HOW I LEARNED TO STOP WORRYING AND LOVE YOUTUBE:
Video-Hosting Services and the Death of Copyrights on the Internet
By: Jonathan A. Hyman
 
YouTube has become one of the most popular internet destinations with the post-Grokster generation, quickly gaining on juggernaut MySpace.  If you are unfamiliar with YouTube, it is a free website which allows users to post video and audio clips to share with the world. 

While YouTube is not the only video hosting service (Google, AOL, Yahoo!, and now CNN, have their own), it is by far the most popular.  According to YouTube, an estimated 6 million unique users visit the site daily, up from 3 million in December, and view more than 70 million videos a day.  These numbers let YouTube live up to its motto: “Broadcast Yourself.”    

Users post anything from homemade movies and music videos to clips of movies, TV shows, and sporting events.  Currently, the most popular videos show the explosive effects of mixing Mentos with Diet Coke and user-filmed video of the violence in Lebanon and Israel.  Many of the most viewed videos are of teenagers doing whatever they think is funny (or unintentionally funny) in order to be seen by a global audience.  While many of the videos are user-filmed original content, there is a vast array of copyrighted content that is available in its original form or combined with other video or audio. 

Posting content to YouTube is simple.  Upload the video and YouTube encodes it, provides a player, and pays for bandwidth and server space.  YouTube does have limits on what can be posted.  Clips cannot exceed 10 minutes in length.  Thus, YouTube is ill-suited for copying full length movies (unlike peer-to-peer sites).  Videos must not contain material that is unlawful, obscene, pornographic or racist.  YouTube does not allow material that is copyrighted, protected by trade secret or otherwise subject to third-party proprietary rights.  However, YouTube does not screen videos before posting and relies on complaints of its users or IP owners to remove objectionable material. 

YouTube has been making IP owners restless as they try to figure out how to purge the large amount of copyrighted material from the site.  YouTube and its users’ actions could subject YouTube to direct liability, as well as, secondary liability under the theories of contributory and vicarious infringement.  So how is YouTube getting “away” with it? 

YouTube may be considered an automated system and therefore may have immunity from liability.  In the Fourth Circuit’s decision in Costar Group, Inc. v. Loopnet, Inc.  373 F.3d 544 (4th Cir. 2004) the court held that an OSP that simply owns and manages a system used by others who are violating copyrights, and is not an actual duplicator itself, is not directly liable for copyright infringement.  Thus, current case law likely requires a volitional act from the YouTube to attach liability.      

In addition, YouTube appears to be playing by the rules of the Digital Millennium Copyright Act (“DMCA”) and likely qualifies for the storage system safe harbor under Section 512(c). The storage system safe harbor limits liability for infringing material stored or hosted on YouTube’s systems.  The safe harbor provisions of the DMCA were enacted to limit the liability of online service providers (“OSP”) for copyright infringement.  Before the DMCA, courts inconsistently applied liability to OSPs holding them liable in some instances for copyright infringement because of user posted material, and not liable in other instances.  This uncertainty led to fears that the growth of the internet would be stifled if clear guidelines were not adopted.  The safe harbors were adopted as a less burdensome alternative to having OSPs monitor all users and provide a quick and easy way for victims to get materials removed (much cheaper and faster than lawsuit).  If YouTube qualifies for a DMCA safe harbor it is not liable for monetary damages. 

To qualify, YouTube must meet certain requirements.  First, the safe harbor only provides protection if the content is stored at the direction of a user.  As YouTube's content is uploaded by its users, it meets this first requirement. 

Second, YouTube has implemented a policy for terminating users who are repeat infringers.  YouTube’s terms and conditions define a repeat infringer as one who has been notified of infringing activity, or had submissions removed, more than twice.  However, this policy is not the saving grace it was intended to be, as it is easy for internet users to create anonymous identities to circumvent such policies. 

Third, YouTube has designated an agent with the U.S. Copyright Office to receive notices from copyright owners requesting removal of infringing material.  Upon receiving proper notice of an infringement, YouTube responds quickly to remove the material.  The elements of an effective notice are set out in Section 512(c)(3).  However, a notice is not valid for an indefinite period of time and only applies to works identified in the notice when it was sent.  This can be problematic as much of the same infringing material is be posted and reposted by numerous users under different titles, making detection and removal from YouTube difficult. 

Under the DMCA, YouTube is not required to notify the individual responsible for the allegedly infringing material before it is removed, but must notify the user if material is removed.  A user whose legitimate material has been removed from YouTube by an overzealous copyright holder is not without recourse.  The user can send a “counternotice” under Section 512(g)(3) stating that the material has been wrongly removed.  If YouTube receives a proper counternotice it must promptly forward it to the claiming party.  If the copyright owner does not bring a lawsuit in district court within 14 days, YouTube must restore the material.

