In Part I of this two-part series addressing the Viacom/YouTube lawsuit, I detailed why I think there’s a reasonable likelihood that Google will be found liable for direct, contributory, and vicarious copyright infringement.

A large part of Google’s defense against the allegations Viacom has made is based on its belief that YouTube is protected by the Safe Harbor provisions of the Digital Millennium Copyright Act (DMCA).

The Safe Harbor provisions were designed to protect “service providers” from copyright infringement liability provided that they meet certain criteria.

These criteria require that the service provider:

  • Does not have actual knowledge that the material or an activity using the material on the system or network is infringing.
  • In the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent.
  • Does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.
  • Upon notification of claimed infringement, responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

The definition of a “service provider” is also relevant to the discussion.

The DMCA defines a “service provider” as:

an entity offering transmission, routing, or providing connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received” or “a provider of online services or network access, or the operator of facilities thereof.

Now that the basics of the Safe Harbor provisions are established, let’s evaluate the strength of Google’s claim that it is protected by them.

Criteria 1 and 2

Has Google lacked actual knowledge of copyright infringement on YouTube or awareness of “facts or circumstances from which infringing activity is apparent“?

As I noted in Part I:

“Given the ease with which copyrighted material can be located on YouTube, the number of takedown notices that it has received under the
Digital Millennium Copyright Act
and the discussions over the legal risk Google was taking when it acquired YouTube, it is difficult to argue that Google has been completely clueless about the extent to which YouTube has been a vehicle for wholesale copyright infringement.

It appears highly probably that Viacom will be able to use the YouTube user data that the court handed over to it to quantify just how prevalent the infringement activity on YouTube has been. This will make it difficult for Google to argue that it does not have actual knowledge and/or awareness of it.

Google will certainly argue that with 10 hours of video being of uploaded to YouTube each minute, it is physically impossible for the company to monitor and identify every piece of infringing material and that in any case, there is so much user-generated material available that the benefits of YouTube’s noninfringing uses offset the infringing uses.

Yet as I noted yesterday, in A&M Records, Inc. v. Napster, Inc., the appeals court’s decision stated:

“Regardless of the number of Napster’s infringing versus noninfringing uses, the evidentiary record here supported the district court’s finding that plaintiffs would likely prevail in establishing that Napster knew or had reason to know of its users’ infringement of plaintiffs’ copyrights.”

Thus, I find that it is going to be difficult for Google to convincingly argue that it lacked knowledge about all of the infringing Viacom material that YouTube has been a haven for.

Criteria 3

Google’s desire to make money from YouTube is no secret and Google CEO Eric Schmidt even stated that this is the company’s “highest priority this year.

The $200mn in revenue it is expected to generate this year may be short of expectations but it’s still a non-negligible amount in absolute terms.

Google monetizes YouTube primarily through advertising and when it comes to infringing material, YouTube has two possible means by which it can benefit financially:

  • Advertising is displayed directly alongside the infringing content.
  • The infringing content is such a key driver for YouTube’s popularity and traffic that it is reasonably a key driver for overall revenue.

Google, of course, will argue that it has little ability to police YouTube for copyright infringement and therefore any financial benefit it derives from infringing material is unintentional.

This, however, is again where Viacom’s access to YouTube user data will be handy.

As detailed in Part I, in Fonovisa, Inc. v. Cherry Auction, Inc., the court found that financial benefit does exist “where infringing performances enhance the attractiveness of a venue.

If Viacom can show that infringing material accounts for a significant amount of activity on YouTube, it will be hard for the court to overlook the fact that YouTube’s viability as a business is largely dependent upon that infringing material.

When it comes to evaluating the level of “control” Google can exercise over infringing activity on YouTube, as discussed yesterday, a fairly compelling argument can be made that Google hasn’t done everything it is capable of doing.

I would further argue that it doesn’t take a rocket scientist to figure out one of the biggest reasons why – Google knows that if it implemented tighter controls (i.e. placed greater limitations on search terms like “The Daily Show“), the inability to access the type of infringing material that contributed so heavily to YouTube’s popularity in the first place would reasonably lower YouTube’s appeal and thus its financial potential.

