With our SXSW panel coming up (Reconciling YouTube and Grokster: Business Models for Web 3.0), we are gearing up with content that sets the stage for the discussion and provides a plain English vector into the issues that face online content distributors in the coming years. The following is a breakdown of all the briefs and arguments made by all the parties (e.g., Viacom, Google, EFF, etc.) in the debate. It's a great portal into the rationales that will shape the 2nd Circuit's decision. We thank David Ugelow, our new intern for putting this together. NOTE: all parenthetical citations refer to internal page numbers provided by the author/s of each brief, not the page numbers provided by the creator/s of each electronic document. Viacom International Inc., v. YouTube, Inc., and Google, Inc. Court of Appeals for the Second Circuit Brief of Amicus Curiae Audible Magic Corporation in Support of Neither Party (12/10/2010) ñ The purpose of this brief is to inform the court of the proper purpose and use of Content ID Technology, a view that the district court clearly misunderstood, and that use of Audible Magic's Content ID Technology in the market is robust, scalable and accurate. (17) ñ Audible Magic is a privately held company founded in 1999, that provides content identification and management services to Internet and digital media companies, online service providers, entertainment companies, government agencies and academic institutions. (1) ñ The Content ID Technology has been available on the market since 2004. (1) ñ Audible Magic's Content ID Technology uses a robust technological and algorithmically based means to identify copyrighted video and audio content uploaded and streamed over the Internet. It is readily available in the marketplace, along with other vendors' technology, and is extremely accurate and scalable for its intended purpose – to help websites manage the vast amounts of copyrighted content uploaded to their sites and to help sites work with content owners and implement copyright licenses. (7) ñ Contrary to the view of the District Court below about the "reliability and verifiability" of Audible Magic's Content ID Technology, the marketplace adoption of this technology and its wide usage throughout the new Internet video ecosystem reveals the confidence that both content owners and web sites have in this technology and its important roles. (8) ◦ Content identification technology enables copyright owners and UGC (user-generated content) platforms to accurately, efficiently and effectively prevent copyright infringement. (8) ▪ The District Court did not thoroughly or correctly analyze the role and importance of Content ID Technologies in its decision below. It merely excerpted from another case stating that Audible Magic's Content ID Technology "does not meet the standard of reliability and verifiability required by the Ninth Circuit in order to justify terminating a user's account." (8) ▪ The Content ID Technology analyzes the data in media file, produces a set of numeric values (the digital fingerprint) and compares that to a reference database containing fingerprints extracted from original copyrighted digital media sources. Over the years, Audible Magic has built its reference database using reliable sources of original media from the copyright owner or rights holder. Audible Magic has created an automated system that enables content owners to embed Audible Magic's reference fingerprint generating software inside their production environment to automate the process of fingerprint generation and submission as part of their normal video production workflow. (9-12) ▪ The system is not designed to make a legal or factual determination as to whether an uploaded file infringes a copyright. Rather, it returns data about whether an uploaded file contains copyrighted material and leaves to the website the decision about how to implement its content policies. (13) ◦ The Internet marketplace has evolved rapidly encouraging copyright owners and UGC (user-generated content) platforms to use Content ID Technology together to prevent copyright infringement and help monetize content on the Internet. (13) ▪ The anarchic impacts of the explosive growth of UGC websites and the rampant piracy that user-generated content brought to the Internet are a matter of public record and common knowledge. Content ID Technologies were central to the creation of and the operation of an efficient commercial market for Web 2.0 sites. (13-14) ▪ Several of the world's leading Internet and media companies created a set of voluntary guidelines in October 2007 called the "Principles for User Generated Content Services" (UGC Principles). It created a set of collaborative principles to enable continued growth and development of user-generated content online and respect the IPR of content owners. Content owners had a duty to supply their content as "reference material" of their copyrighted works for Identification Technology services such as Audible Magic. (15-17) ▪ The creation of the UGC Principles by media companies and Internet sites reflects that Audible Magic's Content ID Technology is sufficiently accurate, reliable and highly salable to support today's online video marketplaces. (17) Brief of Amici Curiae American Library Association, Electronic Frontier Foundation in Support of Defendants (4/12/2010) Arguments ñ Congress passed section 512 to reduce legal uncertainty facing online service providers