Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

Aaron P. Rubin

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

Anthony M. Ramirez

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.

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2018: Predictions From Socially Aware’s Editors and Contributors

2018: Predictions From Socially Aware’s Editors and Contributors

Happy 2018 to our readers! It has become a Socially Aware tradition to start the New Year with some predictions from our editors and contributors. With smart co

In the classic rock song “<a href="https://en.wikipedia.org/wiki/Light_My_Fire">Light My Fire</a>,” ‘60s icon and the <a href="https://www.thedoors.com/">Doors</a>’ lead singer Jim Morrison sang, “The time to hesitate is through.”If your company operates a website or blog that hosts user-generated content, and has yet to register an agent for receipt of copyright infringement notices under the U.S. Copyright Office’s new agent designation system, it’s time to light a fire. Failure to do so could significantly increase your company’s copyright liability exposure in connection with such hosted content.Here’s what you need to know:Under the Digital Millennium Copyright Act’s (DMCA) Section 512(c) safe harbor, website operators and other online service providers that comply with the eligibility requirements are shielded from copyright damages in connection with their hosting of infringing content uploaded by service users.This powerful safe harbor has played a major role in the success of Facebook, Instagram, YouTube and other U.S. social media and Internet sites. But it also protects brands that host on their websites text, photos and videos uploaded by their customers.An online service provider seeking Section 512(c) safe harbor protection must designate with the U.S. Copyright Office an agent to receive notifications of infringement from copyright owners. A year ago, the U.S. Copyright Office rolled out a new online system for the designation of agents, replacing a paper-based system that had been in place for nearly 18 years; the Copyright Office, however, provided a year-long grace period for online service providers who had registered agents under the old system to register those agents under the new system.This grace period is coming to a close. Online service providers with an agent registered through the old system must register that agent through the new system by December 31, 2017, in order to maintain a valid agent designation.This point is so important that we’re going to repeat it in bold italics:Online service providers with an agent registered through the old system must register that agent through the new system by December 31, 2017, in order to maintain a valid agent designation. Failure to register under the new system by the end of this year could result, beginning on January 1, 2018, in an online service provider losing the benefits of the Section 512(c) safe harbor in connection with its hosting of user-generated content.We know it’s a busy time of year. We know that copyright issues are often not top-of-mind in the last few weeks of the year. We know that you are preparing for the holidays. But if your company hosts user-generated content and has yet to register its DMCA agent under the new agent designation system, you’ll want to make sure that this task gets moved to the top of the company’s “Things to Do Before Year’s End” list.There’s a lot more to know about the new system. For example, the Copyright Office’s new approach expands the options available to online service providers in designating an agent. Under the old system, service providers were required to name a natural person or a specific position or title. The new regulations provide that a designated agent may be an individual, a specific position or title held by an individual, a specific department within the service provider’s organization or within a third-party entity or a third-party entity generally.For purposes of designating an agent under the new system, related or affiliated service providers that are separate legal entities (e.g., corporate parents and subsidiaries) are considered separate service providers and each will need to have its own separate designation.Further, the cost of designation under the new system is cheaper than under the old system. Each paper form designation under the old system would have cost a service provider $105, not including additional fees to list non-legal names used by the service provider; under the new online system, the designation fee is $6 with no additional fee to <a href="https://www.copyright.gov/dmca-directory/faq.html">register alternative names</a> (i.e., names that the public would be likely to use to search for the service provider’s designated agent in the Copyright Office’s online directory of designated agents).Also, under the new system, online service providers will need to renew their agent designations every three years in order to maintain safe harbor protection in connection with their hosting of user-generated content. There was no renewal requirement under the old system. Although the new system will generate reminder notices as renewal deadlines approach, companies will want to ensure that these deadlines are noted on their own calendaring systems.The Copyright Office has created a series of<a href="https://www.copyright.gov/dmca-directory/help.html"> tutorials</a> to assist online service providers in registering an agent under the new system. The tutorials titled “<a href="https://www.copyright.gov/onlinesp/tutorials/transcripts/designate-an-agent.pdf">Designating an Agent for a Service Provider</a>” and “<a href="https://www.copyright.gov/onlinesp/tutorials/transcripts/register.pdf">Creating a DMCA Designated Agent Registration Account</a>” provide step-by-step instructions on how to designate an agent through the new online system.For more information regarding the new system (including the rationale behind the new system), check out <a href="https://www.sociallyawareblog.com/2016/12/06/new-copyright-office-rule-creates-potential-gotcha-for-blogs-and-websites-hosting-user-generated-content/">our blog post on the subject from December 2016</a>.Here are our key takeaways regarding registration under the new system:<ul><li>If your company hosts, stores or even links to user-generated content, it should ensure that it has registered an agent with the Copyright Office under the new system. If it hasn’t, it should do so by December 31, 2017.</li><li>The fact that your company may have already registered its DMCA agent with the Copyright Office under the old paper-based system will be irrelevant for purposes of maintaining DMCA safe harbor protection in 2018 and onward.</li><li>Under the new system, a company cannot make a single designation covering all of its affiliates; rather, each corporate entity that hosts user-generated content will need to do its own designation.</li><li>After registering under the new system, online service providers will need to ensure that they observe the “every three years” deadlines for renewing their registrations. The Copyright Office states that the new system will automatically send email reminders to the designated primary contract and, if provided, secondary contact, service provider and designated agent at 90 days, 60 days, 30 days and one week prior to the deadline for renewal; but companies will want to make sure that renewal deadlines are recorded on their internal calendaring systems.</li></ul>So, if your company hasn’t done so already, it needs to get its DMCA agent registered under the new agent designation system. If it doesn’t do so, you may be singing a different song associated with Jim Morrison and the Doors: “When the music’s over, turn out the lights . . . .”

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If Your Company’s Website Hosts User-Generated Content, Stop and Read This Post!

If Your Company’s Website Hosts User-Generated Content, Stop and Read This Post!

