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US copyright law shake-up: Days of flinging stuff on the web and waiting for a DMCA may be over

Two big cases barreling through America's courts

By Kieren McCarthy, 5 May 2017

Analysis The holes and flaws in America's copyright law are under serious review thanks to two decisions by the US Ninth Circuit Court of Appeals – both of which come with significant implications for media companies.

But, if the Trump Administration has anything to do with it, one of those flaws will not be tackled by the Supreme Court because it might lead to a big media company losing a decade-long legal battle.

At issue are two cases: one covering copyrighted celebrity pictures posted to an online forum, and the other a YouTube video showing a baby dancing. Both dig into how much effort should be required by people to look into copyright issues if they want to avoid being held liable.

In the first – Mavrix Photographs v LiveJournal – a fundamental piece of online liability is at stake, namely: should online publishers be held liable for copyrighted material on a moderated site?

In the second – Lenz v Universal Music Corp – it is the copyright holder that is on the back foot, and the issue is what they should do before asking for copyrighted material to be taken down.

First up – Mavrix

In the photo case, Mavrix Photographs – which takes pictures of celebrities – claims that LiveJournal's "Oh no they didn't!" news site should be held liable for posting its pictures online even though it never sent a takedown request.

One of the fundamental pieces of law covering online publication is that a publication cannot be held liable (ie, cannot be made to pay out tons of money) for what internet users post to their pages so long as they respond to requests (DMCA takedown requests) from copyright holders to take down infringing material when they spot it.

Mavrix Photographs is not happy with that – most likely because they spend an inordinate amount of time sending takedown requests in an endless and largely pointless game of whack-a-mole.

Mavrix feels that LiveJournal is hiding behind that law to let its photos of celebs appear on the site and profit from the traffic. And they have a few points to make their case:

  1. The posts only appear if approved by a moderator.
  2. The site has a set of guidelines moderators must follow before approving a post.
  3. The site knew it was posting copyrighted material – in large part because some of the photos had a Mavrix watermark clearly visible on the pictures.

Mavrix is arguing, effectively, that LiveJournal knows it is breaking its copyright, and is profiting from it, but because outside users are the people initially adding the photos to its system, they claim that it is not liable. LiveJournal said that its moderators were only reviewing things like image size rather than whether the image was copyrighted.

Mavrix lost its case when the trial court decided the posts were created "at the direction of users," so it appealed. And the Appeals Court last month largely agreed with Mavrix.

Rather than rule on it though, it sent the decision back down to the lower court asking it to look at whether the site's moderators "acted as agents" of LiveJournal. And it noted that if they had acted as agents then it should consider some new factors, namely:

  • Did it have "actual knowledge" that the pictures were infringing copyright?
  • Alternatively, did it have "red flag knowledge," meaning that it would have been obvious to a "reasonable person" that the pictures infringed copyright – and this is where the watermark will be a critical component.

This is potentially a huge deal for internet publishers, who would no longer be able to just set up a DMCA takedown system and consider themselves legally covered.

Instead, if this becomes accepted law, companies would have to consider what their moderation policies are and whether they need tightening. It is likely that this would only impact sites that don't allow any content to go up unless they are approved, but even so, it would be a significant shift in the law.

And the Trump 'don't shake 'em' case

The issue of "actual knowledge" also plays a big role in the other case: that of the dancing baby YouTube video.

Incredibly, this case has been going on for a decade now, mostly because Universal Music refuses to back down out of fear that it would undermine its ability to hit anyone and anything with a DMCA notice.

The video in this case is Stephanie Lenz's toddler (who is now 10 years old) dancing to Prince's Let's go crazy. The song is actually pretty distorted, it's in the background and hard to make out over the sounds of the child and the push walker.

Lenz filmed it and posted it online to show friends and family that her child was learning to walk. But, despite only having 20 views, she was hit with a DMCA takedown from the company that owns the music – Universal.

She appealed the takedown for the simple reason that it was a cut-and-dried example of "fair use," but Universal fought her. And so, with the backing of the Electronic Frontier Foundation – which was looking for a case to challenge the over-zealous use of the law by copyright holders – she sued. And won. So Universal appealed.

