Singularity Law

Viacom recently sued YouTube for copyright infringement, claiming a billion dollars in damages for unauthorized copies of its content posted on the popular website. Many observers suspect that the suit was filed by Viacom, not because it intends to litigate the matter through to judgment, but as a negotiating ploy to get a better licensing deal from YouTube. YouTube has been negotiating deals with various video content providers for licenses that would permit YouTube to post authorized copies of video content from television networks and movie studios in exchange for preventing the posting of unauthorized copies. A number of content providers have also signed on including NBC and CBS, who now have their own dedicated “channels” on YouTube filled with licensed content. But Viacom balked at the terms offered by YouTube and decided to “renegotiate” in the courts.

But we must go back in time to see how the situation got to where it is today. The Digital Millennium Copyright Act (DMCA) was enacted in 1998. The DMCA is very much a compromise law containing something for everyone. In particular, the Act sought to reach an accord between Internet Service Providers and website owners that wanted immunity from liability for third party postings of the copyrighted content of others, and copyright owners (such as Viacom) that wanted ISPs and websites held strictly liable as copyright infringers for such posted content. The DMCA tried to reach a balance by giving ISPs/websites immunity from copyright liability if they abide by certain notice and takedown procedures spelled out in the act and block repeated infringers. ISPs and websites have no obligation to monitor third party content, nor do they have to implement filtering or other technology to block third party postings of copyrighted materials. They only need act upon receiving a proper notice sent by the copyright owner.

Many online sites have been established as a result of the protection provided by the DMCA. Some, such as Napster and Grokster have run afoul of the law because the content on their sites were almost exclusively infringing materials and their business plan was primarily based on making money from the sharing of infringing materials. YouTube, Google and other sites are different – the vast majority of content posted on the sites are developed by the poster (such as an amateur videographer) or developed for non-commercial distribution. On YouTube, it is estimated that 90%+ of the videos posted on the service are not owned by major content providers and are posted either with the consent of the copyright owner or are not objected to by the copyright owner. A recent study concludes that of the most popular videos on YouTube, only 9% had been removed due to DMCA take-down requests, and those potentially infringing videos generated less than 6% of all viewings.

Having based its business model on the safe harbor protection provided by the DMCA, YouTube has no obligation to police or take down infringing content without notice. And providing notice is expensive for content providers. Even if the copyright owner provides notice and YouTube takes the video down, it may be reposted, and a new DMCA notice required. What is a content owner to do? YouTube offers a solution – sign a license agreement with the company and it will make sure only authorized versions of your copyrighted content are posted on YouTube. YouTube has software that can prevent uploading of unauthorized content by analyzing the “audio signature” of a video clip, which it will be pleased to use, but only if the copyright owner signs a license agreement. If not, YouTube will withhold the software and require the copyright owner to jump through the “DMCA notice and takedown” hoops.

Viacom did not like this strategy and decided to “soften” YouTube up for some more amenable negotiations. It is reported to have employed up to 15 people whose sole job was to search YouTube for videos that allegedly infringed Viacom’s copyrights. Then Viacom laid 100,000 takedown notices on YouTube. Viacom obviously thought that the avalanche of notice would bring YouTube to the negotiating table. But it didn’t. YouTube merely set its minions to work taking down the identified videos. Viacom’s strategic use of massive takedown notices to force YouTube to change its licensing strategy and implement its blocking software for Viacom’s copyrighted content didn’t work. So Viacom sued.

To my way of thinking, both parties are abusing the “rights” granted to them under the DMCA. YouTube is using its right NOT to implement blocking software it already has in its possession unless a copyright vendor agrees to its licensing terms. Viacom is attempting to bludgeon YouTube into implementing the software (or otherwise block Viacom content from its service) despite YouTube’s DMCA safe harbor rights. While both parties are complying with the letter of the law, they are not complying with the spirit of the law. The risk, in my opinion, is that their behavior will get the attention of Congress, who may decide to revisit the DMCA safe harbor provisions. And if that happens, who knows what might result?