Claire Corlett

Fish Food, Fish Tanks, and More
William Fisher, CopyrightX, Lecture 11.2, Supplements to Copyright: Dual-Use Technologies

William Fisher, CopyrightX, Lecture 11.2, Supplements to Copyright: Dual-Use Technologies

The cases we’ve considered
thus far involved defendants who operate sites, dance
halls, flea markets, and so forth, in which third parties engaged
in copyright infringement. Somewhat different,
and more difficult, are cases in which the defendant sells
a product, or provides a service, that its customers sometimes employ in
ways that violate the copyright laws. And sometimes employ
in ways that do not. As I mentioned earlier,
such cases have come to be known as “dual
use technology cases.” There have been four major cases
of this sort in the United States. The Sony, or Betamax case,
which I discussed in connection with the fair use doctrine
in lecture number nine. A set of rulings concerning the
Napster file sharing service. A decision by the Court of
Appeals for the Seventh Circuit involving one of the successors
to Napster, known as Aimster. And a second decision by the
Supreme Court in the Grokster case. I’ll briefly describe the facts
and holdings of those decisions. In the Sony case, as you already
know, the defendant prevailed. In all three of the file sharing cases,
by contrast, the defendants lost. However, the ways in which
they lost varied considerably. Put differently, the
courts adjusted and then readjusted the law of
secondary liability to address the changing structure
of the file sharing systems. A charitable interpretation
of this sequence of cases would depict it as an
illustration of the flexibility and wisdom of common law adjudication. An uncharitable
interpretation would see it as a manifestation of what is
sometimes called result orientation. In other words, a determination by the
courts to suppress a social practice they saw as pathological,
and a willingness to contort the law to achieve that end. Which is the more apt
interpretation, I leave to you. The basic facts of the Betamax
case, as you’ll recall, are that the film studios
licensed television networks to broadcast their films to
viewers with the expectations that the viewers would
watch the embedded ads, and then buy some of the
products promoted by those ads. The advertisers in turn would pay
the TV networks fees, some of which the networks paid to the studios
in the form of license fees. This longstanding business
model was disrupted by Sony when it began manufacturing and
selling VCRS, which among other things, enabled the viewers to avoid
watching the embedded advertisements, thus endangering the flows of
revenue through the system. Because the viewers were
using their machines to make verbatim copies
of the studios’ films, the studios might have brought
suit against the viewers. But the impracticability
of that approach prompted the studios,
instead, to bring suit against Sony, the manufacturer of the
devices the viewers were employing. In the end, as you know, the studios
lost in the Supreme Court, barely. The two interlocking rulings that
enabled Sony to escape liability are set forth on your screen. The second ruling, that time
shifting constitutes a fair use and is thus a lawful use of a VCR,
we discussed in lecture number nine. Our concern here is
with the first ruling. The manufacturer of a device that can
be used to violate the copyright laws is liable for contributory
infringement, if and only if the device is not capable of
substantial non-infringing uses. The key phrase comes
at the end, “capable of substantial non-infringing uses.” Using the first letters of
those words as an abbreviation, this dimension of the Sony decision
might be called the COSNU defense. This standard for
secondary liability, which the court adapted from a loosely
analogous aspect of patent law, is quite generous to defendants. Taken literally it means that
the manufacturer and distributive of a dual use technology does not
need to show that his product is often used for legal purposes, or even that
it is ever used for legal purposes, but merely that it is capable of being
used for substantial legal purposes. Sony of course, easily passed that test. Because as we’ve seen,
time shifting, which the Supreme Court for the
reasons we’ve already considered determined to be lawful, was
the most common use of VCRS. But the way in which the court
phrased the COSNU defense seemed to offer an escape
hatch to defendants whose products were much
less often employed legally. The relationship between the COSNU
defense announced and applied in the Betamax case, and the overall
doctrine of secondary liability, is not entirely clear. But it appears that the way
in which the defense engages with the standard requirements is by
negating the element of knowledge, which as you know, is
one of the requirements of contributory infringement. More specifically,
the fact that a device is capable of substantial
non-infringing uses prevents the plaintiff,
