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Copyright in the YouTube Age

Permanent Link: http://ufdc.ufl.edu/UFE0021926/00001

Material Information

Title: Copyright in the YouTube Age Hosting and Linking of Online Video
Physical Description: 1 online resource (237 p.)
Language: english
Publisher: University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: 2008

Subjects

Subjects / Keywords: breyer, copyright, dmca, fair, filtering, google, grokster, harbor, infringement, internet, linking, noninfringing, online, safe, sony, substantial, use, video, youtube
Journalism and Communications -- Dissertations, Academic -- UF
Genre: Mass Communication thesis, M.A.M.C.
bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: Our study presents a legal analysis of copyright infringement?s impact on the dissemination of online video. The rapid increase in online video?s popularity is due in large part to the unprecedented success of YouTube.com, the Internet?s leading hosting website for online video. YouTube, as well as other video hosting websites, offers Internet users the unprecedented ability to share their creative audio-visual works with the world. However, the technology also enables users to engage in infringing uses by sharing unauthorized copies of copyrighted television shows and motion pictures. In addition, linking websites have developed as popular tools for Internet users to find and access copyrighted videos stored on hosting websites. Both the infringing uses of YouTube and linking websites? assistance in the facilitation of copyright infringement have caused great concern within the content industry regarding their ability to continue to market and protect their creative works online. At the same time, limitations on user-generated content caused by websites seeking to limit their liability raise concerns as to the limitations of free speech and fair use. Previous research reveals that copyright law has regularly struggled to adapt to technological innovation. This study examines the latest struggle as copyright law adjusts to online video hosting and sharing technologies. A variety of copyright laws apply in this instance, including direct liability under the Copyright Act, the common law of secondary liability, and the safe harbor provided by the Digital Millennium Copyright Act. This study applies these areas of law to the case studies of YouTube and a popular linking website, SouthParkzone.com, and determines whether either may be liable under the applicable copyright laws. Finally, this study identified four possible solutions to problems identified through the legal analysis, including how to preserve First Amendment concerns within secondary liability, the future of automatic filtering and its impact on user-generated content and fair use, and a new test for liability for linking websites consistent with First Amendment principles.
General Note: In the series University of Florida Digital Collections.
General Note: Includes vita.
Bibliography: Includes bibliographical references.
Source of Description: Description based on online resource; title from PDF title page.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The University of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Thesis: Thesis (M.A.M.C.)--University of Florida, 2008.
Local: Adviser: Brown, Justin.

Record Information

Source Institution: UFRGP
Rights Management: Applicable rights reserved.
Classification: lcc - LD1780 2008
System ID: UFE0021926:00001

Permanent Link: http://ufdc.ufl.edu/UFE0021926/00001

Material Information

Title: Copyright in the YouTube Age Hosting and Linking of Online Video
Physical Description: 1 online resource (237 p.)
Language: english
Publisher: University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: 2008

Subjects

Subjects / Keywords: breyer, copyright, dmca, fair, filtering, google, grokster, harbor, infringement, internet, linking, noninfringing, online, safe, sony, substantial, use, video, youtube
Journalism and Communications -- Dissertations, Academic -- UF
Genre: Mass Communication thesis, M.A.M.C.
bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: Our study presents a legal analysis of copyright infringement?s impact on the dissemination of online video. The rapid increase in online video?s popularity is due in large part to the unprecedented success of YouTube.com, the Internet?s leading hosting website for online video. YouTube, as well as other video hosting websites, offers Internet users the unprecedented ability to share their creative audio-visual works with the world. However, the technology also enables users to engage in infringing uses by sharing unauthorized copies of copyrighted television shows and motion pictures. In addition, linking websites have developed as popular tools for Internet users to find and access copyrighted videos stored on hosting websites. Both the infringing uses of YouTube and linking websites? assistance in the facilitation of copyright infringement have caused great concern within the content industry regarding their ability to continue to market and protect their creative works online. At the same time, limitations on user-generated content caused by websites seeking to limit their liability raise concerns as to the limitations of free speech and fair use. Previous research reveals that copyright law has regularly struggled to adapt to technological innovation. This study examines the latest struggle as copyright law adjusts to online video hosting and sharing technologies. A variety of copyright laws apply in this instance, including direct liability under the Copyright Act, the common law of secondary liability, and the safe harbor provided by the Digital Millennium Copyright Act. This study applies these areas of law to the case studies of YouTube and a popular linking website, SouthParkzone.com, and determines whether either may be liable under the applicable copyright laws. Finally, this study identified four possible solutions to problems identified through the legal analysis, including how to preserve First Amendment concerns within secondary liability, the future of automatic filtering and its impact on user-generated content and fair use, and a new test for liability for linking websites consistent with First Amendment principles.
General Note: In the series University of Florida Digital Collections.
General Note: Includes vita.
Bibliography: Includes bibliographical references.
Source of Description: Description based on online resource; title from PDF title page.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The University of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Thesis: Thesis (M.A.M.C.)--University of Florida, 2008.
Local: Adviser: Brown, Justin.

Record Information

Source Institution: UFRGP
Rights Management: Applicable rights reserved.
Classification: lcc - LD1780 2008
System ID: UFE0021926:00001


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COPYRIGHT IN THE YOUTUBE AGE:
HOSTING AND LINKING OF ONLINE VIDEO















By

DREW SHENKMAN


A THESIS PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
MASTER OF ARTS INT MASS COMMUNICATION

UNIVERSITY OF FLORIDA

2008






































O 2008 Drew Shenkman



































To my family.









ACKNOWLEDGMENTS

I thank my chair and members of my supervisory committee for their feedback on this

study as well as during my time in the classroom. I thank all of my mentors in the legal

profession who have provided great examples of professionalism, diligence, and advocacy early

in my legal career. I thank my parents, brother, and grandparents for their constant support and

encouragement.











TABLE OF CONTENTS
page

ACKNOWLEDGMENTS .............. ...............4.....

LIST OF FIGURES .............. ...............7.....


AB S TRAC T ......_ ................. ............_........8

CHAPTER


1 INTRODUCTION ................. ...............10.......... ......

YouTube and Online Video ................. ...............12................
Concern from the Copyright Industry............... ...............15
Linking to Infringing Content............... ...............16
Protecting the Interests of the End-User ................. ...............18...............
Digital Copyright Law ................. ...............19........... ....
A Possible Affirmative Defense .............. ...............27....
Research Questions and Methodology .............. ...............29....

2 LITERATURE REVIEW ................. ...............33................


Copyright Law and New Technology............... ...............4
The Legislative Process ................. ...............40........... ....
Copyright Incumbents ................. ... .. ...... ...............4
Changing Views: Regulatory Policy and Copyright Consumers ................. ...............51
Technology and the Courts .................. ........... .. ...............55.....
Secondary Liability's Effect on Copyright Law .............. ...............56....
Judiciary's Role in Setting Copyright Policy .............. ...............60....
Conclusion ................ ...............61.................

3 REVIEW OF CASE LAW .............. ...............63....


Direct Liability .................. ............... ...............64......
Reproduction Right @ 106(1) ................. ...............65........... ..
Derivative Works @ 106(2) ................. ...............66.......... ....
Distribution Right @ 106(3) ................................ ...............6
Public Display and Performance Rights @ 106(4)-(5) ......... ................ ...............68
Secondary Liability................ ...............6
Vicarious Liability ................. ...............71.......... ......
Contributory Liability .................. ........ ...... ...............72.......
Modern Secondary Liability and Technology ................. ...............73........... ...
Sony v. Universal City Studios (1984) .............. ...............74....
A&M~v. Napster (9th Cir. 2001) ................. ...............79..............
In re Aimster (7th Cir. 2003) ............... ...............84....
M~GM v. Grokster (2005) ............... ...............89.
Post-Grokster developments .............. ...............98....












Linking Law. ................. ................ ...............99.......
Linking to Infringing Content .............. ...............101....
Linking and Thumbnail Images............... ...............103
Linking to Illegal Material (DeCSS) ................ ...............106........... ...
Indexing and Linking to Music .............. ...............108....
DM CA Safe Harbor ............... .. ............ ...............110......
Transitory Communications ( 512(a) ......__....._.__._ ......._._. ............1
System Caching @ 512(b) ........._._.... .. ......._ _. ...............113..
User-Directed Storage of Material @ 5 12(c) ................. ...............114........... ..
Information Location Tools ( 512(d) ................ ...............118..............
Fair Use ................. ...............119................


4 CASE STUDY ANALYSIS ................. ...............124......... .....


YouTube.com Case Study .............. ...............126....
Direct Liability .............. ...............128....
Reproduction right............... ...............129.
Distribution right ............ _... ...._ ...............133....
Public display and performance right............... ...............133.
Derivative works right............... ...............136.
Secondary Liability .............. ...............136....
Vicarious liability ......................._ ...............1 8....
Traditional contributory liability ............_ ..... ..__ .....___............4
Substantial noninfringing use ................. ....._._ ....._._ .............5
Inducement ..........._...__........ ...............160.....
DMCA @512 Immunity .............. .. .............. ..........6
Linking Websites: SouthParkzone.com Case Study ....._____ ..... ... .__ ...........__....176
Jurisdictional Problems .............. ...............180....
Direct Liability .............. ...............18 1...
Secondary Liability .............. ...............182....
Vicarious liability ............... ...... .__ ...............183...
Contributory liability and inducement .............. ...............185....
Inducement ............ ..... .._ ...............187...
DMCA @512 Immunity .............. ...............189....

5 FUTURE OF ONLINE VIDEO .............. ...............194....


Innovation Leading to Creativity: Justice Breyer' s Substantial Noninfringing Use
Standard .............. ........ .. .... ...... .. ........... 9
Safe-Harbor Burden Shifting: The Future is in the Filter............... ...............203
Filtering User-Generated Content While Preserving Fair Use ................. ........._._ .......210
First Amendment Test for Linking Websites .............. ...............219....
Conclusion ........._.. ..... ._ ._ ...............225....


LIST OF REFERENCES ........._.._ ..... .___ ...............227....


BIOGRAPHICAL SKETCH .............. ...............237....










LIST OF FIGURES
Figure Page

4-1 SouthParkzone.com homepage ........._._. ...._. ...............192..

4-2 SouthParkzone.com video player page ....__ ......_____ .......___ ............9









Abstract of Thesis Presented to the Graduate School
of the University of Florida in Partial Fulfillment of the Requirements
for the Degree of Master of Arts in Mass Communication

COPYRIGHT IN THE YOUTUBE AGE:
HOSTING AND LINKING OF ONLINE VIDEO

By

Drew Shenkman

May 2008
Chair: Justin Brown
Major: Mass Communication

Our study presents a legal analysis of copyright infringement' s impact on the

dissemination of online video. The rapid increase in online video's popularity is due in large

part to the unprecedented success of YouTube.com, the Intemet' s leading hosting website for

online video. YouTube, as well as other video hosting websites, offers Internet users the

unprecedented ability to share their creative audio-visual works with the world. However, the

technology also enables users to engage in infringing uses by sharing unauthorized copies of

copyrighted television shows and motion pictures. In addition, linking websites have developed

as popular tools for Intemet users to find and access copyrighted videos stored on hosting

web sites.

Both the infringing uses of YouTube and linking websites' assistance in the facilitation of

copyright infringement have caused great concern within the content industry regarding their

ability to continue to market and protect their creative works online. At the same time,

limitations on user-generated content caused by websites seeking to limit their liability raise

concerns as to the limitations of free speech and fair use. Previous research reveals that

copyright law has regularly struggled to adapt to technological innovation. This study examines

the latest struggle as copyright law adjusts to online video hosting and sharing technologies. A









variety of copyright laws apply in this instance, including direct liability under the Copyright

Act, the common law of secondary liability, and the safe harbor provided by the Digital

Millennium Copyright Act. This study applies these areas of law to the case studies of YouTube

and a popular linking website, SouthParkzone.com, and determines whether either may be liable

under the applicable copyright laws. Finally, this study identified four possible solutions to

problems identified through the legal analysis, including how to preserve First Amendment

concerns within secondary liability, the future of automatic filtering and its impact on user-

generated content and fair use, and a new test for liability for linking websites consistent with

First Amendment principles.










CHAPTER 1
INTTRODUCTION

Before 2005, sharing original video content through a website on the Internet required

fairly sophisticated web-publishing knowledge or enough money to pay someone with such

knowledge. Similarly, watching a favorite TV show or movie at the time and place of their

choosing online was difficult. Copyright owners were slow to adopt online video outlets and

were afraid of losing increasing viewers to the Internet. Yet in early 2005, the world of online

video drastically changed in a Silicon Valley garage: three former PayPal employees launched

YouTube.com, and the rest is history. In fairness, YouTube was not the first video-sharing

website online--Google Video was born around the same time. But what quickly differentiated

YouTube from its competitors was its superior ease of use. YouTube's popularity and use

increased exponentially, where less than a year after its founding, YouTube served an estimated

100 million videos a day to its users. By July 2007, more than 57% of the online public

watched or downloaded Internet video on YouTube or other online video platforms.2

However, YouTube proved popular not only for the sharing of original user-generated

content. Users soon began to use its unrestricted upload structure to post favorite clips and full

length copyrighted programming. Shortly thereafter, video linking websites began to aggregate

links to popular videos on YouTube and a number of its fast-growing competitor hosting

websites.3 By the time the copyright industry finally was turned on to the popularity of such

online video-sharing websites and realized the amount of its own content was uploaded to the



John C. Dvorak, Missing the Point About You Tube, MARKETWATCH, Aug. 10, 2006,
Illi w\ il itmarketwatch.com/news/story/story .aspx?guid=%7B293 99EOD-DBFD-4DA3 -BB53 -
1EO9BAD7F66B%/7D (last visited Feb. 16, 2008).
2 Mary Madden, Online Video, PEW INTERNET & AMlERICAN LIFE PROJECT, July 25, 2007, at 2, available at
http1 w\ il \t .pewinternet.org/pdfs/PIP_Online_Video_200.d (last visited Feb. 16, 2008).
3 See Kevin J. Delaney, Free Viewing -- Threat for Big Media: Guerrilla Video Sites, WALL ST. J., p.A1, Apr. 17,
2007.









websites without permission, it was too late to reverse the trend. Much like the peer-to-peer file

sharing of Napster in the late-1990's, online video-sharing, legal or otherwise, found itself

entrenched in the Internet landscape.

However, the copyright industry feeling threatened by new Internet technologies is nothing

new. Napster' s effect on the music industry is just one example of the power of the Internet as a

distribution platform for digital content. Despite a significant rebound by the music industry, the

Recording Industry Association of America (RIAA) recently estimated that the industry

continues to lose an annual $300 million domestically due to online or hard-copy copyright

infringement.4 Figures regarding the impact of video piracy are speculative. The visual

entertainment industry, including broadcast television, cable, and the motion picture industry are

a multi-billion dollar a year industry. As a result of increasing online infringement, an array of

lawsuits are being filed against the websites and networks that allegedly have a hand in the

copyright infringement. In just one example of recent lawsuits filed against YouTube, Viacom

sought $1 billion in damages.'

This study will identify, analyze, and respond to the legal problems associated with video

hosting websites like YouTube and websites that link to them. A maj or focus will be a case-

study analysis of YouTube, as well as video linking websites through a case study of

Southparkzone.com. Numerous legal questions surround the new technology, and the law

appears to be approaching a crossroads. This research will ultimately aim to propose possible

solutions to the stalemate at which the copyright industry and new Internet technologies finds

themselves, either in the form of legal answers or proposed legislative solutions.



SWilliam Triplett, C Iu q;, Pirates, VARIETY, Aug. 21, 2007,
hopl1 \\ \\ ll i nell.com/article/VR11 17970624.html?categorrid=1338&cs=1.
SComplaint, Viacom, Inc. v. YouTube, Inc., 2007 WL 775611at $10 (S.D.N.Y. filed Mar. 13, 2007)(No. 07-2103).










YouTube and Online Video

In December 2005, three young computer programmers launched YouTube.com as an

Internet website allowing users to share and view videos.6 What started out as a small

independent operation is now the top online video distribution website, currently ranking as the

world's second most popular website overall.' On October 9, 2006, online giant Google

announced a $1.65 billion stock acquisition of YouTube.s By the end of 2006, YouTube had

gained such popularity and influence that Time Magazine devoted its year-end "Person of the

Year" cover to the website and named it the "Invention of 2006." 9 YOuTube was not the first

website to allow easy distribution of online videos to users, as there are many online video

distribution competitors in the marketplace. 10 However, no website currently comes close to

matching YouTube' s market power in bringing online video to users. 1

YouTube became an overnight sensation mainly for two reasons: (1) it' s ease of use, and

(2) attractive content, some of which includes popular clips of copyright-protected television

shows and movies. 12 One of YouTube's strengths is the ability of users to view videos without

downloading any software or registering first with the website. 13 This makes the website very

user-friendly and requires only the most basic web-knowledge to view or upload a video.

Additionally, as the website developed, users were able to link directly to videos in their own



6 See About YouTube, www.youtube.com/t/about (last visited Feb. 16, 2008).
SSee Alexa.com worldwide site-rankings, b1lip w\ il \t .alexa.com/site/ds/top_sites?ts_mode= globlan=oe (last
visited Feb. 16, 2008). YouTube only currently ranks behind yahoo.com. Id.
SGoogle Press Release, Google To Acquire YouTube for $1.65 Billion in Stock, Oct. 9, 2006.
http://www.google.com/press/pressrel/googeyubehm (last visited Feb. 16, 2008).
9 JOhn Cloud, The Gurus of You Tube, TIME, Dec. 16, 2006 at 66.
'0 NBC-Universal and News Corp. recently agreed to create a competitor to YouTube. Richard Siklos, Push Comes
to Shove for Control of Web Video, N.Y. TIMES, April 1, 2007. Other competitors, large and small exist. See e.g.
Joost.com, Bolt.com, Dailymotion.com, Gofish.com, Grouper.com, Livevideo.com, and MetaCafe.com.
11 See Cloud, supra note 9, at 66.
12 See id.
1 3Id~










web pages, send links to others via email, and eventually embed the actual videos on any other

website or blog, making it appear as though the video appeared and played within the "foreign"

website. 14 YOuTube also allows a user to search its vast database of videos with simple

keywords. In short, it became virtually impossible for a web user to not at some point in time

come across a video hosted by YouTube by the time the website celebrated its first birthday.

YouTube is an extremely lucrative website, as witnessed by the $1.6 billion price tag paid

by Google. YouTube offers its user-generated service to its users free of charge, in exchange for

delivering advertising to them through the website. Currently, YouTube limits serving

advertising to viewers via traditional banner advertisements on the homepage, search pages, and

sponsored videos. 16 YOuTube does not place any advertising on pages that contain video

uploaded by users due to copyright concerns that will be explored later.

YouTube also utilizes alternative revenue sources, such as sponsored videos by content

owners. For example, CBS agreed to a deal that put videos from the 2007 NCAA Men's

Basketball Tournament on the website with banner advertisements from Pontiac posted during

video play. 1 In addition, undisclosed agreements have been made between content-providers

such as the National Hockey League, the NBA, CB S, and many others in the entertainment

industry. IsThese agreements have not all been made public, and many are tentative deals in

order to gauge the interest of the Internet community. 19 Still other entertainment companies



14 See Sharing YouTube Videos, http://youtube.com/sharing (last visited Feb. 16, 2008).
1s YouTube Fact Sheet, http://www.youtube.com/t/fact~sheet (last visited Feb. 16, 2008).
1 6Id~
17 Press Releases, CBS Sports, The NC4A and Pontiac Bring NC4A March Madness to Sponsored CBS Sports
NC4A Tournament Channel on YouTube, available at
http://www.youtube.com/press_room entry?enr~~H4e6 (last visited Feb. 16, 2008).
's See Miguel Helft, Google Courts Small YouTube Deals, and Very Soon, a Larger One, N.Y. TIMES, Mar. 2, 2007,
available at http://query .nytimes.com/gst/fullpage. html?res= 950DE4D81 63 1F93 1A3 5750COA9619C8B63.
19 See id.










have forayed into their own online video websites, such as Joost.com,20 partly owned by

Viacom, and Hulu.com, a j oint venture of NBC-Universal and NewsCorp.21

The business of YouTube has little importance without briefly understanding how the

technology of the website works. YouTube identifies itself as a personal video-sharing service

that has developed into the Internet' s self-proclaimed premier "video entertainment

destination."22 There are no membership requirements to view, thus anyone can view a video

uploaded on YouTube. However, for a user to post a video, they must first register for free with

the website to become a member and agree to specific Terms of Use. 23 Every member must

agree to not upload any videos to which they do not possess the requisite copyright in.24 There is

currently no prescreening process by YouTube before the video goes "live" to the public, the

user simply uploads a video.25 Thus, it is not difficult for YouTube members to upload original

user-generated content or infringing content. Once a member, the user may then upload videos

in the proper format, no longer than ten minutes in length, and consisting of no more than 100

mega-bytes of data.26 A member simply chooses whether they want the video to be "public" or

"private" and then clicks upload.27 If the member chooses to make the video "public," the video

is available for viewing to anyone in the world in a matter of minutes after the upload is

complete.





20 http://www.joost.com (last visited Feb. 16, 2008).
21 http://www.hulu.com (last visited Feb. 16, 2008).
22YouTube Fact Sheet, supra note 15.
23YouTube Terms of Use, http://www.youtube.com/t/terms (last visited Feb. 16, 2008).
24See Id.
25Cloud, supra note 9, at 66.
26 Y~uTube Help, How Do I Upload a Video?
http://www.google.com/support/youtube/binasepynsr572&oi=02 (last visited Feb. 16, 2008).
2 Id.










Next, the instant the upload takes place, a digital copy of the video in its entirety is made

onto the YouTube computer servers.28 The copy is transcoded in YouTube's own compressed

format and stored on YouTube central servers.29 YOuTube then automatically creates a

thumbnail of the video from a frame within the video in order to add it to its searchable library.30

In order to classify the video and aid in searches, the uploading member is asked by the website

to "tag" the video by indicating keywords to help identify the subj ect matter of the video.31 The

uploading member may be as detailed as they want to be in identifying the video.

Concern from the Copyright Industry

As Viacom alleges in its complaint filed against YouTube, YouTube's meteoric rise in

popularity may have been in part due to users' attraction to the vast amount of popular copyright-

infringing material hosted on its servers.32 YOuTube, of course, asserts that it is solely intended

as a sharing website for original, user-generated content. As the public continues to adopt

Internet video, copyright industry leaders fear losing control over copyrighted content. For

example, they fear that viewers looking for the highlights of a NFL football game or a funny clip

from The Daily .\/#<~l will no longer turn to the official websites or traditional television outlets

of the NFL or Comedy Central, respectively, but instead to video-sharing websites like

YouTube.

Such a fear is not completely irrational. Traditional television content providers rely

almost exclusively on advertising; and advertisers are attracted to only one thing: viewers'

eyeballs. Thus, the more viewers watch a show, the higher its ratings, and the more the



28 See Complaint, supra note 5.
29Id.
s Id.
31Id.
32Complaint, supra note 5.










television outlet may charge for advertising time. The logic follows that as viewers exit to the

Internet to view unauthorized, commercial-free versions, ratings will decline and advertisers will

demand lower rates or ultimately abandon the traditional television distribution outlets

altogether. As a result, content-owners have an economic incentive, and as will be later

explored, the legal right to protect their interest in the videos they own. Therefore, many

attribute YouTube's extreme popularity to its early reliance on attracting viewers to its site

through infringing videos, and see this trend as endangering the advertising-supported business

models of television.33

Linking to Infringing Content

However, the controversy over online video does not begin and end simply with YouTube.

Increasingly popular are "linking" websites, which simply offer visitors "links" to other hosting

websites offering infringing content.34 For example, fans of the popular show "South Park" can

go to the linking website Southparkzone.com and view every episode in the history of the series

commercial-free and conveniently organized by season.35 Neither parent company Viacom,

Comedy Central, nor South Park Studios receive royalties from the playing of the episodes nor

have the ability to control the distribution of them.

To understand the uniqueness of such websites, the process of the Internet must first be

explained. Users typically explore the Internet through what we know as websites, online hubs of

information along the information superhighway. Typically, websites either have information

directly on the home page which is visible to the viewer, or embedded on further pages

throughout the website in the form of text, pictures, or logos known as hyperlinks (commonly



33 Id.
34 Delaney, supra note 3.
35 http://www.southparkzone.com (last visited Sept. 1, 2007).










called "links").36 When a user clicks on a link, the user' s web browser reads the embedded code

and directs the browser to the new web address.37 It is common practice to link to other pages,

pictures, and video within the website's control. Everything on a webpage is copied and stored

on a server, which is what web browsers access to produce a copy for the end-user to view.

Often, websites also link to other websites, pointing users to interesting articles, videos,

and other information. This results in the network effects that give the Internet its enormous

power as a research and information tool.38 The process of embedding a link on a website does

not insert what is being linked into the website, nor are copies made of any content on their

servers. It merely allows the user to jump to the new website at the click of a mouse. No

copying is involved by merely directing the user to another website. However, through a process

called "framing," content from another website can be made to appear as if it resides on the non-

original webpage.39 Similarly, there is no copying involved with framing, the media merely

play from the original host server into the frame on the website. To the webpage viewer, the

result is seamless and difficult to differentiate from original content. Through technologies from

video-sharing websites, framing of video on a website is quite easy. So too, of course, is the

simple linking to video clips on an outside video-sharing website. Often times, the streaming

videos linked to on the linking websites are housed on offshore servers outside of the direct







36 See Nicos L. Tsilas, Minimizing Potential Liability Associated With Linking and Framing on the World Wide
Web, 8 CoMMLAW CONSPECTUS 85, 85-86 (2000).
37 Id
38 See generally Michael L. Katz & Carl Shapiro, Systems Cobmpetition &~ Network Effects, 8 J. EcoN. PERSPECTIVES
93 (1994). "The value of membership to one user is positively affected when another user joins and enlarges the
network, such markets are said to exhibit 'network effects' or 'network externalities'." Id. at 94.
39 See Mark Sableman, Link Law Revisited: Internet Linking at Five Years, 16 BERKELEY TECH. L.J. 1273, 1297-
1301 (2001).










jurisdiction of the United States, thereby creating jurisdictional problems.40 The legal issues

surrounding linking will be further addressed in Chapter 4.

Protecting the Interests of the End-User

United States copyright law limits the use of original works of authorship in a Eixed

tangible expression to the authors, or subsequent owners or licensees of the copyright.41 The

policy behind copyright law is to provide and maintain the Einancial incentive for authors of

creative works. Article I, Section 8 of the U.S. Constitution provides for Congress to pass laws

in order to, "promote the progress of science and useful arts, by securing for limited times to

authors and inventors the exclusive right to their respective writings and discoveries."42 Online

videos are copyrightable as Eixed original works of authorship under the Copyright Act as either

motion pictures or audiovisual works.43 Thus, the resulting protection allows online video

content-owners to control the reproduction and distribution of their works.

However, throughout the history of copyright law, a debate has raged over the reach of the

law and limits that should be placed on it in a free society in order to promote the sharing of

information and therefore the betterment of society as the Constitution suggests.44 Thus, a more

basic normative debate regarding copyright law must first be addressed. While copyright is

often framed as a regime to protect commercial authors, scholars such as Professor Lawrence

Lessig argue that the original intent of the Constitutional guarantee was to promote creativity in

society though the sharing and participation of the public in a non-commercial context.45 Lessig


a0 Delaney, supra note 3.
41 17 U.S.C. #102.
42U.S. CONST. Art. I, #8.
4317 U.S.C. #l02(a)(6).
44See generally, Michael D. Birnhack, NINIMER ON COPYRIGHT, #19E.01, (David Nimmer & Melville Nimmer eds.,
Matthew Bender, New York 2007)(discussing the history of the conflict and contemporary criticisms of copyright
law and the First Amendment).
45 See LAWRENCE LESSIG, FREE CULTURE, 119-124 (Penguin Press, New York 2004).










sees copyright as a mechanism for the spreading of free culture for the betterment of society.46

As a result, Lessig asserts that copyright should allow for the spreading of our culture while at

the same time protecting the commercial rights of authors.47

Lessig's key argument is that creativity builds on past works.48 This is easily seen though

the increasing number of consumers as creators, of the increasing amount of user-generated

content on websites such as YouTube, which must be similarly protected.49 The problem, Lessig

notes, is that digital technology radically changes the way the lines are drawn between

commercial and non-commercial use, resulting in a top-down copyright regime controlled by

incumbent industries.so He states that unlike traditional copyright law, where there were clear

regulated uses (you could not publish another' s work, for example) and unregulated uses (e.g.,

reading a work, giving your copy away, even sleeping on it), the Internet creates an environment

where every act is a "copy."S Thus, according to Lessig, in an Internet world, every use then

becomes a regulated use "controlling creativity."5

Digital Copyright Law

Copyright law has long struggled to protect original works during times of technological

change.53 While the content of original creations rarely change, the form in which they are

delivered to end-users changes greatly over time, often quite abruptly. For example, what is

commonly referred to as the formal beginning of copyright law, the 1710 Statute of Anne was


4 6Id
47 Id. at 170-73.
48 LESSIG, FREE CULTURE, supra note 44, at 29.
49 See Lawrence Lessig, Talks Larry Lessig: How Creativity is Being Strangled by the Law, Mar. 2007 available at
1lutp w\ \\ \\ .ted.com/talks/view/id/187 (last visited Dec. 11, 2007).
50Id.
si LESSIG, FREE CULTURE, supra note 44, at 170-73.
52 The subtitle of Lessig's 2004 book is Free Culture: How Big Media Uses Technology and the Law to Lock Down
Culture and Control Creativity. LESSIG, FREE CULTURE, supra note 44.
53 See Jessica D. Litman, Copyrightle ge J,te,.. t and Technological C 4, ig.. 68 OR. L. REV. 275, 277 (1989).










largely a response to printing press and the ease at which copies of written works could suddenly

be made.54 Similarly, modern applications of copyright law in the United States includes

numerous instances of technological changes affecting the writing and revisions of the law. The

struggle continues between copyright law and advances in digital technology.