Fast forward a few years and Lenz also wins the appeal at the Ninth Circuit Court of Appeals, but the court refuses to find Universal liable for its actions – so no payout.

As a result, both Universal and Lenz appeal the decision to the Supreme Court and the decision has come under scrutiny – not least when the Supreme Court asked the Solicitor General to look at it and make a recommendation as to whether it should consider the case.

This week the Solicitor General's response was published and it has no fewer than 11 attorneys listed on it, as well as the United States Copyright Office.

Not fair

You might imagine then that it was a solid, considered piece of work. And in some respects it is. But its overall conclusion has lawyers all over the US shaking their heads.

The Ninth Circuit reached a compromise solution that displeased both sides. Everyone agrees that the video in this case was a solid example of "fair use": it was not a video created to make money; it was clearly not a video focused on the music; it was only a short clip; and hardly anyone had viewed it. Done.

The court decided that in future, copyright holders must consider whether there is fair use of its material before it sends a DMCA notice. Universal doesn't like this because it puts the onus on it to consider people's use of their material before firing off legal letters; it would much rather have free rein.

But the court also said a copyright holder can form its own opinion of whether something is fair use or not, rather than be held to a judge-decided standard.

The court was clearly trying to be helpful by not opening up media companies to potentially thousands of new lawsuits. And it also flagged automated systems as a possible solution, which would mean large companies don't need to hire dozens of people to scour websites looking for copyrighted material.

But that also meant that Lenz had spent a decade in court fighting an unreasonable action and the company got to simply walk away. What's to stop Universal – or anyone else – doing it again?

The most intriguing part of the Solicitor General's note to the Supreme Court, however, is its claim that the Ninth Circuit considered completely the wrong thing when it decided that Universal was not liable.

In fact, it says that the appeals court made a "significant legal error" when it focused on "the truth or falsity" of Universal's claim that it had acted in good faith – ie, whether Universal had bothered to carry out a review into whether the video was infringing before firing off a takedown notice.

If it had – even if it was wrong – then it was not liable; if it hadn't but then lied and said it had, then it could be liable.

Knowledge is a powerful thing

Instead, the Solicitor General's paper states, the appeals court should have focused only on whether Universal had "knowingly misrepresented petitioner's video to be infringing," ie, it knew it was fair use but sent the takedown request anyway.

In this respect, it is very similar to the LiveJournal case: they knew the pictures were copyrighted but published them anyway.

The problem with this, however, is that it would almost certainly open up Universal to liability because the baby-dancing video is so obviously an example of fair use.

Amazingly, the Solicitor General directly acknowledges this fact and even gives it as the reason for why he is recommending that the Supreme Court not hear the case.

The court of appeals' analysis thus contains a significant legal error, and one that could give rise to unwarranted Section 512(f) liability in a case where the challenged material actually was infringing. This case does not provide a suitable vehicle for correcting that mistake, however, because the error potentially benefits petitioner and respondents have not sought review of that aspect of the court of appeals' decision.

Now, to be fair, the Solicitor General is saying the issue at the heart of its argument shouldn't be considered because it wasn't put forward by Lenz's legal team. But even so, it is a somewhat ludicrous state of affairs when the Solicitor General identifies what he says is a fundamental flaw in a critically important piece of law and then basically says "but let's just ignore it for now."

Again, however, the main issue will come down to the question of "actual knowledge." Did Universal really know that the baby video was fair use and sent the takedown notice anyway – or was it just a mistake? And that brings a whole range of other questions, such as: what would amount to "willful blindness" on the part of a copyright holder?

The end result of this – if the Supreme Court goes with the recommendation – is that both online publishers and copyright holders will be working to a legal standard that everyone knows is waiting to be overturned. Not exactly an ideal situation.

And so we are waiting on both a district court and the Supreme Court to make decisions about where we go from here when it comes to online copyright issues.

One thing does appear to be certain, however: the law is slowly requiring people to put more effort into deciding whether copyright is being infringed before taking action. That is a logical shift but one that is going to have huge ramifications. ®

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