in the court’s words, from showing that the
defendant “has sold equipment with constructive knowledge of
the fact that its customers may use that equipment to make unauthorized
copies of copyrighted material.” Now in theory the studios could
have overcome that impediment if they could have shown that
Sony had actual knowledge that a particular customer was
using her machine illegally. For example, that a particular customer
was using her machine for librarying, which even the majority of the
Supreme Court seemed to assume did not qualify as a fair use. The studios did not make such a showing,
and probably could not have done so. But this possibility, as we will see,
played a role in some later cases. Another ambiguity in
the Betamax opinion, concerns whether the
COSNU defense applies only to claims of
contributory infringement, or also to claims of
vicarious infringement. Almost all the court’s opinion
focuses on contributory infringement, but in one cryptic footnote,
specifically footnote number 17, the court observed that “the lines
between contributory infringement and vicarious liability
are not clearly drawn. And that recent analysis of respondent’s
unprecedented contributory infringement claim necessarily entails consideration
of arguments and case law, which might also be forwarded
under other labels.” The court thereby left
open the possibility that its ruling applied to
vicarious liability as well. Again, this possibility
didn’t much matter in the Betamax case itself,
because in any event, the studios could not show that
Sony had the right and ability to supervise the ways in which
it’s customers used its machines. And so could not establish
vicarious liability, even if the COSNU defense were
inapplicable to such claims. But it would make a difference
in some subsequent cases. So that’s where things stood as of 1984. For the next 15 years, the COSNU
defense, announced in the Betamax case, stood as a powerful bulwark for firms
developing products and services that were sometimes used to engage
in copyright infringement. What destabilized this doctrinal
structure was the rise of file sharing. The next three cases in
the sequence struggled to reconcile file sharing
with the Betamax framework. The first, and arguably most famous
of the three file sharing cases, was Napster. I’ve mentioned the Napster system
and the associated legal controversy before. Here’s a somewhat more detailed
description of the facts. Napster consisted of a website and
an application program that together enabled music fans to exchange
copies of sound recordings. The Napster website,
which was, contained a directory listing
all of the recordings that could be found on the hard drives
of all of its members’ computers, and an index to those recordings. A music fan who wished to
join the community and gain access to those recordings,
would first log into the website and download from it a fee piece
of software known as MusicShare. After installing the
software on his computer, the user would sign up by selecting a
unique username, typically fictitious, and a password. He would then create on his
computer a “user library” into which he would copy any recordings,
typically in the form of MP3 files, that he wanted to
share with other users. He would then log into
the Napster system. His software would talk to the
software on Napster’s servers. One result of that conversation is that
a list of the files on his computer would appear in the Napster directory. The files themselves would
not be copied onto the servers of Napster’s site, just their names. That’s the significance of the
hollow circles in this diagram. Other users would be
doing the same thing. Suppose one of the subscribers,
say user number two, wanted to find some
recordings by Eric Clapton. She would submit a search
request using Clapton’s name. If any of Clapton’s recordings
appeared in the index, the software would identify which
of the libraries of currently logged in subscribers
contained those recordings, and provide that information to the
application on user number two’s computer. That information would
enable her computer to connect directly to one
of those host computers, here belonging to user number
one, download a copy of the file directly from the host
computer, and save it on user number two’s hard drive. The fact that the two users’
computers were in direct contact explains the name peer to peer copying. User number two could then either play
the file directly from her computer or, if she had a CD burner
and the appropriate software, she could convert the
MP3 file to a WAV file and copy it onto a CD, which could
then be played on any CD player. Now if only a few people engaged in this
practice the owners of the copyrights and the compositions and
recordings most likely would have tolerated it, just as they
had tolerated the longstanding practice of teenagers making so-called
mixed tapes for their friends. But the system grew