As such, I find that Google is going to have a very difficult time convincing anyone that it has not benefited financially from copyright infringement and that it hasn’t intentionally tried to walk a fine line by trying to do just enough to create the appearance that it respects copyright but at the same time doing less than it is capable of to ensure that the infringing material that is a draw for so many of its users doesn’t go away completely.

Criteria 4

Google will argue that it when it receives notice of copyright infringement, it acts expeditiously to remove the infringing material. And by in large, it does appear that Google has responded promptly to DMCA takedown notices.

Viacom’s counter-argument will certainly be that there is so much infringing material on YouTube that it would be nearly impossible for Viacom to provide a takedown notice every time it finds a piece of Viacom material on the service. It will also likely argue that any requirement to incur all the costs related to the monitoring of infringements on YouTube places an undue burden on its business.

In my opinion, this will be one of the more interesting aspects of the lawsuit because it will force the court to ponder the question – if a service becomes such a haven for infringing material that the DMCA takedown regime becomes an unmanageable, costly and almost impossible process for the copyright owner, to the benefit of the operator of the service, what should be done?

Of course, Google’s ability to claim that it is simply following the procedure laid out by the DMCA is wholly dependent upon the court finding that the DMCA applies to YouTube in the first place so this may be rendered a moot point.

Is YouTube a “service provider“?

Does YouTube qualify as a “service provider“? While it would seem to fit the mold of “a provider of online services or network access, or the operator of facilities thereof,” it’s worth considering that the court could find differently.

In A&M Records, Inc. v. Napster, Inc., the court refused to extend the “service provider” definition to Napster even though it appeared to meet the literal definition of the term.

Although the reasons for that decision may be different in the Viacom/YouTube case, there are still viable reasons.

I have talked to several people in the legal profession who are familiar with the DMCA and the general consensus is that the concept of a “service provider” as used in the DMCA implies some sort of passive role in the facilitation of data exchange.

Whether a “service provider” is an ISP or a hosting company, the common characteristic is that the “service provider,” for the most part, plays a passive role in the exchange.

YouTube has a far more active role:

  • As I noted yesterday, “When a video file is uploaded to YouTube, YouTube’s servers apply a physical process to the file to transcode the file into the Flash video format so that it can be displayed in YouTube’s Flash video player. This transcoding is an integral part of the YouTube service and one could argue that without this, the wholesale distribution of infringing content on such a service doesn’t take place.
  • While YouTube does “host” the videos that its users upload, it is not merely a “host.”

    Through its Flash player, YouTube enables all users (not just the uploaders) to view uploaded videos, it provides a searchable index of the videos so that users can easily locate videos and it makes it easy for users to “share” content with other individuals and online services.

    YouTube calls itself “the premier destination to watch and share original videos worldwide through a Web experience,” highlighting the fact that the company sees itself as more of a “media destination” than a traditional “host” or “internet service provider.”

Based on my discussions on this issue, I think there’s a reasonable argument to be made that when the DMCA was conceived, the intention was to provide protections to businesses less active than YouTube in potentially infringing activity.

Because of the above, it’s hard to argue that YouTube would have been the type of service that the authors of the DMCA had in mind when they wrote it. Thus, YouTube’s role in materially contributing to copyright infringement may give the court pause when deciding whether or not to consider YouTube a “service provider” under the DMCA.

Conclusion

YouTube’s DMCA defense is, in my opinion, tenuous at best.

While quite a few observers argued that the DMCA would protect Napster, the outcome of that case should serve as a warning to Google – no matter how big and popular, you can’t rely on the law to protect you when you’re on the wrong side of it.

At the end of the day, given recent case law, I am hesitant to believe that a court is going to overlook Google’s clear knowledge of infringing activity as it relates to Viacom’s material (and the overall size of the YouTube copyright infringement problem in general) and the benefit it has derived from it.

As I see it, the facts of the case simply don’t support Google’s argument that the Safe Harbor provisions of the DMCA apply to YouTube and if its Safe Harbor defense falls apart, the rest of Google’s case falls apart with it.