First, it is important to understand the basics of digital technology that has worked to

change the market so drastically. Digital technology turns a traditional analog product into a

series of l's and 0's written into binary code." Since the code is simply a very long series of

numbers, it can be replicated perfectly over and over again, without any loss of information. 56

Anything can be digitized: a song to CD or MP3,5 a video from VHS to DVD or MPEG, 5 even

a paper book to e-book. 59 A number of factors have led to the revolution of digital technology.

First, increased processor speeds, memory storage ability, and data compression technology such

as the MP3 file format allows for audiovisual works to be digitized.60 Next, digitization allows

for higher sampling rates, thus permitting more transparent reproductions than typical analog

sampling.61 The flawless digital files are inexpensive to reproduce, and infinitely manipulable,





54See G. PETER ALBERT, INTELLECTUAL PROPERTY LAW IN CYBERSPACE 208 (Cumul. Supp. BNA, Wash. D.C.
2006).
55HARRY NEWTON & RAY HORAK, NEWTON'S TELECOM DICTIONARY, 20th Ed., "digital video compression" (CMP
Books, San Francisco 2004) [electronic resource] available through the University of Florida Libraries' Catalog.
56 See Peter S. Menell, Envisioning Copyright Law 's Digital Future, 46 N.Y.L. SCH. L. REV. 63, 98 (2003).
57MP3 refers to the Moving Picture Experts Group 1 Layer 3 file, which allows for audio files to be compressed
digitally to a 1:12 fraction of the original analog file, but without any loss of quality. See id. at 66.
V8\/HS, or video home system, is the traditional analog tape: DVD, stands for digital video disk, and is the digital
version of a VHS tape: and MPEG is the digital online video equivalent, and is the compressed and digitized format
of video on the web. NEWTON & HORAK, supra note 54.
59 See Menell, supra note 55, at 109-12.
61) See id. at 110-12.
61 See id. Sampling is nothing more than the reality of the optical illusion of viewing any reproduced medium. Id.
For example, traditional film movies consist of still cells passing through light fast enough to project a "moving"
image which the eye cannot differentiate. Id. Digital projection fools the eye similarly, except that digital
technology allows for more details to be inserted into every "cell", thus creating a more sharp and realistic image.










resulting in easily produced derivative works, and of course, easily pirated works as well.62 As

digital Hiles shrink in size, they retain powerful management and searchability attributes, while

gaining in portability, as seen through the enormous popularity of the iPod.63 Finally, because of

the rise of the Internet as an inexpensive distribution medium, combined with the convergence

of consumer digital technology, all the powers of digital technology combine to provide users

with an unprecedented ability to share media files with others, legally or otherwise.64

The Internet achieved critical mass during the mid-1990's, opening new avenues for

improved digital technology to take root.65 The infinite network of the Internet in turn allowed

for the development of new methods of information compression, which thereby increased the

desire for cheap and larger storage technologies.66 Add into the mix the late 1990's flood of

affordable digital consumer electronic products such as the MP3 player and the digital video

recorder, and the copyright world soon found itself swimming in a new digital sea.67 The initial

reaction of the copyright industry to the Digital Millennium Copyright Act of 1998 (DMCA) was

to use digital technology to its advantage through encryption and copying controls.68 However,

this tactic was soon circumvented by new piracy technology, which the DMCA similarly

forbids.69








62See id. at 114-15 (2003).
63 See id. at 115-16.
64 See id. at 116.
65 See id. at 66.
66 See id.
67 See id.
68 See id. at 66-68. For example, DVD's include a digital encryption code which prevents their copying known as
the DVD Content Scrambling System. Id.
69 See id. at 66-68.









Due to the relatively small size of music files, the music recording industry was the first to

be affected in a substantial way by digital technology.70 The spread of peer-to-peer (P2P) file

sharing networks enabled large-scale infringement of digital audio works and created maj or

problems for the recording industry in decreased sales and decreased demand for legal copies."

While the Napster and Grokster Supreme Court decisions of the early 21"t Century largely settled

the legal issues surrounding online copyright infringement of music files,72 Solving the problems

for the video production industries of television and motion pictures is just beginning. As digital

technology continues to improve, full-length television programs can be copied digitally, and

full-length motion pictures are not far behind. The legal standards for copyright infringement

will be set forth in Chapter 3, and analyzed in the context of YouTube and linking websites in

Chapter 4.

However, a brief introduction to the concept of secondary infringement is necessary.

There is a well-developed body of case law that enables a plaintiff to sue for infringement based

upon acts complicit by a third party that enables direct infringement.73 Secondary liability has

two traditional categories: vicarious infringement and contributory infringement.74 The

Supreme Court also recently instituted an additional mode of contributory liability known as

"inducement," by which distributing a device or service which promotes or induces the

infringement of copyright can result in liability."





"0 See id. at 99-100.
71 See id. at 119-23.
72 See infra notes 86-106 and accompanying text.
73See DAVID NININER & MELVILLE NININER, NININER ON COPYRIGHT #12.04(A)(Matthew Bender 2007)(hereinafter
NININER ON COPYRIGHT).
7Id
75See Metro-Goldwyn-Mayer Studios, Inc v. Grokster,Ltd., 545 U.S. 913 (2005).










The distinctions between vicarious and contributory liability are often confused. In short,

vicarious liability focuses on the relationship of the defendant to the third-party infringer, while

contributory infringement looks to the relationship of the defendant to the actual infringing act.76

YouTube's operation as an Internet platform for hosting user-generated videos calls both areas of

secondary liability into question. Video linking websites similarly could be subject to possible

secondary liability.

Vicarious liability pertains to a third-party's right, duty, or ability to control a third party

direct infringer and the ability to profit from the infringement of others." The Supreme Court

noted that "vicarious liability is imposed in virtually all areas of the law...."' To be found liable

for vicarious infringement, three basic elements must be met: (1) there must be an act of direct

infringement by a third party (1) the defendant must hold the right or ability to control the

infringer' s conduct, and (2) defendant must receive a direct financial benefit79 fTOm the

exploitation of the work. so

Unlike vicarious infringement's focus on the association between the defendant and their

control over the direct infringer, contributory infringement looks to the connection between the

defendant and the actual infringing act. Contributory infringement may generally be found



76 William Sloan Coats, Mark R. Weinstein, Erik R. Zimmerman, Pre-and Post-Grokster Copyright Infringement
Liability for Secondary and Tertiary Parties, Practising Law Institute, 877 PLI/Pat 323 at n.7 (Sept. 2006).
77See NIMMER ON COPYRIGHT, supra note 72, at #12.04(A)(2). See also Metro-Goldwyn-Mayer Studios, Inc. v.
Grokster, Ltd., 545 U.S. 913, 930 (2005).
78Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 435 (1984).
79 There is some disagreement among the Federal Circuit Courts as to how extensive the financial benefit must be.
C~f Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963)( stating that, "an obvious and
direct financial interest in the exploitation of copyrighted materials" may result in the imposition of liability upon
the beneficiary of that exploitation; finding chain store liable for the infringing acts of retained operator running its
record departments), with A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1023 (9th Cir. 2001) (finding Napster
liable for vicarious infringement because the future of the business relied upon building a network of infringing
users to advertise to), and Fonovisa v. Cherry Auction, 76 F.3d 259, 263 (9th Cir. 1996) (finding a direct financial
benefit by swap-meet landlord when lessees paid minimal rental fees and defendant received no commission or
proceeds from the sales of bootleg music).
so NIMMER ON COPYRIGHT, supra note 72, at #12.04(A)(2).










where, "one who, with knowledge of the infringing activity, induces, causes or materially

contributes to the infringing conduct of another ."s Thus the three basic elements of

contributory infringement are (1) an act of direct infringement by a third party, (2) where the

defendant has knowledge of the infringing activity, and (3) the defendant induces, causes, or

materially contributes to the infringement.82 Some have further divided this up into two general

ways to be a contributory infringer, either by participating in the infringement, or providing the

means by which to infringe.83

As the Supreme Court has noted, copyright law has developed in response to changes in

technology, as far back as the invention of the printing press necessitating the rise of copyright

protection.84 Two major Supreme Court cases dealt with emerging technology, Sony v.

thriversal City Studios in 1984,85 and the more recent M~etro-Golabwyn-Mayerye v. Grokster

decision of 2005.8

In 1984, the Supreme Court decided the seminal case of Sony v. thriversal City Studios

(Sony), holding that the sale of video tape recorders failed to violate content provider' s

copyrights.87 The Sony Betamax video tape recorder, an early version of the VCR, enabled users

to record shows and movies from their televisions.88 The Supreme Court reversed the holding of

the Ninth Circuit, finding Sony not liable for the direct, vicarious, or contributory infringement

of Betamax users in a five-to-four decision.89 It relied heavily upon the traditional reluctance of



st Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971).
82See Grokster, 545 U.S. at 930.
83NINIMER ON COPYRIGHT, supra note 72, at #12.04(A)(3)(a-b).
84Sony v. Universal City Studios, 464 U.S. 417, 430 (1984).
ssId.
"b545 U.S. 913 (2005).
87464 U.S. 417 (1984).
88Id. at 420.
89 Id. at 421.










the judiciary to do what it viewed would be imposing an unprecedented new form of liability

upon innovators.90 The maj ority acknowledged that, "it is not our j ob to apply laws that have not

yet been written," leaving room for Congress to "take a fresh look at this new technology, just as

it so often has examined other innovations in the past."91 This dicta in Sony is just one piece of

evidence leading to the likely conclusion that online copyright law needs a fresh look in order to

protect the traditional copyright regime.

In its contributory infringement analysis, the Court declined to clearly define the

"substantial non-infringing use" standard borrowed from patent law.92 In defining what was a

"substantial non-infringing use, the Court said that it did not need to consider every possible

potential use and determine whether it was infringing, but instead whether a "significant number

of them would be non-infringing."93 This term remains unclear even after subsequent file-

sharing decisions and has yet to be applied in the online video context. This is a critical point

that YouTube must address as to whether it is capable of substantial non-infringing uses.

In 2005, the Supreme Court, addressed the issue of contributory infringement of peer-to-

peer file sharing networks inM2G2~v. Grokster.94 Grokster and codefendant Streamcast,

distributed free software enabling users to share digital files directly among one another.95 Both

companies made money by placing advertising within the software.96 Grokster and Streamcast

both took advantage of the downfall of Napster by advertising and promoting the fact that their





91) See id. at 431-32.
91 Id. at 456.
92 Id
93 Id. (emphasis added).
94 Grokster, 545 U.S. 913 (2005).
95 Id. at 923.
96 Id. at 926.










respective software would be a good replacement.97 The Supreme Court decided the case on the

new inducement theory of contributory liability, finding a determination of vicarious liability

unnecessary."

The Court first noted Sony 's "substantial noninfringing use" doctrine, yet, the Court

punted on the issue, holding only that the lower court's ruling on substantial noninfringing use

was incorrect.99 Though the issue was addressed by two separate three-justice concurrences, 100

it remains a lingering question post-Grokster of what exactly constitutes a substantial

noninfringing use. Next, the Court applied the "inducement" theory of contributory liability

from patent law, holding that the distribution of a device with the intent "of promoting its use to

infringe copyright, as shown by clear expression or other affirmative steps taken to foster

infringement," is liable for the resulting acts of third party infringers. 101 In discussing

inducement, the Court noted that such things as Grokster's promoting to users looking to fi11 the

Napster void, its lack of filtering software to prevent infringement, and its dependence on

advertising revenue directly correlated to the use of the software. 102 As a result, the Court found

Grokster liable of inducement to infringe and remanded the decision. 103

Finally, in the present controversy over YouTube, numerous lawsuits have been Eiled

against YouTube and other similar websiteS. 104 Two lawsuits are most notable. First is the high-



97 Id. at 924.
98 Id. at 930.
99 Id. at 932-34.
loo Id. at 942 (Ginsburg, J., concurring); Id. at 949 (Breyer, J., concurring).
'01 Grokster, 545 U.S. at 936-37(majority opinion)
m:I1d. at 939-940.
103 Id. at 941.
104 Veoh Networks, Inc. v. UMG Recordings, Inc., 07 1568 (S.D. Cal., filed Aug. 9, 2007); Cal IV Entertainment,
LLC v. Youtube, Inc., 3:2007cv00617 (M.D.Tenn. filed June 7, 2007); Football Assoc. Premier League Ltd. and
Bourne Co. v. YouTube, Inc, 07 Civ. 03582 (S.D.N.Y., filed May 4, 2007, class action); Viacom Int'L, Inc. v.
YouTube, Inc., No. 1:2007 CV 02103 (filed Mar. 13, 2007); UMG Recordings, Inc. v. Bolt, Inc. CV 06-06577 (C.D.
Cal., filed Oct. 16, 2006); UMG Recordings, Inc. v. Grouper Networks, Inc., CV 06-06561 (C.D. Cal., filed Oct. 16,










profile suit filed against YouTube by Viacom, parent company of numerous cable TV networks

such as Comedy Central and MTV. 1os In its complaint, Viacom alleged that YouTube

knowingly engaged in activities resulting in the massive infringement of copyrighted material,

and thus should be found liable for both contributory and vicarious infringement. 106 Recently

associated with the Viacom suit is a class-action suit started by a complaint by a European soccer

league against YouTube. 107 These and other similar lawsuits in the courts may ultimately decide

the issue of secondary infringement concerning the new online video technologies.

A Possible Affirmative Defense

Typical copyright lawsuits are private rights of action filed by the copyright owners.

However, just as copying is different in the digital world, so too are the methods for fighting

against infringement. The Digital Millennium Copyright Act (DMCA), passed in 1998 with

much fanfare, was seen as a great leap forward for the protection of copyright owners in digital

media, allowing for the implementation of digital rights management technologies to strengthen

copyright holder' s rights in the digital age. 10s The DMCA provides an affirmative defense for

direct or secondary infringement by "online service providers" with a safe-harbor from liability






2006); IO Group, Inc. v. Veoh Networks, Inc., 2006cv03926 (N.D. Cal., filed June 23, 2006). See also Tur v.
YouTube, Inc., CV 06-4436 (C.D. Cal., consolidated with Football Assoc. case in S.D.N.Y): New Jersey Turnpike
Authority v. YouTube, Inc., 2:2007cv02414 (D.N.J., complaint voluntarily dismissed May 24, 2007)(N.J. Turnpike
Authority's security camera footage of a car accident at a toll booth turned up on YouTube and other file sharing
websites).
'05 Viacom Int'L, Inc. v. YouTube, Inc., No. 1:2007 CV 02103 (filed Mar. 13, 2007).
106 Id.
107 The Football Assoc. Premier League Ltd. and Bourne Co. v. YouTube, Inc, 07 Civ. 03582 (S.D.N.Y., filed May
4, 2007, class action).
10s Digital Rights Management technology allows copyright owners to program into digital copies of their
copyrighted works specific limitations on the copy's usage. For example, a digital music file may have a restriction
placed on it limiting the number of computers it can be played on. See generally 17 U.S.C. ##1201, 1202, providing
for criminal penalties for those tampering with, removing, or circumventing digital rights management technologies
from copies.










for infringing acts of its users if certain procedures of notice and takedown are observed. 109 The

safe-harbor was implemented in order to protect internet service providers from liability, treating

it more as a common carrier than a content provider responsible for its users action on its

networks. 110

The safe harbor requires those operating as "service providers" to follow strict notice and

takedown procedures outlined in the law. 11 Very simply, upon knowledge or awareness of

infringing activity, a website is required to promptly remove or disable access to the alleged

material. 112 The knowledge or awareness typically comes from content owners notification of

infringement, however, not all users accused of infringement are necessarily guilty of

infringement due to fair use or by mistake of the accusing party. As a result, it requires the

copyright owners to vigorously protect its products, limiting liability for secondary infringers

such as YouTube until they are put on actual notice by the copyright owner, while placing the

entire burden on the alleged infringer to prove beyond a doubt that they are authorized to use the

video.ll





109 Online Copyright Infringement Liability Limitation Act, Title II of the DMCA, 17 U.S.C. #512 (1998).
110 See Ellinson v. Robertson, 357 F.3d 1072, 1076 (9t Cir. 2004)(DMCA created "to provide greater certainty to
service providers concerning their legal exposure for infringements that may occur in the course of their activities.").
See also Tim Wu, Does YouTube Really Have Legal Problems?, SLATE, Oct. 26, 2006,
bli w\ il itslate.com/id/2 152264 (last visited Feb. 16, 2008).
111 17 U.S.C. #512(c).
112 17 U.S.C. #512(c)(1)(A)(iii).
113 See e.g. Jennifer M. Urban & Laura Quilter, Efficient Process or "Chilling Effects"? Takedown Notices Under
Section 512 of the Digital Millennium Copyright Act, 22 SANTA CLARA COMPUTER & HIGH TECH. L.J. 621, 637-38
(2006); Emily Zarins, Notice Versus Knowledge Under the DMCA 's Safe Harbors, 92 CAL. L. REV.
257, 291-95 (21 r'4); Colin Folawn, Neighborhood Watch: The Negation of Rights Caused by the Notice
Requirement in Copyright Enforcement Under the DMCA, 26 SEATTLE U. L. REV. 979 (2003); Alfred C. Yen,
Internet Service Provider Liability for Subscriber Copyright Infringement, Enterprise Liability, and the First
Amendment, 88 GEO. L.J. 1833, 1888 (2000). See also Lawrence Lessig, Make Way for Copyright Chaos, N.Y.
TIMES, Mar. 18, 2007 (Op-Ed Contribution) available at
http://www.nytimes.com/2007/03/18/opinion/8esghtle=31870400&en=5a2a6ea9bc52f3fc&ei= 5 124&part
ner-permalink&exprod=permalink (last visited Feb. 18, 2008).










While numerous courts have grappled with the issue of the Section 5 12 safe-harbor, no

definitive rule has emerged concerning online video hosting websites. 114 Whether YouTube falls

under the safe-harbor will in large part determine its liability under the Copyright Act for the

infringing actions of its users. The question similarly applies to linking websites. The impact of

the burden shift on the copyright regime, how it affects content providers and their ability to

protect their product, and its impact on fair use, are all important issues that will be further

explored in Chapters III, IV, and V.

Research Questions and Methodology

The primary purpose of this research is to explore copyright infringement of online video

distribution via YouTube and linking websites. As a secondary purpose, this study will also

address the larger theoretical impact that YouTube and video liking sites are having upon digital

copyright law. Specifically, this study addresses the following set of research questions:

1) Are video-sharing website like YouTube liable under direct infringement?

2) Are video-sharing websites like YouTube, as well as video linking websites, liable

as a secondary infringer?

3) Are video-sharing websites like YouTube, as well as video linking websites,

immune from liability under (512(c) of the DMCA as an "online service

provider"?

4) What remedies are available to help solve the problem of copyright infringement of

online video?



'' See e.g. Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1117 (9ti' Cir. 2007); Parker v. Google, Inc., 422 F. Supp.
2d 492 (E.D. Pa. 2006); Ellison v. Robertson, 353 F.3d 1072, 1079 (9th Cir. 2004); Corbis Corp., v. Amazon.com,
351 F. Supp. 2d 1090 (W.D. Wash. 2004); In Re Aimster, 334 F.3d 643, 655 (7ti Cir. 2003); Hendrickson y.
Amazon.com, Inc., 298 F. Supp. 2d 914, 915 (C.D. Cal. 2003); Perfect 10, Inc. v. Cabernet Ventures, Inc., 213 F.
Supp. 2d. 1146, 1171 (C.D. Cal. 2002): ALS Scan, Inc. v. RemarQ Communities, Inc., 239 F.3d 619, 625 (4th Cir.
2001): A&M Records v. Napster, 239 F.3d 1004, 1025 (9" Cir. 2001).









The first question examines direct infringement by applying each of the exclusive rights

that exist under copyright law. To answer the second question, this study will review what

constitutes a "substantial noninfringing use" in determining traditional secondary liability of

vicarious and contributory infringement under Sony and review the applicability of inducement

under Grokster. To analyze the third question, the study will explore whether YouTube

immunity is different from the sort of immunity granted to regular websites. What does the

legislative history of the DMCA suggest as to the limitation of liability for websites such as

YouTube? Will these types of sites continue to enj oy protection more copyright owners seek to

protect their copyrighted works on the Internet? If the immunity stands, what are the

implications for users and fair use? The analysis will look to the Section 512 immunity standard

and analyze the repercussions of the "burden shift" to alleged infringers. The same questions are

then posed as they apply within the video linking website Southparkzone.com. Finally, the

fourth question will be explored through suggested changes to and interpretations of the law.

The scope of the research is limited to YouTube and linking websites, with applicable case

law and other materials generally limited to the last twenty years and concerning emerging

technology. As an emerging technology, and with the law surrounding it in flux, this research is

original in application to online video and linking websites. Very limited literature currently

exists on YouTube, and that which was published within the research period was limited in

amount and different in scope.

All research was conducted though legal methods analyzing case law, statutes, and

legislative history. Chapter 2 will follow with a legal literature review of academic journals and

law review articles on the topic. Chapter 3 will then overview the prior case history pertaining to

copyright infringement and emerging technologies, from Sony through Grokster, to the pending










YouTube litigations. Chapter 4 will then provide the analysis of the legal questions and

problems outlined below through a case study of YouTube and the linking website

Soutparkzone.com. Finally, Chapter 5 will conclude the study by proposing practical legal

solutions to the problems created by online video infringement and remaining questions in the

law.

In carrying out the legal literature in Chapter 2, law review articles were searched through

Westlaw and Lexis-Nexis Communications law review databases as well as all of the law review

databases. Academic j ournals were searched by utilizing the University of Florida Library's

Research Gateway which links to databases such as Academic Search Premier, InfoTrac,

EbscoHost, GaleGroup, and Proquest. Search terms included "DMCA w/p 'safe harbor'" "fair

use" "Grokster" "Sony v. Universal" and "substantial noninfringing use."

Many of the cases had already been identified, however, these cases are expanded and new

cases uncovered in Chapter 3 upon completing sound legal research methods via Westlaw and

Lexis Nexis. New cases were searched though the All-Fed database since copyright is a federal

question, and utilized search strings such as "copyright w/p online w/p infringement" "copyright

w/p internet w/p infringement" "DMCA w/p 'safe harbor'." The research is time-limited to

December 2007. New cases were identified through keycite on Westlaw by viewing previously

found cases, as well as through Andrew's Litigation Reporter on Westlaw for current and

recently decided copyright law cases. In addition, a number of copyright law websites and blogs

provide industry-based updates to stay abreast on current ongoing cases. Dockets were searched

in ongoing cases to discover the most current legal strategies being pursued by counsel in the

YouTube litigations through the free website http ://www.dockets.Justia. com. Parallel cases

having to do with online service provider immunity under other laws with similar safe-harbors










were similarly searched for using "online service provider" and other similar language from the

DMCA. Legislative history for DMCA was thoroughly searched via Westlaw's keycite system

and search terms to House and Senate reports, through the Library of Congress' Thomas website,

and Senate and House committee websites.










CHAPTER 2
LITERATURE REVIEW

In order to further explore the issue of websites such as YouTube and linking websites

facilitating online copyright infringement, it is important to review the scholarly literature

concerning the broader issues of online copyright. Little scholarly literature exists on the new

technology of YouTube.com and similar online video-sharing websites. There are a number of

brief commentaries on the lawsuits filed by Viacom and others against YouTube. However,

nothing in the literature as of yet handles the full analysis of the growing online video

infringement problem. Further exploration is needed, as the problem continues to grow: a 2007

study estimated that the market for online video will grow from 13 million households in 2005 to

131 million households by 2010.2

As such, the remainder of this literature review, after a brief review of linking and safe-

harbor research, will focus on general policy regarding copyright and new technology in light of

online video to set a theoretical framework for the remainder of this study. It will then focus on

the effect of changing dissemination technologies on copyright law, the legislative process, and

the problem of online infringement facilitators. Next it will turn to the judiciary's effect on

copyright law and specifically on common law based secondary liability. Finally, it will review

the copyright law and economics literature and examine a number of new ways to look at

copyright law from unique perspectives other than the courts and Congress.




SSee e.g. Michael Driscoll, Comment: Will YouTube Saillnto the DMICA 's Safe Harbor or Sink for Internet
Piracy?, 6 J. MARSHALL REV. INTELL. PROP. L. 550 (2007); Christopher D. Newkirk & Thomas A. Forker, Does
You Tube 's Bright Past Mean a Cloudy Future?, 19 No. 1 INTELL. PROP. & TECH. L. J. 1 (2007); Christina Scelsi,
You Tube, 24-FALL ENT. & SPORTS LAWYER 10 (2006); Tim Wu, Does YouTube Really Have Legal Problems? How
the Bell Lobby Helped Midwife You Tube, SLATE, Oct. 26, 2006, http1 w\ int\\slate.com/id/21 52264/fr/rss (visited
Nov. 5, 2007).
2 Michael A. Einhorn lr_, D?:r I and Its Discontents: How M~arkets are Transforming Copyright, 54 J.
COPYRIGHT Soc'Y U.S.A. 231, 235 (2007).










As introduced in Chapter 1, linking websites are becoming more prevalent on the Internet

to distribute infringing videos to users, without hosting copies of infringing materials on their

own web servers. For example, SouthParkzone.com is an hub of links to unauthorized full-

length copies of the hit television show "South Park."3 The links direct the users to copies stored

on video-sharing websites, such as YouTube.com or veoh.com, and nothing is located on the

southparkzone.com servers but the links to the infringing copies. While there are methods to rid

the host websites of illegal copies, fresh links are often searched for or uploaded to replace dead

links within a matter of hours of removal. This is a very new problem in the copyright law world

due to the ease at which illegal copies may be accessed and the difficulty at which infringing

copies may be removed.

Similar legal issues were prevalent during the early development of the Internet during the

1990's, and the topic was covered on a limited basis in the literature.4 Other linking literature

concentrates on cases pertaining to anti-circumvention copyright laws where websites linked to

codes and instructions for unlocking digital rights management technologies.5 The more recent

problem of linking websites devoted solely to infringing videos has been covered on an even









3 See e.g. South Park Zone, http://www.southparkzone.com (last visited Nov. 20, 2007)(offering links to
unauthorized streaming copies of Comedy Central's South Park); Peekvid, hopl w\ il \\ .peekvid.com
(last visited Nov. 20, 2007)( Peekvid's disclaimer of liability on its home page: "Peekvid does not contain any
content on its site, but is merely an index of available links on the Internet.").
4 See e.g. Mark Sableman, Link Law Revisited: Internet Linking Law at Five Years, 16 BERKELEY TECH. L.J. 1273
(2001); Nicos L. Tsilas, M~inimizing Potential LiabilityAssociated With Linking and Framing on the World Wide
Web, 8 CoMMLAW CONSPECTUS 85, 85-86 (2000); David L. Hayes, Advanced Copyright Issues on the internet, 7
TEX. INTELL. PROP. L.J. 1, 84-87 (1998); Edward A. Cavozos & Coe F. Miles, Copyright on the 111111 Linking and
Liability, 4 RICH. J. L. & TECH. 3 (1997).
5 See Michael Dockins, Comment, Internet Links: The Good, the Bad, the Tortious, and a Two-Part Test, 36 U.
TOLEDO L. REV. 367, 386 (2005).










more limited basis.6 This is clearly an area in the literature that is in need of further development

and will be a maj or focus of the remainder of this study.

One of the most relied-upon defenses to online copyright infringement by video hosting

websites is the Online Copyright Infringement Liability Limitation Act, otherwise known as

section 512 of the Digital Millennium Copyright Act (DMCA).7 Section 512 grants certain

online service providers immunity from secondary copyright infringement as a conduit of the

infringing activity." Three years prior to the enactment of the DMCA, copyright scholar Jane

Ginsburg noted that service providers were best-situated to prevent infringement.9 Section

512(c) may apply to video-sharing websites such as YouTube, that are open to the public for

uploading without prior approval of content. The lack of content approval is integral to the

notice-takedown process. First, the online service provider must receive notice--a request from

the apparent content-owner that an infringing video is on their servers. Upon notice, the online

service provider must then "expeditiously" remove the alleged infringing video, notify the

complainant of the removal, and notify the original uploader that the content has been removed

and their right to serve a "counter-notice" to the complainant. The specifics of @512(c) will be

addressed further in Chapters III and IV.




6 See Louise Longdin, Note & Comment, Hyperlinking and Copyright Infringement, 13 NEW ZEALAND BUS. L. Q.
33 (2007)(comparing briefly American legal copyright problems with linking to English, Australian, and Canadian
problems).
S17 U.S.C. #512 (2000).
SThis is distinct from what are commonly known as Internet Service Providers, or ISP's.
9 See Jane C. Ginsburg, Folrt, 5 Cars on the 'Information Superhighway ': Authors, Exploiters, and Copyright in
Cyberspace, 90 COLUM. L. REV. 1466, 1492-93 (1995).