In the classic rock song “Light My Fire,” ‘60s icon and the Doors’ lead singer Jim Morrison sang, “The time to hesitate is through.” If your company operates a 

We <a href="http://www.sociallyawareblog.com/2016/08/10/ugcrisk/" target="_blank" rel="noopener noreferrer">discussed last year</a> the trend toward companies seeking to monetize user-generated content. A recent Central District of California decision in Greg Young Publishing, Inc. v. Zazzle, Inc. serves as an important reminder of the serious risks that can arise from seeking to commercially exploit such content.Under the Digital Millennium Copyright Act’s (DMCA) Section 512(c) safe harbor, online service providers that comply with the eligibility requirements are shielded from copyright damages in connection with their hosting of infringing content uploaded by service users. This powerful safe harbor has played a major role in the success of Facebook, Instagram, YouTube and other U.S. social media and Internet sites.Although the DMCA is nearly 20 years old, questions remain as to the boundaries of the Section 512(c) safe harbor. In Zazzle, the court addressed one such question: Whether the safe harbor protects an online service provider that not only hosts images uploaded by its users, but also creates and sells—at the direction of those same users—physical products featuring such images. In a victory for copyright owners, the court ultimately concluded that the Section 512(c) safe harbor did not protect the online service provider’s activities with respect to such physical products.<h4>The Parties’ Dispute</h4>Zazzle, Inc. (“Zazzle”) operates a website that allows site users to upload images of artwork, slogans and designs; in doing so, users can elect to have the images printed on coffee mugs, posters, t-shirts and other physical products for sale to the public. When a sale occurs, Zazzle manufactures the ordered product and delivers it to the purchaser, and then pays a royalty to the user who had uploaded to Zazzle’s website the image that appears on the product.As is often the case with user-generated content sites, many of the images uploaded to the Zazzle site are not owned by the uploading users, and are uploaded without authorization from the owners of such images.Greg Young is a producer and marketer of works created by the visual artist Kerne Erickson, and the licensing agent for Scott Westmoreland, who is also a visual artist. Alleging that Zazzle was publicly displaying and creating consumer products using images from 41 paintings created by Erickson or Westmoreland, Young—through a corporate entity named Greg Young Publishing, Inc. (GYPI)—sued Zazzle for copyright infringement. Zazzle moved to dismiss the suit, arguing that GYPI lacks standing to sue and that Zazzle is protected against liability for copyright infringement under the Section 512(c) safe harbor.<h4>Standing to Sue for Copyright Infringement</h4>Westmoreland CopyrightsThe court first considered whether GYPI had standing to enforce the copyrights in Westmoreland’s works. GYPI and Westmoreland had entered into an agreement specifying that GYPI would be Westmoreland’s “exclusive representative” for soliciting, negotiating and administering licensing agreements with third parties. The court, however, distinguished the right to negotiate license agreements from the power to use or authorize use of the paintings, and found that GYPI’s status as an exclusive representative of Westmoreland was insufficient to establish standing.GYPI further argued that an “Enforcement of Copyrights” provision in the parties’ agreement gave GYPI “the right to enforce the copyrights as a beneficiary to th[e] Agreement” if Westmoreland declined to do so. Citing <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2013/05/09/11-16751.pdf" target="_blank" rel="noopener noreferrer">Ninth Circuit precedent</a>, the court held that the mere right to sue for copyright infringement without the transfer of an associated exclusive right in the Westmoreland copyrights was insufficient to confer standing on GYPI.Finding that Westmoreland did not grant GYPI any exclusive rights under his copyrights, the court determined that GYPI lacked standing to sue Zazzle for alleged infringement of the Westmoreland paintings.Erickson CopyrightsTurning to the Erickson copyrights, the court noted that the copyrights in the Erickson paintings had been assigned to Young’s d/b/a entities, “Greg Young Publishing” (GYP) and “Greg Young International” (GYI).  Zazzle argued that GYPI had no standing to enforce the copyrights because, at the time of the alleged infringement, the copyrights were technically owned by GYP and GYI, not GYPI.The court, however, noted that GYP, GYI and GYPI “were all one-man shops” controlled by Young; “[a]s a practical matter, Young is GYPI, just as Young was GYP and GYI.” Because Young “could decide that copyrights owned by any of these entities would be jointly owned by all of them, and no one could disagree,” the court held that GYPI is entitled to assert claims belonging to Young’s d/b/a entities. Moreover, and as an alternative to this holding, the court deemed GYPI’s complaint amended to add GYP and GYI as plaintiffs.<h4>Applicability of the DMCA Section 512(c) Safe Harbor</h4>Once the court found that GYPI had standing to sue for infringement of the Erickson works, Zazzle asserted the DMCA Section 512(c) safe harbor as an affirmative defense. In response, GYPI argued that Zazzle is ineligible for Section 512(c) safe harbor protection because (1) Zazzle is not a service provider for purposes of the safe harbor; (2) Zazzle knew that its services were being used to infringe GYPI’s copyrights; and (3) Zazzle received a financial benefit from the infringing activity and had the right and ability to control it.Is Zazzle a Service Provider?In determining the applicability of the Section 512(c) safe harbor, the court first considered whether Zazzle was a “service provider” eligible for protection under the safe harbor.GYPI argued that Zazzle is not a service provider because Zazzle “goes beyond passively accepting and displaying user-submitted images” by also directly manufacturing and selling physical products bearing the user-submitted images.The court, however, rejected this argument, noting that “a company does not cease to be a provider of online services because it offers offline services as