Appeals Court Rules Website Moderators Can Potentially Undercut Copyright Defense

In its latest big decision on the copyright front, the 9th Circuit revives a paparazzi agency's lawsuit over a photo of Beyonce Knowles.
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In the everlasting battle to shape copyright liability in the digital age, the content industry scored a key decision on Friday when the 9th U.S. Circuit Court of Appeals ruled that moderators could be deemed agents of a website with potentially enough requisite knowledge of infringements to undercut an internet service provider's safe harbors. The decision could influence the future use of moderators online.

The opinion emanates from a lawsuit filed by Mavrix Photographs, a litigious paparazzi shop, against LiveJournal, which runs the popular celebrity fan community "Oh No They Didn't!" 

Mavrix sued for copyright infringement upon some of its photos appearing on ONTD, including one that appeared to show Beyonce was pregnant.

The twist in this case, if one wants to term it as such, is that Mavrix skipped past a takedown notice to sue LiveJournal. The defendant then argued that it didn't know of the allegedly infringing posts and had immunity under the Digital Millennium Copyright Act. But LiveJournal did employ a team of volunteer moderators who reviewed posts to see if they were compliant with the website's rules. That didn't matter. At a district court, a federal judge ruled that the photos were posted "at the direction of users" partly because the actions of the moderators couldn't be attributed to LiveJournal.

Today, after the dispute attracted significant interest from the Motion Picture Association of America on one side and tech companies including Kickstarter, Etsy, Pinterest and Tumblr on the other, the 9th Circuit has reversed the lower court ruling and revived the copyright dispute.

Circuit Judge Richard Paez believes there are genuine issues of material fact as to whether the moderators are LiveJournal's agents.

In regards to the possibility that these moderators act as agents, Paez notes, "Although LiveJournal calls the moderators 'volunteers,' the moderators performed a vital function in LiveJournal’s business model. There is evidence in the record that LiveJournal gave moderators express directions about their screening functions, including criteria for accepting or rejecting posts. Unlike other sites where users may independently post content, LiveJournal relies on moderators as an integral part of its screening and posting business model."

The opinion then discusses how an agency relationship may be created through "actual or apparent authority" as well as "the level of control a principal exerts over the agent."

This is all important because the safe harbor provisions of the DMCA (512c) set up a threshold question of whether material that's posted online is stored at the direction of a user. 

"Posts 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' toward enhancing the accessibility of the posts," explains Paez. "The ONTD moderators manually review submissions and publicly post only about one-third of submissions. The moderators review the substance of posts; only those posts relevant to new and exciting celebrity gossip are approved. The question for the fact finder is 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."

Once this determination is made, the 9th Circuit provides more feedback on what then needs to be addressed at the trial court.

Even if the posts came at the direction of users, LiveJournal must also show it lacked both actual and red flag knowledge of the infringements. The fact that it didn't receive a takedown notice helps, but Paez writes it's still not "conclusive" because there needs to be an assessment of LiveJournal's "subjective knowledge of the infringing nature of the posts."

According to the 9th Circuit, if the moderators are agents, their knowledge of infringements counts too. Further, when dealing with red flag knowledge, the fact that some of the photos contained watermarks stating "Mavrixonline.com" could be a factor in showing that infringements should have been "objectively obvious" to a reasonable person. Finally, even if LiveJournal manages to survive all of these hurdles, it will also need to demonstrate it derives no financial benefit from the infringements that it had a the right and ability to control.

Today's opinion can be read in full here.

In advance of the ruling, some in the tech industry warned that if the use of moderators could eradicate safe harbors, the choice would be to become either under-assertive or over-assertive with regards to user-submitted content. "The first would leave online services toothless against even the worst kind of anti-social material, while making it more difficult for users to find useful content," the brief from various tech companies stated. "The second would punish innocent users, silence a host of lawful speech, and erode the open nature of the Internet."

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