extraordinarily fast. By October of 2000, roughly
a year after its launch, it had 32 million subscribers. Four months later it had 80 million. Nor was it limited to the United States. Indeed the percentage of
people with internet access who used Napster was higher in
Canada, Argentina, Spain, and Brazil, than it was in the United States. Copyright owners, unsurprisingly,
became increasingly concerned. Soon after the launch of the
service, the Napster executives contacted the record
companies and sought to obtain licenses to
distribute their works. The record companies
considered such an arrangement. Indeed Bertelsmann, the German parent
company of one of the record companies, extended a loan of $80
million to Napster, and tried to persuade the
other record companies to license their catalogs to Napster. But in the end, the
record companies decided to litigate rather than negotiate. As in the Betamax case, the
companies could have brought suit against Napster’s subscribers, who are
actually engaged in copying their works and distributing unauthorized copies. But again, the
impracticability of that option prompted the copyright owners
to pursue Napster instead. Because Napster was not itself copying
recordings or distributing copies, the owners did not have a good
claim for direct infringement. But they could and did contend
that Napster was secondarily liable for the conduct
of its subscribers. Judge Patel of the district court
found in favor of the owners. Napster appealed to the
Ninth Circuit, which ruled, in brief, that use of the
Napster system to sample songs is not a fair use. Because Napster is capable of a
substantial non-infringing use, the owners of the system lack the
constructive knowledge of infringing uses necessary to support
contributory liability. Note here the impact
of the Betamax ruling. So far things look good for Napster. But its luck would not hold. Next the Court of Appeals ruled that
because the Napster operators can ascertain whether a particular
recording has been copied illegally, they have timely actual knowledge
of specific acts of infringement necessary to support
contributory liability. Remember that this was an option
left open by the Betamax case that the Ninth Circuit
in Napster seized it. Finally for the same
reason, the court of appeals ruled that the Napster operators
have the “supervisory control” over the conduct of its
subscribers necessary to support vicarious infringement. Death came swiftly. By the summer 2002 the
Napster system had been closed and the company filed for bankruptcy. Critics of the record companies
argue that by suing Napster, they made a catastrophic
strategic mistake. Had they agreed to license
the Napster service they might have been able to collaborate
in the construction of a lawful music subscription system, from which
they could have earned a great deal and avoided alienating
millions of consumers. By adopting instead a
confrontational posture, the record companies
delayed for roughly a decade the emergence of such services. By then the recording
industry had shrunk by half. In the US its gross revenues in
1999 were around $13 billion. Today they’re around $7 billion. Global revenues have shrunk
at a corresponding pace. Today they are around $16 billion. This collapse could’ve been
avoided if the company’s had embraced peer to peer technology,
instead of trying to suppress it. The record companies, of course,
disagree with this assessment. Capitulation to Napster,
they argue, would have led to an even faster
decline in the industry, as other unauthorized and thus free
services sprang up and drew customers away. Perhaps. It’s unlikely we’ll ever be able
to resolve this controversy. So back to our story. Napster’s demise did indeed open the
way for follow on similar services. One of them was Aimster,
so named because it piggybacked on AOL’s
instant messaging service. It was similar to Napster in
many ways, but differed in one. Encryption prevented the
operators of the Aimster system from knowing the contents of the
files its subscribers shared. Nevertheless, the intentions
of the Aimster creators were reasonably clear from the
fact that they provided users online tutorials showing
them how to use the system to exchange sound
recordings, most of which would likely be subject
to copyright protection. Like its ancestors, Aimster attracted
subscribers with extraordinary speed. It was launched on August 8, 2000. Within three days 20,000
people had signed up. By early 2001 it had 2.5
million registered users. And by the end of April 2001, the
number had grown to 4.2 million. The purpose of the encryption
included in Aimster’s design was, of course, to avoid the kind
of “actual knowledge” of infringing behavior that had doomed Napster. In the judgment of the Court of
Appeals for the Seventh Circuit, this was too clever by half. In the court’s judgment,
Aimster was plainly liable for contributory infringement. The court brushed aside the COSNU