Copyright owners should be cautious about making unsupported claims of infringement as false claims can lead to liability to anyone who suffers any damages because of a misrepresentation, including court costs and attorneys’ fees under Section 512(f).  Thus, the copyright holder can become liable to YouTube or the poster for any damages that resulted from the improper removal of the material.

Lastly, YouTube must not “receive a financial benefit directly attributable to the infringing activity” if it has the right and ability to control such activity.  Section 512(c)(1)(B).  This is the big issue for YouTube.  As noted above, YouTube relies on users to police infringements and does not have a filtering mechanism to ensure copyrighted materials are not posted.  If it can be shown that YouTube receives a direct financial benefit attributable to the infringing activity, it may fail to qualify for safe harbor protection.

Because YouTube essentially stores material at the direction of its users and complies with the requirements of the DMCA it likely qualifies for the storage safe harbor.  If YouTube fails to qualify for the storage (or any other) safe harbor it is not necessarily liable for copyright infringement.  The copyright owner must still demonstrate that YouTube has infringed and YouTube can still use any defenses such as fair use or the Costar decision.
Numerous IP owners have contacted YouTube to remove their copyrighted material.  NBC requested removal of “Saturday Night Live” skits posted in their entireties.   American Airlines demanded that its in-house training video entitled “Flight Attendant, Upside Down” be removed.  The RIAA has been sending notices to remove videos comprised of homemade music videos featuring copyrighted music. 

However, after this initial wave of fear regarding YouTube, some major content producers have embraced YouTube and its growing audience.  Under the terms of an agreement with NBC, YouTube will create an official NBC Channel to preview NBC’s new shows and host exclusive clips from such shows as “Saturday Night Live,” “The Office,” and “The Tonight Show.”  The agreement also includes on-air promotion of YouTube on NBC.  Recently, YouTube hosted a contest based on “The Office” where users submitted their own promos for the show and the winners will be shown on NBC.  Similar arrangements have been made with production companies which have tried to stimulate interest in their movies by hosting trailers on YouTube.  Lucasfilm requested removal of its original content, but has agreed to let the numerous Star Wars fan-made parodies remain.  Warner is also reportedly exploring the idea of licensing songs for a nominal fee to allow the legal use of its material. 

One IP owner is gambling that YouTube has slipped from its safe harbor and is liable under the Supreme Court’s Grokster decision.  125 S. Ct. 2764 (2005).  Robert Tur of LANS recently filed suit against YouTube seeking removal of his copyrighted videos of the beating of Reginald Denny and damages on the ground that YouTube intentionally induces infringement.  In Grokster, the Supreme Court held that if an OSP distributes a product with the object of promoting its use to infringe copyrights, as shown by clear expression or other affirmative steps taken to foster infringement, then the OSP can be liable. Tur believes that YouTube intentionally induces infringement because it derives a substantial benefit from the hosting of numerous copyright infringements.  Tur argues that YouTube has actual knowledge of what particular copyrightable material is on its site.  Tur further argues that even though YouTube allows for non-infringing uses, it is “intended to promote infringement of copyrighted works” and is aimed at a “known source of demand for copyright infringement, e.g., the market comprised of former Grokster video ‘sharers.’”  Tur points out that YouTube has not developed or implemented any substantial filtering tools or other mechanisms to diminish the infringing activity. Tur argues that this failure, and its known perception as a “bootleg-heavy site,” puts YouTube squarely in the same boat as Grokster. Tur submits that YouTube’s advertising sales generate revenue based on infringing activity and relies on infringing material to increase users, which in turn generates greater advertising revenue.

The recent sale of MySpace for almost $600 Million certainly has YouTube’s creators and investors salivating for an even bigger payday, provided it can prove that it is possible to capitalize (monetize) its business model.  Currently, YouTube has minimal ads for everything from mortgages to VOIP, email, and satellite TV services.  According to YouTube’s website, it is pursuing advertising as its business model and is exploring a range of possibilities including sponsorships, contextual-based advertisements and banner ads.  These business plans are exactly what Tur is counting on.  The more money YouTube pulls in, the easier it may be to pull YouTube from its safe harbor and show that it has intentionally induced infringement.  If discovery in the Tur case turns up evidence that YouTube was banking on infringing material to increase viewership, it will likely fall prey to Grokster’s demise: marketing materials touting itself as the heir to Napster, including proposed materials flaunting Grokster’s illegal uses.  Only YouTube knows if similar smoking guns exist for its service. 

If Tur’s lawsuit is successful, others will surely follow, which will drain YouTube’s financing and keep potential investors and suitors away.  Nevertheless, with Hollywood’s new attitude of joining new technologies before it is too late (See Warner’s deal with peer-to-peer BitTorrent to distribute its movies), the fears over YouTube’s negative impact may be exaggerated.  It seems that at least some rights holders are learning to love YouTube rather than taking the nuclear option of shutting it down, assuming they can figure out how to make money from it.