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Hotfile Slams MPAA's Interpretation of YouTube Ruling

What did the Second Circuit really say in its recent verdict on Viacom's appeal? Hollywood studios offer a reading. The cyberlocker has its own interpretation. There's no peace in ongoing copyright wars.

Youtube Viacom Split

Less than two weeks ago, the Second Circuit Court of Appeals handed down an important ruling in Viacom's lawsuit against Google for massive alleged copyright infringements on the YouTube network. The lawsuit was revived, representing a victory for Viacom, but as we pointed out at the time, the key significance will be how future litigants and judges interpret the vagueness of the ruling.

It hasn't taken very long for copyright holders and their legal targets to fuss over the meaning of what the appellate circuit said in the ruling. Late last week, in the midst of a battle with cyberlocker Hotfile, the MPAA delivered its own interpretation. The studio's reading then got a response from Hotfile's attorneys, who wrote that the plaintiffs were attempting to put a "brave face" on what was said at the Second Circuit.

Let the semiotic battles begin. If the Second Circuit provided any sign-posts for how copyright law is to be interpreted going forward, one would hardly know it from court filings last week in the Hotfile case.

Hollywood studios are currently pushing for a summary judgment victory against Hotfile, calling the website "more egregious" than Napster, Grokster and Limewire and "indistinguishable" from Megaupload.

In a notice of supplemental authority on Wednesday, the MPAA wanted to bring a Florida federal judge's attention to the Second Circuit ruling in the YouTube case and specifically, four key points:

#1:

"First, the Second Circuit held that service providers can obtain knowledge of infringement that disqualifies them from DMCA safe harbor by being willfully blind to infringement."

The appellate circuit largely accepted Google's interpretation of the actual, specific knowledge of infringing material that compels an ISP to respond expeditiously or lose its safe harbors from liability. It didn't seem to accept Viacom's interpretation of "red flags," but did mention that further fact finding would be needed on whether YouTube willfully blinded itself, referencing a survey that estimated 75 percent to 80 percent of all YouTube streams contained copyrighted material and pointed to various internal e-mails between YouTube execs. The MPAA is spinning this as a victory, saying that the Second Circuit determined that "while service providers have no freestanding duty to monitor for infringing material, a service provider can be found willfully blind where it was aware of a high probability of the fact in dispute and consciously avoided confirming that fact.”

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Further, the plaintiffs add, "In these circumstances, as the Second Circuit observed, willful blindness 'may be applied … to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.'"

In other words, Hollywood rights-holders still believe that ISPs have to do more than respond to takedown notices.

#2 & #3:

"Second, the Second Circuit emphasized that Grokster inducement liability is based on 'purposeful, culpable expression and conduct' and reaffirmed that such conduct was inconsistent with DMCA safe harbor protection..."

"Third, the Second Circuit rejected defendants’ argument that the higher DMCA standard for 'ability to control” should apply to common law vicarious infringement as well. In ruling that the DMCA 'requires something more than the ability to remove or block access to materials posted on a service provider’s website,'...the Second Circuit confirmed that '[u]nder the common law vicarious liability standard, [t]he ability to block infringers’ access to a particular environment for any reason whatsoever is evidence of the right and ability to supervise.'"

The issue of vicarious liability -- the responsibility of ISPs towards infringers on their network -- has been the source of tremendous controversy in courts over the years, and in legal circles, perhaps there's been no sentence in the Second Circuit's ruling up for more debate than when the appellate court discussed ISP's "right and ability to control" infringements on its network.

In the ruling, the Second Circuit didn't accept Google's interpretation of copyright law that the "ability to control" only pertained to specific knowledge of infringements, nor did it seem to accept Viacom's conflation of vicarious liability standards on this topic, saying "something more" was needed. Or did it reject? Here, the MPAA believes that the vague "something more" language was a victory to copyright holders' interpretation.

#4:

"Finally, contrary to defendants’ arguments, the Second Circuit reaffirmed that service providers can obtain knowledge of infringing activity that disqualifies them from DMCA safe harbor from sources other than copyright owner takedown notices."

See above. The MPAA adds, "Indeed, even in finding that service providers must have knowledge of specific infringing activity to be disqualified from safe harbor under § 512(c)(1)(A), the Second Circuit made clear that the test is an objective one: whether from the facts and circumstances known to the service provider, specific infringing activity would have been apparent to a reasonable person."

Is that objective or subjective?

This all adds up to a reading whereby ISPs defending themselves against copyright holders in court might wonder if they actually won nothing in the Second Circuit's ruling in the YouTube case.

Of course, Hotfile has a different interpretation, saying that plaintiffs have submitted a filing that "badly distorts the important aspects of the YouTube decision."

The company's lawyers say that the Second Circuit rejected the position that "generalized knowledge of infringement on a website suffices to deprive a defendant of safe harbor protection under the DMCA" and that "that disqualifying knowledge or awareness can be proved through statistics."

To the issue of willful blindness, Hotfile says sure, but only applied to specific instances of infringement.

To the issue of "right and ability to control," Hotfile says that the MPAA has engaged in a "tortured reading" to find support for the idea that DMCA safe harbors don't apply to those who possibly maintain inducement liability and that it is attempting to "camouflage" the fact that the Second Circuit disagreed with them on the “right and ability to control” provision of the DMCA.

Essentially, when adding up the respective parties' interpretations of the YouTube decision, the Second Circuit ruling has become a Rorschach inkblot test. The parties each read elements within the decision to support their respective causes. That fact isn't surprising, but what's remarkable is how little clarity there is in what the judges at the appellate circuit had to say. The state of disagreement about copyright law is pretty much exactly the same as before. Unfortunately, judges don't sit immediately for follow-up questions.

Read the full position papers on the following page.

E-mail: eriq.gardner@thr.com

Twitter: @eriqgardner