defense that had saved Sony on a ground that the defendants had
failed to present evidence of any lawful uses of their system. The court next ruled that
the defendant’s strategy of see no evil could not save them. In its words “willful blindness” is
the equivalent of actual knowledge. Finally, material
contribution was established by the defendant’s active encouragement
of infringing uses of the system. Interestingly the court was
less sure that the defendants were liable for vicarious infringement. But no matter, contributory
infringement was sufficient. The holdings in the Aimster case
were relatively unsurprising. Much more eye opening were some
statements made by the court in dictum, suggesting doubts concerning the pillars
on which the Betamax ruling had rested. Judge Posner writing for the
court, expressed his disagreement with the Betamax
formulation on two fronts. First, he contended that to trigger
the COSNU defense a defendant must demonstrate that its product has
substantial non-infringing uses, not merely that it is capable of
substantial non-infringing uses. Adoption of this suggestion would
entail converting the doctrine from a COSNU defense to
a [INAUDIBLE] defense. Second, he argued that even if the
defendant makes such a showing, if the infringing uses are
substantial, the defendant must also show that it would have been
“disproportionately costly” to design its product so as to eliminate
or reduce the infringing uses. These principles were not
necessary to the Aimster opinion, but they voted ill for the
developers of dual use technologies. The last of major file sharing
cases involved the Grokster service. It differed from its predecessors,
somewhat, in structure. Specifically the fast
track technology that it, along with some other companies
employed, was decentralized. Not quite as decentralized
as Nutella, a popular system developed by a renegade
programmer at AOL. But more so than either
Napster or Aimster. In brief, a fast track user
interested in exchanging files would locate, with the aid
of a central server, one of the set of computers connected
to the internet that functioned as so-called super nodes, coordinating
search requests among clusters of users. Once engaged in the system, the
user could submit a request, let’s say for a particular
Clapton recording. If a copy of the
requested recording were located on one of the
connected users’ computers, it would be delivered to the requesting
party with no further involvement by Grokster. Partly because of the
structure, the system was used reasonably often
for non-infringing purposes, such as distributing movie trailers,
sharing the works of Shakespeare, and locating computer software for
which distribution is permitted. As well as for exchanging
recordings unlawfully. These circumstances prompted
the district court judge who first heard the copyright owners
suit again Grokster to deny liability. The Court of Appeals
for the Ninth Circuit also ruled in favor
of Grokster, reasoning that the existence of
legitimate uses of the system means that the defendants
could not be charged with constructive
knowledge of unlawful uses, just as Sony could not be charged
with constructive knowledge of unlawful uses of its VCRS. Grokster did not learn of specific
illegal uses of its technology until it was too late to stop them. And unlike Fonovisa,
the defendants were not supplying the site and
facilities for illegality, and had no affirmative duty to alter
their software to prevent illegality. For all these reasons, in the
judgment of the Ninth Circuit, defendants were not liable
for contributory infringement. With respect to vicarious infringement,
the plaintiffs had failed to establish, said the Ninth Circuit, the necessary
right and ability of the defendants to supervise the direct infringers. These arguments, as I hope you see, are
reasonably straightforward applications of the law as it existed at the time. The Ninth Circuit was not tilting the
table in favor of the defendant’s. But the copyright owners
and their supporters contended that this is
where the current law leads. The law must be wrong,
and should be modified. They asked the Supreme Court
to revisit the Betamax case and to adjust the pertinent standard. How exactly? Various possible reforms were proposed. The copyright owners
themselves contended that the COSNU defense,
announced in Sony, should not apply when “the primary or
principle use of a product or service is infringing.” The Solicitor General
offered a different approach. Secondary liability should be imposed
“if the defendant’s product is overwhelmingly used for
infringing purposes, and the viability of
the defendant’s business depends on the revenue
and consumer interest generated by such infringement.” One group of economists argued instead
that secondary liability should be imposed if the defendant
“could eliminate or greatly reduce the level of infringement without
significantly cutting down the quantity and quality of lawful uses.”
