By FRANKFURT KURNIT

Media companies and other copyright holders may need to change the way they deal with infringing content on the Internet.  In a closely watched copyright case, Lenz v. Universal Music Corp. (also known as the "Dancing Baby" case), the United States Court of Appeals for the Ninth Circuit ruled yesterday that copyright holders must consider fair use before issuing takedown notices to remove allegedly infringing content from websites such as YouTube and Facebook. This decision has significant implications for owners of copyright-protected content, especially studios, record labels, publishers and other entities with large content catalogs, as well as individuals and businesses that rely on fair use to exploit copyrighted material owned by others. 

The Ninth Circuit, which covers California and many other Western U.S. states, is one of the most significant courts for copyright law and is the first appellate court to address this issue. The court made clear that copyright owners may not exercise their rights under the Digital Millennium Copyright Act ("DMCA") to remove infringing online content without first having a good faith belief that the use of the copyrighted material was not fair use. It is not enough for companies merely to employ technology or even individuals to mechanically screen and determine that online content contains their copyright-protected material. Rather, copyright owners must form a subjective, good faith belief that the challenged use does not constitute fair use —-  a determination that requires a case-by-case analysis often with experienced legal counsel. And while an automated service could comply with the Ninth Circuit's interpretation of DMCA requirements, it would likely be limited to circumstances of wholesale copying and performance.

Facts of the Lenz Case: Take Down That Dancing Baby at Once!
In 2007, Stephanie Lenz uploaded a 29-second home video to YouTube that showed her two young children in the kitchen dancing to the song "Let's Go Crazy" by Prince. Early in the video, Lenz asks her thirteen-month old son, "What do you think of the music?" The toddler then bobs up and down to the music while holding a toy.

An assistant in the legal department at Universal Music Publishing ("Universal") saw the Dancing Baby video during his daily YouTube monitoring assignment. The assistant's job was to search YouTube for Prince's songs and evaluate whether a Prince song was the "focus" of any videos sufficient to warrant sending a takedown notice to YouTube. Critically, the evaluation did not include a fair use analysis. Universal decided to issue a takedown notice to YouTube for the Dancing Baby video pursuant to Section 512 of the Copyright Act. Such takedown notices are common practice of copyright owners to remove infringing user-generated content from the Internet. When YouTube, Google and similar service providers receive a takedown notice stating, among other things, that "the complaining party has a good faith belief that the use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law," the DMCA allows such providers to avoid liability by removing the accused content from their website and notifying the user who posted it. The user may seek to have the content restored by sending a counter-notification to the service provider, stating that the user "has a good faith belief that the material was removed or disabled as a result of mistake or misidentification . . . ."  The service provider must then restore the content within 10 to 14 days unless the copyright owner files an infringement lawsuit. 

Following receipt of Universal's takedown notice —  which included the requisite "good faith belief" statement — YouTube took down the Dancing Baby video and notified Lenz of its removal. The video was restored after Lenz sent a counter-notification of fair use. Lenz subsequently sued Universal under the DMCA for misrepresenting that the Dancing Baby video was infringing.

Ninth Circuit's Ruling: Copyright Owners Must Consider Fair Use
The Ninth Circuit agreed with Lenz that the "good faith belief" requirement in a takedown notice included the good faith belief that the use was not authorized under fair use principles. Fair use, according to the decision, "is not just excused by the law, it is wholly authorized by the law." Accordingly, the copyright holder must have a subjective, good faith belief that the allegedly infringing content is not making fair use of the copyrighted work. And while only a subjective belief is required —- even if a court were to conclude otherwise —- a copyright holder must pay more than "lip service to the consideration of fair use." Copyright holders also cannot be "willfully blind" to facts concerning whether content is fair use. If a copyright holder fails to properly consider fair use prior to sending a takedown notice, that copyright holder may be liable for nominal damages to the accused infringer even if he or she suffered no actual damages. Significantly, the Ninth Circuit did not decide whether the scope of recoverable damages included the accused infringer's attorneys' fees.  

Practical Implications for Copyright Holders
The Ninth Circuit acknowledged that there is a vast amount of infringing content on the Internet and that a good faith consideration of fair use does not require an intensive investigation. Nevertheless, for many companies, changes will need to be made. The computer programs that many copyright holders use to identify infringing content on the Internet and automatically generate takedown notices would be satisfactory if they included a fair use component to their analysis; human review is not imperative to the process. In particular, the Ninth Circuit noted that a computer program could satisfy the fair use consideration requirement where the video and audio track of the allegedly infringing content matches that of a copyrighted work and is almost entirely comprised of that work. In most other cases, however, human review is likely required, which should include a consideration of fair use by an individual qualified to make such a determination.

If you have any questions about fair use under the Copyright Act, please contact Craig Whitney at (212) 826 5583 or via email, Jeremy Goldman at (212) 705 4843 or via email or any other member of the Frankfurt Kurnit Litigation Group.

 

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