and thereby encourage growth of the Internet and e-commerce. (4) ◦ The heart of the dispute between the parties regarding the applicability of the 512(c) safe harbor boils down to a dispute over the interpretation of three statutory provisions: ▪ 512(c)(1)(A) – the "knowledge disqualifier,"provides safe harbor so long as the service provider doesn't have actual knowledge of infringing material. (4) ñ General knowledge of infringement on a service provider's system is not enough to trigger the knowledge disqualifier and remove a service provider from the ambit of the safe harbor provision. If it were, then the "notice-and-takedown" provisions of the statute would be rendered superfluous. A copyright owner could simply commission a survey inquiring generally into the incidence of infringing activity on a service, provide it to the service provider, and thereby strip the provider of the safe harbor. (12) ñ Plaintiffs also contend that operating a service with general awareness that some users infringe triggers liability under Grokster. Basing secondary liability on such knowledge, in addition to damaging Internet commerce, would also severely chill innovation in new devices and in software applications, and run counter to the Supreme Court's determination in Sony and care in Grokster to protect innovation in the absence of specific intent to infringe copyright. (14) ▪ 512(c)(1)(B) – the "control and benefit disqualifier," provides safe harbor so long as the service provider does not receive financial benefit directly from infringement in a case in which the service provider has the right and ability to control such activity. (4) ñ Plaintiffs' interpretation of this provision amounts to a rehash of their erroneous contention that the safe harbors have no application to vicarious liability claims. (14) ñ YouTube's general ability to control its servers cannot amount to control over particular infringements of plaintiffs' works. (15) ñ Plaintiffs claim that vicarious liability should apply because YouTube reserved the right to remove videos and could have done more human review, keyword searching, community flagging, and digital fingerprinting. If that were the case, how could a service provider ever ben certain it had done enough to satisfy every copyright owner intent on shiftingi the burden of copyright enforcement onto it? (16) ▪ 512(c)(1) – the scope of the safe harbor, which applies to infringement liability incurred by reason of the storage at the direction of a user of material residing on a system or network controlled or operated by the service provider. (5) ñ Plaintiffs claim that Section 512(c)'s scope should be read narrowly to apply only where defendants passively provide server storage as an empty vessel for someone else's websites or other activities. This reading not only renders the safe harbor a dead letter for most "user generated content" services today, but would have deprived many service providers in 1998 of its protections. This could not be what Congress had in mind. (16) ◦ The statutory structure and legislative history of the DMCA make it clear that Congress intended Title II's safe harbor provisions to facilitate the robust development and world-wide expansion of electronic commerce, communications, research, development, and education. (5) ◦ Congress correctly understood that the application of copyright principles intended for the analog world to new Internet tech put fledgling online service providers in an almost impossible situation. In order to provide services to potentially millions of users, service providers necessarily must make multiple copies of content at several stages of their technical processes. (7) ◦ In order to encourage investment in Internet businesses, and thereby foster free expression online, Congress intended to-and needed to-provide service providers with greater legal predictability with respect to copyright infringement claims. (8) ◦ The structure of the 512 statutory scheme clearly reflects Congress's intention to reduce legal uncertainty. Congress crafted four statutory safe harbors with detailed provisions setting out "rules of the road," that provide both rightsholders and service providers with a more definite alternative to the doctrinal ambiguities that characterized early judicial efforts to apply evolving copyright principles and judge-made secondary liability doctrines to the new Internet contexts. (9) ▪ So long as their activities fell within one of the four safe harbors, service providers would essentially "opt in" to this alternate, more definite, set of rules by meeting the statutory prerequisites: registering a Copyright Agent, implementing a notice-and-takedown policy, accommodating standard technical measures, and adopting a policy of terminating repeat infringers. (9) ▪ The statute also clarifies the outer limits of a service provider's obligations-for example, by making it clear that a service provider need not monitor its service or affirmatively seek facts indicating infringing activity in order to enjoy the safe harbor. (9) ◦ Plaintiffs argue that the 512 safe harbors do not apply to secondary liability claims. This flies in the face of Congress's intent to reduce legal uncertainty for online service providers. This interpretation would render the safe harbors superfluous, leaving online service providers vulnerable to precisely the legal risks and uncertainties that Congress intended Section 512 to limit. (10) ◦ Plaintiffs ñ Section 512 has been successful in achieving Congress's goals (18) Viacom International Inc., v. YouTube, Inc., and Google, Inc. District Court for the Southern District of New York Memorandum in Support of Viacom's Motion for Partial Summary Judgment Facts YouTube was founded in 2005 as a "consumer media company" to "deliver entertaining, authentic and informative videos across the Internet," by Chad Hurley, Steve Chen, and Jawed Karim, three co-workers at PayPal. (5) They wanted to quickly establish YouTube as the most popular video site on the Internet, then cash in by selling it. (5) YouTube/Google Internal Communications cited by Viacom: o YouTube's ISP complained that YouTube was violating its user agreement because, as Chen explained, "we're hosting copyrighted content." Chen states "i'm not about to take down content because our ISP is giving us shit." (6) o Shortly after Grokster came down, Hurley emailed the other founders, stating "we need views, [but] I'm a little concerned with the recent Supreme Court ruling on copyrighted material." (6) o During the summer of 2005, the founders removed some infringing material, while leaving other infringing clips up. Chen stated, "That way, the perception is that we are concerned about this type of material and we're actively monitoring it. [But the] actual removal of this content will be in varying degrees. That way…you can find truckloads of…copyrighted content…[if] you [are] actively searching for it." (6-7) o "We're going to have a tough time defending the fact that we're not liable for the copyrighted material on the site because we didn't put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it." – Chen (7) o "aaahhh, the site is starting to get out of control with copyrighted material." – Chen in 2005 (8) o "if you remove the potential copyright infringements…site traffic and virality will drop to maybe 20% of what it is." – Chen (8) o "[T]he copyright infringement stuff[,] I mean, we can presumably claim that we don't know who owns the rights to that video and by uploading, the user is claiming that they own that video[,] we're protected by DMCA for that. [W]e'll take it down if we get a case and desist [i.e., a takedown notice]." – Chen (8) o September 3, 2005, YouTube instituted a "community flagging" method for removing infringing videos – users flag uploaded videos as likely violative of copyright laws for follow-up scrutiny by YouTube employees. September 23, 2005, Hurley emailed the other founders to remove the "community flagging" feature. (9-10) o "As of today episodes and clips of the following well-known shows can still be found: Family Guy, South park, MTV Cribs, Daily Show, Reno 911, Dave Chapelle. This content is an easy target for critics who claim that copyrighted content is entirely responsible for YouTube's popularity. Although YouTube is not legally required to monitor content (as we have explained in the press) and complies with DMCA takedown requests, we would benefit from preemptively removing content that is blatantly illegal and likely to attract criticism." – Karim to YouTube's board of directors at a meeting in March, 2006. (12) o At a meeting prior to purchasing YouTube, the Google Video team advised executives: § YouTube is "a 'rogue enabler' of content theft" § "YouTube's content is all free, and much of it is highly sought after pirated clips" § "YouTube's business model is completely sustained by pirated content. They are at the mercy of companies not responding with DMCA requests." § "[Content owners] (mainly) perceive YouTube as trafficking mostly illegal content – it's a video Grokster" (15) Google purchased YouTube in 2006. (12) Google's financial advisor, Credit Suisse, determined that more than 60% of the video views in a sample of YouTube videos deemed representative of site traffic were "premium," shorthand for "content copyright[ed] (either in whole or in substantial part)" or "removed [and] taken down" in response to a takedown notice. (14) Viacom negotiated with Google from November 2006 to February 2007 over a possible "content partnership" agreement to license some of Viacom's copyrighted works to appear on YouTube. During negotiations, Viacom made clear that without such a license, the appearance of Viacom works on YouTube was unauthorized. (18) Google offered a package that it valued at a minimum of $590 million for a content license from Viacom. (18) Google's offer and term sheet included a guarantee that Google would use digital fingerprinting technology to prescreen all uploads to YouTube and block any videos from Viacom works not licensed under the agreement. (18) Negotiations broke down, Google never obtained a license from Viacom, Viacom sent takedown notices for more than 100,000 infringing videos on YouTube. (19) Viacom pressed Google to employ fingerprinting technology to prevent infringement, Google chose not to use this technology. (19) At the end of 2006, MPAA requested that Google test out filtering technology, including the technology of Audible Magic, from whom YouTube already had a license. MPAA offered to pay for the test. Google and YouTube rejected this request. (20) YouTube makes money by selling ads that appear on YouTube and are seen by users who come to the site to find and watch videos. (30) YouTube displayed ads on the watch pages of infringing videos, on the homepage, on search result pages, and on browse pages (i.e., pages organizing videos by category