LEGAL
Back in April's issue of Corporate Counsel Connect, I wrote about UMG Recordings v. Shelter Capital Partners, a March 2013 ruling out of the Ninth Circuit. The case is about a major copyright holder (UMG Recordings) that sued a website that allows users to upload and share videos with other users (Veoh), operating much in the same manner as YouTube. You may have been reminded of a similar lawsuit – 2012's Viacom v. YouTube – in which an IP giant sued a user-generated video-sharing website.
As noted in my earlier article, the similarities are significant for copyright law: UMG expanded the holdings in the Viacom ruling (which was decided in the Second Circuit) into the Ninth Circuit. Both rulings were victories for the respective video websites, with both courts finding that the Digital Millennium Copyright Act's (DMCA) "safe harbor" provision protected both services from infringement liability.
However, if you believe that these rulings are indicative of a trend favoring online providers of user-generated content, think again. On October 17, the Motion Picture Association of America (MPAA) announced that it had reached a settlement with the operators of IsoHunt, one of the web's larger BitTorrent indexers to end a copyright infringement lawsuit.
For those not familiar with "BitTorrent indexes," they are files that operate to facilitate peer-to-peer file transfers. They contain a text description of the file accessible with the index, an encrypted identifier, and a list of "trackers" – or servers willing to actually facilitate the file transfer. The actual file transfer is usually started by one or more individuals, who host or "seed" the file on their own computer for others to download. As more individuals download all or parts of a file, they themselves become "seeds" for the parts of the file that they have thus far downloaded. An individual downloading a file from a Torrent may have received different portions of the file from several different individuals. Since the downfall of other peer-to-peer file-sharing services such as Napster, Torrents have become the most prevalent method for online file-sharing – both legitimate and illegal.
Hence, the copyright infringement suit against IsoHunt. The "settlement" doesn't seem as much a compromise as it does a surrender by the BitTorrent indexer: in addition to shutting down the website, IsoHunt founder Gary Fung agreed to pay $110 million. After a ruling by the Ninth Circuit Court of Appeals in March of 2013, though, Fung likely felt as though he had few other options. The ruling – made by the exact same three judges who ruled in UMG – found that IsoHunt, unlike YouTube, didn't qualify for protection under the DMCA's safe harbor provisions.
I could go through each of the elements of the safe harbor provisions in each case, but it all boils down to the simple fact that the court views IsoHunt and similar file-sharing websites as categorically illegitimate. According to law professor Eric Goldman's blog this and other court decisions against peer-to-peer file sharing services apply a different version of copyright law that is far more draconian for these services than "normal" copyright law.
Of course, there are several pieces of evidence that corroborate the presumption of illegitimacy in IsoHunt's case, specifically, Hunt's public acknowledgement that the availability of infringing content increases website traffic and the usage of fairly damning keyword metatags such as "warez" (Internet speak for "illegally copied software").
Nonetheless, the primary reason that the court found that the safe harbor provisions didn't apply to IsoHunt was because the panel found that IsoHunt was not working adequately enough to remove infringing content over which it may have "substantial influence." Indeed, in IsoHunt's case, there was evidence of the provider's encouragement of infringing activity by its users.
Of course, the arguments used against IsoHunt largely resemble those used against Veoh and YouTube, and it's very likely that the respective operators of these latter two websites are aware that there's quite a bit of infringing content on their sites. YouTube and Veoh were able to meet a different fate in court than IsoHunt because they not only have refrained from actively encouraging any infringing activities by their users, but have also taken active steps to remove infringing content.
It doesn't matter that these video websites aren't doing as much to remove infringing content as the IP holders would prefer; it's good enough for the court that these websites are removing potentially infringing content under the "red flag" notice requirements of the DMCA.
And that's the lesson learned from this body of case law: to courts in file-sharing copyright infringement cases, the website's intent, either actual or apparent, seems to be of central importance. So even if a website operator is aware that some of its users exploit its services to distribute infringing content, the operator should always appear to object to these uses and take actions consistent with this disapproval.
Jeremy Byellin is a practicing attorney in the state of Minnesota and a writer for the Westlaw Insider blog. His articles for the blog cover a wide range of legal topics, with a specific focus on major legal developments and cyberlaw.
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