Sep 15, 2015

Copyright Holders Must Evaluate Fair Use Before Sending a Takedown Notice

Section 512(c) permits service providers, e.g., YouTube or Google, to avoid copyright infringement liability for storing users’ content if—among other requirements—the service provider “expeditiously” removes or disables access to the content after receiving notification from a copyright holder that the content is infringing. 17 U.S.C. § 512(c). On Monday, September 14, 2015, the Ninth Circuit Court of Appeals addressed the question of “whether copyright holders have been abusing the extrajudicial takedown procedures provided for in the Digital Millennium Copyright Act (DMCA) by declining to first evaluate whether the content qualifies as fair use.” It unequivocally ruled “yes.” Before sending a takedown notice, the copyright holder must subjectively decide that the use of the copyrighted materials is not a ‘fair use.’

Stephanie Lenz posted a 29-second home video on YouTube of her two young children gallivanting around her kitchen to a barely recognizable (bad audio) Prince song, “Let’s Go Crazy.” At the time Lenz posted the video, Universal Music Corp.(Universal) was Prince’s publishing administrator responsible for enforcing his copyrights. An assistant in Universal’s legal department decided the video should be included in the takedown notification sent to YouTube that listed more than 200 YouTube videos Universal believed to be making unauthorized use of Prince’s song. The notice included a “good faith belief” statement, as required by 17 USC §512(2)(3)(A)(v), that use of the copyrighted material (the song) “is not authorized by the copyright owner, its agent, or the law.”  YouTube removed Lenz’s video and Lenz attempted to restore the video by sending a counter-notification to YouTube pursuant to §512 (g)(3). Universal protested again, reiterating that the video constituted infringement because there was no record that “either she or YouTube were ever granted licenses to reproduce, distribute, publicly perform or otherwise exploit the composition.” Lenz (by then represented on a pro bono basis by the Electronic Frontier Foundation) sent a second counter-notification, which resulted in YouTube’s reinstatement of the video.

In 2007, Lenz filed suit against Universal and, after the District Court dismissed her tortious interference claim and claim for declaratory relief, Lenz filed her Second Amended Complaint in 2008, alleging only a claim for misrepresentation under §512(f)  – that in submitting the takedown notice, Universal knowingly made a material misrepresentation “that [the] material or activity is infringing.” Both parties moved for summary judgment on Lenz’s §512(f) misrepresentation claim and on January 24, 2013, the District Court denied both motions and certified its summary judgment order for interlocutory appeal under 28 USC §1292(b).

After hearing oral arguments on July 7, 2015, the Ninth Circuit Court of Appeals issued its Opinion on Monday in Lenz v. Universal Music Corp. et al., case Nos. 13-16106 and 13-16107. The Ninth Circuit held that the extra judicial takedown procedures provided for in the DMCA “requires copyright holders to consider fair use before sending a takedown notification, and that failure to do so raises a triable issue as to whether the copyright holder formed a subjective good faith belief that the use was not authorized by law.” To hear the oral arguments, click HERE.

As the Court explained: Because 17 U.S.C. § 107 both “empowers” and “formally approves” the use of copyrighted material if the use constitutes fair use, fair use is “authorized by the law” within the meaning of § 512(c). The Court rejected Universal’s argument that fair use is not “authorized by the law” because it is an affirmative defense that excuses otherwise infringing conduct. If a use is a fair use, it is not an infringement to be excused – fair use is a right granted by the Copyright Act of 1976. (Citing Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1542 n.22 (11th Cir. 1996).

Under the Ninth Circuit’s ruling, before a copyright holder sends a takedown notice to a service provider, such as YouTube, it must form a subjective good faith belief that a use is not a fair use by evaluating the fair use factors recited in 17 USC §107:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

The Court emphatically stated: “To be clear, if a copyright holder ignores or neglects our unequivocal holding that it must consider fair use before sending a takedown notification, it is liable for damages under § 512(f). If, however, a copyright holder forms a subjective good faith belief the allegedly infringing material does not constitute fair use, we are in no position to dispute the copyright holder’s belief even if we would have reached the opposite conclusion. A copyright holder who pays lip service to the consideration of fair use by claiming it formed a good faith belief when there is evidence to the contrary is still subject to § 512(f) liability.”

Section 512(f) provides for the recovery of “any damages, including costs and attorney’s fees, incurred by the alleged infringer . . . who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing . . . .” 17 U.S.C. § 512(f). Even if there is no actual monetary loss, “a plaintiff may seek recovery of nominal damages for an injury incurred as a result of a § 512(f) misrepresentation.”

To read the Court’s Opinion, Click HERE.