The safe-harbor has been examined in detail by numerous authors. 10 The literature has

been divided into three camps:"l (1) early commentary that recognized @512 as the solution to

all the Internet' s problems, 12 (2) suggestions that it actually provides a disincentive to online

service providers to monitor for infringement despite their best position to do so, 13 and (3)

commentators that thought the onus put on users to prove they had the right to share the work

after removal acted as a chill on Internet expression. 14 Additionally, Professor David Nimmer

thoroughly examined the legislative history and intent in his book Copyright : Sacred Text,

Technology, and the DM\CA .1

The early praise of the DMCA safe harbor largely due to optimism for the effectiveness of

the new statute based on the history of its development. 16 The safe harbor began as a

recommendation of the Intellectual Property Working Group of the Information Infrastr-ucture

Task Force, formed in 1993 to address digital technologies and the Internet. 17In 1995, the



'o See Cassandra Imfeld & Victoria Smith Ekstrand, The M~usic Andustry and the I.. /.,as r..- Development of the
Digital M~illennium Copyright 4ct 's Online Service Provider Provision, 10 Cohal. L. & POL'Y 29 (2005); Emily
Zarins, Notice I ersus Knowledge 177der the DhIC4 's Safe Harbors, 92 CAL. L. REV. 257 (li r'l; 4j Mitchell P.
Goldstein, Service Provider Liabilityfor 4cts Conunitted by Uvers: What You Don 't Know Can Hurt You, 18 J.
MARSHALL J. COMPUTER & INFO. L. 591 (2000); Alfred C. Yen, hnternet Service Provider Liability for Subscriber
Copyrighthnfringeinent, Enterprise Liability, and the First 4mendinent, 88 GEO. L. J. 1833 (2000).
11 Jennifer M. Urban & Laura Quilter, Efficient Process or "C Italins;~ Effects "? Takedown Notices 177der Section
512 of the Digital hlillenniuin Copyright 4ct, 22 SANTA CLARA COMPUTER & HIGH TECH. L.J. 621, 637-38 (2006).
'2 See Urban & Quilter, supra note 11, at 1270; Michelle A. Rayn,;.l .,*l,.;,<, Terra hncognita: Why the Digital
Millennium Copyright 4ct Was Keeded to Chart the Course of Online Service Provider Liability for Copyright
Infringeinent, 60 OHIO ST. L.J. 755, 785-86 (1999); Steven E. Halpernl New Protections for hnternet Service
Providers: 4n 4nalyvis of 'The Online Copyright hnfringeinent Liabilitv Limitation 4ct, 23 SETON HALL LEGIS. J.
359, 406-07 (1999).
'3 See Urban & Quilter, supra note 11, at 687-88: Colin Folawn, Keighborhood Watch: The ...;.~,te. ? ofRighty
Caused by the Notice Requirement 177der the DhfC4, 26 SEATTLE U. L. REV. 979 (2003).
'4 See Emily Zarins, Notice I ersus Knowledge 177der the DhIC4 's Safe Harbors, 92 CAL. L. REV. 257 (li r'l; 4j
Alfred C. Yen, hnternet Service Provider Liability for Subscriber Copyright hnfringeinent, Enterprise Liability, and
the First 4mendinent, 88 GEO. L. J. 1833 (2000).
'5See generally DAVID NININER, COPYRIGHT : SACRED TEXT, TECHNOLOGY, AND THE DMCA (Kluwer Law
International, The Hague 2003). See also, David Nimmer,.il- .... ,,,r S;I ... Jeana.. -History the Sweet and Sour
Spoty of the DhIC4 's Conunentary, 23 CARDOZO L. REV. 909, 951 (2002).
'6 Supra note 12.
'7Halpern, supra note 12, at 382-83.










Intellectual Property Working Group issued a "White Paper" recommending that a passive

conduit exception to liability should be extended to online service providers. IsShortly

thereafter, Congress initiated a bipartisan legislative initiative to implement the

recommendations, but ultimately failed due to a standstill over the reach of the limitation of

liability. 19 However, the safe harbor was revived during Congress' implementation of two

World Intellectual Property Organization treaties, which had originally included safe harbor

provisions in earlier drafts.20 As a result, the Digital Millennium Copyright Act was finally

agreed upon by both houses of Congress and signed into law on October 28, 1998.21 Due to the

long history of industry participation in the process of developing the safe harbor, it is

understandable that there were few early critics.

However, others greeted the safe harbor with more skepticism, finding that it created a

perverse incentive for service providers to avoid monitoring their systems despite being in the

best position to do so.22 When a service provider is alerted to possibly infringing material, it

has no reason to distrust the accusation, as further inquiry may result in knowledge of infringing

material.23 Such knowledge risks losing immunity and introduces the provider to great potential

financial liability, the same uncertain liability the safe harbor attempts to avoid in the first

p ace.24




's Rayn supra note 12, at 744. See Information Infrastructure Task Force, Intellectual Property and the National
Information Infrastructure: The Report of the Working Group on Intellectual Property Rights at 100 (1995)
available at http://www.uspto.gov/go/com/doc/ipnii/lawcp~d (last visited Mar. 3, 2008).
19 Halpern, supra note 12, at 383.
20Id.
21 Id. See also Digital Millennium Copyright Act, Pub. L. No. 105-304, ##201-203, 112 Stat. 2860, 2877-2886
(Oct. 28, 1998).
22 See supra note 13.
23 Urban & Quilter, supra note 11, at 687.
24Id.









After observing the operation of the safe harbor over its early years, a number of

commentators pointed a maj or failing. 25 They noted that the DMCA' s notice and takedown

procedure shifted the traditional burden of copyright owners proving infringement to alleged

infringers being forced to disprove infringement.26 Professor Alfred Yen pointed out this

problem, noting the First Amendment concerns that arise when allegedly infringing works are

taken-down preemptively without a chance for the alleged infringer to respond prior to the

takedown.27 Although alleged infringers are equipped with the ability to serve a counter-notice

and eventually have their material put-back, that process then puts the alleged infringer at risk to

be sued by the copyright owner.28 In addition, there are few safeguards to protect users from

over-zealous claims of infringement by copyright owners other than bad-faith claims directly

forbidden by the DMCA itself.29 As a result, Yen noted, the notice-takedown process under the

DMCA results in a chilling effect on speech by over-zealous takedown notices or through the

perceived nisk of litigation by alleged mnfringers serving counter-notice."

Pertinent to this study is the effectiveness of the notice and takedown regime on the online

video-sharing and protection of copyrighted works. Jennifer Urban and Laura Quilter conducted

an empirical analysis of the effect of section 5 12 of the Digital Millennium Copyright Act' s

(DMCA) notice and takedown regime in 2006.31 Urban and Quilter found that a limited







25See supra note 14.
26 Urban & Quilter, supra note 11, at 638; Yen, supra note 14, at 1887-88.
27Yen, supra note 14, at 1888.
28Id.
29Id.
s Id.
31 Urban & Quilter,supra note 11.










achievement of the overall goals of section 5 12, "the inexpensive takedown of clearly infringing

hosted content or links to infringing websites."32

In the study, Urban and Quilter examined a data set compiled by online copyright

watchdog group "Chilling Effects," consisting of nearly 900 takedown notices sent to alleged

individual online infringers of all forms of copyright. 33 Of that number, 734 notices were

reported by Google, Inc., the entire number of notices received by the Internet search giant since

it began record-keeping in 2002.34 Of the claims, only 31% applied to the (512(c) safe-harbor

relating to online service providers,35 many of which were substantially and procedurally

flawed. 36 In all, they found an overall abuse of the notice and takedown process and a negative

impact on the public's consumption of copyrighted works and a degradation of the Internet as a

platform for sharing information.37

One of the most important findings was that Urban and Quilter determined that the

immediate removal of alleged infringing content, without any response from the alleged

infringer, constituted a lack of fairness and due process.38 As a result, they suggest amending

~512 from requiring "expeditious" takedown to a set time period which would not instantly strip

an alleged infringer of his ability to share content that may in the end be rightfully his to share.39

This would in effect "build[] some due process back into the system" and restore the notice-






I2d. at 687.
33Id. at 641.
3Id
35Id. at 667.
36 Id. at 682.
37Id. at 687-88.
38See id. at 688-89.
39 See id.










takedown regime to its proper balance, rather than a one-sided attack tool of the copyright

owners."

Copyright Law and New Technology

As noted in Chapter 1, copyright law has struggled to adapt to changes in technology.41 As

a result, a maj or question throughout the scholarly literature is the classic chicken-egg question

of how technological advances affect copyright law: whether the technology changes the law, or

the law changes technology (or at least adapts to it). It is important to further examine this

question in order to frame the issue the Internet' s constantly advancing digital technology,

specifically for the purposes of this study regarding the infringement of online video. In 1989,

Professor Jessica Litman noted that while one group of scholars maintained that copyright law

had always accommodated changes in technology largely with great success, another group

insisted that current technological changes were incongruent to the original notion of copyright

law of protecting authors' incentive to create.42 This trend largely continues in the more recent

literature on the topic. Litman herself contends that technology has a net positive effect of

granting greater control to the end-users.43

The Legislative Process

Some commentators contend that it is the legislative process that is deficient in adapting

copyright law to changing technology. Litman's seminal 1989 analysis, Copyright Legislation

and' Technological Change, examines the effect technological change has on the legislative

process of developing new copyright law. 44 Litman argues that the legislative process is



0 Id. at 689.
41 Jessica D. Litman, Copyright~,,~Ir..; .,te, and Technological C It, s;.., 68 OR. L. REV. 275, 276 (1989).
4Id
43See JESSICA D. LITILAN, DIGITAL COPYRIGHT 14 (Prometheus Books, Amherst, N.Y. 2001).
44Litman, Copyrightles, ulater.. > and Technological C It, s;..., supra note 41, at 277.










responsible for the deficiency of copyright law in accord with new technology.45 Much of the

copyright law through history was written by the industry concerned with drafting "fact-specific"

statutes that are easily surpassed when new technology takes over.46 Litman contends that the

obsession of current stakeholders to entrench themselves in current technology through

complicated statutes that quickly become outdated is the greatest barrier to lasting copyright

laws.47 111 Other words, Litman argues that copyright legislation is essentially about the

incumbent copyright industry increasing its control over the sale of its products.48

However, the sought-after control was typically more of an inside job than one might

imagine. Dating back to 1909, Congress has largely allowed the interested parties in copyright

legislation gathered together to write the laws.49 One obvious problem with such a process is

clearly defining who has the right to sit at the table when it comes time to renegotiate.'o Since

the negotiations are largely self-initiated, it is left to the industries to determine the proper

players. This results in a favoritism towards incumbents and away from new technologies. Such

a complication in this legislative strategy can be easily applied to current copyright

controversies. For example, if perhaps Google was afforded a seat at the table, but not some of

its smaller software rivals, Google's technological approach will clearly be favored in the

revi sion.








4 5 Id
4 6Id
47 See id. at 359-60.
48 See LITMAN, DIGITAL COPYRIGHT, supra note 43, at 81.
49 Litman, supra note 41, at 278. Litman identified that the 1909 Copyright Act followed this exact model, however
"fringe" industries such as the piano roll and phonograph were not invited to participate. Id. at 285.
so See id. at 280.










But what is the result on copyright legislation in the wake of this process? Professor Tim

Wu notes two main streams of copyright legislation that emerged in the Internet age." First, are

new specific rules for passive dissemination technologies in the form of safe-harbors.52 In the

past, new dissemination technologies relied on compulsory licenses to gain access to copyrighted

works, the lifeblood of any disseminator. 53 However, with the safe-harbors, disseminators are no

longer concerned with gaining legal access to copyrighted works, since the safe-harbor places

that burden on the users of the websites and sharing programs, and immunizes disseminators

from consequences of unknown user infringement. 54 Wu argues that this essentially allows

copyright distribution facilitators to free-ride off the works of others without maj or legal

repercussion so long as they adhere to the safe harbor's dictates. 5

The second type of copyright legislation sought is specific laws aimed at limiting

infringing users.56 For example, Congress passed new laws aimed at strengthening digital rights

management technologies by making it illegal to circumvent security measures." It also singled

out certain technologies for a tax to be paid to the copyright owners knowing that a certain

amount of infringement would occur utilizing the technology.' The digital rights management

abilities and targeted taxes work to not only strengthen the hand of the copyright incumbents, but

equally work to weaken the hand of their challengers. 59


si See Tim Wu, Copyright Communications Policy, 103 MICH. L. REV. 278, 344 (01 rI14,.
5 2Id
5 3 Id
54 See id.
5 5 Id
56Id. at 344-45.
57 Id
58Id. See infra at notes 99-101.
59 See Jane C. Ginsburg, Copyright and Control Over New Technologies ofDissemination, 101 COLUM. L. REV.
1613, 1619-20 (2001). For example, the 1992 Audio Home Recording Act (AHRA) was a law aimed specifically at
a new digital audio tape technology (which never caught on commercially). Id. The AHRA imposed a tax on the
sale of qualifying devices to be distributed to content creators. Id. In exchange for the tax, the AHRA allowed the










Copyright Incumbents

Once the laws are written and enacted, it is common for the "winners" to reap the rewards

of their carved-out areas of the law to utilized their technology, while the "losers" struggle to

adapt their products to the new laws, often resulting in a stifling of technology. The conflict

between incumbent and challengers is a common cycle throughout the history of copyright law. 60

The conflict is unavoidable because new technologies will constantly evolve to displace the old

either through a technological advantage or lower costs.61 In TOSponse, incumbents will use all

means available, including fine tailored legislation, to destroy the incoming competition.62

As Professor Alina Ng notes, copyright incumbents attempt to use information, the

currency in which copyright deals, to solidify their dominance.63 Ng suggests that "unless fences

are erected, common resources, such as information, will be depleted in precisely the same

manner that common pastures are overgrazed."64 Such fences regarding online video are

essential, for once a work is disseminated to the public, digital technology readily allows it to be

exploited by anyone with the requisite knowledge to do so, legally or otherwise. If no fences are

erected, then free riding may result-- where one unjustly benefits from the work of another at the

expense of the author.65




device to make first-generation copies, but prevented users from making additional copies to distribute off the
device. Id.
60 Wu, Copyright Communications Policy, supra note 51, at 292-97.
61 Id. at 293.
62 See id. at 292.
63 See Alina Ng, Copyright's Empire: Why the Law M~atters, 11 MARQ. INTELL. PROP. L. REV. 337, 346 (2007). For
the seminal analysis of copyright law and economic theory, see William M. Landes & Richard A. Posner, An
Economic Analysis of Copyright Law, 18 J. LEGAL STUD. 325 (1989). See also Paul A. Samuelson, The Pure
Theory of Public Expenditure, 36 REV. OF EcoN. & STATISTICS 387 (1954)(defining in economic terms what
constitutes a "public good").
64 See Ng, supra note 63.
65 See id. But see Mark A. Lemley, Property, Intellectual Property, and Free Riding, 83 TEX. L. REV. 1031
(2005)(critiquing the notion that free riding in intellectual property should be eliminated).










The incumbent typically retains a more powerful position than the challenger: incurring

great litigation costs on the challenger, denying the challenger access to copyrighted materials or

"taxing" them for access, and seeking regulatory and legislative restrictions on the challenger.66

However, even with all the advantages, the copyright policy making process is typically

unpredictable concerning new technologies.67 Despite constant improvement, major shifts in

technology, such as from analog to digital on the Internet, are generational changes.68 Similarly,

maj or changes to the copyright law are similarly uncommon. 69 Thus, the actions of multiple

government actors can be unpredictable and yield unexpected results.'0

Professor Kevin M. Lemley's 2005 article, The Innovative M~edium Defense: A Doctrine

to Promote the M~ultiple Goals of Copyright in the Wake ofAdvancing Digital Technologies,

attempts to Eind the proper balance in order to prevent the stifling of new technology by

incumbent copyright owners and disseminators.7 Lemley contends that if the framers of the

Constitution intended to promote the useful arts and sciences (as developed in patent and

copyright law), then so too did they intend to protect innovative mediums which would

communicate such creative works.72 Lemley adds that because copyright owners do not

typically directly benefit Einancially from innovation, they have no incentive to cooperate and







66 Id. at 294-95.
67 Id. at 295.
68 See id.
69 See id.
7 0Id
n1 Kevin A Lemley, The Innovative M~edium Defense: A Doctrine to Promote the M~ultiple Goals of Copyright in the
Wake ofAdvancing Digital Technologies, 110 PENN. ST. L. REV. 111, 112-13 (2005).
72 Id. at 134.










work with innovators.73 The basic business desire to do what has worked in the past and avoid

taking chances on new mediums works to stifle innovation.74

Most importantly, Lemley argues that the stifling of new technology is due to the

overprotection of copyright granted to creators, creating a "technological veto."'" In support,

Lemley cites Matthew Fagin' s three reasons why copyright law threatens innovation of new

mediums: (1) a "de facto" control over the channels of distribution, (2) expanding liability that

inhibits fair use, and (3) owners' retention of complete distributional control.76 Such a

"technological veto" allows incumbents to deliver their works through traditional models of their

choosing, regardless of whether they are the most efficient to them or the consumer.

Additionally, this prevents consumers from being able to adopt new technologies that they desire

because incumbents will attempt to prevent their content from following consumers to disfavored

new locations.

In addition, Lemley notes basic economic theory encourages innovation only to a limited

extent within the preexisting business model." For example, the music industry's move from

records, to 8-tracks, to cassette tapes, to CD's only increased the sound quality, changing nothing

substantial about the individual listening experience.' To the contrary, where outside innovators

are allowed to introduce new technology to incumbent industries, consumers receive more




73Id. at 135 (2005). See also Mark A. Lemley & R. Anthony Reese, Reducing Digital Copyrightlnfringement
Without R. .r,, r,;I~nnovation, 56 STAN. L.REV. 1345, 1350 (~li14,1.
74Kevin A. Lemley, supra note 71, atl35.
75Id. at 136-37 (citing Matthew Fagin, ET AL., Bevond Napster: Eving antitrust Law to 4ckance and Enhance
Online Adusic Distribution, 8 B.U. J. Sel. & TECH. 451, 499 (2002)).
76Matthew Fagin, ET AL., Beyond Napster: Eving antitrust Law to advance and Enhance Online Adusic
Distribution, 8 B.U. J. Sel. & TECH. 451, 499-500 (2002).
77Kevin A Lemley, supra note 71, at 138. Economist Joseph Schumpeter's static market model of competition
posits that where an industry is committed to a propertization of its commodity, it tends to protect the delivery of the
good within the current business model. Id. at 138-39.
78Id










freedom in choosing how to consume the content, and innovation is encouraged and robust.79

For example, out-sourcing Google to develop a new software by which a television station can

broadcast its newscast online is more likely to result in an innovative delivery system, and

actually will drive to create more competition within the creative industry in the long-term"s

However, incumbent firms have little incentive to allow outside firms for two reasons.

First, the value of the copyrighted work decreases when the creator' s control over the

dissemination is decreased.81 Second, although long-term benefits will result to the incumbent

firm, short-term losses will result in the investment in what is often an unproven and somewhat

risky method of distribution.8s2 For example, the rise of the iTunes Music Store as the premier

legal online distributor of music files can be attributed to its charging relatively high prices for

music, and giving substantial profits to the traditional recording industry.83 Thus, they buy-off

the incumbent industry and block out potential innovators.84

In striking a balance between incumbent firms and innovators, Lemley argues for a

limitation of secondary liability and the introduction of an "innovative medium defense" similar

to that of fair use." Secondary liability poses a threat to innovation because it can limit the

investment in technologies for fear of being dragged into a lawsuit.8s6 Lemley also argues that

secondary liability often results in the shutting down of innovative technologies, resulting in a

loss of use of that and similar technologies to the public for their non-infringing uses. s7Thus,



79 Id. at 139.
so See id.
81See id.
8 2Id
83 Tim Wu, The Copyright Paradox, 2005 SUP CT. REV. 229, 248 (2005).
8 4Id
85Kevin A Lemley, supra note 71, at 140-162.
86 Id. at 141.
87Id. at 142.










Lemley supports the imposition of an "innovative medium defense" by which new technologies

can be protected while at the same time protecting individual copyright owners.88 The

innovative medium defense would apply similarly to the fair use factor test, utilizing the

following factors: (1) whether the technology advances consumer autonomy, (2) whether the

technology allows more than nominal noninfringing uses, (3) whether the medium allows

unlimited reproduction and distribution, (4) whether it fosters positive active consumerism, and

(5) whether the medium will allow an adequate return for copyright owners.89 This approach

favors the innovator and assumes incumbent copyright firms are willing to take short-term losses

to accommodate the introduction of new technology. While resistance by incumbents is often

short-sighted, it is hard to expect self-interested companies to sacrifice profits for the "good" of

society by not attempting to stifle competitive innovation.

Professor Jane Ginsburg studied the problem from a different approach in her 2001 article

Copyright and Control Over New Technologies ofDissemination, not just examining the

attempted control of new technology, but also the exploitation of it by incumbents.90 Ginsburg

found that where copyright incumbents sought to exploit new technology, they often did so

successfully and quite profitably.91 For example, Ginsburg points to the music industry's

adaptation to the radio licensing model by forming the ASCAP collective licensing society to

license the right to play songs over the radio.92 On the other hand, where incumbent copyright

holders sought to legally block new technologies, new technologies have regularly won out.93




88Id. at 157-62.
89 Id.
90 Ginsburg, supra note 59, at 1619-20.
91 Id. at 1619.
92 Id. at 1620-21.
93Id. at 1619.










However, as the article was written prior to the anti-technology decisions of Na~pster, Aimster,

and Grokster, this dichotomy has been somewhat lessened.

As for the Digital Millennium Copyright Act (DMCA), Ginsburg asserts that Congress

attempted to devise a "dual regime" in order to grant access control to owners while not wholly

shutting down new technologies.94 However, as Ginsburg notes, the limitation of controlling

access to a work, rather than mere copies of it, restricts the latter fair uses of the work.95 Quite

correctly, Ginsburg' s criticism of controlling access to works ultimately strikes at one of the

Constitutional intents of copyright to promote the progress of the arts.96 By limiting access to

works, the law ultimately impinges upon the creativity of new works and makes for a less

creative society.

Part of copyright law' s challenge in adapting to changes in technology can be attributed to

the traditional methods of distribution and consumption, and the resistance of content owners to

shift to new methods. Professor Joseph Liu examines the challenge of ownership of digital

copies in Owning Digital Copies: Copyright Law/ and the Incidents of Copy Ownership.97

Traditionally, copyright scholars followed Howard Demsetz' s prominent notion of property

rights as applied to copyright: as a property right granted in the possession of physical copies.98

One of the basic tenets of property law is the free alienability of physical property.99 A "hard"

copy is limited in the manner in which it can be transferred, thus restricting the ability of an


94 See id. at 1631-34.
95 Id. at 1635-36.
96 See U.S. CONST., art. I, #8, cl. 8.
97 JOseph P. Liu, Owning Digital Copies: Copyright Law and the Incidents of Copy Ownership, 42 WMl. & MARY L.
REV. 1245, 1247 (2001).
98 See Howard Demsetz, Toward of Theory of Property Rights, 57-2 AM/. EcoN. REV. 347. 359 (1967).
99 See Liu, Owning Digital Copies, supra note 97, at 1248-49 (2001). The first-sale doctrine embodies this notion in
copyright law. Id. The first sale doctrine, 17 U.S.C. #109, is the concept of exhaustion- that once an item is placed
into the stream of commerce, the original creator's right to reap any further financial benefit from later sales is
prohibited. See Quality King Distribs., Inc. v. L'Anza Research Int'l., Inc. 523 U.S. 135, 152 (1998).










owner to make enough pirate copies to harm the producer. 100 For example, one can give another

a book, transferring ownership rights in the book, but one cannot easily copy the entire book and

distribute copies of it without more technology, such as a copy machine. 101

However, as Liu notes, a digital copy's characteristics are markedly different from "hard"

copies, erasing the "physical baseline" which the property right of copyright assumeS. 102 Above

all, digitization allows unprecedented access to works, legal or otherwise. 103 Liu posits that in

order for copyright law to be relevant in the digital environment, its physical legal characteristics

of alienability must be applicable to digital copieS. 104 Still, to apply this concept to digital

copies, the limitations on ownership must be clear either through license or technological

limitations. 1os Ultimately, the distribution of individual digital copies results in a pay-per-use

regime, in which use-limitations are built into the price of the work and are agreed upon at time

of purchase. In a pay-per-use system, data is encrypted and a user purchases the right to unlock

the data in a limited manner. 106

In 2001, F. Gregory Lastowka examined the shifting distribution in Free Access and the

Future of Copyright. 107 Lastowka articulated three main methods of traditional distribution: (1)

the purchase of copies, (2) the purchase of access to content, or (3) free content. 10s However, he

contends that digital technology upsets the traditional models, blurring the long-established lines

1oo Liu, Owning Digital Copies, supra note 97, at 1249-51.
101 See id. at 1248-49.
102 Id. at 1250.
103 Id. at 1309-10.
104 See id. at 1336-40.
1os See id. at 1338-39.
106 See Tom W. Bell, Fair Use vs. Fared Use: The Impact ofAutomated Rights M~anagement on Copyright 's Fair
Use Doctrine, 76 N.C. L. REV. 557, 555-56 (1998).
'07 F. Gregory Lastowka, Free Access and the Future of Copyright, 27 RUTGERS COMP. & TECH. L. J. 293 (2001).
'0s Id. at 294. The purchase of copies is self-explanatory, e.g. the purchase of a computer program on CD-ROM or a
physical copy of a book. Id. The purchase of access includes viewing a movie in a theater or renting it for a set
period of time from a video rental store. Id. at 294. The free distribution model includes broadcast television,
though it also assumes a bargain of viewing a limited number of advertisements during the programming. Id.










differentiating segments of the copyright distribution market. 109 The displacement of the

traditional models is due largely to digitization technology, increased storage and memory

capacity, and the prevalence of network effects via the Internet. 110 Lastowka argues that the

confluence of these events has led to the end of the single-copy concept and is leading ultimately

to the "end of the middleman" in copyright. 1

The middleman long held an essential role in the copyright distribution chain by making

money producing and distributing copies of the work to the public. 112 However, digital

technology allows anyone to become a producer, and allows the bypassing of traditional

distribution outlets in favor of direct-to-consumer distribution. 113 In addition, the Internet' s

popularity is based largely on the free access to information. 114 The consequence of such

changes could mean the end of the middleman and ultimately copyright law itself. 11 As

Lastowka observes, two common arguments of those predicting the end of copyright are that (1)

"copyright law is not respected normatively," and (2) since information naturally wants to be

free, sharing information is a more advanced and superior model to "crass commercialism."116

However, the copyright middlemen wield extreme power and continue an essential role in the

digital environment by constructing secure online systems to distribute works on a pay-per-use

basis. 117





109 See id. at 296.

"' See id. at 298-306.
"1Id. at 304.
1 13 Id
"1Id. at 312.
"5 Id. at 305.
"1 6d.
117 See id.










Changing Views: Regulatory Policy and Copyright Consumers

While the incentive-laden temporary monopoly continues to drive authors to be creative,

two related, alternative models have emerged to explain copyright policy: (1) Tim Wu's

copyright as communications policyll and (2) Joseph Liu's regulatory copyright model.119 Tim

Wu's Copyright 's Communications Policyl20 examines the conflict from the competition side,

while Liu then segues to the legislative and regulatory tactics by which the industries battle in

Regulatory Copyright. 121 While each approach is different, together they help to explain the new

direction that copyright law is headed in during the Internet age. While both agree the author-

incentive is the basis for copyright law, they also agree that it has been displaced. 122 The

common thread through both is that copyright incumbents use various rent-seeking and anti-

competitive behaviors to retain their stranglehold over the dissemination industry. 123

As explained previously, incumbent copyright firms furiously battle to inhibit new

competitors from taking over in a number of different ways. Wu's copyright as communications

policy explains the tension between the two abusive behaviors of both incumbents and

challengers. 124 While new entrants attempt to free-ride off incumbents, incumbents attempt to

lock them out of entering the market. 125 Wu notes that classic communications policy stated

that as long as new technologies could afford to pay for the right to disseminate copyrighted

works in the form of compulsory licenses, they could use the works. 126 For example, this model


its Wu, Copyright 's Communications Policy, supra note 51.
119 JOseph P. Liu, Regulatory Copyright, 83 N.C. L. REV. 87 (211114 .
120 Wu, Copyright 's Communications Policy, supra note 51.
121 Liu, Regulatory Copyright, supra note 119.
122Id.
123 See Liu, Regulatory Copyright, supra note 119, at 135 (21* r 4);Wu, Copyright 's Communications Policy, supra
note 51, at 278-79.
124 Wu, Copyright 's Communications Policy, supra note 51, at 287.
125 Id.
126 Id. at 324-35.










was used with music on the radio, and broadcast television on cable. 127 What resulted, argues

Wu, is a copyright regime in which incumbents look to the law-making process for protection in

the form of specific technology-based laws and safe-harbors. 128

Professor Joseph Liu picks up the argument from there, describing the increasingly

regulatory model of copyright law. 129 Liu characterizes regulatory copyright by four factors: (1)

increasingly complex statutes, (2) increasingly industry and technology specific statutes, (3)

more intervention in the markets, and (4) greater policy-making power of Congress. 130 The first

factor, increasingly complex statutes, discards the traditional broad-based approach in copyright

law left to case-by-case interpretation by the courts. 131 In its place are detailed statutes designed

to elicit "precise results" without much wiggle room for interpretation by the courts. 132 Second

and similarly, the specific statutes are much more industry and technology specific, Eine-tailoring

them to obtain specific results. 133 Such specifieity may be in the form of specific compulsory

licenses to certain devices, narrow exemptions and exceptions, or even limiting the use of certain

technologies altogether. 134

Third, as a result of the complex and specific laws, regulatory copyright intervenes in the

structure of copyright markets more than traditional copyright law. 135 For example, compulsory

licenses may be tailored for certain sectors of the copyright industry, while others may apply a





1 See id.
12s Id. at 342.
129 See Liu, Regudatory Copyright, supra note 119, at 103-04.
130 See id. at 103-05.
131 Id. at 103.
132Id~
133 Id
134Id~
135 Id. at 104.










tax to reallocate profits to incumbents. 136 Quite often, such interventions have negative effects

on fair use for consumers. 137 Lastly, the regulatory regime grants increased power to Congress

in lieu of the courts. 138 Due to increased lobbying efforts and Congress' willingness to amend

the copyright statute at the direction of the industry, more power is placed in the legislative

process of fine-tailoring outcomes for problems rather than in court interpretation of broad-based

copyright laws. 3

Liu proposes a number of causes for the shift to the regulatory regime of copyright law.

