without permission — something that could lead it to lose its safe harbor protection in the same way that Grokster did.

This does not mean, of course, that someone will sue. A spokesperson for Getty Images, which licenses a wide variety of pictures, informed me that the company is “aware of the issue and [is] discussing it with Pinterest.”

Copyright holders may also fear a public relations fallout that would come with a lawsuit. For content owners, it’s one thing to label hip-hop artists and music fans as “thieves.” But it’s quite another when the content involves food and dress pictures — even the most hardened copyright visigoth would pause at denouncing a 16-year-old who borrows pictures to make a collage of her future wedding.

As for Pinterest, the copyright issues present not just a legal problem but a business one as well. Even if the company can implement a YouTube-like takedown system, users will balk if their pretty image boards become spotted with copyright removal notices. Collages are not much fun with pieces ripped out.

The ultimate solution is likely to be a licensing scheme in which image owners will let Pinterest users post pictures in return for sponsored pics or a royalty payment. The good news is that cash is already rolling in at Pinterest. LL Social reported on Tuesday that the company is quietly collecting commission fees by skimming the affiliate links that give third parties a cut of online sales. Spreading some of that money around will make Pinterest popular with copyright owners in no time.

Why Amazon's Plagiarism Problem Is More Than A Public Relations Issue

Jeff John Roberts — Wed, 18 Jan 2012 19:14:29 +0000

Plagiarized editions for sale in Amazon’s Kindle store show how the company is still adapting to the world of original content creation. At the same time, the stolen books may also present a test of the retailer’s ability to rely on a widely used legal shield that protects content sites from being accused of copyright infringement.

Amazon’s plagiarism problem came to light again last week after Fast Company reported that many of the bestselling self-published “authors” in the Kindle store were actually copycats who uploaded other writers’ e-books under different titles. Using the Kindle Direct Publishing platform, the copycats are able to hijack the sales of the original authors by simply copying and reselling their works.

Spammy and stolen e-books — either plagiarized copies of copyrighted works by other authors, or books thrown together from “private label rights” (PLR) content, which can be bought very cheaply online and quickly formatted into multiple e-books — have long been a problem in the Kindle store. We don’t have data on how many of these titles are currently for sale or how widespread the problem is.

“We’ve found that the folks spreading PLR are also more likely to be plagiarists of real book content” as well, says Mark Coker, the CEO of e-book publishing platform Smashwords (a competitor of Amazon’s self-publishing platform). In many instances, Coker says, plagiarized and PLR content banned by Smashwords still appears in the Kindle and Nook stores. He says those stores don’t vet content as thoroughly as Smashwords does.

Amazon (NSDQ: AMZN) provides an e-mail address that plagiarism victims can use to demand that an offending e-book be removed. In response to our questions on plagiarized content in the Kindle store, the company provided the following statement:

Since the launch of Kindle, we have worked steadily to build processes to detect and remove books that either violate copyright or don’t improve the customer experience. Over time, we’ve rejected or removed thousands of such offending titles, and we expect to keep improving our approach to protect the service we provide to both Kindle readers and authors/publishers.

Update: When we submitted a list of questions to Amazon via e-mail, we asked them if they use screening software to screen for unauthorized copies. Instead of responding to the individual questions, the company provided the above statement. An Amazon spokeswoman called me this morning, however, and told me that Amazon does employ screening software. However, the company would not specify the kind of software it uses; whether it is screening for PLR or plagiarized content; or any other details. ~~Amazon does not, however, employ software to screen for unauthorized copies — which is perhaps surprising given that~~

Amazon would not elaborate on what software it is using or if it resembles the electronic anti-plagiarism tools are used by nearly every university and by publishers as well. This type of software works by comparing a newly submitted document against a database of existing texts and flagging submissions that contain a high degree of overlap.

Robert Creutz, an executive with anti-plagiarism service Ithenticate, says his company’s software takes between 45 seconds and a few minutes to screen a text. Creutz says clients include book publishers like John Wiley and journal publisher Reed Elsevier (NYSE: RUK).

