9th Circuit Hears Two Key Cases About DMCA Safe Harbors: IsoHunt And Veoh

from the how-the-sausage-is-made dept

Last week, a single three judge panel from the 9th Circuit appeals court heard two key appeals concerning the DMCA, and specifically the DMCA’s safe harbors for service providers. Lawyer Michael Barclay attended both appeals and has an excellent report and analysis of each. It’s not always easy to read the tea leaves of which way judges are leaning on appeals like this, but based on both appeals, and the details of both cases, if I had to guess, I’d say that the appeals court will uphold both lower court rulings, even if this seems slightly contradictory.

If you’re not aware of the details of the two cases, the Veoh case is quite similar to the YouTube/Viacom case. Veoh was a video hosting website that ended up in a lawsuit with Universal Music, who not only sued the company, but sued a bunch of its investors as well (a tactic that the record labels have tried a few times, despite the fact that investors are shielded from liability for the actions of company management for very good reasons: otherwise you’d create a massive chill on investment). The judge wisely tossed the Veoh lawsuit, noting that the company was clearly protected by the DMCA safe harbors, and the separate action against the investors was also shot down. Of course, mainly because of this lawsuit, Veoh ran out of money and was forced to shut down. It ended up selling off its assets to some other company, but a “mystery funder” (I’ll give you three guesses…) showed up and continued funding the appeal.

The IsoHunt case is one that has probably received more attention. IsoHunt is one of many BitTorrent search engines out there, and it was sued by the movie studios. Given similar lawsuits, it wasn’t much of a surprise when IsoHunt lost, but there were elements of the ruling that were quite troubling. It was really the first big DMCA safe harbor lawsuit to make use of the “red flag” provisions of the DMCA. Most safe harbor cases have focused on whether or not the service provider responded to notices, but in this case, the court said that there were enough “red flags” that, even in the absence of notices, IsoHunt should have blocked certain files. This is problematic for any number of reasons, as it leaves an incredibly vague standard out there that is, in many ways, incompatible with the notice-and-takedown provisions of the DMCA. The only real way to reconcile these would be to say that red flags only apply to very specific infringing works, rather than the fact that infringement takes place on the site. Unfortunately, the court didn’t really do that here. It also took certain statements from IsoHunt founder Gary Fung really out of context to support the claim that he was inducing infringement under the Supreme Court’s Grokster standard for inducement.

It’s interesting to see that IsoHunt’s lawyer, Ira Rothken, even referenced the Veoh case in his opening remarks, trying to make the claim that IsoHunt has an even stronger case than Veoh, in that IsoHunt is a pure search engine and, unlike Veoh, doesn’t host or control any of the actual content. Separately, he argued that the evidence presented for inducement by Gary Fung came from 2003, but the actual infringement in the case came in 2007 — and suggested that you can’t use general inducement for specific cases of infringement. Apparently, the court was skeptical on this. It would surprise me if the court found that convincing at all, as I don’t think anything in previous inducement rulings have ever suggested the inducement has to be directly tied to the infringing files. Anyway, you can listen to the IsoHunt hearing below:

The Veoh hearing, on the other hand, appeared to go pretty strongly in Veoh’s favor. Universal Music’s argument appeared to be that the DMCA safe harbors are meaningless, because they’re kinda annoying for Universal Music. That’s a bit of an exaggeration, but not by much — and the judges aren’t buying it. Universal kicks it off by ridiculously claiming that the Veoh ruling would upend copyright law. That’s simply not true, and the judges immediately called Universal’s lawyer on this, pointing out that copyright law and the case law in the 9th Circuit clearly puts the burden on the copyright holder to file notices, rather than expect service providers to proactively police.

Universal also argued that the DMCA only applies to backend infrastructure service providers, not every other service providers. That’s a massive uphill climb there, as no court has ever ruled that. Thankfully, the judges seemed rightfully skeptical, and pointed out that this would decimate the DMCA’s safe harbors (exactly what Universal Music and the RIAA wants, of course). Finally, Universal Music tried to argue (again against all sorts of precedent) that since the DMCA was merely locking in common law precedent, vicarious liability could be interpreted broadly. Again, the judges seemed skeptical, noting that this would apparently destroy the DMCA’s safe harbors. From Barclay’s summary:

Judges Fisher and Berzon had problems with that interpretation. Judge Fisher said that under vicarious liability principles, most commercial web sites would satisfy the ?financial benefit? provision, and since in response to a takedown notice they could remove the content, that would satisfy Marenberg?s interpretation of the control provision. Both Judges Fisher and Berzon told Marenberg that under his interpretation, the safe harbor would therefore go away: Judge Berzon told Marenberg his view of the statute ?kind of blown the whole thing up.?

We’ve actually seen a weaker, less legalistic, version of this argument made here many times before. We see people argue all the time that, for example, YouTube must be liable because it makes some money from hosting, and thus is profiting from infringement. Except, that’s not what the law says. YouTube isn’t profiting from infringement. It’s profiting (if it’s profiting) from providing a service, which is hosting and displaying videos. It makes that money whether the works are infringing or not. If Universal’s interpretation of the safe harbors is correct, there are no more safe harbors online, because any for-profit company loses all safe harbors. That’s clearly not what Congress intended.

Either way, you can year the Veoh hearings below as well:

I still think that the appeals court will likely uphold both lower court rulings (though, I’m only about 70% confident on that…), even if it is a bit bizarre when you compare the two. IsoHunt doesn’t host or transmit any infringing content. Veoh likely did. And yet Veoh has been deemed protected, while IsoHunt was not. That seems like a questionable outcome no matter what.

Filed Under: 9th circuit, copyright, dmca, safe harbors
Companies: isohunt, mpaa, universal music, veoh