Most importantly, he suggests that it is a direct result of the rent-seeking by the incumbent

copyright industry. 140 Incumbents are the most organized and well-positioned to effect copyright

policy in Congress. 141 Emerging technologies and consumers may both have their own agendas,

however, they are ill-equipped to fight the more powerful incumbent rent-seeking. 142 Further, the

increased value of the copyright markets drives the desire to rent-seek from Congress to retain

the dominant position. Another possible cause for the increased regulatory copyright policy is

that Congress' itself is responsible. Through political compromises designed to cure market

failures, Congress may encourage the private deal-making that often results in complex and

detailed statutes. 143






136Id~
137 See generally Glynn S. Lunney, Fair Use and Market Failure, 82 B.U. L. REV. 975 (2002); Tom W. Bell, Fair
Use vs. Fared Use: The Impact ofAutomated Rights M~anagement on Copyright 's Fair Use Doctrine, 76 N.C. L.
REV. 557 (1999).
138 Id. at 104-05.
139 See id.
140 Id. at 131.
141 Id
142 See Id.
143 See id. at 129-131.










However, increased regulatory copyright is not necessarily always positive, Liu notes. 144

On the whole, more complex statutes are more difficult to interpret for industries that were not

involved in writing them. 145 In addition, the broader goals of copyright law are less transparent

and diminishes the role of the courts in applying general concepts. 146 As for Congress, interest

group pressure poses a constant problem of whether or not it is making copyright policy for the

right reasons rather than political paybacks. 147 COngress also may be criticized for drafting

extremely complex copyright laws, yet not really having the requisite detailed knowledge to do

so. 148 As a result, the statutes are not only complex, but can create further problems due to a lack

of foresight and industry knowledge by Congress. 149

Generally, Wu and Liu caution against the further spread of copyright as a communications

policy and the regulatory copyright regime that results. Liu adds to the literature of alternative

views of copyright policy by looking at the often overlooked end-user in Copyright Lane 's

Theory of the Consumer. 1so With the increasing use of copyright dissemination technologies by

consumers to not only upload infringing videos, but also their own original works, this theory is

worth discussion. Liu argues that consumers are often left out of the copyright discussion,

despite the fact that the original copyright author-incentive regime was intended to encourage

them to share their creations for the betterment of society. 5

Traditional copyright law assumes passive consumers, readily reading, listening, and

viewing whatever the market brings to them, when the market brings it to them, in whatever

144 See id. at 134-37.
145 Id. at 134-35.
I46d. at 135
'47 Id. at 136.
14s Id. at 136-37.
149 See id.
'5o Joseph P. Liu, Copyright Law 's Theory of the Conswner, 44 B.C. L. REV. 397 (2003).
'51 See id. at 397-98.










form or medium brought to them.152 Thus, traditional copyright policy merely aims to provide a

functioning market of creative works through the author-incentive. 153 Liu suggests that this view

persists into digital copyright law, such as the use of "consumers" in the Digital Millennium

Copyright Act and the increasing popularity of the "pay per use" model such as iTunes. 154

Conversely, Liu argues that digital technology allows the consumer to assume an active

role with greater autonomy in selecting the manner in which to consume copyrighted works. 5

While Sony recognized consumer autonomy by legalizing time-shifting abilities of VCRs in

1982, traditional analog mediums typically left consumers boxed into time slots and specific

methods of consumption. 156 No other medium in history has granted consumers more autonomy

than the Internet; however, the Internet brings a unique problem. Traditional copyright law

limits sharing copyrighted works with others, but allows a certain amount to be shared in a social

manner, for example, lending a friend a DVD or CD. 1 Yet, the Internet allows sharing with

complete strangers anywhere in the world at little to no cost to the sharing consumer. 5

Technology and the Courts

Other than Congress, the body Constitutionally empowered to the make copyright law, no

other governmental body comes close to the power over copyright law policy than the United

States Federal Courts. Since the grant of copyrights is based in the U.S. Constitution, all

copyright disputes have original subject matter jurisdiction in the Federal Court system. As Tim





152 See id. at 402-03.
153 Id
154 Id. at 403-04.
15 Id. at 406-07.
156 See id. at 408-09.
' Id. at 412-14.
' See id. at 413.










Wu stated, in copyright law, the courts act as a "technological gatekeeper."159 This section will

first focus on the effect of the courts on the shaping of the law of secondary liability in copyright.

Then, it will address the overall policy towards copyright law the courts have taken recently.

Secondary Liability's Effect on Copyright Law

A maj or area concerning online infringement of video is secondary liability. Secondary

liability allows copyright owners to seek remuneration for acts of infringement from the deep

pockets of facilitators, rather than the low-rate of return of suing individual direct infringers. 160

To briefly review, secondary liability consists of both contributory and vicarious infringement,

where a facilitator makes it possible another's infringing act. 161 Vicarious liability assumes the

facilitator' s right and ability to control supervise the infringer and receives a direct financial

benefit from the infringing act. 162 COntributory liability requires a facilitator to have knowledge

of the infringing activity and materially contributes, causes, or induces another to do the act. 163

Articles simply too numerous to list have been written in dissecting the maj or Supreme

Court cases of Sony and Grokster regarding their secondary liability policies, and the subj ect will

be analyzed further in chapters III and IV. 164 Notably, Professor R. Anthony Reese examined

the post-Grokster effect on the on the subj ect of substantial noninfringing uses, noting that the



159 Wu, Copyright 's Conununications Policy, 103 MICH. L. REV. 278, 348 (li li14).
'60 See Mark A. Lemley & R. Anthony Reese, Reducing Digital Copyright lnfringeinent Without8. Pt r,. re ly
Amnovation, 56 STAN. L. REV. 1345, 1349 (~lr'l1)
' See DAVID NININER & MELVILLE NININER, NININER ON COPYRIGHT, #12.04(A)(2) (!\bu~ll\\ Bender, New York
2007). See alvo MGM v. Grokster, 545 U.S. 913, 930 (2005).
162Id~
163 Id
164 See e.g. R. Anthony Reese, The Temporal Dynamics of "Capable of Substantial Nonin~fringing Uves", 13 MICH.
TELECOM. & TECH. L. REV. 197 (2006); Center for Democracy & Technology, I,,la n.. r ..? i Grokvter: Limits on the
Scope of Secondary Liability for Copyright Infringenient, 2006 STAN. TECH. L. REV. 3 (2006); Tiffany A. Parcher,
Comment, The Fact and Fiction of Grokvter and Sony: Eving Factual Comparisons to Uncover the Legal Rule, 54
UCLA L. REV. 509 (2006); Tim Wu, The Copyright Paradox, 2005 SUP. CT. REV. 229 (2005); Richard M. Myrick,
Note, Peer-to-Peer and Substantial Nonin~fringing Uve: Giving the Terin "Substantial Some M~eaning, 12 J.
INTELL. P ROP. L. 539(200).










application of the doctrine to the same dual-use device may change over time as the uses of the

device change. 165 As will later be explored in Chapters III through V, the Grokster Court' s

failure to apply and further articlate the substantial noninfringing use doctrine left its continuing

power uncertain. 166 Reese compared the Court's concurring opinions on the issue and concluded

that together they called for a prediction of future uses, yet courts are not always the best-situated

to make accurate predictions. 167 As a result Reese suggested that copyright owner plaintiffs

should have a limited opportunity to return to to court at a later date should circumstances

change and current information can prove a device no longer capable of substantial

nominfnnging uses. 6

However, also pertinent to this study is scholarship concerning the effect technological

change has on secondary liability. A common criticism is that the legal system is ill-equipped to

deal with new technology and secondary liability. 169 In the ambiguous common-law developed

world of secondary liability in copyright law, disparate judgments concerning similar

technologies are common throughout history. 170 Further, what seems as the settled law of

contributory and vicarious liability is in fact an amalgam of unrelated precedents responding to

new technologies over the years, from piano rolls and dance halls to the VCR. 17 As a result,

Professor Craig Grossman argues that innovation proves a poor stimulus for judicial reasoning,





165 R. Anthony Reese, The Temporal Dynamics of "Capable of Substantial Nonin~fringing Uses", 13 MICH.
TELECOM. & TECH. L. REV. 197, 224 (2006).
166 See id.
167 Id. at 222-23.
168 Id. at 223.
169 See Craig A. Grossman, From Sony to Grokster, the Failure of the Copyright Doctrines of Contributory
Infringement and Vicarious Liability to Resolve the War Between Content and Destructive Technologies, 53 BUFF.
L. REV. 141, 221-22 (2005).
17 ld~
171 Id










for innovation "moves too quickly for the inherently conservative process of refining precedent

through judicial practice."172

Additionally, Professors Mark Lemley and Anthony Reese point out two maj or effects of

digital technology on secondary liability. 173 First, it negatively impacts innovation of "dual-use"

technologies, which allow for both infringing and non-infringing uses. 174 For example,

something as simple as a trumpet may be put to both infringing and non-infringing uses, but that

does not mean that it is not a universally accepted legal device. 1 Courts may be quick to look

at dual-use devices as a zero-sum game, shutting down services prematurely, or allowing them to

ravage copyright industries wholesale. 176 For instance, if a new technology has $100 of lawful

use, but $1000 worth of harm to society or authors, it is questionable whether that product should

be on the market. 7

There are a number of additional weaknesses of secondary liability regarding new

technology. First, new technology is especially vulnerable to total shutdown, because its true

capabilities may yet to be fully developed, so a court may be quick to pull the trigger. 1 Second,

courts are unable to address the specific illegal conduct of the actual infringers through

secondary liability. 179 The actual end-user infringers suffer no repercussion whatsoever. Third,

courts have recently loosened the direct financial benefit under vicarious liability, resulting in





172 Id. at 263.
173 See Lemley & Reese, supra note 160, at 1354-72.
174 Id. at 1355.
175 Id.
176 Id. at 1380.
177 See Wu, Copyright 's Communications Policy, supra note 51, at 348-50. See also Randal C. Picker, Copyright as
Entry Policy: The Case of Digital Distribution, 47 ANTITRUST BULL. 423 (2002).
'7s Lemley & Reese, supra note 160, at 1389.
179 Id. at 1379.










more facilitators being found liable, though also resulting in less innovation. Iso Each of these

problems accumulated may have drastic negative impacts on innovation.

Lemley and Reese recommend three alternatives to suing facilitators based on secondary

liability. I First, one solution is to change the incentive of individual infringers to commit

piracy, by making them accountable through enforcement and increased Eines.182 Second,

eliminate the need for enforcement through automatic collections in the form of taxes on

facilitating devices.18s3 Third, if individual enforcement is still necessary, then create a cheaper

more nimble alternative dispute resolution system to keep them out of the courts.18s4

Some scholars note that secondary liability is beginning to take on a more attenuated

degree, resulting in a new "tertiary liability."" Lemley and Reese first used the term in 2004 to

describe courts' increasing use of liability to go after "the helpers of the helpers."18s6 Different

from secondary liability, the tertiary infringer has no contact whatsoever with the primary

infringer. l Instead, the tertiary infringer is typically a small-scale innovator or start-up, or

large-scale venture capitalist, that provides the infringing technology to the facilitator. Iss Thus,

it is argued, that shutting down the source of the infringing technology is most efficient rather

than shutting down entire dual-use facilitators.18s9 However, it could also result in a chilling of



1sold. at 1367-69.
1 See id. at 1351.
182Id~
183 Id. at 1351-52. See also WILLIAM FISHER, PROMISES TO KEEP: TECHNOLOGY LAW AND THE FUTURE OF
ENTERTAINMENT, chp. 6 (Stanford Univ. Press, Stanford, Cal. 2004); Neil W. Netanel, Impose a Noncommercial
Use Levy to Allow Free Peer-to-Peer File we on,,~ 17 HARV. J. L. & TECH. 2 (2003).
184 Lemley & Reese, supra note 160, at 1351-52.
' See id. at 1347 (li li14); Benjamin Glatstein, Comment, Tertiary Copyright Liability, 71 U. CHI. L. REV. 1605

186 Lemley & Reese, supra note 160, at 1347.
1 Benjamin Glatstein, Comment, Tertiary Copyright Liability, 71 U. CHI. L. REV. 1605, 1610 (li i14).
'ss Id. at 1617-19.
189 Id. at 1617-18.










outside investment and as a result again stifle innovation. 190 Tertiary liability has yet to be

widely recognized as a viable legal doctrine and remains a largely theoretical approach. 191

Judiciary's Role in Setting Copyright Policy

In response to the Supreme Court' s recent 2005 Grokster copyright decision, Professor

Tim Wu addressed the issue of the Court' s changing role in copyright policy in The Copyright

Paradox. 192 Since the landmark 1982 decision, Sony v. Universal City Studios, courts

consistently apply the "Sony system" of weighing the costs and benefits to society of new

technology.193 While the legal test determining this is still unclear twenty-five years later, Wu

describes two maj or ways courts decide cases, either the "bad actor" or "welfarist" models,

borrowed from antitrust law. 194 In the "bad actor" model, courts look to punish alleged violators

of the law, in this case copyright infringers. 195 Under the "welfarist" model, the courts overlooks

bad behavior, instead favoring outcomes which benefit society as a whole, a very utilitarian

notion. 196

Wu characterizes the Grokster decision as a classic tension between the two models, with

the Supreme Court ultimately taking the "bad actor" approach by punishing the developers and

promoters of contributory-infringing software. 197 He notes that since peer-to-peer had a

reputation of piracy, it allowed the Supreme Court to make the politically easy choice of labeling




1901)d. at 1621-22.
191 See William S. Coats ET AL., Pre- and Post-Grokster Copyright Infringement Liability for Secondary and
Tertiary Parties, 35-JUL COLO. LAW. 71, 72 (2006).
192 Tim Wu, The Copyright Paradox, 2005 SUP. CT. REV. 229 (2005).
193 Id. at 233.
194 Id. at 230.
195 Id
196 Id. This approach relies on Adam Smith's philosophy of allowing some bad behavior in society is tolerable as
long as the results largely benefit society as a whole. Id.
1 9 Id










Grokster as the "bad actor."198 While the Court split evenly on the question of how to further

interpret the dictates of the Sony test of weighing societal costs and benefits, it unanimously shut

down Grokster by applying the inducement test borrowed from patent law to the "bad" intent of

the software. 199

However, Wu cautions against such outright punishment of the "bad guys" for two main

reasons.200 First, the "bad actor" approach ignores possible positive consequences to society of

infringing devices.201 Second, by shutting down alleged infringers, the courts effectively create

barriers to entry and ultimately set market entry policy in the copyright technology industry.202

It is always dangerous whenever a non-expert actor, such as the courts often are regarding

copyright economics, to set market policies. 203 Wu argues that the "bad actor" test is simply too

black and white for copyright policy, "either blessing or cursing the market entry of a given

technological device."204 He concludes that the courts are simply ill-positioned to deal with the

market-based problems in copyright law, and should cede substantial power back to Congress to

determine the proper equilibrium.205

Conclusion

In conclusion, the copyright literature is vast, and very little literature exists on the topic of

copyright infringement of online video. This chapter has supplemented the absence by focusing

on the impact of new dissemination technologies on copyright law, the effect it has on legislative

decisions, and the courts. The remaining chapters will attempt to build on this scholarship by


198 Id. at 239-41.
199 Id. at 241.
200 Id. at 230-32.
201 Id. at 231.
202Id. at 231-32.
203 See id. at 231.
204 Id. at 249.
205 Id. at 251.










applying the law to a case study analysis of YouTube and the linking website

SouthParkzone.com in Chapter 4, and proposing solutions to the greater problems identified in

Chapter 5.










CHAPTER 3
REVIEW OF CASE LAW

Copyright law at its most simple form is the unauthorized copying of the original work of

another. An author' s copyright may also be infringed by violating one of five statutory exclusive

rights under Section 106 of the Copyright Act. Section 106 provides for the exclusive rights to

reproduce,2 prepare derivative works,3 distribute to the public,4 perfOrm,' and publicly display

their copyrighted works.6 COurts have stated simply that the word "copying" in a legal context

means the violation of any of the exclusive rights. 7 Naturally, for any work to be eligible for

copyright protection, it must be an original work of authorship, made with a modicum of

creativity attributed to the author."

However, in the context of the Internet, the most impacting form of copyright infringement

to authors because of scope is not typically direct infringement, but secondary infringement. The

Internet brings a new scale to the problem of copyright infringement. The problem is not as

much as the creation of actual copies, but instead the means by which the copies are made and

shared. As a result, it only takes one original copy, but also requires a mechanism to make and

distribute copies. For example, in the past, to copy and distribute hard copies of a movie

illegally on DVD, a person would have to have the means and knowledge of how to copy and


S17 U.S.C. # 106 (2002).
2106(1).
3106(2).
S106(3)("...to distribute copies...of the copyrighted work to the public by sale or other transfer of ownership, or
by rental, lease, or lending ).
5 106(4)("...in the case of ... motion pictures and other audiovisual works, to perform the copyrighted work
publicly ).
6 #106(5)("...in the case of ...the individual images of a motion picture or other audiovisual work, to display the
copyrighted work publicly ).
SA&M r. Napster, 238 F.3d 1004, 1013 (9th Cir. 2001)(citing S.O.S., Anc. v. Pavdqv, Anc., 886 F.2d 1081, 1085 n.3
(9th Cir. 1989).
SSee Feist Publications, Inc. v. Rural Telephone Service, Co., 499 U.S. 340, 361 (1991)(stating the requirement of
originality was "that the work was independently created .., and that it possesses at least some minimal degree of
creativity. )









distribute hard copies to individuals. This often occurred in black markets and flea markets,

reaching only the number of people for which there were hard copies available. However, with

the Internet, one only needs to limited knowledge to distribute or display copies on the Internet.

On the Internet, copies are non-exclusive, meaning that there are an unlimited "amount" of

copies available to anyone that has access to the Internet and the limited knowledge of how to

download the copy. As a result, the mechanisms, programs, and linking and sharing websites

that make the copying and distribution easy for the Internet user often find themselves in

litigation for assisting and enabling the copyright infringement of their users. This is known as

secondary liability.

This chapter will further examine copyright jurisprudence of secondary liability, prior

linking law, and possible defenses. First, this section will explain direct liability, as direct

infringement must first be proven in order to have secondary liability. Next, it will cover the law

regarding secondary liability--both vicarious and contributory infringement. It will then set

forth the history of linking law on the Internet. Then, it will address the Digital Millennium

Copyright Act' s safe harbor of Section 512. Finally, it will cover the statutory defense of fair

use as it applies to online video.

Direct Liability

Secondary liability cannot exist in the absence of direct infringement by a third party.9

Thus, in order to address secondary liability in copyright law, what constitutes direct

infringement must be further explored. Direct infringement is the violation of one of the five

exclusive rights under (106. 10 Section 501(a) of the Copyright Act sets forth the requirements



9 rapster, 239 F.3d at 1013 n.2; Religious Tech. Ctr. v. Netcom On-Line Conununication Servs., Inc., 907 F.Supp
1361, 1371 (N.D.Cal 1995).
"' See 17 U.S.C. # 106 (2002); 17 U.S.C. # 501 (2002).









for an infringement complaint. 11A plaintiff s prima facie copyright infringement claim must (1)

show ownership of the allegedly infringing material, and (2) demonstrate a violation of one of

the (106 exclusive rights, absent fair use. 12 Violation of the (106 exclusive right in terms of

digital technology and the Internet have taken a few unique forms and thus necessitate a closer

look. Each of the exclusive rights (with the exception of the public performance right, which is

largely irrelevant to this study) will now be further explored in the context of digital technology

and the Internet.

Reproduction Right g 106(1)

The right of reproduction in a physical world simply prohibits the making of tangible

copies of an original protected work. An author of a book retains the right to authorize copies of

his book, a film producer to authorize copies of his movie on film reels, and a television station

to allow copies on videotape. It is also generally accepted that the reproduction right extends to

copies made in media other than the original form, absent personal fair use, which will be further

explored later. 13 For example, a music producer retains the right to make copies of a sound

recording in both CD form as well as digitized Mp3 files for sale on the Internet. In a physical

world, making a hard copy of a work typically involves secondary equipment such as a tape

recorder, VCR, or photocopy machine. In the digital world, however, a digitized file can be

copied with the simple click of a mouse with free software.

Thus, a special problem presents itself with the Internet regarding ephemeral copies of the

contents of a page that are kept in random access memory (RAM), known as cache, when a




" g 501(a).
'12 d. See also Napster, 239 F.3d at 1013.
13 See id. See also Sony v. Universal City Studios, 464 U.S. 417, 443 (1984)(personal time-shifting of television
progranuning with VCR fair use).










browser views a webpage. 14 The cache enables the browser to more efficiently reproduce the

webpage, and is not generally considered a violation of the reproduction right by the end-user. 1

Typically, cache files by end-users are viewed as fair use because the copies are temporary in

nature and only as required to enhance the web-browsing experience. 16 However, search engines

and other websites providing links to copyrighted material where copies of the pages are held in

cache have been found to be an unauthorized reproduction. 1 In addition, the U.S. Copyright

Office' s 2001 report on the Digital Millennium Copyright Act clarifies that copies stored in

cache could be sufficiently characterized as reproductions "so long as the reproduction persists

long enough to be copied, perceived, or communicated "--a relatively simple standard.

Derivative Works g 106(2)

The concept of derivative works stems from the heart of the intent of the Constitution' s

copyright clause to promote a creative society. 19 However, absent fair use, the right to authorize

and license derivative works resides with the original author. A derivative work is defined by

~101 of the Copyright Act generally as a creative work built upon a previous work.20 For

example, a screen play and subsequent movie based upon a fictional novel are both derivate

works of the original novel. It also includes different versions of the original work through

editing and alteration. On the Internet, the derivative right is often implicated due to the ease at



14 See Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1156 at n.3 (9" Cir. 2007).
I Id.
16 See Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1169-70 (9th Cir. 2007).
17 See Ticketmaster L.L.C. v. RMG Technologies, Inc., 507 F. Supp 2d 1096, 1005-06 (C.D. Cal. 2007). See also
Twentieth Century Fox Film Corp. v. Cablevision Systems Corp., 478 F.Supp 2d 607, 621 (S.D.N.Y. 2007).
1s See U.S. Copyright Office, DMCA Section 104 Report, at 107-117 (Aug. 2001), available at
hop w\ il itcopyright.gov/reports/studies/dmca/sec- 104-report-vol-1 .pdf (last visited Jan. 11, 2008).
19 See U.S. CONST. Art. I, Sec. 8.
20 17 U.S.C. # 101 (2005) ("A "derivative work" is a work based upon one or more preexisting works, such as a
translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art
reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or
adapted.").









which copies can be made, altered, and edited. This includes popular "mashups," in which

copyrighted videos are re-edited and combined with other copyrighted material to form entirely

new videos rarely resembling the originals.21 In light of the increase in user-generated content

on video-sharing websites such as YouTube, the right to authorize derivative works, absent fair

use, is often implicated in alleged infringements.

Distribution Right g 106(3)

The Copyright Act specifically grants copyright owners the exclusive right to distribute

copies of their works "to the public by sale or other transfer of ownership .. rental, lease, or

lending."22 The pertinent question to this study is whether the distribution right extends to

streaming of online video. The standard of distribution, according to the statute, is "to the

public."23 Additionally, the Supreme Court has held that electronic copies should be treated

similarly as hard copies regarding the distribution right.24 Yet, it is questionable whether the

mere placement, or "making available," of a streaming video on the Internet available to the

public is a "distribution" because, by the strict language of the statute, it is not a "sale or other

transfer of ownership .. rental, lease, or lending."25 The argument is that a transmission is

legally distinct from a sale or transfer of ownership.

However, few courts have applied the "making available" standard to the distribution right.

In 1994, the Fourth Circuit deemed a library's making of infringing books available to the public

to check out a "distribution" of the works. 26 As for the Internet, a number of courts have held



21 See N'gai Croal, Time for Your Mash-Up?, NEWSWEEK, Mar. 6, 2006, at 61-62.
22 17 U.S.C. # 106(3) (2002).
23 Id
24 N.Y. Times v. Tasini, 533 U.S. 483, 498 (2001).
25 See id. See also R. Anthony Reese, The Public Display Right: The CopyrightAct 's Neglected Solution to the
Controversy Over RAM Copies, 2001 U. OF ILL. L. REV. 83, 122-38 (2001).
26 Hotaling v. Church of Jesus Christ of Latter-Day Saints, 1 18 F.3d 199, 203 (4th Cir. 1997).










that the posting of infringing images for download on Bulletin Board Systems (BBS) and

websites held on centralized servers constituted a distribution.27 However, the Ninth Circuit

recently backed away from such a definition of distribution where the Google search engine

merely directed users to images held on other websites' servers, finding no liability for Google.28

Public Display and Performance Rights g 106(4)-(5)

Finally, the public performance and display rights are often implicated by the Internet

regarding online video, treated in the statute as either motion pictures or audiovisual works.29

The (106(4) performance right, as defined by (101 states that a motion picture or audiovisual

work is performed when its images are shown "in any sequence."30 Similarly, the (106(5)

public display right is implicated where a copy of a work is "shown" or where motion picture or

audiovisual work shows "individual images non-sequentially."31 Regarding infringement of

video, these distinctions appear to be without much difference. However, a single still image

displayed online from a video, such as a thumbnail, could constitute a public display given the

nonsequential nature of the image.32 Yet, the semantics of which right applies is less important

than determining whether either applies at all.

The key in defining what constitutes a "public" display or performance, and whether

Internet content qualifies, lies in the definition of "public." The answer is found what is known

as the "transmit clause" of (101, stating that to "transmit or otherwise communicate a


27See Playboy Enters. v. Webbworld, Inc., 991 F. Supp. 543, 550-53 (N.D. Tex. 1997)(storing infringing photos on
servers with the ability for users to download and print the photos was a distribution); Central Point Software, Inc. v.
Nugent, 903 F. Supp. 1057, 1058 (E.D.Tex. 1995)(making available for download of copyrighted computer software
on BBS was distribution); Playboy Enterp. v. Frena, 839 F. Supp. 1552, 1556 (M.D. Fla. 1993)(holding that user
postings of Playboy's copyright images to BBS with the ability to later be downloaded constituted a distribution).
28See Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1162-63 (9th Cir. 2007).
29 See 17 U.S.C. # 101 (2005).
so Id. ("perform").
31 Id. ("display").
32See Michaels v. Internet Entertainment Group, Inc., 5 F. Supp 2d 823, 830-31 (C.D. Cal. 1998)(finding that still
images captured from a celebrity sex-tape and posted on Internet a violation of the video's public display right).










performance or display of the work .. to the public, by means of any device or process, whether

the members of the public receive it in the same place or separate places and at the same time or

different times."33 The transmit clause incorporates the Internet into the public display and

performance rights by adopting the basic tenet of online video, that the end-user can view it in an

on-demand fashion, at the time and place of their own choosing. For example, in a precursor

case to the current online video controversy, a U.S. District Court found that a Canadian

company that converted live U.S. copyrighted telecasts into streaming video for its users violated

the public performance rights of the copyright holders.34 Setting aside the international

jurisdictional issues, the website iCraveTV.com streamed copyrighted works such as NFL

football and NBA basketball games, and publicly performed them because Internet users could

access them through the website.35

Secondary Liability

Liability for copyright infringement can only be found in the Copyright Act for direct

infringement by an individual.36 However, there is a well-developed body of law that enables a

plaintiff to sue for infringement based upon acts complicit by a third party that enables direct

infringement.37 COmmonly known as secondary liability, it has two major categories: vicarious

infringement and contributory infringement. The Supreme Court has recognized such liability in

the field of copyright, acknowledging that, "the absence of such express language in the







33 17 U.S.C. # 101 (2005)(("publick")).
34 Twentieth Century Fox Film Corp. v. iCraveTV, 2000 WL 255989 at *3 (W.D. Pa. 2000).
35 Id.
36 See 17 U.S.C. # 501(a) (2002). See also Sony v. Universal City Studios, 464 U.S. 417, 434 (1984).
r7 See DAVID NININER & NIELVILLE NININER, NININER ON COPYRIGHT, #12.04 [A] (Mathe w~i\\ Bender, New York
2007).










copyright statute does not preclude the imposition of liability for copyright infringers on certain

parties who have not themselves engaged in the infringing activity."38

The origins of secondary liability in copyright law stem from the common law agency

doctrine of respondeat superior as well as a parallel provision in the Patent Act which expressly

allow for secondary liability.39 Respondeat superior is derived from the tradition of the master-

servant relationship, holding a master responsible for the actions of his servant.40 Such liability

was similarly extended to the workplace, making a corporation culpable for the actions of its

employee in matters related to the business, and has since been extended to many other types of

relationships where a right to supervise or control exists.41

The Supreme Court cited the similarities in the Patent Act that makes liable anyone who

"actively induces infringement of a patent"42 as well as imposing liability on a specific

"contributory" infringers.43 The Court relied upon the Patent Act due to the common

Constitutional origins of copyrights and patents when extending secondary liability to copyright

law. 44 While the Court recognized the substantial differences between patent and copyright law,

it argued that both are grounded upon the basis that protecting the creative monopoly may

require courts to look beyond mere duplication, instead to the devices which make actual

duplication possible.45




38Sony v. Universal City Studios, 464 U.S. 417, 435 (1984).
39 See NINIMER ON COPYRIGHT, supra note 37, at #12.04(A)(1): Sony, 464 U.S. at 434-35.
"0 See NINIMER ON COPYRIGHT, supra note 37, at #12.04(A)(1).
41 See id.
42See 35 U.S.C. # 271(b) (2003).
43See 35 U.S.C. # 271(c).
44See NINIMER ON COPYRIGHT, supra note 37, at #12.04(A). Patent law expressly provides for secondary liability as
anyone who "actively induces infringement of a patent," 35 U.S.C. #271(b), and certain "contributory" infringers,
35 U.S.C. #271(c). Sony v. Universal City Studios, 464 U.S. 417, 435 (1984).
45Sony, 464 U.S. at 442.