Screening software is also used by video sites like YouTube (NSDQ: GOOG) and by document sharing site Scribd.

But while it appears that Amazon could easily employ a filter to protect its authors’ works, it may be under no legal duty to do so.

The Kindle Store as Safe Harbor

Illegal copies are hardly unique to Amazon, of course. The Kindle store is just the latest in a long line of forums, from Grokster to YouTube, through which third parties have offered works without the creators’ permission.

Most times, the websites are not legally at fault. The law protects them by granting “safe harbor” status — a shield that helps internet companies avoid liability when a third party posts copyrighted material on their sites.

Websites can lose their safe-harbor status, however, if they are found to control and directly profit from the unauthorized activities. The meaning of these terms is not entirely clear, though, and is part of a high-profile court case between YouTube and Viacom (NYSE: VIA).

Hillel Parness, a copyright attorney at Robins, Kaplan, Miller & Ciresi, said that courts have found that a website has no duty to act unless it knows about a specific infringement. This means that Amazon is likely not responsible for the plagiarism unless an author can show the company knew a particular title was plagiarized. But Parness adds,

“If authors decide to challenge Amazon, they may choose to focus on the revenue Amazon enjoys on the sale of every e-book. Or perhaps they will question the fairness of placing the burden on authors to monitor Amazon’s e-book marketplace for books that infringe their own. Indeed, one may question if self-published authors even have the practical ability to do so.”

Amazon also stands out because it is a retailer making a direct commission from the unauthorized copies — unlike other safe harbor situations in which a site makes money indirectly via advertising.

In deciding if a site is shielded, courts will also look at its response to copyright complaints. Some plagiarized authors have reported Amazon was slow to take action — a situation that could place it on shaky ground.

Overall, Amazon’s response to the plagiarism problem reflects its status as a relative newcomer to the publishing game. This will no doubt change as the company continues to expand its presence from retailer to content creator.

All Eyes on Viacom/YouTube Case After Court Rules For Veoh

Jeff John Roberts — Thu, 22 Dec 2011 02:15:59 +0000

A California appeals court yesterday rejected Universal Music’s claim that video-sharing service Veoh didn’t do enough to protect content owners. All eyes now turn to New York where another influential court is set to rule on the same issue — who should be responsible for copyright enforcement.

In the Veoh decision, a unanimous 9th Circuit Court of Appeals gave a ringing endorsement to the current copyright regime in which “safe harbors” protect internet companies from misdeeds by their users. Universal had argued that Veoh lost protection of its safe harbor because it didn’t do enough to stop unauthorized videos on the site.

The Veoh decision basically affirms existing law but it is significant because the lawsuit is part of a great game in which copyright owners are trying to chip away at safe harbors. The goal of the game is to use lawsuits and legislation to place more copyright enforcement duties onto sites like Veoh.

Copyright owners are unhappy with the current regime, created in 1998, which protects sites like Veoh as long as they remove copyrighted material when they receive notice about it. They complain the system has left them playing a whac-a-mole game as internet users upload more and more files. Internet companies respond that copyright owners are overstating the problem, especially as almost all of the “notice-and-takedown” work takes places through automated technology.

In the context of this debate, yesterday’s decision was a strategic setback for the content industry because the court strongly affirmed the current system:

Although Congress was aware that the services provided by companies like Veoh are capable of being misused to facilitate copyright infringement, it was loath to permit the specter of liability to chill innovation that could also serve substantial socially beneficial functions. Congress decided that “by limiting[service providers'] liability,” it would “ensure[ ] that the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will continue to expand.”

The part of the decision that copyright lawyers will be looking at most closely involves the meaning of so-called “red flags” — situations where companies like Veoh should have known that users were violating copyright but did nothing to stop it. Universal, Viacom (NYSE: VIA) and other content owners are hoping to use the red flag rule to shred some of the safe harbor protections.