well.” The court held that Zazzle’s services—allowing users to upload images online to be printed on consumer goods—were “unquestionably ‘online services’” and that Zazzle was therefore “a provider of online services” consistent with the definition of a “service provider” in the statute.Did Zazzle Have Knowledge of the Infringing Images or Conduct?Having found Zazzle to be a service provider, the court turned to the issue of whether Zazzle had actual or constructive knowledge of the infringing Erickson images or of activity using such images that was infringing; any such knowledge would render Zazzle ineligible for Section 512(c) safe harbor protection.Observing that constructive knowledge “<a href="https://www.leagle.com/decision/infco20130314153" target="_blank" rel="noopener noreferrer">has been construed so narrowly in the Ninth Circuit</a> that it is questionable whether it retains any independent meaning,” the court held that a service provider does not have knowledge of the infringement unless (1) the copyright holder submits a complaint that complies with the DMCA’s procedural requirements or (2) a third-party submits a “sufficiently specific complaint” about potential infringement.Although GYPI argued that it had complained to Zazzle regarding its users’ unauthorized uploading of the Erickson images and had provided Zazzle with a catalogue of such images to check for future infringement, the court determined that, even if such allegations are true, they do not show that Zazzle had “specific knowledge of particular infringing activity” that would render Zazzle ineligible for Section 512(c) safe harbor protection.Did Zazzle Receive a Financial Benefit From Infringement That It Could Control?Finally, the court considered whether Zazzle received a financial benefit directly attributable to the infringing activity where it had the right and ability to control such activity.Because Zazzle did not dispute that its sale of physical products bearing the Erickson images resulted in a financial benefit directly attributable to infringing activity, the court focused on whether Zazzle had the right and ability to control the infringing activity. The court stated that the following rights and activities, standing alone, do not result in a right and ability to control:<ul><li>That the service provider has “the general ability to remove infringing materials and terminate the accounts of repeat infringers;” and</li><li>That the service provider engages in “limiting monitoring” of its site or network for “apparent infringements.”</li></ul>Rather, the right and ability to control exists where a service provider exerts “substantial influence” over the activities of its users—for example, by playing “an active role in selecting, monitoring, or marketing user content.”Zazzle argued that it lacked the ability to control the sale of infringing products because, after a user’s order was approved by Zazzle’s content management team (CMT), the production process was “effectively automated.” The court rejected this argument, noting that “[i]t doesn’t matter if Zazzle lacked the ability to control its productions process after CMT approved the product,” given that the CMT presumably had the authority to reject infringing products. Moreover, even if Zazzle’s entire process were automatic, “that would suggest at most that Zazzle had chosen not to exercise its right and ability to reject infringing products, not that it lacked the right and ability to do so.”The court concluded that Zazzle had the right and ability to control the sale of infringing products; “[u]nlike eBay or Amazon, Zazzle’s role is not limited to facilitating the sale of products owned and marketed by third parties. Zazzle creates the products.” As a result, the court found Zazzle ineligible for DMCA Section 512(c) safe harbor protection to the extent it manufactured and sold the infringing physical products featuring the Erickson images. (One prominent Internet law commentator, Prof. Eric Goldman, <a href="http://blog.ericgoldman.org/archives/2017/06/dmca-safe-harbor-doesnt-protect-zazzles-printing-of-physical-items-greg-young-v-zazzle.htm" target="_blank" rel="noopener noreferrer">has questioned</a> the court’s reliance on the “right and ability to control” factor—rather than the “service provider” factor—in ruling against Zazzle.)In a small victory for Zazzle, the court noted that its ruling “does not preclude Zazzle from invoking Section 512(c) with respect to images that were displayed on its website but never printed onto physical products.”<h4>Concluding Thoughts</h4>After nearly two decades of court decisions taking an ever more expansive approach to the DMCA Section 512(c) safe harbor, is the pendulum beginning to swing in the other direction?Although the outcome of Zazzle is perhaps not surprising, when viewed in connection with the Ninth Circuit’s recent decision in <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2017/04/07/14-56596.pdf" target="_blank" rel="noopener noreferrer">Mavrix Photographs, LLC v. LiveJournal, Inc.</a>, it suggests that courts are increasingly seeking to reign in the scope of the safe harbor.As website operators, brands and other companies have become more bold in their efforts to curate and monetize user-generated content, Zazzle and Mavrix highlight the need for companies to step back and reassess the potential copyright risks associated with their exploitation of user-generated content.*                   *                  *For more on copyright-related challenges in connection with user-generated content, please see the following Socially Aware articles: <a href="http://www.sociallyawareblog.com/2017/08/17/could-the-use-of-online-moderators-increase-copyright-liability-exposure/" target="_blank" rel="noopener noreferrer">Could the Use of Online Volunteers and Moderators Increase Your Company’s Copyright Liability Exposure?</a>; <a href="http://www.sociallyawareblog.com/2016/08/10/ugcrisk/" target="_blank" rel="noopener noreferrer">Commercializing User-Generated Content: Five Risk Reduction Strategies</a>; and <a href="http://www.sociallyawareblog.com/2016/12/06/new-copyright-office-rule-creates-potential-gotcha-for-blogs-and-websites-hosting-user-generated-content/" target="_blank" rel="noopener noreferrer">New Copyright Office Rule Creates Potential “Gotcha” for Blogs and Websites Hosting User-Generated Content</a>.