you should hear, here, an echo of Judge Posner’s
proposal in Aimster. The most radical approach was offered
by another group of economists. Lower courts could should consider all
economic variables in particular cases when deciding whether to
impose secondary liability. Other parties argued instead,
that the Betamax COSNU defense should be preserved because first,
tighter standards for contributory vicarious infringement would endanger
some socially valuable dual use technologies. The unpredictability of all of the
proposed alternatives to COSNU, when combined with the threat
of statutory damages, a topic we’ll examine next week,
would chill innovation. And the entertainment industry
could be saved, they argued, through less radical forms of therapy. In the end, the Supreme
Court split the difference. It left the Sony COSNU defense intact. But it added to the set of
forms of secondary liability a new doctrine, adapted
from other sources, which it referred to as “inducement.” The key sentence in the Supreme
Court’s opinion announcing this rule is set forth on your screen. “One who distributes a device with
the object of promoting its use to infringe copyright, as shown by clear
expression or other affirmative steps taken to foster infringement,
is liable for the resulting acts of infringement by third parties.” The question immediately
arises, how does a plaintiff go about proving
inducement of this sort? The court’s answer by offering evidence
of “purposeful, culpable expression and conduct.” What kinds of evidence will suffice? Not that the defendant knew that
his product or service was sometimes used for unlawful purposes,
that was not enough to give rise to liability in the Betamax case, as
we saw, and it’s still not enough. Nor is it sufficient for
plaintiff to offer evidence the defendant is providing
customers generic product support. Something more is essential in
order to demonstrate inducement. In its opinion, the
Supreme Court identified four sorts of relevant evidence. Advertising illegal
uses, targeting customers known to engage in illegal uses,
failure to adopt infringement reducing technologies,
and commercial sense of the enterprise that
depends on illegal uses. The last two types of
evidence, though relevant, will not be enough on their
own to succeed, it seems. A plaintiff needs some evidence
of the first two types, advertising unlawful
uses, or targeting kinds of consumers known to be
engaging in infringement, such as reaching out to former
Napster subscribers who are now looking for a substitute
file sharing service. Like most Supreme Court
opinions, the Grokster ruling contained some ambiguities. For instance, in one
crucial sentence the court indicated that liability
under the inducement theory arises when the distributor
intended and encouraged the product to be used to infringe. The two verbs in that
sentence are different. The former suggests a
subjective standard, under which the crucial variable
is the defendant’s state of mind. Evidence pertaining to the defendant’s
intention would thus be relevant. The latter, by contrast,
suggests an objective standard, under which only the defendant’s
conduct would be germane. These and other ambiguities are tacitly
left to the lower courts to work out. But the principal implications of
the Grokster ruling are clear enough. If you actively promote unlawful
uses of your product or service, you’re in trouble. Ironically this standard, had it
been in place in the late 1970s, might have led to a different
result in the Betamax case. As you’ll recall, I hope, Sony
sponsored some advertisements that seemed to tout the use of its VCRs
for librarying, not just time shifting. And librarying is an activity that
the Supreme Court subsequently seemed to assume was unlawful. This appears to be the kind of
active promotion of illegality that the court in Grokster condemns. Whatever the merits of
the Grokster approach, evaluating conduct in the
past, it is likely to have diminishing force in the future. Why? Because attentive
potential defendants will be sure not to advertise
or otherwise promote the unlawful uses of their
products and services, and to avoid mentioning such things
in their internal correspondence. In short, the inducement rule is likely
to catch the unsophisticated creators of startups, not sophisticated
actors with good lawyers. That’s not an optimal legal standard. Thus far we’ve been
examining the expansion in recent years of the judge made
doctrines of secondary liability. But there’s another force
to be reckoned with. An economically and
politically important group of businesses that are
potentially vulnerable to liability under these expanding rules,
have sought and obtained qualified immunity,
specifically in 1998, as part of the so-called Digital
Millennium Copyright Act, commonly abbreviated as DMCA,
a group of companies that provide a variety of
internet based services, persuaded Congress to grant them
protection against copyright liability. Both direct and secondary
liability, provided that they complied with some