The 9th Circuit Court didn’t bite this time. Copyright aficionados can read for themselves in paragraph 14 of the decision (embedded below), but the long and the short of it is: “we hold that Veoh’s general knowledge that it hosted copyrightable material and that its services could be used for infringement is insufficient to constitute a red flag.”

The entertainment industry will be disappointed by the California court’s terse ruling but the game is not over yet. Red flags are also expected be a big part of the YouTube-Viacom decision expected any day now. In October, the 2nd Circuit Court of Appeals in New York took the unusual step of asking YouTube (NSDQ: GOOG) and Viacom to submit an additional filing after a hearing to explain red flags in more detail.

The Viacom-YouTube case is being watched closely in the mainstream press because it sheds light on the early days of the popular video service that Google bought in 2006. The case has also garnered headlines because of the sensationalist $1 billion figure that Viacom is claiming and because it involves other high-wattage players like the English Premier League.

The New York court is taking an unusually long time to issue its ruling, possibly because it’s been waiting to see what its sister court in California had to say.

If the 2nd Circuit decides to break from the 9th Circuit in its YouTube ruling, the stage could be set for Supreme Court review. The New York court is considered one of the intellectual giants among the country’s federal appeals courts while the California court is well-respected for its sophisticated rulings on technology issues.

As for Veoh, the video-sharing service declared bankruptcy in 2010, citing the exorbitant costs of defending itself in the Universal lawsuit which it has won at each stage. But the website is still operating after being obtained by a company backed by Jerusalem Venture Partners.

Veoh ruling by 9th Circuit

Why Grooveshark Has Slim Chance Of Fending Off Universal's Streaming Suit

Jeff John Roberts — Wed, 23 Nov 2011 21:01:34 +0000

Streaming website Grooveshark this week became the latest flashpoint in the cat-and-mouse game between the music industry and music sharing services. But unlike their largely unsuccessful suit against cyber-locker site MP3Tunes earlier this year, the copyright owners this time around appear to be well poised to tear down the “safe harbors” that typically protect such websites.

Grooveshark, which claims to have millions of listeners, is popular as an online jukebox stuffed with popular songs added by users. Universal sued it last week because, unlike online similar services like Pandora (NYSE: P) and Spotify, the site didn’t obtain licenses to stream the songs.

Grooveshark appears to be on thin ice due to a series of damning emails submitted by Universal which suggest that the company’s executives were themselves stuffing the site with copyrighted songs. The emails are included with the complaint (embedded below) and include messages like “We bet the company on the fact that it is easier to ask for forgiveness than to ask for permission.” The complaint also includes a chart purporting to show that the executives uploaded hundreds of thousands of songs. The music industry has previously claimed that its take-down notices to Grooveshark have been ineffective because the site allows removed copyrighted material to simply reappear a short time later.

Universal is claiming the site and its owners have profited as a result of display advertising, the sale of of premium subscriptions and infusions of venture capital. The company is asking for damages under copyright law which provide for up to $150,000 per song.

Universal has a strong case if its allegations are true. Ordinarily, websites are protected by safe harbor laws which ensure they are not liable for copyright violations by their users. In order to preserve this legal shield, the site owners must respond to take-down notices by copyright owners and ensure they are not directly controlling and profiting from the infringement. In Grooveshark’s case, however, the facts provided by Universal suggest the company may have forfeited the safe harbors.

The music industry came up short earlier this year when it attempted to override safe harbors in the case of MP3Tunes, a site that provides music “lockers” into which users can transfer songs they discover on third party sites. A court found that the site was largely protected by the safe harbors except in the case of certain instances where it had not done enough to respond to take down notices. The key difference in the new Grooveshark case is that Universal may be poised to tear down the harbors altogether on the basis that its owners were directing the infringement.

The new lawsuit also borrows another tactic from the MP3Tunes case and earlier file-sharing litigation by personally naming the owners of the company. This tactic has in the past allowed the music industry to use the threat of personal judgments worth tens of millions of dollars to force website owners to close down their sites even in the case where the site itself has found to be legal.