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Zazzle Fizzles: Website Operator Denied Copyright Safe Harbor Protection for Its Sale of Physical Products Featuring User-Generated Images

Zazzle Fizzles: Website Operator Denied Copyright Safe Harbor Protection for Its Sale of Physical Products Featuring User-Generated Images

We discussed last year the trend toward companies seeking to monetize user-generated content. A recent Central District of California decision in Greg Young Pub

With over one billion websites on the Internet, and 211 million items of online content created every minute, it should come as no surprise that content curation is one of the hottest trends in the Internet industry. We are overwhelmed with online content, and we increasingly rely on others to separate the good from the bad so that we can make more efficient use of our time spent surfing the web.Consistent with this trend, many websites that host user-generated content are now focused on filtering out content that is awful, duplicative, off-topic, or otherwise of little interest to site visitors. And these sites often find that humans—typically passionate volunteers from the sites’ user communities—are <a href="https://www.forbes.com/sites/stevenrosenbaum/2015/07/26/the-curation-explosion/#2473ecf8409c" target="_blank" rel="noopener noreferrer">better than algorithms</a> at sorting the wheat from the chaff.Of course, any website that deals with user-generated content needs to consider potential copyright liability arising from such content. We’ve <a href="http://www.sociallyawareblog.com/2016/01/14/new-court-decision-highlights-potential-headache-for-companies-hosting-user-generated-content/" target="_blank" rel="noopener noreferrer">discussed</a> in past Socially Aware blog posts the critical importance of <a href="https://www.law.cornell.edu/uscode/text/17/512" target="_blank" rel="noopener noreferrer">Section 512(c) of the Digital Millennium Copyright Act</a> (the DMCA) to the success of YouTube, Facebook and other online platforms that host user-generated content. By providing online service providers with immunity from monetary damages in connection with the hosting of content at the direction of users, Section 512(c) has fueled the growth of the U.S. Internet industry.Nevertheless, questions have persisted as to whether a website operator’s use of employees or volunteers to review and filter user-generated content could deprive the operator of protection under the Section 512(c) safe harbor. A new Ninth Circuit decision, <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2017/04/07/14-56596.pdf" target="_blank" rel="noopener noreferrer">Mavrix Photographs, LLC v. LiveJournal, Inc.</a>, tackles this subject head on, concluding—to the alarm of many online service providers—that a company’s use of volunteer moderators to curate content hosted on its website resulted in triable issues of fact as to whether the company qualifies for DMCA safe harbor protection to the extent that such content infringes third-party copyrights.<h4>LiveJournal and the Oh No They Didn’t! Community Journal</h4>The defendant in the case, <a href="https://en.wikipedia.org/wiki/LiveJournal" target="_blank" rel="noopener noreferrer">LiveJournal</a>, operates a <a href="http://www.livejournal.com/" target="_blank" rel="noopener noreferrer">social media platform</a> on which a user can, among other things, create a “community journal” focused on a particular topic or theme. As the name suggests, a community journal allows multiple users to submit content to the journal. The creator or administrator of a community journal decides whether to enable moderation, to have no moderation, or to employ a hybrid moderation model (e.g., whitelisting certain domains while requiring moderation for others).The dispute involved a moderated community journal focused on celebrity gossip and pop culture, called <a href="http://ohnotheydidnt.livejournal.com/" target="_blank" rel="noopener noreferrer">“Oh No They Didn’t!”</a> (ONTD). Initially run entirely by volunteers, ONTD created rules to govern user submissions and posted comments; these rules included a requirement that users incorporate any referenced articles and photos in their submissions (rather than linking to such items), and a prohibition on the submission of old gossip and outdated photos.  ONTD also adopted a “blacklist” of third-party sources from which users were prohibited from copying materials for inclusion in their submissions.By 2010, ONTD was generating 52 million page views a month, making it the most popular journal on the LiveJournal platform. To maintain this success, ONTD relied on volunteer moderators (who review user-submitted items to ensure compliance with ONTD’s rules) and maintainers (who review and delete posts, and have the authority to remove users and even moderators from the ONTD community).That same year, for the first time, LiveJournal became directly involved in the operation of ONTD. In particular, it hired one of ONTD’s volunteer moderators—Brendan Delzer—to serve as the journal’s full-time “primary leader.” In this new role, Delzer instructed ONTD moderators regarding their own review and selection of content, and monitored and evaluated moderators, removing underperformers; Delzer also continued to review and select user-submitted content for posting to ONTD. By making Delzer an employee, LiveJournal sought to “take over” ONTD, in order to further grow the journal and run ads against the journal’s content.<h4>The Parties’ Dispute</h4>The plaintiff, Mavrix, is a company that specializes in candid photographs of celebrities; it generates revenue by selling its photos to magazines. Between 2010 and 2014, 20 celebrity photographs owned by the plaintiff were allegedly posted to ONTD in seven separate posts, all without Mavrix’s authorization. Some of these photos incorporated either a generic watermark or a Mavrix-specific watermark.In 2014, in lieu of sending a DMCA takedown notice, Mavrix sued LiveJournal for copyright infringement in connection with the 20 photographs. Upon learning of the suit, LiveJournal removed the photographs from its site and terminated the LiveJournal account holders who had posted the photographs. LiveJournal ultimately moved for summary judgment on the basis that it was shielded from copyright liability under the Section 512(c) safe harbor.Mavrix opposed LiveJournal’s motion and filed its own motion asserting that LiveJournal was disqualified from the Section 512(c) safe harbor because, as a result of the activities of ONTD’s volunteer moderators acting as LiveJournal’s agents:<ul><li>The photographs had not been hosted on the LiveJournal site “at the direction of a user,” as required under Section 512(c);</li><li>LiveJournal had actual or at least red flag knowledge of the photographs through the ONTD moderators; and</li><li>LiveJournal received a financial benefit directly attributable to the allegedly infringing activity, where it had the right to and ability to control such activity.</li></ul>The district court granted LiveJournal’s summary judgment motion, finding that ONTD moderators constituted independent third-party users, not agents of LiveJournal. Mavrix appealed, and the Ninth Circuit reversed.<h4>Storage at Whose Direction?</h4>As noted above, the Section 512(c) safe harbor is available only where content is stored by an online service provider “at the direction of the user.” In reaching its decision, the Ninth Circuit focused on whether LiveJournal’s use of moderators to pre-screen user-submitted content meant that the Mavrix photos were posted at LiveJournal’s direction, rather than at the direction of the users who submitted such photos to ONTD.After reviewing the sparse case law on the subject, the Ninth Circuit held that the common law of agency applies in determining whether the acts of the ONTD moderators are attributable to LiveJournal, and that genuine issues of material fact existed as to whether the moderators are LiveJournal’s agents.In reaching this conclusion, the Ninth Circuit examined the common law agency concepts of actual and apparent authority and the level of control of a principal over the agent, and found:<ul><li>Regarding actual authority (which arises where the principal assents to the agent taking action on the principal’s behalf), Mavrix had presented evidence that LiveJournal “gave its moderators explicit and varying levels of authority to screen posts” and provided “express directions about their screening functions.” Unlike other online platforms where users may independently post content, “LiveJournal relies on moderators as an integral part of its screening and posting business model.”</li><li>Regarding apparent authority (which arises when a third party reasonably believes that a person has authority to act with legal consequences on behalf of another), Mavrix had presented evidence that ONTD users may have reasonably believed that the journal’s moderators had authority to act for LiveJournal.