Written by: R. Terry Parker
Published in Law360 (May 11, 2017)
In case you missed it, last month, in Mavrix Photographs, LLC v. LiveJournal, Inc., 2017 U.S. App. LEXIS 6028 (9th Cir. Cal. Apr. 7, 2017), the Ninth Circuit delivered a notable decision on the immunities provided by the Digital Millennium Copyright Act (“DMCA”), surprising a number of lawyers in the copyright community. The Electronic Frontier Foundation called the ruling “an unfortunate turn.” Tech Dirt called it a “dangerous opinion”. Fortune Magazine warned it “Raises New Copyright Risk for Websites.” But is this decision really cause for such alarm? For some, yes. If your business model is a website that attracts eyeballs- and thus advertising revenue- ”that are drawn to your curated, quality content and you rely on the DMCA’s notice-and-takedown procedures to protect you from infringement suits for that content, you need to be alarmed. The Ninth Circuit’s LiveJournal decision heralds a definite shift in the current of DMCA case law.
The DMCA was enacted in 1998 in an attempt to bring US copyright law up to speed with the quickly emerging internet. It was intended as a balanced compromise between the entertainment industry and the tech industry. On the one hand, the DMCA offered stronger protection for the rights of copyright owners whose works were being infringed on the internet on a massive and previously unimagined scale. On the other hand, it protected internet service providers from liability so that they would not be “sued out of existence” for the innumerable infringements occurring from the mere transmission of information, allowing the internet and its commerce to continue to improve and expand. To that end, the DMCA provides, in § 512 of the Copyright Act, four safe harbors that “allow qualifying service providers to limit their liability for claims of copyright infringement based on (a) ‘transitory digital network communications’, (b) ‘system caching’, (c) ‘information residing on systems or networks at [the] direction of users,’ and (d) ‘information location tools.'”
At issue in LiveJournal was 512(c). Under 512(c), internet service providers are protected from liability for “the storage at the direction of a user of material that resides on a system or network” if they meet certain conditions, the threshold condition being they are an internet service provider that is storing material on their system or network at the direction of their users. Once that threshold qualification is satisfied, “a service provider is eligible for safe harbor under section 512(c) if it: (1) does not know of the infringement; or (2) acts expeditiously to remove or disable access to the material when it (a) has actual knowledge, (b) is aware of facts or circumstances from which infringing activity is apparent, or (c) has received DMCA compliant notice; and (3) either does not have the right and ability to control the infringing activity, or-if it does- that it does not receive a financial benefit directly attributable to the infringing activity.”
LiveJournal is a social media publishing platform where users create and run thematic blogs called “communities,” posting and commenting on content related to a theme. One of these communities is Oh No They Didn’t! (“ONTD”), a community which features users’ posts of photographs, videos, links, and gossip about celebrities. For example, one post was a Mavrix photo showing an apparently pregnant Beyoncé that generated discussion in its comments section. However, unlike YouTube, or Facebook, which has a hands-off approach to the content users post on their websites, ONTD users submit proposed posts to moderators who review the submissions for unwanted material, and material with possible problems like copyright infringement issues, pornography, and harassment. These moderators are all unpaid users, except one, Brendan Delzer. Delzer was the “primary leader” of the ONTD community but was employed by LiveJournal and charged with growing ad revenue at ONTD.
Mavrix is a photography company that specializes in candid photographs of celebrities in tropical locations, as seen in a number of celebrity magazines. After discovering a number of its photographs on ONTD, Mavrix sued LiveJournal seeking damages, rather than utilizing the DMCA’s notice-and-takedown procedure that LiveJournal had in place which may have resulted in the removal of the images but no damages awarded by a court. LiveJournal moved for summary judgement, arguing there were no genuine issues of material fact as to whether it was entitled to immunity under § 512(c). In keeping with the statute’s conditions, LiveJournal merely provides storage at the requests of its users, it has a Terms of Service that prohibits users from engaging in infringing activity, it enforces policies and procedures to respond to take-down notices, it had no actual or constructive knowledge of infringing activities on its site, and it did not control or benefit from infringing activities on its site And this should be enough to protect it from any claims of infringement occurring on its website. The district court agreed and granted the motion for summary judgement.
