Wednesday, November 15, 2006

YouTube's Terms of Use and the DMCA

Mark Cuban has been all over the various story lines behind YouTube, first mentioning their $500 million copyright infringement slushfund (which turns out to be only about $200 million) and now posting Robert Tur's motion for summary judgment. After all his criticism of YouTube, it does seem like a major coincidence that Cuban is contemplating the purchase of Tur's Los Angeles News Service. However, he has taken a serious interest in the case, keeps providing material, and always poses the right questions, for which he is to commended. Most recently, the question has become whether or not YouTube's Terms of Service grant it the right and ability to control infringing material on its site, which would open the door to a claim of vicarious liability for copyright infringement. It appears not.

Tur's motion for summary judgment claims that YouTube has forfeited its status under the DMCA's safe harbors. This is to be expected because a court can only find YouTube liable for copyright infringement if it is not protected by any of the DMCA's safe harbors, but here, the reason for why Tur claims YouTube is not covered is interesting. One argument is that YouTube forfeits its safe harbor by financially benefitting from infringing content by serving ads, which is a no-no under the DMCA. The claim I'm focusing on here is that YouTube's Terms and Conditions, which say in pertinent part that:
For clarity, you retain all of your ownership rights in your User Submissions. However, by submitting the User Submissions to YouTube, you hereby grant YouTube a worldwide, non-exclusive, royalty-free, sublicenseable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the User Submissions in connection with the YouTube Website and YouTube's (and its successor's) business, including without limitation for promoting and redistributing part or all of the YouTube Website (and derivative works thereof) in any media formats and through any media channels.
appears to essentially give YouTube "effective ownership" of user videos (since the license covers must rights that a copyright owner enjoys) which could mean that YouTube would have sufficient control over uploaded content so as to void its safe harbor status. No more safe harbor status means no more YouTube since any and everybody could (and most likely will) start suing YouTube for infringement. Whoa.

The DMCA offers several safe harbors that limit liability for a variety of actions that could lead to copyright infringement, but YouTube falls squarely under the DMCA's 512(c) covering "Information Residing on Systems or Networks at Direction of Users." In order to qualify for this safe harbor, and to not be held liable for anything a user uploads to its site, YouTube must not be a contributory infringer [512(c)(1)(A)], must not receive a financial benefit directly attributable to the infringing material [512(c)(1)(B)], and must not expeditiously remove infringing content upon receipt of a DMCA takedown notice [512(c)(1)(C)].

Tur's claim, that the Terms of Use give YouTube control over user content is a claim of vicarious infringement rather than contributory infringement. The distinction between vicarious and contributory infringement is subtle, but an important one that can be muddled.

Vicarious infringement occurs when a party (1) has the right and ability to control the infringer's acts and (2) receives a direct financial benefit from the infringement. In contrast, contributory infringement occurs when a party, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another. These two species of infringement are related, but sufficiently different so that YouTube could be vicariously liable yet not a contributory liable, or vice versa, because the elements of each are quite distinct. It's important to note that the requirements under section 512(c)(1)(A) describe contributory infringement and not vicarious. Under a strict reading of the DMCA, it appears that vicarious infringement would not defeat YouTube's safe harbor status since the statute only contemplates the contributory infringement standard. But I will continue on addressing YouTube vicarious liability and whether or not it has the right and ability to control infringing material.

In Religious Technology Center v. Netcom, a lawsuit over the posting of the unpublished writings of Scientology founder Ron Hubbard on Netcom's bulletin board service, the court found that Netcom could be held liable for contributory infringement but not vicarious infringement. For vicarious liability, evidence that Netcom reserved the right to take remedial action against its users in its Terms of Service, that it reserved the right to restrict the posting of infringing material, that it suspended user accounts upwards of 1000 times, and that it had deleted specific postings in the past, all showed that Netcom had the right and ability to control acts of infringement on its servers. However, the Church could not prove that Netcom benefited directly from the infringing activity because there was no evidence showing that this specific case of infringement "in any way enhance[d] the value of Netcom's services to subscribers or attracts new customers. The court thus found that Netcom was not vicariously liable for the infringement, but found it was contributorily liable because it had actual knowledge of the infringement once the Church of Scientology notified it of the infringement and that it materially contributed to the infringement by providing an a service for the automatic distribution of the infringing material. Though the case was decided before the DMCA went into effect, the principles of contributory and vicarious infringement enunciated in both are still the relevant standards.

Another case dealing with these two kinds of infringement is Perfect10 v. Google, which dealt with Google's liability over its display of and linking to copyrighted photos through its Image Search feature. The court held that Google would not be secondarily liable, either under vicarious or contributory theories. As to vicarious liability, the court found that Google lacked the right and ability to control the infringing conduct of others, because it "does not exercise control over the environment in which it operates - ie. the web." As opposed to Napster, which was vicariously liable for infringement because it remove access to a file within its universe, Google is unable to do the same since its universe is the entire Internet. Even though Google could remove its link to the material at issue, the material is still widely available either directly or through another search engine, which shows that Google lacks the ability to control the infringing uses. Further, Perfect10 used the Terms of Service strategy to say that Google's AdSense policy gave it the right and ability to control its users, but this argument was rejected. The court said that if "right and ability to control" is to mean anything, it must mean more than what is included in AdSense's revenue sharing agreement and that such Terms must include "some form of control over or the authority to stop or limit the infringing conduct itself. The court found that Google did receive a financial benefit from the infringement, through its AdSense service, but without having the right and ability to control it could not be held liable.

It is important to note that YouTube has much more in common with Napster than with Google in regards to the Perfect10 opinion. It is pretty clear that YouTube operates within its own universe and serves infringing content from its own servers, much like Napster did, as opposed to how Google operates or even compared to the decentralized construction of Grokster and other p2p sites.