</li><li>Regarding the level of control, Mavrix presented evidence showing that “LiveJournal maintains significant control over ONTD and its moderators”; that Delzer—a LiveJournal employee—had engaged in “substantive supervision” of ONTD moderators, and had exercised the power to select and remove moderators; and that LiveJournal had “ratified” the ONTD-developed rules that moderators relied on in screening user submissions.</li></ul>Based on its analysis of actual authority, apparent authority and control principles, the Ninth Circuit held, “From the evidence currently in the record, reasonable jurors could conclude that an agency relationship existed” between LiveJournal and ONTD’s volunteer moderators.The Ninth Circuit next turned to a related issue: If the fact finder were to determine that the ONTD moderators are agents of LiveJournal, the fact finder would then need to determine whether Mavrix’s photos “were indeed posted at the direction of the users in light of the moderators’ role in screening and posting” the photos. The court noted that posts are at the direction of the user if the online service provider (1) “played no role in posting them on its site” or (2) “carried out activities that were ‘narrowly directed’ towards enhancing the accessibility of the posts.”Regarding this second item, the Ninth Circuit observed that activities such as the automatic reformatting of posts or the manual screening of posts “for infringement or other harmful materials like pornography” can be “accessibility-enhancing,” and thus do not necessarily deprive an online service provider of protection under Section 512(c). But, if ONTD’s moderators are determined to be LiveJournal’s agents, the fact finder would then need to decide “whether the moderators’ acts were merely accessibility-enhancing activities or whether instead their extensive, manual, and substantive activities went beyond the automatic and limited manual activities we have approved as accessibility-enhancing.” In this regard, the Ninth Circuit noted that the ONTD moderators manually review the substance of user-submitted items to ensure that they contain new and exciting gossip and that only one-third of all submitted items are ultimately approved for posting.<h4>Lack of Knowledge</h4>Having provided guidance to the lower court on the threshold requirement of whether the Mavrix photos were stored at the direction of users, the Ninth Circuit turned to another Section 512(c) safe harbor requirement disputed by the parties: Whether LiveJournal lacked actual and red flag knowledge of such users’ infringing activities. If, on remand, the fact finder were to determine that the photos were stored by LiveJournal at the direction of users (rather than at LiveJournal’s own direction via its agents), LiveJournal would then need to establish that it had neither actual nor red flag knowledge that the photos were infringing.The actual knowledge inquiry looks at whether an online service provider has subjective knowledge of the specific infringing activity at issue. The district court had held that actual knowledge can only be conferred through a DMCA-compliant takedown notice received by a service provider from the copyright owner; because Mavrix had never sent such a notice, LiveJournal necessarily lacked actual knowledge of its users’ infringing activities in connection with the Mavrix photos.Sending shockwaves through the online service provider community, the Ninth Circuit rejected the district court’s approach, holding that a fact finder may determine that LiveJournal—either directly or through its agents, the volunteer moderators—in fact possessed subjective (and thus actual) knowledge of the infringing posts, even in the absence of a takedown notice from Mavrix.Further, even if LiveJournal can establish on remand that it lacked actual knowledge, it must also show that it did not have red flag knowledge of the infringing posts. Red flag knowledge exists where an online service provider is aware of facts that would have made the specific infringement at issue objectively obvious to a reasonable person. Such infringement must be “immediately apparent to a non-expert.”The Ninth Circuit noted that some of the posted Mavrix photos contained either a generic watermark or a Mavrix-specific watermark, and that, on remand, the fact finder will need to determine whether it would have been objectively obvious to a reasonable person that photos bearing such watermarks were infringing.<h4>Lack of Financial Benefit and the Right and Ability to Control</h4>The Ninth Circuit then turned to the final Section 512(c) safe harbor requirement at issue: Even if LiveJournal were to establish on remand that the Mavrix photos were stored at the direction of users, and even if it were able to establish that it lacked actual or red flag knowledge that the photos were infringing, it then must show that it did not financially benefit from infringing activities that it had the right and ability to control.The Ninth Circuit stated that the right and ability to control component of this final requirement involves “something more” than the mere ability of the service provider to remove or block access to materials posted on its website. This “something more” exists where the service provider exerts “high levels of control” over the activities of users. The court observed that, on remand, the fact finder should take into account the following in assessing whether LiveJournal had a right and ability to control the infringing posts:<ul><li>LiveJournal ratified ONTD rules that instruct users on the substance of their posts;</li><li>ONTD moderators screened the substantive content of user submissions;</li><li>Nearly two-thirds of posts submitted by ONTD users were rejected by ONTD moderators, including on substantive grounds;</li><li>ONTD prohibited users from submitting content taken from third-party content sources identified on a “blacklist” maintained by ONTD; and</li><li>LiveJournal implemented a mechanism to automatically block any submitted items originating from one of the sources on the ONTD blacklist.</li></ul>The court concluded that “the fact finder must assess whether LiveJournal’s extensive review process, infringement list, and blocker tool constituted high levels of control to show ‘something more’.”Finally, the Ninth Circuit noted that LiveJournal would need to establish that it did not derive a financial benefit from infringement that it had the right and ability to control. A safe harbor-disqualifying financial benefit “need not be substantial or a large portion of the service provider’s revenue,” and could be based on a broad availability of infringing materials attracting advertisers to the service provider’s site. On remand, the fact finder would need to consider the following:<ul><li>LiveJournal’s receipt of revenue from advertising based on the number of ONTD page views; and</li><li>Evidence presented by Mavrix (but contested by LiveJournal) showing that approximately 84% of posts on ONTD contain infringing material</li></ul>In order for LiveJournal to prevail on its safe harbor defense, the fact finder would need to determine whether LiveJournal met its burden of establishing that it did not financially benefit from infringement or that, if it did so benefit, it lacked the right and ability to control such infringement.<h4>Concluding Thoughts</h4>The Ninth Circuit’s Mavrix opinion may be the most significant DMCA safe harbor decision since the Second Circuit’s landmark <a href="http://scholar.google.com/scholar_case?case=13644579048975596329&hl=en&as_sdt=6&as_vis=1&oi=scholarr" target="_blank" rel="noopener noreferrer">Viacom Int’l, Inc. v. YouTube, Inc.</a> ruling in 2012. On numerous fronts—including what constitutes “at the direction of a user,” what constitutes “actual knowledge,” what constitutes “red flag knowledge,” what constitutes a “right and ability to control” and what constitutes a “financial benefit”— the Mavrix decision appears to go against the tide of generally pro-service provider decisions on these issues over the past two decades.Regardless of what the district court ultimately decides on remand, Mavrix is a wake-up call to website operators and other online service providers who rely on volunteers to screen, review or curate user-generated content. Such operators and service providers will want to carefully study the Ninth Circuit’s decision to determine whether they should take steps to modify their current practices regarding user-generated content. And, although Mavrix focuses on volunteers, not employees, companies should keep in mind that employees engaged in screening, reviewing or curating user-generated content are even more likely than volunteers to qualify as company agents, and thus may raise some of the same DMCA safe harbor concerns discussed in the Mavrix decision.