The Grooveshark and MP3Tunes case are drawing renewed attention to safe harbors at a time when content owners have been pushing for new legislation to make the internet industry more responsible for policing copyright. The issue is also at the center of an appeals court decision, expected any day, in which Viacom (NYSE: VIA) claims that YouTube (NSDQ: GOOG) wrongfully benefited from safe harbors when it ignored “red flags.”

The new case is also likely to fan the vitriol that has defined recent debates over copyright law. Critics say that the music industry has relied on draconian lawsuits to protect a failing business model rather than create new digital services for consumers. The industry claims it is simply protecting music owners.

Grooveshark complaint

YouTube Defines Copyright 'Red Flag' For Court In Viacom Appeal

Jeff John Roberts — Tue, 08 Nov 2011 00:33:28 +0000

In the latest twist in the epic feud between Viacom (NYSE: VIA) and YouTube (NSDQ: GOOG), an appeals court has zeroed in on a narrow question: how to define the ‘red flag’ that indicates someone should have known about copyright infringement.

The issue came to the fore when the 2nd Circuit Court of Appeals issued an unusual order to the parties 10 days after an October court hearing. The proceedings, which began in 2006, turn on whether YouTube should be liable for clips of South Park, The Daily Show and other copyrighted material that was uploaded by users in the early days of the site. Viacom is appealing a lower court’s decision to throw out the case last year.

In its order, the appeals court asked YouTube to explain how the court should interpret “red-flag knowledge.” The red flag rule refers to a situation where a service provider can lose a legal shield (known as a safe harbor) because they turned a blind eye to copyright infringement. The safe harbors protect ISP’s and web hosts like YouTube from being liable for the actions of third parties who use their services to breach copyright law.

The red flag provision has come up in a series of high profile copyright cases in the last two years, including one involving image company Perfect 10 and another involving cyber-locker site MP3tunes.com. Courts have typically refused to find “red flag” knowledge and, in the MP3 case, a judge ruled there is no red flag if a website has to investigate whether or not something infringes copyright. The judge said that a website with the word “pirate” or “bootleg” in its name would be a red flag but that the words “file-sharing” or “free” are not.

Despite these cases, the appeals court appears to be worried that YouTube’s interpretation of the “red flag knowledge” provision does not spell out any practical difference from the law’s “actual knowledge” provision. This outcome would be a problem because there is a legal principle that Congress does not write redundant rules.

In a filing last week, YouTube argued that Congress intended for there to be a very high bar before “red flag” liability is triggered and cited a famous copyright scholar who concluded that “the flag must be brightly red indeed — and be waving blatantly in the provider’s face.” And in response to the redundancy issue, YouTube seemed to suggest that the red flag rule was there to prevent a site from avoiding liability by claiming that, in its own mind at least, there was no infringement (even if anyone else would have concluded otherwise):

The awareness provision thus prevents a service provider from claiming that, because it did not actually believe the material was infringing, it had no duty to remove it, even though it was aware of facts that would have made the infringement obvious to a reasonable person.

The distinction between “actual” and “red flag” knowledge is important in the YouTube-Viacom context because the lower court threw out the case after finding that YouTube had only a general knowledge of copyrighted material on the site rather than a specific knowledge of individual URL addresses where the infringing videos could be found. Viacom and other plaintiffs, including the English Premier League, believe the lower court judge ignored factual questions about what YouTube and its new owner, Google, knew about copyright infringement on the site. They want the appeals court to reinstate the case before a jury.

The YouTube-Viacom appeal comes at a time when content owners are pushing courts and Congress to re-evaluate the safe harbor rules created under the 1998 Digital Millennium Copyright Act. The purpose of the safe harbors is to ensure that companies could provide services that would allow the Internet to flourish without having to worry about being sued over the actions of third parties. But content owners argue that the safe harbors are too broad and that service providers should play a greater role in helping them combat copyright infringement.

Viacom is expected to submit a reply to Google’s red flag arguments this week. In light of the new filings, the appeals court is unlikely to issue a final decision for several weeks at least.