or other characteristics). (31) When a user submits a video for upload, YouTube makes an exact copy of it in its original format. It also makes one or more additional copies of every video during the upload process in a different format called Flash. (42) YouTube makes and sends a replica of the video to a content distribution partner to facilitate timely streaming to all users. (43) YouTube also streams the videos on demand to the computers of millions of users. (43) Arguments The internal emails and memoranda of YouTube's founders and Google's senior executives make a compelling and indisputable record of defendants' intent to use infringing video clips to build the YouTube business. (21) Defendants' conduct squarely makes them liable for the infringement on YouTube under Grokster. (24) o Here, the evidence of YouTube's and Google's unlawful objective of operating the YouTube site as a haven for infringement is even more powerful than in Grokster, Usenet, or Fung § YouTube's founders made conscious decision to build their user base "as aggressively as we can through whatever tactics, however evil." § They knew the site was "out of control with copyrighted material" but decided not to block infringing content. § They disabled community flagging for infringement to avoid obtaining "notice" from users and to shift the entire burden to copyright owners. § Google decided to buy YouTube despite warnings that YouTube contained mostly infringing content. Google then adopted YouTube's copyright policy to increase traffic. (27) o Google and YouTube were not just innocent and unwitting accomplices to infringement perpetrated by YouTube users. Defendants operated YouTube with the unlawful objective of using infringing material to explosively build their user base and become the dominant video website on the Internet. (29) o Even apart from their unlawful intent, defendants are secondarily liable for the infringement on YouTube under principles of vicarious copyright liability, because they derived a direct financial interest from the infringement and had the right and ability to control it. Defendants are vicariously liable because they derived a direct financial benefit from infringement that they had the right and ability to control. (30) o Defendants derived a direct financial interest from the infringement through advertising revenues. (31) o Defendants have earned actual ad revenue from the draw of infringing videos on YouTube. (39) o YouTube and Google have always had the right and ability to control the infringement on YouTube. They simply chose not to. (32) § YouTube has always had and exercised the unfettered right to remove videos from the site and terminate user accounts for any reason at YouTube's complete discretion. (32) § YouTube, not its uploading users, exercises the ultimate editorial judgment and control over the content available on the site. (32) § YouTube instituted "community flagging" for identifying suspect videos. (33) § YouTube had the ability to find infringing clips by searching for keywords associated with copyrighted content using their own search feature and index. (34) § Audio fingerprinting services have been in widespread commercial use to forestall copyright infringement over the Internet since well before YouTube started business. (36) § Defendants specifically refused to use existing fingerprinting technology, even though it had an Audible Magic license in place to do so, for a content owner to prevent theft of its intellectual property, unless the owner agreed to grant YouTube a content partnership license. (36) o Defendants are direct infringers. They actively and volitionally participate in infringing acts that occur on facilities they control and operate, pursuant to processes they have developed and frequently modify, typically with no input from users at all. (42) § Unlike peer-to-peer networks, all the infringing acts on YouTube are being committed on facilities operated and controlled by defendants themselves, not their users. Defendants themselves engage in the copying, public performances and displays, and distribution of copies that infringe Viacom's exclusive rights under copyright. (45) § Defendants' involvement in these infringing acts meets and exceeds the level of volition required for direct infringement by copying under Second Circuit case law. (45) o Defendants do not qualify for the DMCA defense. They are too culpable to receive protection. § The DMCA does not place the entire burden on copyright holders to continually monitor all sites like YouTube for infringing activity and send an unending series of takedown notices, while the website owners intentionally profit from infringing activity they could control. (49) § Defendants operated YouTube with knowledge and awareness of, and intent to use, copyright infringement as the key to their success in attracting the larges user base of any Internet video site. (50) § Defendants were not merely aware of red flags signaling rampant infringement, they rallied around them. (50) § Defendants don't qualify for the DMCA safe harbor because their copyright infringement results not from web hosting, but from operating as a consumer media company. YouTube and Google never sought to operate a mere storage or web hosting service. They sought to build a media entertainment empire comparable to other major television and film distribution outlets. (66)
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