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Could the Use of Online Volunteers and Moderators Increase Your Company’s Copyright Liability Exposure?

Could the Use of Online Volunteers and Moderators Increase Your Company’s Copyright Liability Exposure?

With over one billion websites on the Internet, and 211 million items of online content created every minute, it should come as no surprise that content curatio

The U.S. Supreme Court <a href="https://www.supremecourt.gov/opinions/16pdf/15-1194_08l1.pdf" target="_blank" rel="noopener">unanimously held</a> that a North Carolina law that the state has used to prosecute more than 1,000 sex offenders for posting on social media is unconstitutional <a href="https://www.theverge.com/2017/6/19/15830286/supreme-court-north-carolina-sex-offenders-social-media" target="_blank" rel="noopener">because it violates the First Amendment</a>.The U.S. Supreme Court <a href="https://www.reuters.com/article/us-usa-court-song-idUSKBN19A1VA" target="_blank" rel="noopener">denied certiorari in what has become known as the  “dancing baby” case</a>—a lawsuit brought by a woman who sued Universal Music Group for directing YouTube to take down a video of her toddler-age son dancing to Prince’s “Let’s Go Crazy.” The high court’s decision leaves in place the decision of the <a href="http://www.leagle.com/decision/In%20FCO%2020150914123/LENZ%20v.%20UNIVERSAL%20MUSIC%20CORP." target="_blank" rel="noopener">Ninth Circuit Court of Appeals </a>holding that copyright owners must consider the possibility of fair use before sending a DMCA takedown notice.Queen Elizabeth II proposed to Parliament <a href="https://www.cnet.com/uk/news/uk-new-laws-could-remove-embarassing-facebook-pictures-of-your-youth-queens-speech/" target="_blank" rel="noopener">a law that would require social networking sites to honor Internet users’ requests</a> to remove anything the users shared before turning 18. The European Union already requires search engines to abide by users’ requests to remove information as part of the “right to be forgotten,” but the information must fulfill several criteria to qualify for removal.In an effort to minimize the extent to which <a href="https://en.wikipedia.org/wiki/Social_bot" target="_blank" rel="noopener">social bots</a> can manipulate public opinion, Germany plans to update its communication laws to <a href="https://a9t9.com/blog/social-bots-law-identify-automated-social-media-postings/" target="_blank" rel="noopener">require the operators of social media platforms to identify</a> when posts were generated by social bots and not actual people. And, yes, the name in German for this labeling requirement is Kennzeichnungspflicht.In other German social-media-news, <a href="https://www.nytimes.com/2017/06/20/world/europe/germany-36-accused-of-hateful-postings-over-social-media.html?_r=0" target="_blank" rel="noopener">police in that country raided the homes of 36 people accused of posting on social media hate speech</a> that included threats and harassment based on race and sexual orientation, and left-wing and right-wing extremist content.Making Texas one of 18 states to pass a bill on self-driving cars, Lone Star State governor <a href="https://www.texastribune.org/2017/06/15/lawmakers-clear-way-driverless-cars-texas-roads-and-highways/" target="_blank" rel="noopener">Greg Abbott signed a bill confirming that car manufacturers may test autonomous vehicles on Texas roads</a> and highways.Bitcoin’s price might be surging, but <a href="https://www.bloomberg.com/news/articles/2017-06-19/bitcoin-is-digital-gold-but-will-you-buy-a-sandwich-with-it" target="_blank" rel="noopener">it has yet to achieve widespread usage</a>.Motivated in part by her desire to avoid real-estate-agent fees, <a href="https://www.thesun.co.uk/money/3843335/homeowner-to-sell-her-house-by-streaming-it-live-on-facebook-and-its-completely-legal/" target="_blank" rel="noopener">a London homeowner plans to sell her house by hosting a viewing on Facebook Live</a> and receiving offers through Facebook Messenger.

Social Links: SCOTUS strikes down law banning sex offenders from social media, denies cert in “dancing baby” case; Germany may require ID of status updates posted by “bots”

The U.S. Supreme Court unanimously held that a North Carolina law that the state has used to prosecute more than 1,000 sex offenders for posting on social media

Social Links: SCOTUS strikes down law banning sex offenders from social media, denies cert in “dancing baby” case; Germany may require ID of status updates posted by “bots”

One year since agreeing with the European Commission to remove hate speech within 24 hours of receiving a complaint about it, <a href="https://techcrunch.com/2017/06/01/social-media-giants-making-progress-on-illegal-hate-speech-takedowns-ec/" target="_blank" rel="noopener">Facebook, Microsoft, Twitter and YouTube are removing flagged content an average of 59% of the time</a>, the EC reports.The U.S. Court of Appeals for the Second Circuit <a href="http://www.courthousenews.com/wp-content/uploads/2017/04/2ndFacebook.pdf" target="_blank" rel="noopener">held</a> that a catering company violated the National Labor Relations Act when it fired an employee for posting to Facebook a profane rant about his supervisor in response to that supervisor admonishing him for “chitchatting” <a href="http://blogs.findlaw.com/second_circuit/2017/04/union-workers-profane-post-on-facebook-is-protected.html" target="_blank" rel="noopener">days before the employee and his coworkers were holding a vote to unionize</a>.The value of the digital currency Ether could surpass Bitcoin’s value by 2018, some experts say.The Washington Post takes a look at how the<a href="https://www.washingtonpost.com/news/sports/wp/2017/06/08/how-the-nbas-embrace-of-social-media-might-help-it-someday-surpass-the-nfl/?utm_term=.81a00d53d3a6" target="_blank" rel="noopener"> NBA is doing a particularly good job of leveraging social media</a> and technology in general to market itself to younger fans and international consumers.A <a href="https://www.engadget.com/2017/05/21/israeli-court-emojis/" target="_blank" rel="noopener">judge in Israel ruled in favor of a landlord</a> who took down a rental ad based on his belief that a couple wanted to rent his apartment after they sent him a text message containing festive emoji and otherwise expressing interest in the rental. The landlord brought a lawsuit against the couple for backing out on the deal, and the court held the emoji in the couple’s text “convey[ed] great optimism.” The court further determined that, although the message “did not constitute a binding contract between the parties, [it] naturally led to the Plaintiff’s great reliance on the defendants’ desire to rent his apartment.” For a survey of U.S. courts’ treatment of emoji entered into evidence, read <a href="http://www.sociallyawareblog.com/2016/04/20/emoji/" target="_blank" rel="noopener">this post</a> on Socially Aware.The owner of a recipe site is <a href="http://www.hollywoodreporter.com/thr-esq/food-network-sued-snow-globe-cupcakes-how-video-1009511" target="_blank" rel="noopener">suing the Food Network for copyright infringement</a>, alleging that a video the network posted on its Facebook page ripped off her how-to video for snow globe cupcakes.Twitter’s popularity with journalists has made it a prime target for media manipulators, The New York Times’s <a href="https://www.nytimes.com/2017/05/31/technology/how-twitter-is-being-gamed-to-feed-misinformation.html?ref=media&_r=2&utm_source=Sailthru&utm_medium=email&utm_campaign=THR%27s%20Today%20in%20Entertainment_now_2017-06-01%2006:56:40_ehayden&utm_term=hollywoodreporter_tie" target="_blank" rel="noopener">Farhad Manjoo reports</a>. As a result, Manjoo claims, the microblogging platform played a key role in many of the past year’s biggest misinformation campaigns.The Knight First Amendment Institute at Columbia University claims that the @realDonaldTrump Twitter account’s blocking of some Twitter users <a href="http://www.reuters.com/article/us-usa-trump-twitter-idUSKBN18X2LR" target="_blank" rel="noopener">violates the First Amendment</a> because it suppresses speech in a public forum protected by the Constitution.Pop singer Taylor Swift, who pulled her back catalogue of music from free streaming services in 2014 saying the services don’t fairly compensate music creators, has now <a href="https://www.theguardian.com/technology/2017/jun/09/taylor-swift-returns-to-streaming-services-spotify-google-play-music" target="_blank" rel="noopener">made her entire catalogue of music accessible via Spotify, Google Play and Amazon Music</a>.To encourage young people in swing constituencies to vote for Labour in the UK’s general election, some Tinder users turned their profiles over to a bot that sent other Tinder users between the ages of 18 and 25 automated messages asking if they were voting and focusing on key topics that would interest young voters.