reasonably precise requirements. The complex rules giving
these enterprises protection are now embodied in section
512 of the copyright statute. The details of section 512 are much too
intricate to examine in this lecture. What I will do in the remainder
of this segment of the lecture is to sketch the basic principles
underlying this portion of the statute, and to describe the most important
of the judicial opinions that thus far has construed section 512. A subset of the components of
512 are set forth on your screen. For the complete set,
click on this link. Internet service providers,
meaning passive intermediaries who simply carry packets of
information from one party to another, are not liable for copyright
infringement, provided that they do not select the stuff that is sent, or who
it is sent to, or modify it en route. This should not be surprising. The Postal Service is also not liable
if some of the letters it carries contain unlawful material. Things less obvious when we shift
from ISPs to so-called OSPs, online service providers, which are
defined in section 512)(k)(1)(b) as providers of online services
or network access or the operators of facilities therefore. To qualify for the 512
safe harbor, such entities must abide by the requirements
set forth in 512(I) In brief, adopting,
announcing, and abiding by a policy for terminating people
who repeatedly abuse their services, and accommodating reasonable
technological protection measures adopted by
the copyright owners. If an OSP qualifies, it enjoys immunity
with respect to various activities, including, unsurprisingly,
passive caching of the material that turns out to be infringing. The most controversial of
the activities for which OSPs may secure immunity concerns
not carrying packets from one person to another, or
caching it for faster retrieval, but rather storing material
sent to them by one person. And making that material
accessible to lots of other people. In 1998 this practice was not terribly
common, but it is now ubiquitous. OSPs who do this are free of liability
if they first publicly identify an agent the copyright owners
can contact to tell them that specific works are being
stored on their systems unlawfully. Second, abide by a
detailed set of procedures for removing such material
from their systems, or resolving disagreements
between the copyright owners and the posters
concerning their legality. Third, lacks the kind of specific
knowledge of illegality spelled out in section 512)(c)(1)(a) And fourth, lacks the kind of financial
interest spelled out in section 512)(c)(1)(b) The clauses pertaining to
knowledge and financial interest should sound roughly familiar to you. They pertain to the
same kinds of concerns that have long figured in the
doctrines of contributory infringement and vicarious
infringement, respectively. But those concepts take here an unusual
form, and serve an unusual role. If an OSP are accused of storing
and distributing infringing stuff, can show that he lacks both of
these things, he’s home free. If he can not, he’s
not necessarily liable, but must run the gauntlet of the
doctrines of direct and secondary liability we’ve considered
in the last four weeks. So, much hinges on how exactly
these requirements are construed. The case that to date has its
has examined these requirements most detail, is Viacom versus YouTube. The basic facts are likely
familiar to most of you. YouTube was founded in 2005 by
three former employees of PayPal. The purpose of the initial version
of YouTube was not entirely clear, but its principal function soon became
to enable people to post video clips, and make them available
for the world to watch. It grew extremely rapidly. By 2007 YouTube was the dominant site of
its kind, and its lead over its rivals continued to increase. YouTube’s success was
attributable in part to the sophistication and
convenience of its technology, and in part to the support
it received from Google, which purchased the company
in November of 2006, in a stock for stock transaction
worth roughly $1.5 billion. Last but not least,
YouTube flourished in part because it was willing,
particularly in the early years, to host videos consisting of or
containing commercial copyrighted material, which lots
of users wanted to see. The owners of the copyrights in those
materials reacted in various ways to the rise of YouTube. Some shrugged. Some negotiated licenses
with YouTube or Google, permitting them to host their content. And finally, a few brought law suits. Included in this last group was
Viacom, the entertainment giant that owned the copyrights in
many television shows, episodes of which were uploaded to YouTube
without permission by fans, and then watched by other fans. The numbers were large. In 2007 when it initiated
the lawsuit, Viacom identified 63,497 clips
then hosted on YouTube that, Viacom contended, contained
its copyrighted material. YouTube acknowledged that
some of the videos on its site contained copyrighted
material and promptly removed the 63,000 clips identified by Viacom. But having done so,