Google response to 2nd Circuit

Monster YouTube-Viacom Copyright Battle Is Back

Jeff John Roberts — Tue, 18 Oct 2011 17:45:52 +0000

Remember the epic $1 billion copy-fight that pitted Viacom (NYSE: VIA), the English Premier League and a gang of others against Google/YouTube? (NSDQ: GOOG) Well, it’s back (sort of). The sides are appearing before an appeals court today to open old wounds and learn whether they will get to fight some more. Here is what you need to know.

What is this fight all about, again?

The dispute dates from the free-wheeling early days of YouTube when people uploaded videos of cats on skateboards and grainy clips of The Daily Show and South Park. Viacom took issue with the latter and filed a $1 billion copyright suit against YouTube and its new owner, Google, in 2007. Months later, a group of plaintiffs led by the English Premier Suit filed a related class action suit. The parties demanded huge sums of money, saying that YouTube owed them for each copyrighted video that appeared on the site.

The lawsuit is not about what YouTube is doing right now. For years, the company has provided content owners with filtering technology that alerts them if one of their copyrighted videos appears on the site without permission. The owner can then either ask for the video be removed or else add advertising to it and keep it on the site. Viacom is happy with this system but wants to be compensated for unauthorized videos shown in 2007 and 2008 before the filter was in place.

What happened last year?

In June of 2010 a federal judge granted summary judgment to YouTube, meaning the cases were dismissed without a trial. The judge concluded that YouTube was protected by a shield in the copyright law known as a “safe harbor.” These safe harbors were created in 1998 to ensure that those who provided an Internet service (like hosts or ISPs) were not automatically liable for the misdeeds of third parties. Thanks to the safe harbor, YouTube was not liable for the Viacom clips on its site.

The run-up to the case featured the two main parties airing each others’ dirty laundry. Viacom released an email in which one YouTube co-founder urged another to “stop stealing” videos. Meanwhile, Google produced evidence showing that some of the allegedly copyright-infringing clips had actually been uploaded by Viacom’s own marketers.

Since the 2010 ruling, several plaintiffs, including representatives for parts of the music industry, have decided to remove themselves from the case.

What’s happening today?

The parties will have about 45 minutes between 10 am and noon to argue before a three-judge panel of the US Second Circuit Court of Appeals. Lawyers for Viacom and the Football League will make separate arguments. The panel is unlikely to make any decisions on the spot and will probably issue a ruling in coming weeks saying whether or not the case should be reinstated.

What do Viacom and the other plaintiffs want?

Viacom wants the panel to declare that the judge made an error when he stated that the safe harbor protection applies to YouTube. According to lawyers from Jenner & Block, YouTube forfeited its right to the safe harbor because it did not make an honest effort to stop the clips from being uploaded and instead focused on growing its online video business at the expense of content owners.

Viacom is also hoping that the influential Second Circuit will provide a precedent that curtails the scope of safe harbors in general. It believes that the 1998 law has become too expansive by shielding companies that are no longer simply hosts or content carriers, but full-blown media companies that should not have the same safe harbor protection.

What does YouTube want?

YouTube wants the panel to affirm the lower court ruling and put an end to the long-running litigation. A source close to Google said that the safe harbor law has always been clear and that Viacom has engaged in “attempted negotiations through litigation” in an effort to extract a pay-out, unlike other major studios which simply embraced the filtering technology. The source said that lawyers for other parties in the litigation, such as the Premier League and the French Tennis Federation, have been riding Viacom’s courtroom coattails in an effort to get paid off as well.

YouTube claims that the litigation has been a futile endeavor that has already cost north of $100 million — money that would be better spent developing content and new business plans.

What’s the outcome going to be?

After losing at summary judgment, Viacom faces an uphill fight. If the panel rejects the appeal, its odds will be even longer still.

In the bigger picture, the copyright landscape has changed considerably since someone first uploaded a Jon Stewart clip on YouTube. The ongoing litigation is starting to feel dated in an era where YouTube is a legitimate and successful business, and most copyright owners are pre-occupied with perceived threats from other types of digital technology.