Social Links: Court disallows firing over Facebook page rant; Ether threatens Bitcoin’s reign as top digital currency; NBA slam dunks social media marketing

One year since agreeing with the European Commission to remove hate speech within 24 hours of receiving a complaint about it, Facebook, Microsoft, Twitter and Y

Social Links: Court disallows firing over Facebook page rant; Ether threatens Bitcoin’s reign as top digital currency; NBA slam dunks social media marketing

A nice overview of the rules on researching jurors’ social media accounts in various jurisdictions from Law.com.The importance of appearing at the top of Google search results, especially on mobile devices, is driving retailers to spend more and more on the search engine’s <a href="https://www.nytimes.com/2017/04/23/technology/google-parent-company-alphabet-advertising.html?em_pos=small&emc=edit_tu_20170424&nl=bits&nl_art=1&nlid=69264395&ref=headline&te=1&_r=0" target="_blank" rel="noopener">product listing ads</a>, which include not just text but also the photos of products.Researchers at the Massachusetts Institute of Technology <a href="https://www.digitaltrends.com/cool-tech/mit-construction-robot-3d-print-building/?utm_source=dlvr.it&utm_medium=twitter" target="_blank" rel="noopener">designed a mobile robot that 3D-printed a building that is 50-feet-wide</a> in 14 hours.In the second half of 2016, <a href="https://techcrunch.com/2017/04/27/government-requests-for-facebook-user-data-up-9-in-second-half-of-2016-but-content-restrictions-declined/" target="_blank" rel="noopener">Facebook received 9% more global government requests for users’ account data</a> and—largely because users had stopped posting images of the 2015 Paris terrorist attack victims’ remains, which was against French law—28% fewer global government requests to remove content that violates local law.After Kashmiris posted photos and videos depicting alleged military abuse in the days following a violence-plagued local election, authorities in the Indian-controlled region banned 22 social media sites, claiming it was necessary to restore order.At the UEFA Champions League final in Cardiff, Wales, this summer, British police will pilot a new automated facial recognition (AFR) system to scan the faces of attendees and compare them to a police “persons of interest” database.To show concerned citizens—and criminals—that they mean business, police in an Alabama city are live-broadcasting arrests on Twitter.The <a href="https://www.theguardian.com/technology/2017/apr/25/fitbit-data-murder-suspect-richard-dabate?CMP=twt_a-technology_b-gdntech" target="_blank" rel="noopener">data collected by the physical-activity-tracking device</a> worn by a Connecticut murder victim contradicts the timeline of events given by her husband, a suspect.One of the Kardashians is being sued by a photo agency for allegedly copying a copyrighted photo of her and posting it to her Instagram account.And on the subject of user-generated content, owners of video content that is posted by users to Facebook without authorization can now <a href="https://techcrunch.com/2017/04/27/not-so-freebooting/" target="_blank" rel="noopener">claim ad earnings for the infringing content and set automated rules</a> that will determine when infringing content should be blocked.The editor of the MIT Technology Review provided interesting insights to Chatbots Magazine regarding <a href="https://chatbotsmagazine.com/mit-technology-reviews-jason-pontin-technologists-consistently-underestimate-the-awfulness-of-926b49b4cc98" target="_blank" rel="noopener">the future and current state of artificial intelligence</a>.Police in Silicon Valley arrested a man for allegedly <a href="http://abc7news.com/1915713/" target="_blank" rel="noopener">knocking down a 300-pound security robot</a> while he was intoxicated.