The distinctions between vicarious and contributory liability are often confused. In short,

vicarious liability focuses on the relationship of the defendant to the third-party infringer, while

contributory infringement looks to the relationship of the defendant to the actual infringing act.46

The Supreme Court stated that "one infringes contributorily by intentionally inducing or

encouraging direct infringement .. and infringes vicariously by profiting from direct

infringement while declining to exercise a right to stop or limit it."47

Vicarious Liability

Vicarious liability pertains to a third-party's right, duty, or ability to control a third party

direct infringer.48 The Supreme Court noted that "vicarious liability is imposed in virtually all

areas of the law...."49 To be found liable for vicarious infringement, three basic elements must

be met: (1) there must be an act of direct infringement by a third party, (2) the defendant must

possess the right and ability to control the infringer' s conduct, and (3) defendant must receive a

financial benefit from the exploitation of the work. 5o

A classic example of vicarious infringement can be found in the "dance hall" cases in

which the owners of entertainment venues were found liable for the infringing acts of the

orchestras or bands performing within their venues. 5 Liability was found whether or not the

bandleaders were true employees of the club or merely independent contractors, and regardless

of whether the owner had knowledge of the infringing act. 52 By inviting patrons to the club and

charging for admission, the dance hall owner invited potential liability under vicarious


46 See MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005).
47 Id.
48 See NIMMER ON COPYRIGHT, supra note 37, at #12.04(A)(2).
49 Sony, 464 U.S. at 435.
5o NIMMER ON COPYRIGHT, supra note 37, at #12.04(A)(2).
st See e.g. Dreamland Ball Roomyv. Shapiro, Bernstein, & Co., 36 F.2d 354 (7" Cir. 1929). See also Shapiro,
Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307-08 (2d Cir. 1963).
52 See supra.










infringement for the infringing acts over those employed in some fashion by the club.53 As the

Sony Court pointed out, this line of cases can be contrasted with the landlord-tenant line of cases,

where a landlord leases space to an infringing tenant, but without knowledge or participation in

the infringement.54

There has been some disagreement among the Federal Circuit Courts over what constitutes

a "financial benefit." The Second Circuit has generally followed a more strictly drawn nexus

between the infringing activity and the Einancial benefit." It required an "obvious and direct

Financial interest in the exploitation of copyrighted materials."56 Meanwhile, the Ninth Circuit

has engaged in a broadening of the Einancial benefit requirement to the extent that so long as

there is some Einancial remuneration where there is some right to control the infringing activity,

the requirement will be met. 5

Contributory Liability

Unlike vicarious infringement's focus on the association between the defendant and their

control over the direct infringer, contributory infringement looks to the connection between the

defendant and the actual infringing act. Contributory infringement may generally be found

where, "one who, with knowledge of the infringing activity, induces, causes or materially




53See supra.
54See Sony v. Universal City Studios, Inc., 464 U.S. 417, 438 at n.18 (1984)(citing Deutsch v. 4rnold, 98 F.2d 686
(2"d Cir. 1938).
55See Softel, Inc. v. Dragon Med. & Scientific Communications, Inc., 118 F.3d 955, 971 (2d Cir. 1997); Shapiro,
Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307-08 (2d Cir. 1963).
56 Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963)( stating that, "an obvious and
direct financial interest in the exploitation of copyrighted materials" may result in the imposition of liability upon
the beneficiary of that exploitation; finding chain store liable for the infringing acts of retained operator running its
record departments).
57 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1023 (9th Cir. 2001) (finding Napster liable for vicarious
infringement because the future of the business relied upon building a network of infringing users to advertise to):
Fonovisa v. Cherry Auction, 76 F.3d 259, 263 (9th Cir. 1996) (finding a direct financial benefit by swap-meet
landlord when lessees paid minimal rental fees and defendant received no commission or proceeds from the sales of
bootleg music).









contributes to the infringing conduct of another .."5 Thus the three basic elements of

contributory infringement are (1) an act of direct infringement by a third party, (2) where the

defendant has knowledge of the infringing activity, and (3) the defendant induces, causes, or

materially contributes to the infringement.59 Some have further divided this up into two general

ways to contributorily infringe, either by participating in the infringement, or providing the

means by which to infringe.60

Modern Secondary Liability and Technology

From the development of the VCR in the early 1980's to the online file-sharing craze of

the late-1990's, contributory infringement and vicarious infringement, are at the heart of modern

new-technology copyright infringement cases. As will be explored further below, as new

technologies develop, conflicting questions arise between copyright protection for content-

owners, and questions of fair use by individuals using the new technology. The increasingly

easy ability to copy was the common characteristic of all the devices in question in the new age

of secondary liability. As the Supreme Court has noted, copyright law has developed in response

to changes in technology, as far back as the invention of the printing press necessitating the rise

of copyright protection. 61 There are two maj or Supreme Court cases dealing with emerging

technology, Sony v. Universal City Studios62 in 1984, and the more recent M~etro-Goldawyn-

Mayer v. Grokster63 decision of 2005. Additionally two lower court cases helped to shape the

law. In 2001 the U. S. Court of Appeals for the Ninth Circuit decided A&M~v. Napster, 64 and in



58Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971).
59 MGM v. Grokster, 545 U.S. 913, 930 (2005).
"0 NINIMER ON COPYRIGHT, supra note 37, at #12.04(A)(3)(a-b).
61 Sony v. Universal City Studios, 464 U.S. 417, 430 (1984).
I2d.
63545 U.S. 913 (2005).
64A&M v. Napster, 239 F.3d 1004 (9" Cir. 2001).










2003 Judge Richard Posner of the U. S. Court of Appeals for the Seventh Circuit handed down In

re Aimster Copyright Litigation. 65

Sony v. Universal City Studios (1984)

In 1984, the Supreme Court decided the seminal case of Sony v. Universal City Studios

(Sony), determining whether the sale of video tape recorders violated television show owner' s

rights under the Copyright Act.66 The Sony Betamax video tape recorder67 enabled users to

record television shows and movies from their televisions.68 A survey conducted by Sony for

trial showed that the primary use of the Betamax was for time-shifting, consisting of recording a

show and watching it once at a later time.69 Some shows authorized time-shifting while others

did not. 70 A number of content-owners elected to sue Sony, instead of the direct infringers, on

the theory that some Betamax users utilized the device to record copyrighted works from

broadcast television not only for time-shifting, but also to build libraries of copyrighted

programming."

The U.S. District Court for California determined that non-commercial home recording,

including authorized and unauthorized time-shifting, was a fair use and thus non-infringing.72

The District Court also independently found no contributory infringement by Sony, stating that it

had no direct involvement in the direct infringement by its users.73 The court reasoned that

while the Betamax was capable of a number of infringing uses, finding Sony liable for them


65 In re Aimster Copyright Litigation, 334 F.3d. 643 (7t Cir. 2003).
66 Sony v. Universal City Studios, 464 U.S. 417 (1984).
67 The Sony Betamax was a competitor in the emerging home-video recording market, comparable to today's VCR.
68 Sony, 464 U.S. at 420.
69 Id. at 421.
" Id
71 Id. At the time, broadcasts were either approved for home recording or were prohibited, and an individual had to
look up in TV listings whether or not the work was eligible for home recording. Id. at 445.
72Universal City Studios, Inc. v. Sony Corp. of America, 480 F.Supp. 429 (D.C.Cal. 1979).
73Id. at 436.










would set a precedent that would unduly obstruct commerce and expand potential liability

beyond the judiciary's control.74 The court borrowed the "staple-article of commerce" theory

from patent law," asserting contributory infringement could not be found where there existed a

"substantial non-infringing use."76

However, the U. S. Court of Appeals for the Ninth Circuit disagreed and reversed, finding

that time-shifting was not a fair use because it not a "productive" use." The Ninth Circuit also

rej ected the staple-article of commerce" argument, stating that primary purpose of videotape

recorders was to reproduce television programming.'" The court reasoned that since most

television programming is copyrighted material, if the primary purpose of the Betamax was to

record such material, then videotape recorders cannot be found to have a "substantial non-

infninging use."'

The Supreme Court reversed the holding of the Ninth Circuit, finding Sony not liable for

the direct infringement of Betamax users in a five-to-four decision.so Justice John Paul Stevens,

writing for the maj ority, relied heavily upon the traditional reluctance of the judiciary to do what

he viewed would be imposing an unprecedented new form of liability upon innovators. slJustice

Stevens preferred to leave such decisions to Congress, the body with Constitutional authority to

properly address the issue, when technological innovations alters the market for copyrighted




74Id. at 461.
75See 35 U.S.C. # 271(c) (2003).
76 Universal City Studios, Inc. v. Sony Corp. of America, 480 F. Supp. 429, 436 (D.C.Cal. 1979).
77Universal City Studios, Inc. v. Sony Corp. of America, 659 F.2d 963, 971-72 (9th Cir. 1981)(". when
copyrighted material is reproduced for its intrinsic use, the mass copying of the sort involved in this case precludes
an application of fair use.").
78Id. at 975.
9 Id.
so Sony v. Universal City Studios, 464 U.S. 417, 421 (1984).
si See Sony, 464 U.S. at 431-32.










materials.82 The maj ority acknowledged that, "it is not our j ob to apply laws that have not yet

been written," leaving room for Congress to "take a fresh look at this new technology, just as it

so often has examined other innovations in the past."83

The Court first addressed the issue of whether Sony could be found to be a vicarious

infringer.8s4 While the argument could be made that Sony benefited financially through the sale

of the Betamax, the Court said nothing as to how Sony possessed any control over the customer -

- a necessary element to vicarious liability." The Court determined that the only way Sony

could be found liable on such theory would be if it sold the Betamax with constructive

knowledge of the fact that customers may use the device to violate copyrights.8s6 In Other words,

the only true way for Sony to not be labeled a vicarious infringer under such a standard would be

if Sony stopped selling the Betamax altogether, an alternative neither the Court nor Sony wanted.

Additionally, finding liability based upon mere constructive knowledge of an infringing act

would have forced the Court to go beyond precedent--something it was unwilling to do at the

time."

While the maj ority recognized vicarious infringement as a potential form of liability in

copyright law, though not for Sony, the opinion then focused on the question of whether Sony

was a contributory infringer. ssThe Court adopted the view of the District Court and the "staple-

article of commerce" argument borrowed from patent law.8s9 The Court recognized that to

protect the copyright monopoly, courts are sometimes required to look beyond the direct

8 2Id
83 Id. at 456.
84 See id. at 439.
85See id.
8 6 d.
8 7 Id
88See id. at 440-44.
89 See id.










infringing duplication to the products that make such copying possible.90 As paralleled in the

"staple-article of commerce" doctrine, "the sale of copying equipment .. does not constitute

contributory infringement if the product is widely used for legitimate, unobj ectionable

purposes."91 In Other words, the Court had to determine whether the Betamax was capable of a

"substantial non-infringing use."92

The Court next turned to the task of defining what was a "substantial non-infringing

use."93 In terms of infringement, the Court said that it did not need to consider every possible

potential use and determine whether it was infringing, but instead whether a "significant number

of them would be non-infringing."94 The maj ority did not offer a bright line number of what

significant meant, however they gave deference to the fact-finding of the district court in terms

of how much the Betamax was used for non-infringing use.95 The District Court found that the

defendants collectively held less than ten percent of copyrights in the television market, thus

leaving a significant portion of copyright holders subj ect to the outcome of the litigation, many

of which allowed viewers to copy their programs for later viewing.96 In addition the Court

agreed with the district court that authorized time-shifting expands the audience, allowing a

viewer to see a show that he otherwise might not have had the opportunity to see at the time it

was aired. 97 The maj ority also echoed the district court' s finding that non-authorized time-






90 Id. at 442.
91 Id.
92 Id
93 Id
94 Id. (emphasis added).
95 See id. at 443-45.
96 Id.at 443.
97 Id










shifting also fits under the fair use exception and thus could also be found to be a substantial

non-infringing use."

However, the dissent, authored by Justice Harry Blackmun and j oined by Justices

Marshall, Powell, and Rehnquist, took issue with the maj ority's characterization of contributory

infringement as a "novel theory of liability."99 The minority first disagreed on the finding of fair

use, stating that it would have required unauthorized time-shifting to be a "productive use" as the

Ninth Circuit had required. 100 The minority reasoned that extending fair use as far as

unauthorized time-shifting would erode the basis of copyright law and eviscerate the incentive to

create. 101 Justice Blackmun thus would have found Sony liable for contributory infringement

because to him the intended use of the Betamax was to copy programs off-air, and Sony was

induced and materially contributed to the direct infringement of users by virtue of their

advertising and the sole intended use of the device. 102

Further, the dissent disagreed with the application of the "staple-article of commerce"

doctrine to copyrights. 103 However, recognizing the maj ority's application of "substantial non-

infringing use," Justice Blackmun concluded that, "if a significant portion of the product' s use is

non-infcringing, the manufacturers and sellers cannot be held contributorily liable for the

product' s infringing uses."104 However, Justice Blackmun insisted that if "virtually all" of the

product' s use is infringing, then contributory liability may be imposed. 1os He disagreed with the


98See id. at 447-56.
99 Id. at 457 (Blackmun, J., dissenting).
loo Id. at 479. Justice Blackmun's dissent recognized that there should remain room for non-productive uses that
have a minimal impact on the potential market for the copyrighted work. Id. at 482.
10' Id. at 481.
102 Id. at 490.
'03 Id. at 491. "I do not agree that this technical judge-made doctrine of patent law, based in part on considerations
irrelevant to the field of copyright .. should be imported wholesale into copyright law." Id.
104 Id. (emphasis in original).
10s Id.










maj ority's method of calculating substantial non-infringing useS. 106 Where the maj ority looks at

the amount of television programming that is copyrighted, Justice Blackmun would instead look

at the amount of Betamax usage that is infringing. 107

A&~M v. Napster (9th Cir. 2001)

The first maj or decision by a federal court concerning online copying technology in the

Internet era came in 2001 from the U. S. Court of Appeals for the Ninth Circuit in the

groundbreaking case A&M~Records v. Napster. 10s Napster was a peer-to-peer fie sharing

website with accompanying software which enabled networked users to share music files in MP3

format. 109 Napster enabled its users to make MP3 copies of music files on their computer hard

drive by copying the Hiles from other users' networked computers.110 Napster allowed users to

share their own MP3 music files with other users as well. 11 Though all Hiles were housed on the

user' s computers and not Napster' s servers, Napster made all the sharing possible by uploading

the names of all shared files into its common directory. 112 To download a song, users simply

searched Napster' s centralized directory which directed them automatically to another user' s

computer from which to download the song. 113

Napster was free and easy to use, and as a result direct copyright infringement was rampant

by its users, violating the music copyright owner's distribution and reproduction rights. 114 A

legion of recording industry companies filed suit against Napster and were awarded a temporary


106 Id. at 492.
107 Id. As a result of the divergent views on how to calculate substantial non-infringing use in this case, Justice
Blackmun would have recommended the case for remand to the District Court for reconsideration. Id. at 493.
10s A&M Records v. Napster, 239 F.3d 1004 (9th Cir. 2001).
109 Id. at 1011.
110 d.
1I1 Id.
"12d. at 1012.
113 Id
"1Id. at 1014.










injunction by the district court. 1 Napster offered the defense of fair use for the direct

infringement of its users. 116 Napster asserted that space-shifting (downloading a song that you

already own in another physical form)"' and sampling (downloading a song to see if you like it

in order to determine whether to buy it later) should have been recognized as fair uses by the

district court."Il

However, the Ninth Circuit affirmed the district court' s ruling that Napster was not a fair

use and sustained the temporary injunction based on contributory and vicarious infringement. 119

First, the court addressed Napster' s fair use argument. Regarding sampling as a fair use, the

court held that the more music that was downloaded for sampling purposes, the less likely users

are actually to purchase the CD. 120 Moreover, the court found that sampling would have adverse

effects upon the developing legal digital download market. 121 As for space-shifting, the court

rej ected Napster' s insistence that space-shifting by its users was no different than that of

Betamax users many years prior. 122 The court distinguished Sony by stating that most Betamax

users did not utilize the device to distribute infringing recordings, whereas all Napster users who

participated in file-sharing infringed by distribution as well.123





its Id. at 1011. The recording industry heavyweights suing Napster were A&M Records, Geffen Records, Interscope
Records, Sony Music Entertainment, MCA Records, Atlantic Recording, Motown Record Co., and Capitol Records.
Id. at 1004.
116 See id. at 1014-15.
''7 "(Space shifting occurs when a Napster user downloads MP3 music files in order to listen to music he already
owns on an audio CD." Id. at 1019.
Its Id. at 1018-19.
119 See id. at 1019.
120 Id. at 1018.
121 Id. Itunes music store, for example.
122 Id. at 1019.
123 Id. The court also referenced to Recording Indus. Ass'n ofAm. v. Diamond Multimedia Sys., Inc., 180 F.3d 1072
(9th Cir. 1999), in which the Ninth Circuit stated that the "Rio," a portable MP3 player, only made copies in order to
make owned CD's portable, thus properly space-shifting them. Id.










Next, the court shifted focus to the elements of contributory infringement. 124 A secondary

infringer must have knowledge or have reason to know of the direct infringement to be liable

under contributory infringement. 125 The Ninth Circuit approved the district court' s finding that

Napster had both actual and constr-uctive knowledge of its users unlawful exchanging of

copyrighted music. 126 The district court found that Napster had actual knowledge because

Napster' s founder Sean Parker authored a document stating that Napster needed to remain

ignorant of users' real identities "since they are exchanging pirated music," and the Recording

Industry Association of America informed Napster of more than 12,000 infringing files shared

on its network. 127 It found that Napster had constructive knowledge due to Napster executives'

recording industry experience, their general knowledge of intellectual property rights, their own

downloading of copyrighted songs on Napster, and their promotion of the site with screen shots

including infringing files. 128

The Ninth Circuit followed the rule from Sony that knowledge with a substantial non-

infringing use could exculpate the defendant of contributory liability. 129 However, the court

departed from the district court in defining what constituted a substantial non-infringing use. 130

The Ninth Circuit stated that the lower court placed too much emphasis on the current and



124 See Napster, 239 F.3d at 1020.
125 Id. (citing Cable/Home Communication Corp. v. Network Prods., Inc., 902 F.2d 829, 845-46, n.29 (11" Cir.
1990) and Religious Tech. Ctr. v. Netcom On-Line Communication Serys., Inc., 907 F.Supp. 1361. 1373-74
(N.D.Cal. 1995)).
126Id~
127 Id. at 1020, n.5. But see PAUL GOLDSTEIN, GOLDSTEIN ON COPYRIGHT #6.1.2, p.6:12-1 (2d ed. Aspen Pub., New
York 2003)(disagreeing with the Ninth Circuit's finding that actual knowledge alone is sufficient to find
contributory infringement.).
128 Id
129 Id. at 1020 (citing the rule from Sony that if liability is to be imposed, "it must rest on the fact the they have sold
equipment with constructive knowledge of the fact that their customers may use that equipment to make
unauthorized copies of copyrighted material," unless the device was capable of substantial non-infringing uses.
Sony v. Universal City Studios, 464 U.S. 417, 439 (1984).)
130 See Napster, 239 F.3d at 1020-21.










ongoing infringing uses, rather than looking to the future non-infringing uses. 131 The court also

added that knowledge can be imputed where a computer system operator such as Napster learns

of specific infringing material on the system and "fails to purge such material fr~om the

system."132 The court analogized the rule substantial non-infringing use rule from Sony, saying

that absent specific information identifying infringing activity, a computer system operator

cannot be held contributorily liable solely because the structure of the system allows users to

exchange copyrighted material.133 The court stated further that finding contributory

infringement merely because of an infringing use would violate Sony and surely stifle

innovation. 134

Though the Ninth Circuit gave great deference to Sony in applying the case to Napster, in

the end the court found Napster liable of contributory infringement based upon its actual

knowledge that specific infringing material was available using its system, that it had the

capability to block users' access to such infringing material, and that it failed to remove the

material. 135 In a way, the Napster court added the duty to mitigate against infringement to

contributory infringement where one has knowledge of such infringement, regardless of the

prevalence of the infringement. The court also failed to define how far in the future a court

should look in finding substantial non-infringing uses.

After finding Napster contributorily liable, the Ninth Circuit then determined whether

Napster was liable under the vicarious infringement standard. The court did not apply Sony 's

"staple-article of commerce" doctrine to vicarious infringement because Sony 's discussion of



131 Id. at 1021.
132Id.
133 Id.
134Id.
135 Id. at 1022.










vicarious liability was limited as the issue of vicarious liability was not before the Court at the

time. 136 Thus, the court judged vicarious infringement by the "right and ability to supervise the

infringing activity and also [having] a direct financial interest in such activities."137

First, the court agreed with the district court's finding that Napster derived a financial

benefit from the infringing acts of its users. 138 The court found that the infringing material acted

"as a draw for customers" to the system. 139 In addition, the court found that Napster' s future

revenue is based on increasing the size of its network, and the network size increases as the

quality and quantity of music increases. 140 Therefore, Napster was found to directly benefit from

the infringing acts of its users. 4

Second, the court determined whether Napster possessed the right and ability to supervise

the conduct of its users, agreeing in part with the finding of the district court finding ability to

supervise. 142 The district court found that through a Terms of Use agreement with its users, it

possessed the right to control and terminate accounts, and possessed the technological

capabilities to police the acts of users through its search function. 143 The Ninth Circuit agreed in

principle with this finding, but recognized that Napster users were capable of tricking the search

system by merely misspelling names of songs because the system only read song titles, not the

actual content of the MP3.144 With that said, the court still found that Napster possessed the

ability to supervise and thus could be found vicariously liable.



136 See id. at 1022-23.
137 Id. (citing Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971)).
13s Id. at 1023.
139 Id. (citing Fonovisa Inc., v. Cherry Auction, Inc., 76 F.3d 259, 263-64 (9th Cir. 1996)).
140Id~
141 Id
142 See id.at 1023.
'43 See id. at 1023-24.
1 Id~










Finally, the Ninth Circuit' s concluded its analysis by considering whether Napster found

immunity from all liability under the safe-harbor provision of Section 5 12 of the Digital

Millennium Copyright Actl45 a1s an "Internet Service Provider." 146 The court rej ected the district

court' s conclusion that the safe-harbor had no application to secondary infringers. 147 The court

posed three questions regarding the application of $512 to Napster: (1) whether Napster was an

"Internet service provider" as defined by the act, (2) whether copyright owners must give a

provider like Napster "official" notice in order for there to be knowledge or awareness of

infringement taking place on its system, and (3) whether Napster complies with the section's

directive for "Internet service providers" to establish a detailed copyright compliance policy. 148

However, the court stated that these issues would be developed more thoroughly at trial on

remain .d 149

Inz re Aimster (7th Cir. 2003)

Around the same time Napster was decided, many of the same recording industry plaintiffs

filed numerous suits against the "Aimster" Internet service and its creator John Deep. 1so Aimster

was developed in large part to replace the void in file sharing systems due to the shutdown of

Napster. The Northern District of Illinois was selected by Multidistrict Litigation Panel to hear

the consolidated complaints of Plaintiffs. 1 The district court issued a temporary injunction








1 17 U.S.C. #512.
146 See Napster, 239 F.3d at 1025.
'47 See id.
14s Id
149Id~
'50 See In re Aimster Copyright Litigation, 334 F.3d 643, 645-46 (7th Cir. 2003).
'51 Id. at 645










against Aimster finding a high probability of it being a contributory and vicarious infringer, and

the U.S. Court of Appeals for the Seventh Circuit heard the appeal. 152

Aimster was similar to Napster in that it offered free software to download which allowed

users to share music files over its servers. 153 Also like Napster, Aimster did not host any files on

its servers, only collecting and organizing the information about the files from the users.154 The

Aimster software piggybacked on AOL's instant messaging software, thus requiring users to be

signed into AOL instant messenger to share files.15 Aimster users searched through the

centralized listing of files, but were only able to swap files with those users designated as his

"buddy."156 However, if a user did not designate any "buddies" then all users of Aimster became

"buddies" and thus the whole system was open to them for music file sharing. 1 Aimster

differed from Napster in that it offered "Club Aimster," a service that users could join for a fee

allowing them to more easily download the "top-40" popular music files on Aimster. 5 Judge

Richard Posner, writing for the Seventh Circuit, likened Aimster to a stock exchange, not

directly making copies of the infringing works, but offering the facility for matching offers of

exc ange. 5

The court first drew upon Sony 's substantial non-infringing use doctrine and applied it to

Aimster. Judge Posner stated that in order to define whether Aimster was capable of substantial

non-infringing use, the court need not explore all potential uses and whether they are infringing,




152Id~
153 Id. at 646.
154Id~
155 Id.
156Id~
157 Id
lss Id.
159 Id. at 647.










but instead whether a significant number of them would be non-infringing. 160 Furthermore,

Posner noted that, as in Sony, one potential use of a system--the Betamax' s use of private, non-

commercial time-shifting--could be commercially significant enough to satisfy the standard. 161

The court added that the cost and benefit balancing introduced by the Sony Court is necessary

only where substantial non-infringing uses, real or potential, are demonstrated. 162 But when it is,

"some estimate of the respective magnitudes of these uses is necessary .. ." 163

Most importantly, the Seventh Circuit found that Aimster took affirmative steps that were

missing from both Napster and Sony, in the form of specifically inviting and instructing

infringing uses. 164 Aimster tutorials only gave examples of how to share Hiles of copyrighted

music. 165 Additionally, "Club Aimster" charged users $4.95 a month for the ability to easily

download the most popular music, which turned out to always be copyrighted. 166 While Aimster

was capable of sharing files that would amount to non-infringing uses, the main source of

income was through "Club Aimster" subscriptions. 167

Upon establishing that there was ample evidence to prove that Aimster was being used

rampantly for infringing uses, the court shifted the burden to Aimster to prove substantial non-

infringing uses. 168 Judge Posner then carefully analyzed a number of potential non-infringing

uses of Aimster. 169 First, he noted that not all popular music was copyrighted, finding that a

small number of start-up bands wanted users to swap and share their music to create a

1601)d. at 648.
161 Id
162 See. id. at 650.
163 Id. at 649.
164 See id. at 651-53.
165 Id. at 651.
166 Id. at 651-52.
167 Id. at 652.
168 Id
169Id~










following. 170 Second, he argued that file-sharing could increase the value of a recording by

turning it into currency in a music-sharing market, since users who only downloaded were

essentially free-riders and hurt the system. 1 Third, Aimster's "buddy" system might encourage

the exchange of non-copyrighted ideas and information. 172 Fourth, Aimster' s encryption

technology may encourage forms of expression that users would be embarrassed to share

publicly, such as uncopyrighted off-color j okes, photos, and the like. 173 Finally, a user who

owns a CD but cannot access it for some reason can download a copy in order to space-shift their

music. 174 Although Judge Posner courteously offered potential non-infringing uses of Aimster,

the court noted that not a single piece of evidence was offered showing that Aimster was used for

any such uses. 1 It is not enough that the uses are potentially non-infringing, but that they are

probable and in use. 176

Shifting to the other elements of contributory infringement, the court agreed with the

recording industry's contention that a service provider's ability to prevent its users from

infringing is a factor to be considered in determining liability. 1 However, the court notes that it

is not a controlling factor, because doing so would have required a perverse result in AOL being

forced to shut down it' s productive and generally non-infringing instant messaging service. 7

As for the knowledge requirement, the court disagreed with the analysis of the Ninth Circuit in




1o Id~
171 Id
172 Id
173 Id
'74 Id. at 652-53. However, this reason garnered criticism from other courts and not addressed by the Napster Court.
See id.
1 Id. at 653.
1 6 See id.
' Id. at 648.
s7 Id. at 648-49.