YouTube asserted that it bore no further legal responsibility. Having complied with the so-called
notice and takedown procedures, that as we’ve seen are
mandated by section 512, YouTube contended that it was entitled
to the benefit of the safe harbor of section 512(c), and thus could
not be liable for direct or secondary copyright infringement. Viacom, as you might expect, disagreed. Here’s a statement released by Mike
Fricklas, Viacom’s general counsel, summarising the company’s stance. This paragraph on your screen
succinctly states the arguments that Viacom hoped to use to deny
YouTube the benefit of section 512(c). As you’ll recall, that
provision does not apply when a defendant either has
actual knowledge of infringing material on its site, or receives a
financial benefit directly attributable to infringement,
which the defendant has the right and ability to control. Fricklas, as you can see,
contends that YouTube fails to satisfy both of those
requirements, either of which is fatal to its 512(c) defense. This paragraph, aimed more at
a general, public audience, explains why, in Viacom’s opinion,
it’s fair to require sites like YouTube to purge their systems
of infringing material, rather than to require copyright owners
constantly to monitor such sites. So those are the arguments. The district court sided with
YouTube on all contested issues, and granted its summary judgment motion. In 2012 the Court of Appeals
for the Second Circuit reversed. The interpretations
of the key provisions of section 512 adopted by the Court
of Appeals were, as we will see, highly favorable to OSPs like YouTube. But not quite as favorable
as the interpretations that had been adopted
by the district court. Thus the Court of Appeals remanded
the case for reconsideration in light of its clarified rules. Here, then, are the key portions
of the Court of Appeals’ opinion. First, the court ruled that
the disqualification contained in 512)(c)(1)(A)(i) is triggered
only by actual “subjective” knowledge of specific infringing
material on the dependent’s site. Or willful blindness of the
sort that doomed Napster. The disqualification contained in
512)(c)(1)(A)(ii) the so-called red flag provision, is triggered only by
actual subjective knowledge of facts that would have made infringement
objectively obvious to a reasonable person. Merely being aware that there’s lots
of infringing material on one’s site is not enough to trigger
either of those provisions. However, the court
ruled, Viacom had pointed to a few instances in which internal
correspondence by YouTube executives suggested that they were aware
of specific infringing files on their site, from which a jury might
infer the requisite level of knowledge. Next, the Court of Appeals ruled
that the disqualification contained in 512)(c)(1)(B) is triggered only by
proof of somewhat greater control over the infringing behavior than is required
for ordinary vicarious infringement. Otherwise, the court pointed
out, the safe harbor of 512(c) wouldn’t be of much value,
because would give defendants immunity only from conduct that would
not trigger vicarious liability anyway. So what sort of additional control would
cause a forfeiture of the safe harbor protection? Not merely the ability to block access
to material posted on its service, but perhaps the sort of
“purposeful, culpable expression and conduct” that, as we saw, the
Supreme Court in Grokster suggested would give rise to
liability for inducement. Uncertain on the score,
the Court of Appeals suggested that the district
court think about it further. Finally, the Court of Appeals
construed 512(c) itself, broadly, interpreting it to apply to all
software functions performed by sites like YouTube “for the
purpose of facilitating access to user stored material.” The state of the law governing
OSPs after the Viacom decision, might be depicted
graphically as follows. As you now know, OSPs are potentially
liable not just for direct copyright infringement, but also for any of
the forms of secondary infringement, contributory, vicarious, and,
post-Grokster, inducement. Section 512(c) not only
gives greater specificity to the limits of those doctrine,
but also, more importantly, allows OSPs to engage in some kinds of
conduct that, in the absence of 512, would give rise to liability. In particular, hosting material without
enough specific or red flag knowledge that particular pieces are infringing
to trigger the disqualifications of 512)(c)(1)(A). And without the tight level of
control necessary to trigger the disqualification of 512)(c)(1)(B). Exactly what kinds of conduct
fall into the zones identified by the arrows in this diagram
will have to be worked out in subsequent litigation. But this seems to be the structure
that OSPs must and may now rely upon, at least if the Second
Circuit approach holds. This concludes our discussion
of secondary liability and the especially troublesome issues
presented by so-called dual use technologies. After the break, we’ll turn
to a very different topic, technological protection measures.

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