Social Links: Rules for researching jurors via social media; law enforcement and new technologies; Facebook tool allows copyright owners to claim ad earnings from unauthorized video uploads

A nice overview of the rules on researching jurors’ social media accounts in various jurisdictions from Law.com. The importance of appearing at the top of Googl

Social Links: Rules for researching jurors via social media; law enforcement and new technologies; Facebook tool allows copyright owners to claim ad earnings from unauthorized video uploads

The Fifth Circuit Court of Appeals recently considered in <a href="http://law.justia.com/cases/federal/appellate-courts/ca5/16-10510/16-10510-2017-03-27.html" target="_blank" rel="noopener">BWP Media USA, Inc. v. T&S Software Associates, Inc.</a> whether volitional conduct is required to establish a claim for direct copyright infringement against an Internet service provider (“ISP”). The defendant ISP, T&S Software Associates (“T&S”), hosted a website that included a public forum called “HairTalk” where users could post content about hair, beauty, and celebrities.HairTalk users posted photographs of Ke$ha, Julianne Hough, and Ashlee Simpson that were owned by the plaintiffs, BWP Media USA and National Photo Group (“BWP”), without BWP’s authorization. The plaintiffs sued T&S for direct and secondary copyright infringement based on the users’ posts. The district court granted summary judgment in favor of T&S as to both direct and secondary infringement and BWP appealed the judgment as to the direct infringement claim.On appeal, the Fifth Circuit found that the determinative issue was whether a claim of direct infringement required volitional conduct by the defendant. The court looked to two past cases where courts implicitly, if not explicitly, required volitional conduct—<a href="https://www.law.cornell.edu/copyright/cases/907_FSupp_1361.htm" target="_blank" rel="noopener">Religious Tech v. Netcom</a> and <a href="http://www.ca4.uscourts.gov/Opinions/Published/031911.P.pdf" target="_blank" rel="noopener">CoStar v. LoopNet</a>. In Netcom, the California district court held that an ISP that provided Internet access for an online bulletin board was not liable for infringement based on a user’s posting of copyrighted works to the bulletin board. The Netcom court reasoned that “[a]though copyright is a strict liability statute, there should still be some element of volition or causation which is lacking where a defendant’s system is merely used to create a copy by a third party.”Similarly, in CoStar, the Fourth Circuit found the defendant ISP not liable for direct copyright infringement based on its subscribers’ posting of copyrighted photographs on its website. The court reasoned that the ISP was “simply the owner and manager of a system used by others who [were] violating CoStar’s copyrights and [was] not an actual duplicator itself[.]”BWP argued that the Supreme Court’s 2014 decision in <a href="https://www.supremecourt.gov/opinions/13pdf/13-461_l537.pdf" target="_blank" rel="noopener">American Broadcasting Cos. v. Aereo</a> rejected the volitional-conduct precedent in Netcom and CoStar. In Aereo, the petitioners alleged that Aereo infringed their exclusive right to publicly perform their copyrighted television programs by providing a service that allowed subscribers to stream the programs. Subscribers to Aereo’s service could request to stream a particular television program. After receiving the subscriber’s request, Aereo would record the broadcast of the selected show, transform the signals into data, and transmit the data through the Internet to the subscriber.In distinguishing the Aereo decision from Netcom and CoStar, the Fifth Circuit noted that Aereo never addressed the volitional-conduct requirement and instead based its holding on the technology at issue. Looking to the distinction the Aereo dissent drew between engaging in infringing activity and merely supplying equipment that allows others to do so, the Fifth Circuit concluded that T&S fell in the latter category—it merely hosted the forum on which the users posted the copyrighted photographs. The court pointed out that, unlike T&S, Aereo played an active role in the infringement by providing the means to obtain and transmit copyrighted content and by routing the copyrighted content to its subscribers.Regular Socially Aware readers may be wondering at this point where do the safe harbors under the Digital Millennium Copyright Act (“DMCA”) fit into this case? Unfortunately for T&S, it did not qualify for the Section 512(c) safe harbor because it did not have an agent designated to receive takedown notices during the relevant time period, as the statute requires. BWP seized on this fact to argue that the DMCA superseded the Netcom line of “volitional conduct” cases, and that the Section 512(c) safe harbor now serves as the exclusive means of protection for ISPs against copyright infringement liability based on hosting user content. Because T&S was not eligible for protection under Section 512(c), BWP asserted T&S’s hosting of the celebrity photographs constituted copyright infringement regardless of whether or not there was volitional conduct.The Fifth Circuit flatly rejected this argument and noted that the DMCA explicitly provides that the failure to qualify for limitation of liability under the DMCA “<a href="https://www.law.cornell.edu/uscode/text/17/512">shall not bear adversely</a>” on any of the ISP’s other defenses under the law. The court concluded that T&S’s lack of eligibility for the Section 512(c) safe harbor did not preclude T&S from arguing and proving that it was never liable for copyright infringement in the first place.While this case will surely comfort ISPs hoping to avoid liability for copyright infringement arising from hosting user-generated content, it also serves as a cautionary tale to double check that DMCA agent designation, as it’s always better to have two lines of defense rather than just one. *         *          *For other Socially Aware posts relating to the DMCA safe harbors, please see <a href="http://www.sociallyawareblog.com/2017/02/06/repeat-infringer-policy-requirement-for-key-copyright-safe-harbor-for-online-service-providers/" target="_blank" rel="noopener">Second Circuit Clarifies “Repeat Infringer” Policy Requirement for DMCA Copyright Safe Harbors</a>; <a href="http://www.sociallyawareblog.com/2016/12/06/new-copyright-office-rule-creates-potential-gotcha-for-blogs-and-websites-hosting-user-generated-content/" target="_blank" rel="noopener">New Copyright Office Rule Creates Potential “Gotcha” for Blogs and Websites Hosting User-Generated Content</a>; <a href="http://www.sociallyawareblog.com/2016/01/14/new-court-decision-highlights-potential-headache-for-companies-hosting-user-generated-content/" target="_blank" rel="noopener">New Court Decision Highlights Potential Headache for Companies Hosting User-Generated Content</a>; <a href="http://www.sociallyawareblog.com/2014/06/24/court-holds-that-dmca-safe-harbors-do-not-extend-to-infringement-prior-to-designation-of-agent/" target="_blank" rel="noopener">Court Holds That DMCA Safe Harbor Does Not Extend to Infringement Prior to Designation of Agent</a>; and <a href="http://www.sociallyawareblog.com/2015/03/16/first-ever-award-of-any-damages-for-fraudulent-dmca-takedowns-under-section-512f/" target="_blank" rel="noopener">First-Ever Award of “Any Damages” for Fraudulent DMCA Takedowns Under Section 512(f)</a>.

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5th Circuit: ISP Not Liable for Infringement Due to Lack of Volitional Conduct, Despite Ineligibility for DMCA Safe Harbor

5th Circuit: ISP Not Liable for Infringement Due to Lack of Volitional Conduct, Despite Ineligibility for DMCA Safe Harbor

The Fifth Circuit Court of Appeals recently considered in BWP Media USA, Inc. v. T&S Software Associates, Inc. whether volitional conduct is required to establi