Napster which held that actual knowledge alone is sufficient to prove contributory

infringement. 179

Aimster offered a peculiar defense to constructive knowledge, asserting that it had no way

of knowing what files were being swapped on its system because of the data encryption feature

of the service. Iso However, the court flatly rej ected this excuse, stating that "willful blindness is

knowledge."ls The court analogized other areas of the law such as criminal culpability, where a

defendant taking steps to make sure he does not acquire full knowledge is still held to have

criminal intent.18s2 The court also addressed the issue of vicarious infringement and was less

confident that Aimster could be found liable under such a theory, but still felt it was possible to

prove.18s3 The court reasoned that since Sony intermingled vicarious and contributory liability,

the question was largely academic.18s4 Aimster, like Sony, could have mitigated against the

infringement in the form of encryption and monitoring the use of its system. l However,

Aimster' s "ostrich-like refusal to discover the extent to which its system was being used to

infringe" added to its potential liability.18s6

Finally, like the Ninth Circuit in Napster, the Seventh Circuit attempted to consider

whether the safe-harbor of Section 512 of the Digital Millennium Copyright Actls applied to

Aimster. I The court found that Aimster fit the broad definition of an "Internet service




179 Id. at 649.
1 so d. at 6 50.
181 Id.
182Id.
183 Id. at 654.
184 Id. at 655.
1 Id. at 654.
186 Id. at 655.
's? 17 U.S.C. # 512 (1999).
'ss See Aimster, 334 F.3d at 655.










provider," but was unable to apply it furtherl89 because the statue requires Aimster to discourage

repeat infringers. In contrast, the court found that Aimster actually invited and demonstrated

infringement to its users. 9

Like Napster, the decision in Aimster added to the body of case law and helped interpret

Sony in the digital Internet age. Aimster and Napster shared similar factual qualities, and as a

result found similar results in the courts. The Ninth and Seventh Circuits similarly applied Sony

to the facts, but what differences there were, the Supreme Court was poised in 2005 to settle

them regarding another Napster copycat, Grokster.

MGM v. Grokster (2005)

By the time the Supreme Court put the finishing legal touches on the nearly five-year battle

over peer-to-peer file sharing in 2005, the damage to the recording industry had already been

done by online piracy. At the time of oral arguments before the Court, the recording industry

reported its first increase in sales in five years, though at a miniscule two percent. 191 However,

the Court's ruling effectively ended the legal questions surrounding peer-to-peer network sharing

of copyrighted material, and entered an entirely new doctrine of contributory liability into the

copyright common law.

Before the Court were Grokster and Streamcast (referred together as "Grokster") for

distributing free peer-to-peer file sharing programs. 192 The software was the typical peer-to-peer

variety, enabling users to share files or any kind directly with one another without the aid of

centralized servers. 193 Like Napster and Aimster, the software was primarily utilized in the


189Id.
1 901)d
191 Saul Hansell & Jeff Leeds, 4 Supreme Court \I/ ?I...../... ?for File 1/?, *,,~ N.Y. TIMES, Mar. 28, 2005, available
at httpI un \\ \ nytimes.com/2005/03/28/technology/28groktrhm (last visited Jan. 10, 2008).
192 MGM Studios, Inc. v. Grokster, Ltd, 545 U.S. 913, 919-20 (2005).
193 Id. at 920.










unauthorized sharing of copyrighted music and video files. 194 Although the Grokster' s software

did not allow for it to know when copies are unlawfully shared, the software's search tool

revealed the vast amount of copyrighted files available for download. 195 Moreover, Grokster

was aware of the infringing acts of its users. 196 Often, it had communications from users seeking

technical support with questions of how to play copyrighted movies they downloaded. 197 Yt

neither defendant attempted to employ filtering technology or block known infringers from the

software. 198

However, Grokster' s actions were not merely passive, but it also took steps to actively

encourage infringement through its software. 199 Both Grokster and Streamcast "developed

promotional materials to market its service as the best Napster alternative."200 For example,

Streamcast developed kit for potential advertisers containing articles about its potential to

capture former Napster users.201 Meanwhile, Grokster inserted codes into its website so that

when a user searched for "Napster" they would be directed to Grokster-notwithstanding the

software's inconspicuous similar name to Napster.202 Grokster and Streamcast also sold

advertising space shown on the software.203

As a result of Grokster' s actions, a large conglomerate of music and motion picture

industry companies filed suit seeking damages and an injunction in the U.S. District Court for


194Id~
195 Id. at 922. An MGM conunissioned study concluded that nearly 90% of the files available for download were
copyrighted works. Id. This was compared to the nearly 87% of copyrighted works available on the filesharing
network in Napster. Id. at n.5.
196 Id. at 923.
1 9 Id
198 Id. at 927.
199 Id. at 923-24.
2 Id. at 925.
2 Id. at 924.
20n Id. at 925.
2 Id. at 926.










the Central District of California.204 The District Court found direct infringement by Grokster' s

users, yet granted summary judgment to Grokster on the issue of secondary liability for

distributing the software because it lacked actual knowledge of specific acts of infringement. 205

The U. S. Court of Appeals for the Ninth Circuit affirmed the ruling, applying the Sony rule that

the software was capable of substantial non-infringing uses due to the lack of actual knowledge

and decentralized nature of the sharing network.206 In addition, the Ninth Circuit held that

Grokster did not materially contribute to its users' infringement because they had no

involvement beyond providing the software used. 207

In unanimous opinion by Justice David Souter, the Supreme Court reversed and remanded

applying not the rule of Sony, but instead instituting a new form of liability based upon

inducement. 208 It first acknowledged the secondary liability case law that "when a widely shared

service or product is used to commit infringement, it may be impossible to enforce rights in the

protected work effectively against all direct infringers," and thus a finding of secondary liability

against the distributors of the copying devices is the only practical alternative.209 The Court

identified the theories of contributory infringement-intentionally inducing or encouraging

direct infringement--and vicarious infringement-profiting from direct infringement with a right

to stop or limit it.210 However, it chose to determine liability solely upon contributory liability

based upon the inducement theory, setting aside MGM' s vicarious liability argument.21



204 M.G.M., Inc. v. Grokster, Ltd., 259 F. Supp 2d 1029,1033 (C.D. Cal. 2003) aff'd by 380 F.3d. 1154, 1162 (9th
Cir. 2004).
205 Id
206 M.G.M., Inc. v. Grokster, Ltd., 380 F.3d. 1154, 1162 (9th Cir. 2004) rus'd by 545 U.S. 913, 919-20 (2005).
207 Id. at 1163-64.
208 MGM Studios, Inc. v. Grokster, Ltd, 545 U.S. 913, 941 (2005).
209 Id. at 919-20.
210 Id. at 930.
211 Id. at 931 n.9.










Curiously, in a decision about an innovative technology facilitating infringement, the

Grokster Court chose to introduce the new law of inducement rather than the previous standard

of Sony v. Universal City Studios.212 The Court outright rejected the Ninth Circuit' s application

of Sony 's "staple-article of commerce" to Grokster. 213 It disfavored the Circuit' s application of

the rule that simply because Grokster was capable of commercially significant non-infringing

uses, it could not be held contributorily liable for its users' infringing acts.214 The Court found it

erroneous that such a simple finding could immunize Grokster, despite significant evidence

showing specific knowledge of infringement. 215 However, much to the disappointment of the

parties and numerous amnici, the Court then largely punted the question, refusing to elaborate

further on the principle and state of the Sony doctrine. 216 The Court left further explanation of

the Sony rule "for a day when that may be required."217

Then, the Court began its justification of a new theory of infringement by inducement.

Despite the punting of Sony 's "staple-article of commerce" doctrine, the Court' s opinion next

focused on elaborating further on why a device capable of substantial non-infringing uses could

remain secondarily liable where evidence of intent, such as inducement, exists.218 "[N]othing in

Sony requires courts to ignore evidence of intent .. and the case was never meant to foreclose

rules of fault-based liability. .."219 The Court announced that "where evidence goes beyond a

product' s characteristics or the knowledge that it may be put to infringing uses, and shows


212 Grokster, 545 U.S. at 931-34.
213 Id
214 Id. at 933-34.
215 Id. at 934.
216Id. at 934. "The parties and many of the amici in this case thing the key to resolving [the case] is the Sony rule,
and, in particular, what it means for a product to be "capable of commercially significant noninfringing uses.
[citation omitted]." Id. at 933.
217 Id. at 934.
2 See id. at 934-35.
219 Id










statements or actions directed to promoting infringement, Sony 's staple-article rule will not

preclude liability."22 In a footnote, the Court justified its decision by comparing it to the Patent

Act, which statutorily fails to exempt staple-article devices that induce patent infringement.221 I

is these statements and actions by Grokster and Streamcast that the Court relied upon in

determining the case based upon its new "inducement" standard.222

In adopting the inducement rule from patent law, the Court held that a distributor of a

device "with the object of promoting its use to infringe copyright, as shown by clear expression

or other affirmative steps taken to foster infringement," is liable for the infringing acts of its

users.223 "The inducement rule .. premises liability on purposeful, culpable expression and

conduct .. ."224 It noted that the primary avenue of inducement was advertising, but could also

be in the form of promotional materials, or even statements of the company showing an unlawful

purpose.225 The Court limited its holding by exempting those with "mere knowledge of

infringing potential or actual infringing uses," and "ordinary acts incident to product

distribution" such as offering technical support or product updates.226

The Court held that to prove inducement, a court should examine a defendant's own

statements of unlawful purpose and whether through them a defendant is disqualified from

claiming immunity.227 In applying the facts, the Court found numerous instances of inducement

by advertisement and promotional material. For example, it cited a Grokster newsletter




220 Id. at 935 (emphasis added).
221 Id. at 935 n.10.
222 See id. at 937-40.
223 Id. at 936-37.
224 Id
225 Id. at 935-36.
226 Id. at 937.
227 Id. at 938.










containing articles touting the software's usefulness for accessing copyrighted music.228 It also

cited the several of Streamcast' s own statements aimed at recruiting former Napster users to its

site.229 Through such statements, the Court concluded that summary judgment for Grokster was

erroneous because Grokster demonstrated unlawful intent for three reasons.230

First, each company sought to fill the Napster-void, as evidence showed both Grokster and

Streamcast sought to serve former Napster users.231 Second, Grokster' s lack of an attempt to

develop filtering tools to reduce infringement added to the evidence of unlawful objective.232

However, in a footnote, the Court noted that the failure to filter alone, would be insufficient to

find liability where a device is otherwise capable of substantial non-infringing uses.233 Third,

Grokster' s imputed unlawful obj ective was enhanced by the evidence that Grokster sold

advertising, and the more users meant more advertising revenue.234 Since Grokster' s advertising

revenue turned on high-volume use, which was shown to be highly infringing, it was added as

another factor. 235 As a result, the Court reversed the decision of the Ninth Circuit and remanded

the summary judgment decision to the District Court. 236

Though the opinion of the Court was unanimous, two concurring opinions differed on

whether Grokster supported the Sony substantial non-infringing use standard (both agreed it

would likely be liable under the newly announced inducement standard).237 Both concurrences

agreed to the continuing validity of the Sony doctrine, but disagreed on the application of it in

22s Id
229 Id
23old. at 938-40.
231 Id. at 939.
232 Id
2 Id. at n.12.
2 Id. at 939-40.
2 Id. However, like the previous "no duty to filter," this factor alone is insufficient. Id. a
236 Id. at 941.
23 C~f id. at 942-49 (Ginsburg, J., concurring) with id. at 949-66 (Breyer, J., concurring).










this case. 238 JUStice Ruth Bader Ginsburg, j oined by Chief Justice Rehnquist and Justice

Kennedy, argued that based upon the record evidence, summary judgment for contributory

liability based upon Sony was unwarranted.239 Meanwhile, Justice Stephen Breyer, joined by

Justices O'Conner and Stevens, argued that the Grokster has a number of substantial

noninfringing uses and thus summary judgment on that issue in favor of MGM was proper. 240

Justice Ginsburg argued that because the record evidence showed that Grokster had, "for

some time, been overwhelmingly used to infringe .. and that this infringement was the

overwhelming source of revenue .," such evidence was insufficient to prove "a reasonable

prospect that substantial or commercially significant noninfringing uses were likely to develop

over time."241 Ginsburg criticized Breyer' s characterization of Sony that limiting liability for

dual-use technologies is correct, "unless the product in question will be used almost exclusively

to infringe copyrights .. ."242 IHStead, she argued that Sony requires, "no clear, near-exclusivity

test,"243 but instead that of"substantial or commercially significant noninfringing uses [] likely

to develop over time."244 Ginsburg disputed the District Court' s justification of substantial

noninfringing resting largely upon a "motley collection"245 Of anecdotal evidence of authorized

246
uses.







2 See id.
239 Id. at 942 (Ginsburg, J., concurring).
240 Id. at 949 (Breyer, J., concurring).
241 Id. at 948 (Ginsburg, J., concurring).
2 Id. at 944 at n. 1 (Ginsburg, J., concurring)(criticizing Grokster, 545 U.S. at 957 (Breyer, J.,
concurring))(emphasis in original).
2 Id. at 944 at n. 1, (Ginsburg, J., concurring).
2 Id. at 948.
2 Id. at 947 n.3.
246 Id. at 945-47.










In contrast, Justice Breyer argued the record evidence was sufficient to prove Grokster

capable of substantial noninfringing use and thus immunize it from liability under Sony. 247 In

doing so, he demonstrated that the estimated amount of noninfringing uses in the record, roughly

10% of all files shared via Grokster, was nearly identical in amount to the 9% of authorized time-

shifting uses of the VCR in Sony.248 Breyer argued that while 10% appeared insignificant at the

time, the standard was "capable of' substantial noninfringing uses.249 He noted that while 10%

would be insufficient over the long-term, the "reasonable prospect of expanded legitimate uses

over time" could prove to be exculpatory.250 To justify his reasoning, Breyer listed numerous

potential noninfringing uses for peer-to-peer filesharing, including: research, public domain

works, historical and educational materials, digital photos, "shareware" and "freeware," secure

licensed media, news broadcasts, and user-created audio and video.251

Breyer rationalized his conclusion by invoking the balance Sony sought to provide between

protection copyrighted works and the rights of others to "engage in substantially unrelated areas

of commerce" such as software development. 252 Breyer toyed with idea of modifying Sony, as

he read Sony in a less-strict manner than Ginsburg, stating that the true question should be

whether the proper balance between copyright and new technology interests is found.253 In

determining whether Sony should be modified, (or as he asserts Ginsburg argued, to interpret it

more strictly) three questions had to be answered: (1) whether Sony works to protect new

technology, (2) if so, "would modification or strict interpretation significantly weaken that


24 Id. at 952 (Breyer, J., concurring).
24s Id
249 Id. at 953 (emphasis in original).
25old. at 953.
251 Id. at 954.
2 Id. at 950. However, it could be argued that developing software that relies primarily upon the infringement of
copyrighted works is hardly a "substantially unrelated" area of commerce from the copyright industry.
2 Grokster, 545 U.S. at 956 (Breyer, J., concurring).










protection," and (3) if so, "would new or necessary copyright-related benefits outweigh any such

weakening?"254

In answering his first question, Breyer asserted the Sony rule works to protect innovators

from liability for copyright infringement as they develop valuable new technologies for the

market.255 The rule, he said, allows innovators to develop technology with confidence, while

having a deterrent effect keeping them from developing technology with the dominant purpose to

infringe.256 It is also forward-looking, allowing for future noninfringing uses, and thus intends to

keep the judiciary from having to make judgment calls on conflicting evidence where it lacks the

technical expertise to do so.257 Breyer answered his second question stating that changing the

interpretation of Sony would lead to legal uncertainty surrounding innovation, which would

result in a chilling effect on technological innovation.258 Finally, the answer to his third question

revealed that a more intrusive Sony test provided greater revenue security for copyright owners,

but at the expense of chilling technology.259

In concluding that Sony need not be revised nor interpreted more strictly, Breyer added that

such a change would be disruptive to all industries involved by changing the rules of the

game.260 He encouraged copyright owners to seek alternative tools available to them to Eight

piracy, including the inducement theory.261 In addition, as the recording industry has done

increasingly, he noted copyright holders may always go after individual infringers directly.262



2 Id. at 956-57.
2 Id. at 957.
256 Id
2 Id. at 958
2 Id. at 959-60.
259 Id. at 960-61.
261) Id. at 960.
261 Id. at 962-63.
262 Id. at 963.










Furthermore, copyright holders may develop technological mechanisms to prevent infringement,

as well as continue to develop technology to make legal copying and downloading cheaper and

more efficient.263 Finally, as the Sony Court articulated, Congress always has to power to

reassess the status of its laws, and are much better situated than the Courts are at dealing with

balancing copyright with technological changes.264

Post-Grokster developments

While the general holding of Grokster was clear--that a distributor of a device who

actively induces infringement is liable for the infringements of its users--the continuing status of

the Sony doctrine and what exactly constituted a "substantial noninfringing use" remained in

limbo. Upon remand, the Central District of California found Streamcast liable under the

inducement doctrine as set forth by the Supreme Court (finding the Supreme Court' s opinion

unfavorable, Grokster settled its case and was dropped from the suit).265

A few courts have begun to deal with some of the unanswered questions raised by the

Grokster Court. For example, a copyright owner of pictures of nude women sued Google in part

for displaying the images in its search windows on the secondary liability theories of inducement

and Sony 's' substantial noninfringing use standard.266 The Ninth Circuit adopted and applied

both the Grokster inducement standard, as well as Justice Ginsburg' s stricter SoYty test. 267

However, it rej ected plaintiff s Sony argument because plaintiff s claimed infringement was not

based upon the design of Google' s search engine.268 In TOSolving the inducement issue, the court

looked for actions that intentionally encouraged direct infringement, including knowing actions


263 Id. at 963-64.
264 Id. at 965.
265 MGM Studios, Inc. v. Grokster, Ltd. 454 F. Supp 2d 966, 998 (C.D. Cal. 2006).
266 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1169-74 (9th Cir. 2007).
267 Id. at 1169.
268 Id










that are "substantially certain" to result in direct infringement. 269 The court applied the Grokster

inducement test to Ninth Circuit precedents, creating a new rule that resulted in contributory

liability for a computer system operator such as Google where there is (1) actual knowledge that

specific infringing material is available using the system, and (2) failure to take simple measures

to prevent further damage to copyrighted works.270 However, the court remanded the matter for

further factual development.

The remaining questions surrounding the wake of Grokster and the continuing effect of

Sony will be addressed further in Chapter 4. Questions also remain over the breadth at which

vicarious liability will be imposed in the future due to Grokster 's minimal application of the

doctrine.27 In addition, the following lines of cases addressed next in Section III regarding

linking and in Section IV regarding the application of the DMCA @512 safe harbor will continue

to have a substantial impact while courts attempt to sort out the current status of secondary

copyright law.

Linking Law

As introduced in Chapter 1, linking is the central function of the Internet, allowing users to

navigate through websites and jump to information from one webpage to another. Thus, the

general principle is that linking alone does not constitute copyright infringement in order to not

hinder the basic method of navigation on the Internet.272 In terms of copyright infringement,



269 Id. at 1170.
270Id. at 1171 (citing 4&Mv. Napster, 239 F.3d 1004, 1022 (9th Cir. 2001) and Religious Tech. Center v. Netcom
On-Line Conununicaiton Servs., Inc., 907 F.Supp 1361, 1375 (N.D. Cal 1995)). The court was mindful of
Grokster 's reminder that failure to take preventative measures alone was insufficient to impose liability. Id. at 1169.
2 See MGM Studios v. Grokster 545 U.S. 913, 931(2005).
2 See Batesville Services, Inc. v. Funeral Depot, Inc., 2004 WL 2750253, *11 (S.D. Ind. 2004)("[H]yperlinks are
essential to the operation of the Internet for a host of legitimate purposes."): Ticketmaster Corp. v. Tickets.Com,
Inc., 54 U.S.P.Q.2d 1344, 1346 (C.D. Cal. 2000)(" hyperlinking does not itself involve a violation of the Copyright
Act .. since no copying is involved."): Bernstein v. J.C. Penney, Inc., 1998 WL 906644, *1(C.D. Cal.
1998)("linking is capable of substantial noninfringing uses. .").









linking defendants have traditionally been search engines such as Google, acting as directories

for all of the information contained on the web. However, of primary concern of this study are

not search engines, but instead websites devoted to providing users with links to infringing

copies of copyrighted media such as television shows and movies. For example, the website

Southparkzone.com provides users with links to every single episode of the Comedy Central

television show SoluhrPark. 273 While these websites often attempt to skirt liability in the United

States through housing their websites on offshore servers, the following case law further

articulates the current state of linking law.

The most important principle to linking law is that it is based in traditional secondary

liability. Thus, all the previously mentioned precedents regarding contributory and vicarious

liability, from Sony to Grokster, similarly apply. There are different forms of linking that are

possible: direct linking, deep linking, and in-line linking or framing. Direct linking is the simple

providing of a URL link which directs a user to the front of a new webpage. For example, a link

directing a user to YouTube.com. Deep linking is similar to direct linking, except that it directs a

user to a specific address within a website, not merely the website in general. Finally, in-line

linking, also known as framing, places a website' s content within a "frame" on a website,

surrounded by content chosen by the linker, which often includes advertising. This "creates the

appearance that the in-lined graphic is a seamless part" of the linker' s webpage.274 Sometimes

this is authorized. For example, YouTube.com enables users to embed video clips YouTube into

their web pages. While the videos appear to be part of the new website, they in fact reside on

YouTube's servers and are simply linked to the website. Many blogs often incorporate videos




273 SouthParkzone.com, b1lip un \\ \ southparkzone.com (last visited Jan. 11, 2008).
274 Kelly v. Arriba Soft Corp., 336 F.3d 811, 816 (9th Cir. 2003).










into their daily postings as well. However, just because the framing may be authorized by the

hosting website, it does not mean that the content shared is obviously noninfringing.

Linking to Infringing Content

One of the earlier linking cases involved a website linking to a copyrighted Mormon

Church religious manual, in Intellectual Reserve, Inc. v. Utah Lighthouse M~inistry, Inc. 275 The

arm of the Church of Jesus Christ of Latter-day Saints that owned the copyright ordered Utah

Lighthouse Ministry (ULM) to take down a copy of the manual from its website.276 ULM took

the infringing copy down, but replaced it with three links to other websites that hosted copies of

the manual.277 Intellectual Reserve sued ULM seeking an injunction to limit the linking to other

copies of the work. 278 The U. S. District Court for the District of Utah granted the injunction and

ordered the links removed from the website. 279

Since the allegation of secondary infringement requires proving direct infringement by

another, the court assumed that at trial Intellectual Reserve could prove the three linked copies

directly infringed their copyright.280 ULM did not control the linked websites, thus, the court

found that it could not be held liable for the other websites' direct infringement.281 However, the

court next asked whether ULM could be contributorily liable for the actions of those who browse

any of the three infringing websites via the links from ULM' s webpage. 282 The court assumed

the probability that some users were directed to the infringing websites through the links


275 Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc., 75 F. Supp 2d 1290 (D. Utah 1999). See also Carl S.
Kaplan, Copyright Decision Threatens Freedom to Link, N.Y. TIMES, Dec. 10, 1999, available at
lul w\ it .nytimes.com/1ibrary/tech/99 /12/cyber/cybelw11whm (last visited Jan. 13, 2008).
276 Intellectual Reserve, 75 F. Supp 2d at 1292.
277 Id
278 Id. at 1291.
279 Id. at 1295.
280 Id. at 1293.
281 Id.
282 Id. at 1293-94.










provided by ULM. 283 It held that ULM' s posting of the links on its webpage next to a line

stating "Church Handbook of Instructions is back online!" actively encouraged and induced the

infringement of Intellectual Reserve's copyright, and thus found the probability of contributory

infringement. 284 As a result, the court issued a temporary injunction, the links were taken down,

and ULM eventually settled with Intellectual Reserve.285

Two similar cases tolIntellectual Reserve in the U. S. District Court for the Central District

of California yielded more favorable outcomes for linkers. In Ticketmaster v. Tickets.com,

Ticketmaster alleged that Tickets.com gathered information about ticket prices from its website

and provided users with deep links to pages to buy tickets on Ticketmaster' s website, bypassing

much of Ticketmaster' s advertising in the process.286 The court held that such linking was not

infringement, likening the process to using a library catalog to locate a book, simply in a faster

and more efficient manner. 287 In a brief opinion, the court similarly held in favor of free linking

in Bernstein v. J. C. Penney, Inc., where J.C. Penney' s website promoting Elizabeth Arden linked

to a website operated by third party Internet Movie Database containing alleged infringing

images of Arden spokeswoman Elizabeth Taylor.288 The court upheld the principle that multiple

linking without substantial participation in the infringement would not constitute contributory

infringement. 289




283 Id. at 1294. This assumption would normally have been required to be proven at trial, however, the case settled
before trial. See Utah Lighthouse Ministry, Final Settlement,
b1lip un \\\\.utlm.org/newsletters/no96 .htm#Final%20 Settlement (last visited Jan. 15, 2008).
284 Intellectual Reserve, 75 F. Supp 2d at 1294-95.
285 See Utah Lighthouse Ministry, Final Settlement,
b1lip un \\\\.utlm.org/newsletters/no96.htm#Final%20Setlmn (last visited Jan. 15, 2008).
286 Ticketmaster, Corp. v. Tickets.com, Inc., 2000 WL 525390, *2 (C.D. Cal. 2000).
287Id. The controversy reemerged in 2003, and the court similarly found in favor of Tickets.com. See Ticketmaster,
Corp. v. Tickets.com, Inc., 2003 WL 21406289 (C.D. Cal. 2003).
288 Bernstein v. J.C. Penney, Inc., 50 USPQ2d 1063 (C.D. Cal. 1998).
289 Id.










More recently, the U.S. District Court for the Southern District of Indiana found copyright

infringement for linking content placed on a third party's website by the defendant.290 In

Batesville Services, Inc. v. Funeral Depot, Inc., funeral casket dealer Funeral Depot sold

Batesville caskets and placed photographs of Batesville caskets on its website.291 Batesville

ordered Funeral Depot to take the images down as it was not an authorized Batesville dealer.292

Funeral Depot complied by taking down the images and simply placing them on other websites

within its control and linking to them.293 Funeral Depot also made a deal with an authorized

third party dealer, Veteran's Society, to place the images on its website and link to it.294

At issue were the images placed on the Veteran's Society webpage under the direction and

control of FuneralDepot.295 The court distinguished the facts from similar cases which allowed

for linking, saying that it was not an instance where "Funeral Depot merely found some useful

material elsewhere on the Internet and encouraged its shoppers to link to those sites."296 The

court denied Funeral Depot' s motion to dismiss due to the high probability that a jury could find

contributory infringement for its involvement in displaying the images on the linked web

297
pages.

Linking and Thumbnail Images

A line of cases addresses the specific issue of linking small images of copyrighted works

known as "thumbnails." These cases contain the most recent and thorough analysis of Internet

linking and thus necessitate a closer evaluation. Both cases come from the Ninth Circuit, and


290 Batesville Services, Inc. v. Funeral Depot, Inc., 2004 WL 2750253 at *12 (S.D. Ind. Nov. 10, 2004).
291 Id. at *1.
292 Id. at *1-*2.
293 Id.
294 Id at *2..
295 Id. at *12.
296 Id.
297 Id.










add to prove the general rule that all links are not bad. In 2003, the Ninth Circuit decided Kelly

v. Arriba Soft, finding that the use of thumbnails by a search engine was not copyright

infringement but instead fell within the confines of fair use (further explained below).298 In

2007, the Ninth circuit held that similar use of thumbnails on Google' s image search engine were

not infringing in Perfect 10 v. Amazon.com.299

In Kelly, Arriba operated a search engine that enabled users to perform searches of

images.300 The search engine was fed by a web crawler that automatically searched for images

and indexed them.301 The crawler copied the full size images to Arriba's server and made a

thumbnail of each image. 302 Arriba displayed search results in the form of small thumbnails of

full-size images located on other websites.303 Kelly, a professional photographer and copyright

owner of 35 images featured on Arriba' s site, objected to the thumbnail image display by Arriba

and alleged copyright infringement. 304 The trial court found the search engine thumbnails to be a

fair use, due to their transformative nature and failure to harm the market for the images.305 The

Ninth Circuit affirmed this portion of the trial court' s decision, saying that and generally cleared

the way for linking by search engines.

On similar facts, the Ninth Circuit revisited the issue in 2007 when Perfect 10, publisher of

photos of nude models, sued Google, alleging infringement by Google' s thumbnail indexing

image search engine.306 Similar to Kelly, Google stored small, low-resolution thumbnails of



298 Kelly v. Arriba Soft Corp., 336 F.3d 811, 816 (9th Cir. 2003).
299 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9" Cir. 2007).
300 Kelly, 336 F.3d at 815-17.
301 Id.
302 Id. at 815.
303 Id.
304 Id.
so5 Id. at 816-17.
306 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1156-57 (9ti' Cir. 2007).










Perfect 10's images on its servers.307 However, unlike Kelly, when a user clicked on a

thumbnail, Google merely sent HTML instructions to the user' s browser to access the third

party's website, download the full image, and makes it appear at bottom of Google's search

pae308 In doing so, Google did not download any images to its servers, it merely sent

instr-uctions to the user' s browser of how to do so.309 The court characterized this as both in-line

linking and framing. 310 The process of Google directing the user' s browser to seek and

download the image from the third party's website was in-line linking.311 Then the court stated

that the placing of the content within a frame at the bottom of Google' s search page constituted

framing.312

The District Court temporarily enj oined Google from creating thumbnails of Perfect 10

images, finding direct infringement, but let stand Google' s framing of full-size versions.313 I

also found no secondary liability by Google.314 The Ninth Circuit agreed with the District

Court' s finding that Google was not secondarily liable.315 In determining the issue of direct

infringement for displaying thumbnails, the Ninth Circuit first applied the "server test," to decide

whether actual copies were made on Google servers.316 The server tests simply asks whether or

not copies are made on the alleged infringer' s server, and if so, then prima facie copying is

found.317 The court found that Google's thumbnails did not pass the server test, and were thus



3 Id. at 1155-56.
3()8 Id
3()9 Id
310>Id
311 Id. (citing Kelly v. 4rriba Soft Corp., 336 F.3d 811, 816 (9" Cir. 2003).
312 Id. (citing Perfect 10 v. Google, Inc., 416 F. Supp 2d 828 (C.D. Cal. 2006).
313 Id. at *1.
31 Id. at *15.
315 Id. at *15.
316 Id. at *6.
317 Id










infringing.318 However, it found the thumbnails to be a fair use due to their transformative

nature, lower quality, and usefulness to the public as an Internet index.319 As for the full-size

images made at the direction of code sent by Google to the user' s browser, the court found they

were noninfringing under the server test. 320

Linking to Illegal Material (DeCSS)

Another portion of the case law dealing with Internet linking to copyrighted material has

nothing to do with actual copyrighted material at all. Part of the Digital Millennium Copyright

Act (DMCA), known as anti-circumvention, makes it illegal to circumvent technological

mechanisms that control access to a copyrighted work.321 It also prohibits the trafficking of

programs and methods which make the circumvention possible.32 COurts have dealt with the

specific problem of providing links to copies of a computer program used to unlock the

encryption of DVD's.323 The prime example comes from the Second Circuit in 2001 in

Universal City Studios v. Corley. 324 Whether linking itself could be seen as a form of anti-

circumvention will be addressed in Chapter 5.