The “Threshold Condition” Reversed and Remanded
However, on appeal, the Ninth Circuit reversed the district court’s grant of summary judgment. According to the panel, there were genuine issues of fact as to the threshold showing that Mavrix’s photographs were posted on ONTD at the direction of users. Notably, the court held that “[p]osts are at the direction of the user if the service provider played no role in posting them on its site or if the service provider carried out activities that were ‘narrowly directed’ towards enhancing the accessibility of the posts.” Accessibility-enhancing activities are, the court explained, automated processes, like reformatting or other technological changes, as well as screening for infringement or other harmful material. In addition, there were genuine issues of fact as to whether the unpaid moderators were LiveJournal’s agents. To the extent these users/moderators are agents of LiveJournal, any materials they post would not be posted by users, even if that material was first submitted to the moderator by users.
The legislative history for 512(c) implied narrow parameters for the threshold condition, “by reason of storage at the direction of the user.” Providing storage, for example, is listed as “providing server space for a user’s web site, for a chatroom, or other forum in which material may be posted at the direction of users.” Similarly, the service provider’s involvement in the act of “storage” is expressly limited: “Information that resides on the system or network operated by or for the service provider through its own acts or decisions and not at the direction of a user does not fall within the liability limitation of subsection (c).” The legislative history suggests that Congress intended 512(c) for passive providers of storage at a time when the computerized operations of the internet lead to direct and indirect infringement liability, liability not present in the pre-internet world.
In contrast, prior to LiveJournal, the courts took a more liberal and tech-friendly approach to the DMCA’s threshold condition. One of the earlier authorities to address the scope of the phrase “storage at the direction of the user,” if in a somewhat confusing manner, is CoStar v. LoopNet, 373 F.3d 544 (4th Cir. 2004), which took an expansive reading of the phrase “at the direction of the user.” LoopNet allowed users to post commercial real estate listings to its website, after the postings were reviewed by employees to determine whether the postings concerned commercial listings and whether there were any obvious issues with copyright infringement. The court found that LoopNet met the threshold condition because “[t]he employee’s look is so cursory as to be insignificant, and if it has any significance, it tends only to lessen the possibility that LoopNet’s automatic electronic responses will inadvertently enable others to trespass on a copyright owner’s rights.”
A similarly broad take is employed in UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1015-1016 (9th Cir. 2013). The case concerned UMG’s pursuit of its copyright infringement claims against the defunct Veoh Networks Inc. (“Veoh”), which was an early online video-sharing website that was sued out of existence. Shelter Capital Partners had invested in Veoh. Veoh had won summary judgment in the district court by arguing that its system and policies brought it within the DMCA’s safe harbors, shielding it from liability for the infringement of users who posted infringing videos to the site. On appeal, UMG argued that the infringement was not “by reason of storage at the direction of the user” because “nothing in the ordinary definition of ‘storage’ encompasses” the automatic processes that enabled users to upload videos for the world to view. According to UMG, this was facilitation of access, well beyond the “storage” provided for in the statute. The Ninth Circuit did not buy UMG’s narrow take, holding instead that “storage at the direction of the user” extended to activities that go beyond mere storage to include the displaying of user-uploaded files and other “accessibility-enhancing activities.”
The Ninth Circuit’s holding last month is not at odds with its decision in Shelter Capital with respect to 512(c)’s threshold condition. Whether LiveJournal’s use of the infringed works amounted to more than storage was not at issue. However, the decision is a shift away from what copyright lawyers thought was an accepted level of review and interaction with the content by a website, certainly in light of LoopNet. This marks a decidedly more restrictive application of the DMCA.Â Accordingly, if your business model relies on users posting photographs and videos and you are curating that content, weeding out the less attractive content from the more attractive content, the DMCA is not likely to shield you from the copyright infringement that occurs on your site.
R. Terry Parker is a member of the firm’s Litigation and Business and Finance Practice Groups. His practice focuses on resolving commercial and intellectual property disputes. He can be reached at firstname.lastname@example.org or at 603-226-2600.