How an Obscure Supreme Court Decision Might Influence Viacom's $1 Billion YouTube Case

Must UGC websites be proactive in cleaning up copyright-infringing material on their network or can they just wait for takedown notices to come from content owners?

As many people in the entertainment and technology industries await clarity on this issue from appeals courts, Viacom and YouTube are spinning a recent Supreme Court decision that might provide an answer.

Earlier in the year, both Viacom and Google submitted opening briefs before the Second Circuit Court of Appeals in the billion-dollar, closely-watched dispute over whether YouTube has a safe harbor from Viacom's copyright infringement claims.

Before oral arguments are heard, however, the U.S. Supreme Court issued a decision on May 31 in a somewhat obscure patent case, Global-Tech Appliances v. SEB.

The plaintiff in this case was a large French appliance manufacturer with a patent over a design for a deep-fat fryer. The defendant allegedly was responsible for inducing infringement of these deep-fat fryers in the United States. At issue in the case was the necessary state of mind for the defendant to have liability under a section of the Patent Act.

The Supreme Court ruled 8-1 that for the defendant to be found liable of inducing infringement, it must have knowledge of the existence of the patent and an intention to infringe.

The reason why the decision has gained the attention of content holders like Viacom is that the Supreme Court added that the intent standard could be reached by a demonstration that the defendant willfully blinded itself to infringements. Two weeks after the decision was issued, Viacom's lead lawyer Theodore Olson sent a letter to the Second Circuit drawing attention to the ruling.

One of the biggest issues for the Second Circuit to decide in the Viacom-Google case is the so-called "red flag" test of the DMCA, which says that website hosts with no actual knowledge of infringements are free from liability so long as they are "not aware of facts or circumstances from which infringing activity is apparent."

If the Viacom-Google case can be summed up in a single word, it's "aware." Viacom submits that general knowledge of copyright infringements is enough to make YouTube "aware," whereas Google argues it only becomes "aware" upon "blatant" violations.

It's in this context that Olson argued in his recent letter that the "willful blindness" characterization should be applied to YouTube's behavior.

In a response letter, Google's lawyer, Andrew Schapiro, tells the Second Circuit that Global-Tech was a patent case -- not a copyright one -- and that the DMCA has express provisions governing knowledge whereas the Patent Act does not.

One more interesting development: As Viacom and YouTube suddenly look up to the Supreme Court for some input, further down the legal food chain, some disputes have ground to a stand-still in anticipation of the forthcoming 2nd Circuit ruling in Viacom v. YouTube.

For instance, we've learned that a judge recently stayed proceedings in a dispute by record labels against video-sharing website Vimeo so as to first hear what the Second Circuit has to say in the YouTube dispute. In their lawsuit, plaintiff record labels argue Vimeo actively induces its users to infringe copyrights on sound recordings.

E-mail: eriqgardner@yahoo.com

Twitter: @eriqgardner

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