DVD's are typically encrypted with an anti-circumvention device called Content Scramble

System, or CSS.325 Decryption software, appropriately called DeCSS, was developed to remove

CSS from DVD's in order to make digital copies of the DVD's contents.326 In 1999, the


318 Id. at *6.
319 Id. at *15.
320 Id. at *8-*9.
321 17 U.S.C. #l201(a).
322 17 U.S.C. #l201(b).
323 See Universal City Studios, Inc. v. Reimerdes, 82 F. Supp 2d 211, 325 (S.D.N.Y. 2000) aff'd by Universal City
Studios v. Corley, 273 F.3d 429 (2d Cir. 2001); but see DVD Copy Control Assoc. v. McLaughlin, 2000 WL 48512
(Ca. Super. Ct. Jan. 21, 2000)(websites were not prevented from linking to other sites that contain DeCSS, linking is
the lifeblood of the Internet)
324 Universal City Studios, Inc. v. Corley, 273 F.3d 429 (2d Cir. 2001).
325 Corley, 273 F.3d at 436-37.
326 Id. at 437-38.










publisher ofHacker Quarterly, Eric Corley, placed an article about DeCSS on his website and

included links to other websites where the program could be downloaded at the end of the

article. 327 Members of the motion picture industry sued Corley and others for failing to remove

DeCSS links or files.328 The U.S. District Court for the Southern District of New York was

particularly interested in the hyperlinking to DeCSS copies, and found in favor of the motion

picture industry plaintiffs, issuing an injunction from linking to copies of the program.329

The Second Circuit affirmed the ruling, focusing heavily on the First Amendment

implications ~ ~ of prhbtn yelnig330 as few courts have addressed linking issues from a


First Amendment perspective. The court adopted nearly all of the reasoning of the district court,

recognizing that linking involved both a speech and non-speech element: "[i]t conveys

information, the Internet address of the linked web page, and has the functional capacity to bring

the content of the linked web page to the user' s computer screen."331 The court also noted that

limitation of linking to DeCSS was a content neutral regulation of speech "because it is justified

without regard to the speech component of the hyperlink."332 In Other words, regardless of what

the link says, the physical performance of the link--taking a user to illegal content--would be

enough to justify the prohibition. 333

The court then applied content-neutral jurisprudence to the linking prohibition, finding that

it served a substantial governmental interest unrelated to the suppression of free expression.334


327 Id. at 439.
328 Id. at 440 n.8.
329 Universal City Studios, Inc. v. Reimerdes, 111 F. Supp 2d 294, 341 (S.D.N.Y. 2000).
330 Corley, 273 F.3d at 455-58.
331 Id. at 456.
332 Id
333 See id.
334 Id. (citing to United States v. O'Brien, 391 U.S. 367 (1968)("When 'speech' and 'nonspeech' elements are
combined. a sufficiently important governmental interest in regulating the nonspeech element can justify
incidental limitations on First Amendment freedoms."), Ward v. RockAgainst Racism, 491 U.S. 781, 799










The court then determined whether the strict liability of linking to DeCSS websites would satisfy

the more exacting narrow tailoring requirement.335 It recognized that strictly prohibiting linking

in this case would chill web site operators from linking to certain web pages in fear that the

linked page could contain DeCSS.336 In addition, it would prevent access to any additional

information contained on a linked to website containing DeC SS.337

In order to determine whether the linking prohibition was narrowly tailored, the district

court fashioned a test based upon the N. Y. Times v. Sullivan actual malice standard.338 The test

required a showing of clear and convincing evidence that the linking party: (1) knew offending

material was on the linked-to site, (b) knew it was illegal circumvention technology, and (3)

"created or maintained the link for the purpose of disseminating that technology."339 The

Second Circuit approved the test and the district court' s finding according to it that strictly

prohibiting the linking to DeCSS websites was non-offensive to the First Amendment under a

content-neutral analysis.340 This method of analysis is unique among linking jurisprudence and

may be a reliable standard which may be applied to current video linking websites, which will be

explored later in Chapter 5.

Indexing and Linking to Music

An additional area of linking law concerns the indexing of music by linking to infringing

files. Obviously, the major secondary liability cases ofl~apster, Aimster, and Grokster


(1989)(intermediate scrutiny where "regulation promotes a substantial government interest that would be achieved
less effectively absent the regulation.") and Turner P,... ,I, .,l 0, s; System, Inc., v. FCC, 512 U.S. 622, 662
(1994)(upholding content-neutral regulation where it furthers an important governmental interest unrelated to the
suppression of free expression, no greater than is essential to the furtherance of that interest)).
3 See id.
336 Id
337 Id
3 Id. (citing to A. T. Times Co. v. Sullivan, 376 U.S. 254, 283 (1964)).
339 Id
340 Id










essentially deal with this issue.341 However, the case of Arista Records, hIc., v. M~P3Board,

hIc.342, decided in 2002 by the U.S. District Court for the Southern District of New York,

provides quite similar facts to today's video linking websites and deserve a closer look.

Before the court were motions for summary judgment from all parties, in a lawsuit filed by

various record companies and the Recording Industry Association of America (RIAA) against

MP3Board, a website providing links to files of both infringing and noninfringing music. 343

MP3Board's website contained no music files, but instead featured an automatic search engine

that searched for and organized links to music files elsewhere on the Internet.344 In addition, the

website maintained a message board by which users could post additional links to music files

and share passwords to other music websites.345 Message board users could also make requests

for specific songs, and MP3Board' s staff would then search for the requested links and post the

findings on the boards.346 MP3Board also offered users instructions of how to store music files

with a third party website, and offered a tutorial of how to locate and download files by using a

copyrighted music file as an example.347

The trial court denied all of MP3Board' s motions for summary judgment due to its finding

of triable issues of material facts.348 The court similarly denied the record companies' and

RIAA' s motions for summary judgment, though seemed to insinuate the genuine possibility that

MP3Board could be found liable for contributory and vicarious infringement.349 While the court



3 See generally supra notes 66-260.
3 Arista Records, Inc., v. MP3Board, Inc., 2002 WL 1997918 (S.D.N.Y. Aug. 29, 2002).
3 Id. at *1.
344 Id
345 Id
346 Id
3 Id. at *5.
3 See id. at *18.
349 See id. at *4, *10.










did not make any rulings of law, and there is no further case history, the parallels to current

linking websites is important to note.

DMCA Safe Harbor

In addition to fair use (explained below in Section V), there exists a catchall safe harbor

which grants immunity to all findings of direct or secondary liability for alleged Internet

infringement. 350 In 1998, Congress passed the Digital Millennium Copyright Act (DMCA) in

order to satisfy growing concerns with applying copyright law to the Internet.351 Section 512 of

the DMCA, the Online Copyright Infringement Liability Limitation Act, was intended to

preserve "strong incentives for service providers and copyright owners to cooperate to detect and

deal with copyright infringements that take place in the digital networked environment."352I

was also created to ensure greater legal certainty for service providers.353 This section will first

outline the statute and then detail some of the case law and legislative history interpreting it.

The statute confers immunity upon four specific types of providers of Internet service

providers.354 Eligible categories are (a) transitory digital network communications, (b) system

caching, (c) information residing on systems or networks at direction of users, and (d)

information location tools.355 "Service provider" is defined as the traditional notion of a

common-carrier Internet Service Provider(ISP)(such as AOL, Cable Broadband, or DSL) for

~512(a),356 and more broadly for j@512(b)-(d) as a "provider of online services or network


"5 See 17 U.S.C. # 512 (1999). The one exception to immunity is that a court may still issue an injunction. Id. at
#512(j).
3 See H.R. Rep. No. 105-551 (II), at 21-23 (1998).
3 H.R. Rep. 105-796, at 72 (1998)(Conf. Rep.).
3 See id.
3 See 17 U.S.C. #512 (a)-(d) (1999).
3 See id.
3 512(k)(1)(A)e i sIT ice provider' means an entity offering the transmission, routing, or providing of
connections for digital online communications, between or among points specified by a user, of material of the
user's choosing, without modification to the content of the material as sent or received.").










access, or the operator of facilities therefore."35 For example, Amazon.com and Ebay.com,

operators of websites providing retail services, were held to be a service providers.358 Similarly,

Aimster, a peer-to-peer fie sharing service, was found to be a service provider.35

Two basic prerequisites are set forth for all four categories.360 The first prerequisite is that

a provider must implement a reasonable subscriber policy that provides for the termination of

repeat infringers, often contained in a click-wrap Terms of Service agreement.361 Though the

statute does not define "reasonably implemented," the Ninth Circuit has outlined it as a "working

notification system .. for dealing with DMCA-compliant notifications, .. if it does not

actively prevent copyright owners from collecting information needed to issue such

notifications."362 While there is no active duty to monitor and thus terminate, it is reasonable for

a provider to terminate those that "repeatedly or blatantly" infringe.363 Other courts have

required the implementation of a procedure to receive complaints which is reasonably

implemented so long as it does not tolerate "flagrant or blatant" infringement.364

The second prerequisite requires service providers to accommodate and not interfere with

"standard technological measures" used by copyright owners to protect their works. 365 The

noninterference with "standard technological measures" is important, because (512 imposes no



35#512(k)(1)(B).
3 See e.g. Corb~is Corp. v. Amazon.com, Inc., 351 F. Supp 2d 1090, 1100 (W.D. Wash. 2004); Hendrickson y.
eBay, Inc., 165 F. Supp 2d 1082, 1088 (C.D. Cal. 2001).
359 In re 4iinster Copyrightlerg; olr,. ,. 334 F.3d 643, 655 (7th Cir.2004).
"60 512(i)(1).
3 512(i)(1)(A). See generally David Nimmer, Repeat Infringers, 52 J. OF THE COPYRIGHT SOCIETY 167
(2005)(providing a thorough analysis of the repeat infringer problem and outlining a proposed user-agreement).
3632Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1109 (9t Cir. 2007).
363 Id.
3 See Corbis Corp. v. Amazon.com, Inc., 351 F. Supp 2d 1090, 1102 (W.D. Wash. 2004). See also In re 4iister
Copyright ,,~l ts r s. ,. 252 F. Supp 2d 634, 659 (N.D.Ill.2002), affd, 334 F.3d 643 (7th Cir.2004).
3 512(i)(1)(B) & 512(2)(A)-(C). "Standard technological measures" are meant to be "developed pursuant to a
broad consensus of copyright owners and service providers in an open, fair, voluntary, multi-industry standards
process." #512(2)(A).










duty to monitor so long as monitoring does not become a "standard technological measure."366

However, in order for something to become a "standard technological measure" it must go

through an open multi-industry vetting process and must not impose substantial costs burdens on

service providers. 367 Finally, a service provider that does not fit any of the categories below is

not inherently liable for copyright infringement, as a plaintiff must still demonstrate the provider

has directly or secondarily infringed, and other defenses, such as fair use, continue to be

available.368

Transitory Communications ( 512(a)

This category encompasses the traditional ISP's or any other service provider in their

"transmission, routing, or providing of connections" without regard as to the contents of the

material transmitted.369 It was intended to protect a service provider from transitory infringing

communications when it "plays the role of a 'conduit' for the communications of others."370 The

Ninth Circuit held that storage of an infringing file on its news-group server for up to fourteen

days constituted a transitory communication because AOL acted merely as an intermediary

between two third-parties.371 COHVersely, the peer-to-peer networks of Napster and Aimster









366 See 512(m).
367 512(i)(2)(standard technological measures are those that (A) "have been developed pursuant to a broad
consensus of copyright owners and service providers in an open, fair, voluntary, multi-industry standards process,"
(B) "available to any person on reasonable and nondiscriminatory terms" and (C) "do not impose substantial costs
on service providers or substantial burdens on their systems or networks".).
368 See #512(1).
369# 512(k)(1)(A).
370 H.R. Rep. 105-551(II), at 51 (1998). The primary legislative history authority concerning #512 is the Second
Report to the House of Representatives, H.R. Rep. 105-551(II) (1998), because the Senate acceded to the House
version of the bill in Conference Committee. H.R. Rep. 105-796, at 72 (1998)(Conf. Rep.).
371 Ellison y. Robertson, 357 F.3d 1072, 1081 (9th Cir. 2004).










were not held to be service providers under this section because no files passed through their

systems or servers.37

One of the additional requirements is that no copy of the transitory material may reside on

the provider' s server or network. 373 This requirement takes 05 12(a) out of the realm of video

hosting websites such as YouTube because of the copies that reside on hosting websites' servers.

Another requirement states that the communication must be without editorial control as to the

contents of the transmission, "without selection of the material by the service provider."374

Thus, g512(a) similarly fails to apply to linking websites because the operators of linking

websites search for already-hosted infringing videos and actively select which links to share with

the public.

System Caching g 512(b)

This section was intended to protect the temporary storage of information that eases

Internet congestion and increases performance, known as caching.375 It defines caching as the

"intermediate and temporary storage of material on a system or network operated by the service

provider."376 The caching includes only temporary copies of files sent and as requested by

users.377 Thus, this section applies neither to hosting websites such as YouTube, nor to linking

websites. Hosting websites retain an actual copy of the infringing work, which takes them out of

the category because the material is made available by the hosting website itself,378 while linking


372 See A&M v. Napster, 2000 WL 573136, at *7 (N.D. Cal. 2000) aff'd by 239 F.3d 1004 (9t Cir. 2001); In re
Aimster Copyright Litigation, 252 F. Supp. 2d 634, 659 (N.D. Ill. 2002) aff~d on other grounds, 334 F.3d 643 (7th
Cir. 2003).
373# 512(a)(4).
374 512(a)(2). See also H.R. Rep. 105-551(II), at 51 (1998)("'selection of the material' .. means the editorial
function of determining what material to send, or the specific sources of material to place on-line. .").
375 See H.R. Rep. 105-551(II), at 52 (1998).
376# 512(b).
377# 512(b)(1)(A).
378 512(b)(1)(A) requires that the "material is made available by a person other than the service provider." Id.










websites link to offending material, they do not generally transmit that material through its

servers .

User-Directed Storage of Material g 512(c)

Section 512(c) limits liability for service providers that store, at the direction of a user,

infringing material on their servers or networks.379 However, the storage of material must be

user-directed, and cannot reside on the provider' s server or network through its own acts or

decisions.380 Such service providers under (512(c) include websites, bulletin boards, and chat

rooms.381 The basic reading of this language seems to suggest that if a provider under this

section monitors or censors user-directed material, the provider could risk losing the safe harbor.

However, one court has held that human review and selection in order to weed out obvious

infringement operate merely as a "gateway" and have no bearing on the selection by users of the

material.382 This, of course, could be problematic for providers that miss infringing content,

resulting in the to be explained knowledge element.

There are three general prerequisites to this section.383 First, as detailed below, the

provider must have a requisite amount of knowledge of infringing activity.384 Second, where the

provider has the right and ability to control the infringing activity, it cannot receive a direct

financial benefit attributable to it.385 Third, upon notice or awareness of infringement, the




379# 512(c).
380 H.R. Rep. 105-551(II), at 53 (1998).
381 Id.
382 COstar Group Inc. v. Loopnet, Inc., 164 F. Supp 2d 688, 701(D. Md. 2001).
383 See 512(c)(1)(A)-(C).
384 See 512(c)(1)(A).
385 512(c)(1)(B). The direct financial benefit element should not be found where the service provider charges a
one-time fee or periodic payments to use its service, "unless the value of the service lies in providing access to the
infringing material." H.R. Rep. 105-551(II), at 54 (1998). See also Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102,
1117-18 (9th Cir. 2007)("direct financial benefit should be interpreted consistent with the similarly worded common
law standard for vicarious liability. See e.g., Ellinson v. Robertson, 357 F.3d 1072, 1078 (9th Cir. 2004).).










provider must respond expeditiously to remove or disable access to the claimed infringing

materi al .386

As for the knowledge requirement, the service provider must not have "actual knowledge"

of infringing activity.387 Actual knowledge is often served in the form of a "takedown" notice.388

However, substantially non-conforming takedown notices may be insufficient to prove actual

knowledge.389 In the absence of actual knowledge, the provider cannot be aware of "facts or

circumstances from which infringing activity is apparent."390 COngress called this a "red flag"

test, in which certain facts or circumstances should raise a "red flag" to the provider that their

network or server is being used to infringe.391 COngress noted that whether the provider knew of

a "red flag" required a subj ective look to the facts or circumstances involved. 392 However, it

must be judged obj ectively, as a reasonable person in similar circumstances, in determining

whether the facts or circumstances should constitute a "red flag."393 As one court put it, the test

should be "whether the service provider deliberately proceeded in the face of blatant factors of

[infringement] which it was aware."394

In addition, Congress defined "activity" as "activity using the material on a system or

network. .regardless of whether copyright infringement is technically deemed to occur at that


3 512(c)(1)(C). E pedinotalllui is not defined by the statute, 17 U.S.C. #512(c), nor was Congress willing to set
a time limit to define it.
3 See 512(c)(1)(A)(i). "Actual knowledge" is defined as "direct and clear knowledge." Black's Law Dictionary
(8th ed. 2004), "knowledge". H.R. Rep. 105-551(II), at 54 (1998).
3 See 512(c)(3).
389 See Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1112-13 (9th Cir. 2007)(holding that 22,185 pages of
evidence containing non-conforming takedown notices were insufficient to prove actual knowledge because to so
require would impose a great burden on service providers to decipher and investigate every communication alleging
infringement). See also Hendrickson y. eBay, 165 F. Supp. 2d 1082, 1093 (C.D. Cal. 2001)(notices lacking
statement of good faith and accuracy and inadequate identification of the infringing material).
390# 512(c)(1)(A)(ii).
391 H.R. Rep. 105-551(II), at 53 (1998).
392 Id.
393 Id.
394 COrbis Corp. v. Amazon.com, Inc., 351 F. Supp 2d 1090, 1108 (W.D. Wash. 2004).










site or at the location where the material is received."395 In doing so, it gave the specific

example of a website offering video to the public. 396 Assuming the video was an infringing copy

stored on the website's server, it could constitute both an unauthorized copy of the work created

on the server, and could be an unauthorized public performance of an audio-visual work.397

Either finding would be sufficient to constitute infringing activity.398

As noted, actual knowledge is often served in the form of a "takedown" notice. Since the

statute imposes no duty to actively monitor on the part of service providers, takedown notices are

typically the primary method a provider learns of infringement.399 The section delineates

specific procedures that must be followed in the notice-takedown process.400 The notice and

takedown system lies at the heart of g512(c) immunity (as well as section (d)), though it is not

required, since actual knowledge or simple awareness are sufficient to trigger a takedown to

preserve immunity.401 However, all communication from a copyright owner alleging

infringement must comply with the requirements to constitute actual knowledge or simple

402
awareness.

Each takedown notice must be a written communication to the provider signed under the

penalty of perjury,403 and contain certain specific elements, including identification of the

infringing works and information sufficient to locate the content.404 Once a substantially


395 H.R. Rep. 105-551(II), at 53 (1998).
396 Id
397 See id.
398 See id.
399 See 17 U.S.C. # 512(m)(1999).
400 See 512(c)(3).
401 See 512(c)(1)(A)(i) -(iii). See also H.R. Rep. 105-551(II), at 54 (1998)("Section 512 does not specifically
mandate use of a notice and takedown procedure.").
402 512(c)(3)(B). See also H.R. Rep. 105-551(II), at 53 (1998).
403 MiSrepresentations in either takedown notices or counter-notices may result in damages, costs, and attorneys fees.
#512(f).
404 512(c)(3)(A)(i)-(vi). All notices must include:










compliant notice is received by the provider' s designated agent, actual knowledge occurs and the

provider must then act expeditiously to remove or disable access to the allegedly infringing

content.405 In Order to retain immunity for the takedown, the provider must take reasonable steps

to notify the subscriber to whom the removed or disabled material belongs.406

However, the subscriber or user that is alleged to infringe is not without recourse. They

must send written counter-notice under the penalty of perjury to the provider of their good faith

belief that the material was disabled or removed as a result of mistake or misidentification. 407


The provider must then forward the counter-notice to the original complaining party and must





(i) A physical or electronic signature of a person authorized to act on behalf of the owner of an exclusive
right that is allegedly infringed.
(ii) Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works
at a single online site are covered by a single notification, a representative list of such works at that site.
(iii) Identification of the material that is claimed to be infringing or to be the subject of infringing activity and
that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the
service provider to locate the material.
(iv) Information reasonably sufficient to permit the service provider to contact the complaining party, such as
an address, telephone number, and, if available, an electronic mail address at which the complaining party
may be contacted.
(v) A statement that the complaining party has a good faith belief that use of the material in the manner
complained of is not authorized by the copyright owner, its agent, or the law.
(vi) A statement that the information in the notification is accurate, and under penalty of perjury, that the
complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infhinged.
Id.
405# 512(c)(1)(A)(iii).
406 512(g)(2)(A). Reasonable steps are defined by Congress as simply sending an email to the account the user
submitted with the website upon registration. H.R. Rep. 105-551(II), at 59 (1998).
407 512(g)(3). Counter-notice must include the following elements:
(A) A physical or electronic signature of the subscriber.
(B) Identification of the material that has been removed or to which access has been disabled and the location
at which the material appeared before it was removed or access to it was disabled.
(C) A statement under penalty of perjury that the subscriber has a good faith belief that the material was
removed or disabled as a result of mistake or misidentification of the material to be removed or disabled.
(D) The subscriber's name, address, and telephone number, and a statement that the subscriber consents to the
jurisdiction of Federal District Court for the judicial district in which the address is located, or if the
subscriber's address is outside of the United States, for any judicial district in which the service provider may
be found, and that the subscriber will accept service of process from the person who provided notification
under subsection (c)(1)(C) or an agent of such person.
Id.










notify them that removal or disabling of access will cease within ten business days. 408 Finally,

the provider must then replace the removed material or cease denying access to it within ten to

fourteen business days.409 However, if within that time period, the original complaining party

notifies the provider's designated agent that it filed an action seeking a court order to restrain the

subscriber from engaging in infringing activity, the removal or disabling of access becomes

permanent pending the adjudication of the dispute.410

Information Location Tools ( 512(d)

The final category of @512 limits the liability of information location tools, including

directories, indexes, references, pointers, and most importantly for this research, hypertext

links.411 This subsection follows the same requirements of g512(c), including lack of actual

knowledge or general awareness,412 lack of direct financial benefit,413 and compliance with

notice and takedown procedures.414 COngress gave guidance in what kind of service provider

might be eligible for the safe harbor under this section, echoing that the turning of a blind eye to

a "red flag" of obvious infringement would not qualify.415 In fact, Congress contemplated the

exact type of linking websites that are the subj ect of this study's analysis.416 It described one

such "red flag" as linking to a "pirate" website where movies were available for downloading,

public display, and public performance.417


40s# 512(g)(2)(B).
409# 512(g)(2)(C).
410 Id
411 512(d).
412 Compare 512(d)(1)(A)-(C) with 512(c)(1)(A)(i)-(iii).
413 Compare #512(d)(2) with 512(c)(1)(B).
414 512(d)(3). The only difference in the notice-takedown requirements for #512(d) is that instead of identifying
the location of the infringing material, notice must be given as information reasonably sufficient to locate the
reference or link. Id.
415 H.R. Rep. 105-551(II), at 57-58 (1998).
416 See id.
417 Id










The intent of the section was to promote search engines and other tools that make finding

information on the Internet easier.418 Thus, the safe harbor was not intended for "sophisticated

'pirate' directories" that "refer Internet users to sites that are obviously infringing because they

typically use words such as 'pirate,' 'bootleg,' or slang terms .. to make their illegal purpose

obvious. 419 The "red flag" of what Congress contemplated to be "piracy" was that "the

infringing nature of such sites would be apparent from even a brief and casual viewing."420 The

Ninth Circuit clarified this by saying that for a website to qualify as a red flag of infringement,

"it would need to be apparent that [it] instructed or enabled users to infringe another' s

copyright."421

In sum, the application of the DMCA @5 12 safe harbor is primarily a case by case

application of the statute. Naturally, the formalistic elements of notice and takedown must

summarily be followed, but the knowledge requirements necessitate an ad hoc approach in

dealing with its applicability. As noted above, there are a few areas in which the case law has

developed to clarify specific sections of the statute.

Fair Use

While the DMCA safe-harbor could provide an infringing website or service provider with

a defense from liability, the doctrine of fair use may provide, in select instances, individual users

with an additional defense to liability for infringement. Fair use is the codified principle in

copyright law which allows an individual to make use of copyrighted material in a "fair" way by

weighing the rights of an individual to make comment, criticism, news reporting, and scholarship




4 Id. at 58.
419Id.
420 Id.
421 Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1114 (9th Cir. 2007).










against the financial interests of the copyright holder.422 The Copyright Act includes four factors

which should be considered in determining whether any particular use is "fair."423

Section 107 provides examples where fair use may apply for "purposes such as criticism,

comment, news reporting, .. or research ."424 However, when use of the copyrighted work, or

portion thereof, begin to resemble entertainment rather than "criticism, comment and news

reporting," it becomes more difficult to establish the fair use defense. The factors that are

applied to determine whether there is a "fair use" are:

1. The purpose and character of the use, including whether the use is commercial or non-
profit educational;

2. The nature of the copyrighted work;

3. The amount and substantiality of the work used in relation to copyrighted work as a
whole; and,

4. The effect of the use on the potential market for of value of the copyrighted work.

The four factors are not exclusive unto themselves, as additional facts may lend to other

arguments that prove or disprove fair use. For example, courts have looked to other

considerations such as extreme bad faith by one of the parties. 425 A defendant is not required to

meet each of the four factors when asserting the defense of fair use. Fair use may rest on just

one factor so long as it is sufficiently persuasive over the other factors.426 For example, despite

the third factor, the Supreme Court held that the copying of an entire television show for later

personal viewing constitutes a fair use. 2



422 See 17 U.S.C. #107 (1990).
423 Id
424 Id
425 Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 562 (1985)( "Fair use presupposes 'good
faith' and 'fair dealing."').
426 See Sony v. Universal City Studios, 464 U.S. at 417 (1984).
427 See id.










The first factor looks to how the alleged infringer uses the original work. A defendant

tends to win this argument most when the use is "transformative," meaning that it takes a

preexisting work and builds upon it to make something new.428 The Supreme Court remarked

that transformative works "lie at the heart of the fair use doctrine's guarantee of breathing space

within the confines of copyright .. [T]he more transformative the new work, the less will be the

significance of other factors, like commercialism, that may weigh against a finding of fair

use."429 A later work is "transformative" of an earlier work when it alters the original with "new

expression, meaning, or message."430 An example of this is a parody of an original work.431

Conversely, a later work is considered derivative if it merely replaces the original work, not

changing or transforming it, and such factors weigh against a finding of fair use. 432 For example,

a derivative work would include converting a book into movie.

The second factor asks about creativity of the copyrighted work and the amount of

protection needed for it. Generally, the more original the work is, the more it warrants

protection. This idea stems from the origin of copyright law itself in the U. S. Constitution

intending to promote "the progress of science and useful arts."433 For example, the Supreme

Court held that copying factual names and numbers out of the white pages of a telephone book to

create a competing phone book was not a violation of copyright because phone numbers and

names were facts, not original creative works.434 The Court determined that arranging facts such



428 See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994)("the goal of copyright, to promote science and the
arts, is generally furthered by the creation of transformative works.").
429 Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994).
430 Id.
431 Id. at 579.
4 See 17 U.S.C. #101 "derivative work." ("derivative work" is a work based upon one or more preexisting works .
.. in which a work may be recast, transformed, or adapted.).
4 See U.S. CONST. art. I, sec. 8, cl. 8.
4 See Feist Publications Inc., v. Rural Tel. Serv. Co., 499 U.S. 340 (1991).










as names and numbers in alphabetical order was not sufficiently original to withstand copyright

protection.435

The third factor looks to the amount of the original copyrighted work is used, as well as

how central that portion used is to the original work. Generally, fair use is more likely to be

found where the amount copied is minimal, and the other factors also point to fair use.436

However, wholesale copying does not necessarily negate fair use where the other factors favor it.