So does YouTube really have the right and ability to control infringing material? The user license excerpted above does not address infringing activity, but simple grants YouTube fairly broad distribution and reproduction rights. This clause would certainly cover things like when CNN runs YouTube videos in the Situation Room and other such promotional displays beyond the website itself. The clause is also similar to a Creative Commons license, in particular a Creative Commons Attribution 2.5 License, but without an explicit attribution requirement. Based on Netcom and Perfect10, this license agreement in the Terms of Service may not be enough in itself to show that YouTube has the right and ability to control infringing material in the legal sense required for a showing of vicarious infringement.

A close reading of YouTube's Terms of Service shows that it really doesn't reserve any rights that would make it vicariously liable. According to the Terms in section 5(c):
YouTube does not permit copyright infringing activities and infringement of intellectual property rights on its Website, and YouTube will remove all Content and User Submissions if properly notified that such Content or User Submission infringes on another's intellectual property rights. YouTube reserves the right to remove Content and User Submissions without prior notice.
The Terms give YouTube the right to remove content only when notified: this is the procedure laid out in DMCA 512(c) for takedown notices. I would highly doubt that reserving the right to follow the prescriptions of the DMCA could be interpreted as being the same as "having the right and ability to control infringing material." It simply cannot be that by following the requirements for safe harbor status one simultaneously loses that status. That YouTube can remove content without prior notice could be read to mean only that YouTube has no obligation to inform a user that a takedown notice has been received before disabling access to the material. Further, the Terms go on to say:
YouTube will also terminate a User's access to its Website, if they are determined to be a repeat infringer. A repeat infringer is a User who has been notified of infringing activity more than twice and/or has had a User Submission removed from the Website more than twice.
Again, the determination of being a repeat infringer is based on the DMCA takedown process and seems to contemplate a user who has had multiple DMCA takedown notices filed against material they have uploaded. The terms get really interesting when they say:
YouTube also reserves the right to decide whether Content or a User Submission is appropriate and complies with these Terms of Service for violations other than copyright infringement and violations of intellectual property law, such as, but not limited to, pornography, obscene or defamatory material, or excessive length.
That YouTube reserves the right to screen material for things like obscenity, but not for copyright, seems a bit tricky, but is more a problem with the law than with YouTube. CDA section 230 shields YouTube from liability if a user posts defamatory or otherwise explicit material on the site. It also encourages YouTube to self-police its site by not revoking its exemption from liability if it does remove such material. Previous cases held that if a site edited user submissions it was on the hook to edit all submissions (an almost impossible task when it comes to searching for defamation). Congress objected to this development in the law and passed CDA section 230 to encourage sites to regulate themselves and harmful material on their servers by passing what is essentially a safe harbor much like those in DMCA section 512. This kind of self policing is at odds with the vicarious liability analysis, which is more like the state of online defamation law prior to the passage of CDA 230. It is distressing to think that a judge would force a party like YouTube to chose between the protections of CDA 230 and DMCA 512, so I would think that YouTube's rejection of the right to remove material unilaterally for copyright infringement is not all that troublesome.

When YouTube changed its Terms of Service in July 2006 to include its broad licensing right it got lots of attention. However, in terms of copyright infringement under a vicarious liability analysis, the change is not enough to trigger liability for YouTube because it fails to give YouTube the right to remove or otherwise restrict infringing material. A closer look at the rest of YouTube's Terms shows that it really reserves no rights to act independent of a DMCA takedown notice when it comes to copyright violations. Further, whether a theory of vicarious copyright infringement that accuses YouTube of having the ability to control infringing uses and of receiving a financial benefit from such uses, does not appear to effect YouTube's safe harbor standing under DMCA 512(c), which concerns itself with contributory infringement rather than vicarious.

Tur's agrument, however, that YouTube receives a financial benefit from hosting his video could be a winner and his reliance on the Terms of Service is just superfluous. Receiving a financial benefit from infringing material is enough on its own to void YouTube's safe harbor status, and if Perfect10 v. Google is any guide, YouTube could be in serious trouble on this one. However, the license agreement included in the Terms of Service may be nothing more than a red herring in this case. Good thing for YouTube that it got bought by Google, who's lawyers I'm sure are itching to revisit the Perfect10 decision holding that Google receives a financial benefit from linking to copyrighted material and who already have a head start in crafting that argument in their favor.
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Anonymous Anonymous said...

In you last paragraph you state that: "Receiving a financial benefit from infringing material is enough on its own to void YouTube's safe harbor status." This is misleading and incorrect. As you stated earlier a finding of vicarious liability requires both financial benefit and the right and ability to control the infringing activity. Thus, Tur will probably not succeed in light of the fact that his argument regarding YouTube's right and ability to control the infringing activity is, in my opinion, flawed and inconsistent with 9th Cir. precedent.

11:45 AM  
Blogger nfsmusic said...

I can't even upload videos on YouTube now without being rejected. It's very annoying.

3:23 AM  
Anonymous Anonymous said...

Does iFilm (owned by Viacom) violate the same laws that VIacom is accusing YouTube of breaking?

3:04 PM  
Blogger Nick said...

Anon 3:04 - Most likely it does. iFilm's Terms of Service and FAQ's closely mirror the language of the DMCA. Since Viacom's suit is essentially claiming that the DMCA is ineffective as applied to YouTube, to the extent that iFilm relies on the same mechanisms makes it as guilty as YouTube. Though, one would have to know what on iFilm has been authorized by its copyright owner, and what has not, to know if iFilm infringes like YouTube does (highlighting the difficulty in effecting such detection). This is certainly worth more looking into, and I would note whether iFilm's website (ie. terms and FAQ) have changed since Viacom sued YouTube.

4:50 PM  

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