October 18, 2011 1:50pm PT by Eriq Gardner
Viacom, Google Face Off in Appeals Court Over YouTube Copyright Issues
Viacom, Google, and a class of copyright holders led by the UK Premier League squared off Tuesday before a three-judge panel at the 2nd Circuit Court of Appeals in a case that will shape the future of the Internet by determining the standard for copyright liability.
The parties not only presented distinct world-views of their interpretation of relevant statutory language, but debated "knowledge" almost as if one side was reading from Plato and the other from Ludwig Wittgenstein. The gulf between the two camps is that enormous.
Up first was Paul Smith, chair of the appellate practice at Jenner & Block, arguing on Viacom's behalf that YouTube willfully blinded itself to more than 60,000 copyrighted works like clips from The Daily Show with Jon Stewart and BET content illegitimately posted on the video-sharing website.
In opening remarks, Smith called a decision by U.S. District Court Louis Stanton to dismiss Viacom's billion-dollar lawsuit against YouTube "indefensible." If left to stand, Smith argued that it would nullify three statutory obligations by ISPs like YouTube: First, to act expeditiously if a company gains knowledge of copyrighted material on its network. Second, there would be no preventing online companies from deriving direct financial benefit off the back of copyrighted material. And third, there would be no stopping sites like YouTube from storing infringing materials at the behest of their users.
During questioning from the appellate judges, Smith got some push-back on whether Viacom was merely asserting YouTube had "abstract" knowledge of copyright infringing material. The judges wanted to know whether this would be enough to satisfy its burdens in pushing the case.
Viacom has long argued that general knowledge of infringement is as good as actual knowledge in forcing ISPs to act expeditiously, but here Smith largely eschewed direct talk about "red flags."
Instead, he (as well as the lawyer representing the class plaintiffs) approached the issue more practically, hitting hard on the point that the e-mails and other documented evidence from the case showed that whatever standard of knowledge was picked, it was more than sufficient to bring the case before a jury.
"The founders of YouTube were one of the 10 most frequent users of the website," said Smith, adding, "They deliberately hid from their own eyes what was going on."
Not surprisingly, Andrew Schapiro, a partner at Quinn Emanuel representing Google, had a different view when it was his turn to argue before the judges.
"Judge Stanton joined every court in deciding that knowledge of specific and identifiable infringement is necessary and not mere general knowledge," argued the attorney.
Schapiro said the fundamental mistake being made by his adversaries in the case was to decide that YouTube was in the best position to determine what is infringing and what is not. Just because something is copyrighted doesn't make it infringing, he said.
The attorney submitted that copyright holders like Viacom bear the burden of sending takedown notices because they can provide the proper analysis of material that's been infringed versus material being fairly used. "How would one interpret a video that's spoken in Slovenian?" asked Schapiro. "There's no central depository of copyrights."
If, at the start of the day, the case involved two world-views -- one where Viacom says mere general knowledge is necessary to prompt swift action and one where Google says specific knowledge is what's really necessary -- the appellate justices seemed just as interested in listening to the facts involved in the dispute.
The appellate judges, for example, asked Schapiro hard questions about the e-mails that had turned up in discovery, which purportedly showed that YouTube founders knew that as much as 70% of material on its site was infringing. Why didn't YouTube respond to this?
Schapiro countered they didn't need to, that the evidence merely showed general knowledge.
Fine, said the justices. But what about knowledge by YouTube that users were sharing specific material like whole episodes of The Daily Show?
Schapiro retorted that there's no doubt a work like this was copyrighted, but the question is whether it was infringing. This case, he argued, was over allegations of infringement of "specific clips" and that there was no evidence that YouTube had actual knowledge these clips were improperly on its site.
On retort, Charles Sims, the Proskauer Rose lawyer for the class of copyright holders, disputed this assessment, saying that YouTube had been sent takedowns on things like Premiere League games and specific songs, only to see them pop up again on the website. Sims suggested the judges have their clerks do a search today for this copyrighted material. The case wasn't about clips, he said, but rather about "copyrighted works."
The justices were also curious to address a question over whether YouTube could have done more at an earlier stage to take care of Viacom's concerns.
"We're not suggesting more things couldn't be done," answered Schapiro. "The question is what the statute requires. YouTube has gone above and beyond. YouTube has spent millions of dollars developing state-of-the-art technology."
Later, Schapiro said that if YouTube had done A, B, C, and D to take care of copyright infringements on its network, Viacom would merely argue that it hadn't done E and F. "This case is an example of the old phrase, 'No good deed goes unpunished.'"
So what's going to happen?
One of the justices asked Smith what he really wanted from the 2nd Circuit.
Smith responded that he had a "big ask" and a "small ask."
The big ask involves an interpretation of the DMCA whereby it's established that ISPs like YouTube have an affirmative obligation to make sure their systems are clean before being eligible for safe harbor.
It's not clear that the judges are ready to go that far.
Instead, the justices could merely give Viacom it's "small ask," which means that the case could be remanded to the district judge for more fact-finding. The justices certainly seemed impressed by some of the internal YouTube documents turned up in discovery that showed possible bad behavior.
If we had to guess, the 2nd Circuit might revive Viacom's lawsuit by directing a lower court's attention to YouTube's early days. Viacom might not get everything it wants, but at least it would get before a jury to argue that YouTube execs could have done more with the knowledge at hand.
Asked to pin down damages, Smith said he couldn't, but he did allow that YouTube had once offered a half a billion dollars for licensing Viacom's material, which he says undercuts Google's arguments about not knowing what was specifically troubling its adversary.
Then again, it really depends on how one defines "knowing." The 2nd Circuit better bone up on their philosophy textbooks.