For example, the Supreme Court held once that a mere 300 word excerpt from an unpublished

book in a magazine was not fair use,437 while the next year the Second Circuit decided that a

7,000 excerpt from an out of print book for use as commentary was a fair use.438

Finally, the fourth factor looks to the degree that the infringing work will compete

economically with the copyrighted work. The Supreme Court has held that this element is

"undoubtedly the single most important element of fair use." 439 The analysis must not only look

to the harm the use has on the original work, but also to the potential harm to future works.440

Thus, in applying fair use to new technologies, the Sony Court stated that potential harm need not

be proven, only "evidence that some meaningful likelihood of future harm exists."441

Although the factors are codified in the Copyright Act, they remain indefinite and unclear

in their application. In other words, fair use continues to be fluid, ever changing, and determined

on a case-by-case basis with outcomes varying by court because of the fact-specific nature of the

issues. For example, one court found that using forty-one seconds of footage from a boxing


435 Id
436 See Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 564-65 (1985)("There are no absolute
rules as to how much of a copyrighted work may be copied and still be considered a fair use.").
4 See id.
4 See Maxtone-Graham v. Burtchaell, 803 F.2d 1253 (2d. Cir. 1986).
439 Harper &~ Row, 471 U.S. at 566.
440 Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 590 (1994).
441 Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 451 (1984).









match featuring Muhammad Ali in the making of a biographical documentary of Ali's life was a

fair use because the portion used was small and for informational purposes. 442 Another court

found that using one minute and fifteen seconds of a Charlie Chaplin film in a news report about

Chaplin's death was not a fair use because the portion taken was so integral to the "heart of the

film." 443 This discrepancy in outcomes confounds the application of fair use, especially as

digital technology presents new methods to use copyrighted material.






































442 MOnster Conununications, Inc. v. Turner Broadcasting Sys. Inc., 935 F. Supp. 490 (S.D. N.Y. 1996).
443 Roy Export Co. Estab. of Vaduz v. Columbia Broadcasting Sys., Inc. 672 F.2d 1095, 1100 (2d Cir. 1982)









CHAPTER 4
CASE STUDY ANALYSIS

Thus far, this study outlined in Chapter 1 the problem both the problem the copyright

industry faces with changing Internet video-sharing technologies, as well as implications on fair

use. Chapter 2 introduced scholarly literature about secondary liability in the face of changing

technology and the normative issues surrounding copyright law. Chapter 3 then outlined the

statutory and case law of direct and secondary copyright liability, as well as possible defenses of

fair use and the Digital Millennium Copyright Act' s safe harbor. This chapter will now

incorporate the previous chapters into preliminary legal findings by examining one

representative example of hosting websites and another representative of linking websites. The

first case study will examine YouTube.com, the Internet' s most popular video-sharing and

hosting website. The second will analyze SouthParkzone.com, a popular linking website that

enables Internet users to watch unauthorized copies of full-length, commercial-free episodes of

Comedy Central's popular animated TV show SoluhrPark.

This analysis must first acknowledge a number of ongoing lawsuits against YouTube.com

and similar websites, few of which have been fully adjudicated. The importance of the analysis

is evident in the number of maj or pending lawsuits on the matter. The most noteworthy is

Viacom v. YouTube, in which media conglomerate Viacom, on behalf of its entertainment

subsidiaries such as Comedy Central and Paramount Pictures, sued YouTube, and its owner

Google, for copyright infringement related to the unauthorized display, performance, and

reproduction of copyrighted videos. Viacom is also seeking liability based on the vicarious and

contributory liability theories and seeks damages over one-billion dollars.2 The case is currently



i See Complaint, Viacom, Inc. v. YouTube, Inc., 2007 WL 775611 (S.D.N.Y. filed Mar. 13, 2007)(No. 07-2103).
21d










pending in the U. S. District Court for the Southern District of New York. 3 Lawsuits have not

only been filed against YouTube, but also against its video hosting competitors such as

Veoh.com.4 However, since YouTube has become such a maj or player in the copyright

litigation regarding video hosting websites, the first part of this analysis will study the legal

ramifications of YouTube.

Another notable lawsuit against YouTube is a class-action also brought in the Southern

District of New York entitled 7Jhe Football Association Premier League Ltd. v. YouTube.S The

lead plaintiff, a maj or European professional soccer league, is j oined by a large number of

content owners, including owners of video and music copyrights. 6 A number of plaintiffs

voluntarily dismissed other pending actions against YouTube to join this suit.' In addition, both

the Viacom litigation and the YouTube class action are under the direction of Judge Louis L.

Stanton and both litigations have been co-docketed.

Lawsuits against linking websites are more sparse and much more difficult to prosecute.

Many linking websites offer minimal user interaction to maintain their contention of DMCA

~512 immunity, making them difficult to serve a lawsuit against by hiding their true identity.8 In

addition, many of linking websites are either hosted by offshore servers, their operators are





I1d.
SSee e.g. UMG Recordings, Inc. v. Veoh Networks, Inc., No. 07-5744 (C.D. Cal. filed Sept. 4, 2007); IO Group,
Inc. v. Veoh Networks, Inc., No. 06-3926 (N.D. Cal. filed June 23, 2006).
SFootball Association Premier League, Ltd. v. YouTube, Inc., No. 07-3582 (S.D.N.Y filed May 4, 2007).
6 Id. Other notable plaintiffs include: Bourne Co., The Music Force LLC, Cal IV Entertainment, LLC, Cherry Lane
Music Publishing Company, Inc., Robert Tur, National Music Publishers' Association, The Rodgers & Hammerstein
Organization, Edward B. Marks Music Company, Freddy Bienstock Music Company, Alley Music Corporation, X-
Ray Dog Music, Inc., Federation Francaise De Tennis, The Scottish Premier League Limited, The Music Force
Media Group LLC and Sin-Drome Records, Ltd. Id.
SSee e.g. Tur v. YouTube, Inc., No. 06-4436 (C.D. Cal. voluntarily dismissed 2006).
SSee Kevin J. Delaney, Free Viewing -- Threat for Big Media: Guerrilla Video Sites, WALL ST. J., Apr. 7, 2007, at
Al.










located offshore, or both.9 In many instances, they are located in nations that are not parties to

international copyright treaties that respect basic tenets of copyright law. 1o As a result the

analysis of linking websites will apply examples from a number of video linking websites and

apply the general principles of video linking websites and their legal ramifications.

However, two American-based linking websites were recently sued by copyright industry

companies for linking to copyrighted works shortly after their website was featured by the Wall

Street Journal. In the instance of linking hub youtypc.com, New Mexico residents and website

founders Billy Duran and Sam Martinez were sued for their website' s alleged facilitation of

violating copyrights. 12 The founders failed to contest the lawsuit, which resulted in a default

judgment of nearly $900,000 in damages and attorneys' fees for violating copyright law. 13 The

remaining action was voluntarily dismissed as the plaintiff was unable to properly serve

Youtypc.com.14 Another lawsuit was filed against linking hub peekvid.com, in which the

alleged owner of peekvid.com failed to properly answer, and the court similarly entered default

judgement against the defendants. 1

YouTube.com Case Study

A brief review of the functions and purposes of YouTube.com is necessary before a legal

analysis can take place. YouTube is the self-proclaimed, "leading destination on the Internet for

video entertainment."16 It relies upon user-uploaded content for users to view free of charge. 1


9 See id.
10 See id.
" See id.
12 Judgment Against Defendants Billy Duran and Sam Martinez Pursuant to Entry of Default, Universal City
Studios, Inc. v. Youtypc.com, No. 07-4181 (C.D. Cal. decided Dec. 3, 2007).
1 3Id~
1 4Id~
1s Warner Bros. Entertainment, Inc. v. Peekvid.com, No. 07-4185 (C.D. Cal. filed June 26, 2007).
16 Y~uTube Fact Sheet, http://www.youtube.com/t/fact~sheet (last visited Jan 28, 2008).
" Id~










In order to upload and share videos, users must first register with YouTube, giving their name

and a valid email address, and must agree to abide by the Terms of Use and Privacy Policy. I

The terms include basic content-restrictions on the videos a user may upload, including that they

may not infringe another's copyright. 19

Almost all videos on YouTube are the result of a user uploading a video onto the YouTube

server. Videos uploaded must be no longer than ten minutes in length and no more than 100

mega-bytes of data.20 However, this limitation is a recent policy and older YouTube users

whose account predates the new rule can upload longer videos.21 Once uploaded to YouTube's

server, it then processes the video by converting it into a compact and easy to view format, and

places the video online for anyone to see.22 Users also have the ability to make their videos

password-protected and unavailable to the general public.23 They can also "tag" the video with

key words which assist YouTube's search engine function in locating the video as well as

categorizing the video for placement in one of YouTube's many themed channels. 24 YOuTube

does not review the content of any videos unless the video is "flagged" for inappropriateness by

another user in violation of the Terms of Use.25 Only recently has YouTube begun







1s See Answer at 130, Viacom, Inc. v. YouTube, Inc., No. 07-2103 (S.D.N.Y. Apr. 30, 2007) 2007 WL 1724620.
See also Terms of Use, available at http://www.youtube.com/t/terms (last visited Jan 28, 2008).
19 See id.
20 See Answer ilt ;I supra note 18.
21C8H I UplOad videos that are longer than 10 minutes?, available at
http://www.google.com/support/youtube/bin/nwrpyase-1673&topic=10527 (last visited Jan. 28, 2008).
22 See Answer at 131, supra note 18.
23 See Answer at '41, supra note 18.
24 What are tags? How do I add them?, available at
http://www.goog!.. .. ,, ,II-y>., ? ,lrunk.. i;, ,I, II t. ,.py?answer=55769&~topic=10531 (last visited Jan 28, 2008).
25 What do all the flagging terms mean? available at
http://www.goog!.. .. ,, ,II-y>., ? ,lrunk.. i;, ,I, II ,,. .py?answer=78716 (last visited Jan. 28, 2008).










experimenting with automated copyright protection tools such as filters to identify infringing

works.26

From the viewing end, YouTube's interface is quite simple. Unlike uploaders, a viewer of

videos requires no registration with the website. To view a video, a user simply needs to

navigate to the video's website address, and the video automatically begins to play. If a viewer

has no direct link to a video, they can go to YouTube's homepage, where videos are featured as

well as advertisements and a search engine. The search engine indexes all public videos on

YouTube and yields results based on tagging of the videos, and results are listed along with a

thumbnail image taken from the video.27 Search results are capped at 1,000 video clips on any

given search.28 When a user clicks on a video's thumbnail, the website takes the user to the

video's webpage and the video begins to play.

This section will first examine YouTube's possible direct liability for copyright

infringement, along with possible fair use defenses to each form of direct liability. Second, it

will determine secondary liability possibilities, including inducement, vicarious liability, and

contributory liability. Finally, this section will address the possibility that YouTube may be

immune from secondary liability based on the DMCA @512 safe harbor.

Direct Liability

The question of whether YouTube may be liable for direct copyright infringement stems

from the simple fact that a copy of every allegedly infringing video resides on YouTube's

centralized servers, and that copy is what is played to the end-user. This implicates a number of

the exclusive rights granted to copyright owners by (106, including the reproduction,


26 Andy Greenberg, YouTube 's Filter Fails to Please, FORBEs, Oct. 18, 2007, available at
lull u \\ forb~es.com/2007/10/1 8/google-viacom-video-tech-cx~ag_10 18youtube.html (last visited Jan 28, 2008).
27See Answer at 130, supra note 18.
28Id.









distribution, a public display and performance.29 In addition, the growing popularity of user-

generated content, which may include portions of copyrighted material, may implicate the

derivative works right.30 The direct liability of YouTube's actions has no bearing on the fact that

a user who uploads an infringing video to may themselves commit direct copyright infringement,

however, it will be important later in considering whether secondary liability exists.31

Reproduction right

YouTube' s act of making a copy onto its server of a video is troublesome to the owner' s

reproduction right, however, it may not be fatal to YouTube. In the most basic sense, the act of

making an unauthorized copy of another' s audiovisual work is a prima facie violation of

copyright law. 32 YOuTube admitted in a pleading that, "when a user uploads a video to the

YouTube service, the video is copied into a software format, stored on YouTube's computers,

and made available for viewing through the YouTube service."33 Thus, it is relatively

uncontested that YouTube violates the reproduction right. However, a court might find the

activity excusable for a number of reasons.

First, copies are defined as, "material objects .. in which a work is fixed by any method

now known or later developed, and from which the work can be perceived, reproduced, or

otherwise communicated, either directly or with the aid of a machine or device."34 YOuTube

admitted that the storage copy is made specifically for the purpose of making the video

"available for viewing through the YouTube service" and thus is intended to be perceived,



29 See 17 U.S.C # 106 (2002).
30 See Lee Rainee, Increasing Use of Video \1,, aa, Sites, PEW INTERNET & AMlERICAN LIFE PROJECT, Jan 9, 2008,
at 1 available at httpI w\ il \t .pewinternet.org/pdfs/Pew_Videosharing_memaO.d (last visited Feb. 16, 2008).
31 See supra notes 65-69 and accompanying text.
32 See 17 U.S.C. #106 (2002).
33 Answer at 131, supra note 18.
34 17 U.S.C. #101 ("copies").










reproduced, or communicated.35 The copy must also be "fixed" so that it is "sufficiently

permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a

period of more than transitory duration."36 The Act does not further define "transitory duration,"

and no court has attempted to do so beyond a case-by-case basis.37 However, "transitory

duration" is modified by the ability "to be perceived, reproduced, or otherwise communicated,"

thus a determination is likely based upon the copy's ability to be shown or otherwise viewed.38

YouTube's stored copy appears to fit this definition, though it is statutorily undefined and

therefore open to a court's interpretation.

Second, a possible defense for YouTube is to characterize the copies as ephemeral in

nature. YouTube could argue that it makes the copies on its server at the direction of users only

to facilitate the playing of the video upon request, a simple, automatic, and brief process that is

transitory in nature and lasts only as long as the user wants his video posted online. The

Copyright Act speaks in two places directly regarding ephemeral copies. First, it protects

ephemeral copies of sound recordings for broadcast purposes, but specifically exempts motion

pictures and audiovisual works from the protection.39 Secondly, it provides protection of

ephemeral copies of computer programs.40 The law' s avoidance of exempting ephemeral copies

of audiovisual works suggests that it may have been deliberate.41 COurt interpretation of




35 Answer at 131, supra note 18.
36 17 U.S.C. #101 (2005)("fixed").
37 See, e.g., M~4I Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 518 (9th Cir. 1993); Advanced Computer Servs.
ofi~ich., Inc. v. M~4I Systems Corp., 845 F. Supp. 356, 363 (E.D. Va. 1994) (holding that a copy in RAM for
"minutes" was sufficient to be found a copy under the act ).
38 See U.S. Copyright Office, DMCA Section 104 Report, at 111-12 (Aug. 2001), available at
hop w\ il itcopyright.gov/reports/studies/dmca/sec- 104-report-vol-1 .pdf (visited Jan. 11, 2008).
39 17 U.S.C. # 112 Clin4).
40 17 U.S.C. # 117 (1998).
41 The legislative history of #112 and #117 yields no guidance as to why motion pictures and audiovisual works
were not given protection for ephemeral recordings. See H.R. Rep. 94-1476 (1976)(Conf. Rep.). It is logical that










ephemeral copies generally holds that the exemption for ephemeral copies typically is limited to

either cache copies made by end-users, or copies that are incident to the use of a computer held

only so long as the computer remains powered on.42 As a result, the copies are unlikely to be

found to be ephemeral since they are uploaded at the direction of the user and have a

theoretically infinite life on YouTube's servers, and are far from fleeting or a byproduct of

computer use. They are, instead, the actual video that YouTube displays to viewers.

Third, YouTube may prevail by arguing that the reproduction cannot be direct

infringement because the copying is non-volitional on the part of YouTube. In 1995, the U.S.

District Court for the Northern District of California held in Religious Technology Center v.

Netcom On-Line Communication Services., Inc, that "passive providers of Internet services" that

"automatically and uniformly" create copies of works at the direction of users, without more, is

not a directly infringing reproduction.43 The court did not seek to change the strict liability

application of direct infringement, but noted instead in application it was not well-suited to the

Internet.44 At issue in Netcom was whether user-uploaded copyrighted material to an online

bulletin board website constituted direct infringement on the part of the bulletin board operator. 45

The court found no direct infringement, holding that "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."46



audiovisual works and motion pictures were deliberately left out of #117 since it's 1998 amendment dealt with
copies of computer programs.
42 See e.g., Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1156 at n.3 (9" Cir. 2007);
43 See Religious Technology Center v. Netcom On-Line Communication Serys., Inc., 907 F. Supp. 1361, 1369 (N.D.
Cal. 1995)("Although 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.").
44 Id. at 1369-73.
45 Id. at 1368.
46 Id. at 1370.










Additional courts have similarly adopted Netcom 's holding. In 2004, the Fourth Circuit

articulated that, thereee must be actual infringing conduct with a nexus sufficiently close and

causal to the illegal copying that one could conclude that the machine owner himself trespassed

on the exclusive domain of the copyright owner." 47 The courts compared such passive

providers of Internet services to a photocopy machine, which on its own, is capable of

infringement yet is still allowed to be manufactured.48

The argument is similar to that which grants immunity to "passive conduits" for

defamatory statements made by third-party website users.49 Yet, in copyright law, this "passive

conduit" exemption to direct liability is more like the test for secondary liability than direct

infringement due to the requirement of "something more," either in the form of knowledge an

element of causation or volition on the part of the conduit. Of course, the "passive conduit" test

does not preclude a finding of secondary liability, and in fact years later helped shape the

Napster court' s contributory infringement test. 5o Additionally, the requirements of @512 of the

DMCA echo similar requirements of a passive conduit for immunity from secondary liability."

However, with the adoption of the "passive conduit" standard by a number of courts, though

none in the YouTube litigation's controlling Second Circuit, YouTube may indeed have a

defense to all accusations of direct infringement.


47Co Star Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 555 (4th Cir. 2004)("Agreeing with the analysis in Netcom,
we hold that the automatic copying, storage, and transmission of copyrighted materials, when instigated by others,
does not render an ISP strictly liable for copyright infringement under ##501 and 106 of the Copyright Act."). See
also Field v. Google Inc., 412 F. Supp 2d 1106, 1115 (D. Nev. 2006)( the automated, non-volitional conduct by
Google in response to a user's request does not constitute direct infringement under the Copyright Act.").
48See CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 550 (4th Cir.2004).
49 See e.g., Zeran v. America Online, Inc., 129 F.3d 327 (4t Cir. 1997)(applying Communications Decency Act, 47
U.S.C.230, to protect a website from liability for defamatory communications posted at the direction of a third-
party.)
50 See A&M Records, Inc. v. Napster, Inc. 239 F.3d 1004, 1020 (9" Cir. 2001).
51 See H.R. Rep. 105-796, at 72 (1998)(Conf. Rep.)(expressing intent to preserve "strong incentives for service
providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the
digital networked environment.")










Distribution right

Regardless of whether YouTube's server copy is characterized as a reproduction, the

ability of users around the world to access and play infringing video may violate a copyright

owner' s distribution right. As discussed in Chapter 3, the distribution of an audiovisual work

creates a unique problem in statutory construction because the Copyright Act specifically grants

copyright owners the exclusive right to distribute copies of their works "to the public by sale or

other transfer of ownership .. rental, lease, or lending."52 It is doubtful that YouTube's

playing of video files stored on its servers is a transfer of ownership, rental, lease, or lending.

The few courts that have found online distribution by websites have done so because of the

ability to download the infringing file. 53 However, the normal operation of YouTube merely

allows a user to view a video online, but not download a copy of the video (with the exception of

metadata to facilitate the playing of the video). 54 In effect, YouTube' s playing of the video is a

transmission, which is not mentioned in the specific language of the statute defining a

distribution, but instead specifically implicated in the public display and performance rights.

Public display and performance right

As previously discussed, the main difference between the public display right and public

performance right is in the amount and sequence in which an audiovisual work is shown. 5

YouTube' s showing of videos is a "public" display or performance, as "public" means to

"transmit .. by means of any device or process, whether the members of the public receive it in

5217 U.S.C. #l06(3)(emphasis added).
53 See Playboy Enters. v. Webbworld, Inc., 991 F. Supp. 543, 550-53 (N.D. Tex. 1997)(storing infringing photos on
servers with the ability for users to download and print the photos was a distribution); Central Point Software, Inc. v.
Nugent, 903 F. Supp. 1057, 1058 (E.D.Tex. 1995)(making available for download of copyrighted computer software
on BBS was distribution); Playboy Enterp. v. Frena, 839 F. Supp. 1552, 1556 (M.D. Fla. 1993)(holding that user
postings of Playboy's copyright images to BBS with the ability to later be downloaded constituted a distribution).
54 Some add-on software and websites unaffiliated with YouTube allow for the downloading of videos off YouTube.
For example, Downloadvoutubevideos.com allows you to enter the URL to a YouTube video, and downloads it to
your computer. http://downloadvo utubevideo s.com (last visited Jan. 3 1, 200 8).
55 C~f 17 U.S.C. # 101 ("publicly") with 17 U.S.C. # 101 ("display").









the same place or separate places and at the same time or different times."56 Since users of

YouTube can view uploaded videos at the time and place of their choosing, as well as view the

same video at the same time anywhere around the world, YouTube publicly performs and

displays videos."

The display right is implicated where the work is "shown" or individual images are shown

"non-sequentially."'5 YouTube's cataloguing of videos by creating a thumbnail of each video

for its search function may also implicate the public display right. This is a volitional action by

YouTube, not entirely user-directed, and thus may not qualify for the passive conduit exemption

discussed above.59 However, YouTube would likely argue that the thumbnail is merely a fair

and transformative use for the sole purpose of making the videos on the site more accessible and

better organized. Courts, such as the Ninth Circuit in Perfect 10 v. Amazon.com, have recently

begun to show deference to thumbnails made incident to a search engine as long as the

thumbnails are created for a use distinct from the original use of the work.60 Thus, so long as

there is no known market for a still image of an uploaded video, the thumbnail image created by

YouTube would likely constitute a fair use.61 For example, a still image taken from NBC-

Universal's The Office may indeed have outside merchandising value beyond the video form it









56 17 U.S.C. #101 (2005)(("publicly))).
57Of course, original user-generated videos are uploaded to YouTube with the intent for them to be made available
to the public, thus waiving their public display and distribution rights.
5817 U.S.C. #101 (2005)(display).
59 See supra notes 42-49 and accompanying text.
61) Google, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1168 (9" Cir. 2007); Kelly v. Arriba-Soft, Inc., 336 F.3d 811,
822 (9" Cir. 2003).
61 See Google, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1168 (9th Cir. 2007).










was taken from if the use was purely entertainment based. However, just as with every fair use

inquiry, this must be part of an ad-hoc consideration by a court. 62

The public performance right is implicated by showing an audiovisual work in "any

sequence."63 This would implicate the showing of full-length infringing videos or smaller clips.

For small clips, a fair use analysis must take place in order to determine whether the portion of

the work used is substantial enough in both size and affecting the market for the original work.

Abstractly, fair use would tend to favor small clips that are part of a larger compilation or

commentary, as opposed to simply cutting the best j oke from a sitcom and separating it from its

original form. Yet, again, fair use analyses take place on a case by case basis.64

Finally, whether YouTube can be found liable for directly infringing the public display and

performance rights rests on a strong evidentiary showing by plaintiffs, which may be difficult to

demonstrate without substantial first-hand evidence. Content owners must create a record that

the videos are in fact on YouTube, and that they are capable of being viewed. In addition, if this

is used as a basis for secondary liability, it probably must be shown that users in fact viewed the

videos. It would be insufficient to simply demonstrate that they were available to be viewed

since the definition of displaying or performing publicly includes the transmission or

communication of a work, not just the possibility that it can be transmitted or otherwise

communicated.65 However, the problem is potentially solved by YouTube allowing users to

keep track of the number of times a video is viewed.




62 See Campbell v. Acuff-Rose Music, Inc. 510 U.S. 569, 577 (1994) ("The fair use doctrine thus "permits [and
requires] courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very
creativity which that law is designed to foster. Stewart v. Abend, 495 U.S. 207, 236 (1990)").
63 17 U.S.C. #l01 (2005)("perform").
64 See supra note 62.
65 See 17 U.S.C. #101 (2005)("publicky").










Derivative works right

A large portion of the content on YouTube is user-generated, meaning that the user has

some degree of control over the contents of the video. Some of the videos are entirely original

and copyrighted by the uploading user, while other videos are a hybrid containing portions of

infringing music or video clips. The degree of infringement of a hybrid video varies from video

to video, and is often protected as a fair use as a comment, criticism, or parody. It is unknown

the amount of videos on YouTube that are purely user-generated, but it is safe to assume a large

number are the hybrid variety. This is one area where YouTube is largely immune from direct

liability since the users, and not YouTube itself, create the derivative works that may be

infringing. Again, this could form a basis of secondary liability, but not direct liability since

YouTube takes no part in the production of the videos. Interestingly, YouTube offers a suite of

tools called the "Remixer," which allows a user to upload video clips and reorder them, and add

special effects and transitions.66 However, this again implies more characteristics of secondary

liability than of direct infringement by making possible infringement. To YouTube's credit, it

also has a proactive tool called "AudioSwap" which allows users to substitute unlicensed music

on their videos for music that is licensed for use on YouTube.67

Secondary Liability

Perhaps the area of most concern regarding possible YouTube liability is in the secondary

liability arena. It is enormously important because of financial implications of copyright' s

statutory damage system, which calls for a $750- $30,000 fine per work infringed, irrespective of

any actual damages caused by the infringement.68 A website such as YouTube, with the ability


66 YOuTube.com Remixer, http://www.youtube.com/vtremixer~about (last visited Jan. 31, 2008).
67 YOuTube.com AudioSwap, hopll u\ \\ l\youtube.com/audioswap_about (last visited Jan. 31, 2008).
68 17 U.S.C. #504(c). The copyright plaintiff is put to a choice in determining damages sought. They may seek
either actual damages and profits or statutory damages, but not both. 17 U.S.C. #504(a).










to host millions of potentially infringing videos, has massive potential liability since secondary

liability is predicated on a defendant' s actions that are in some way complicit to the infringing

acts of third parties.69 Secondary liability comes in two traditional common law forms, vicarious

and contributory liability, and a new form recently handed down by the U.S. Supreme Court of

liability by inducement.'0 Since secondary liability cannot be found without a specific directly

infringing act of a third party, a plaintiff must first show evidence of a third party directly

violating one of the (106 exclusive rights.7

For example, every time a user uploads a fully infringing video onto YouTube's server,

they directly infringe the copyright owner' s reproduction right. In this case, YouTube is the tool

by which the making of the copy is possible, just as a photocopy machine enables its user to

make a copy of a work, or the VCR or DVD-Recorder enables users to copy full-length movies

and TV shows. Fair use arguments aside, such copies are prima facie direct infringements of the

reproduction right, and can form a basis for secondary liability arguments. However, as will be

explained later, the doctrine of substantial noninfringing uses,72 Or the DMCA @512 safe

harbor,73 may immunize YouTube from secondary liability. This section will first address

vicarious liability, then contributory liability, and finally liability by inducement.









69 See MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005): Sony v. Universal City Studios, 464 U.S.
417, 435 (1984).
"0 See id.
71See M.G.M. v. Grokster, Inc., 545 U.S. 913, 931 (2005)(citing way, 1-., Bernstein &~ Co. v. H.L. Green Co., 316
F.2d 304, 308 (2d Cir. 1963); Dreamland Ball Room, Inc. v. \1,,1.-, Bernstein &~ Co., 36 F.2d 354, 355 (7th Cir
1929)).
72See infra at notes 143-191 and accompanying text.
73See infra at notes 234-280 and accompanying text.










Vicarious liability

Vicarious liability concerns YouTube's right, duty, or ability to control a third party direct

infringer. 74 The three basic elements of vicarious infringement are (1) an act of direct

infringement by a third party, (2) YouTube's right and ability to supervise the direct infringer' s

conduct, and (3) a direct financial benefit received by YouTube from the exploitation of the

work.75 An act of direct infringement by a user is assumed for this analysis. Although the

Supreme Court has clarified the vicarious liability standard,76 the application of the doctrine to

dual-use technologies remains murky. While the Sony Court outlined the basics of vicarious

liability in 1984, it often interchanged the term with contributory liability, further blurring an

already unclear line." Yet, since the issue was not directly before the Court, it thus dealt with it

"broadly and outside of a technical analysis of the doctrine." Meanwhile, in 2001, the Ninth

Circuit in Napster applied vicarious liability to the peer-to-peer file sharing software.79 Yet in

2003, Judge Posner of the Seventh Circuit declined to apply the doctrine in Aimster, holding

strictly that vicarious liability should only be imposed where a principal-agency relationship

exists.so Recently in 2005, the Supreme Court in Grokster reiterated the standard definition of

the doctrine, but avoided applying it entirely, choosing instead to ground its decision in the new

inducement standard.8



74 See Sony, 464 U.S. at 435.
75See M.G.M. v. Grokster, Inc., 545 U.S. 913, 931 (2005)(citing \/s, 1-,., Bernstein &~ Co. v. H.L. Green Co., 316
F.2d 304, 308 (2d Cir. 1963); Dreamland Ball Room, Inc. v. \1/114, *, Bernstein &~ Co., 36 F.2d 354, 355 (7t Cir.
1929)).
76 See id.
77See Sony, 464 U.S. at 434-42.
78A&M Records v. Napster, 239 F.3d 1004, 1023 (9" Cir. 2001)(referring to Universal City Studios v. Sony, 464
U.S. 417, 435 (1984)).
79 A&M Records v. Napster, 239 F.3d 1004, 1023 (9" Cir. 2001).
so In re Aimster, 334 F.3d 643, 654-55 (7t Cir. 2003).
st See Grokster, 545 U.S. at 931 n.9 ("Because we resolve the case based on an inducement theory, there is no need
to analyze separately MGM's vicarious liability theory.").










In dealing with copyright and new technology, only the Ninth Circuit in Napster directly

addressed vicarious liability, upholding the lower court' s finding that Napster was vicariously

liable.82 First the court found that Napster had a direct financial interest in the infringing activity

of the users of its peer-to-peer file sharing software.8s3 The court reasoned that infringing

material available through the Napster acted as a "draw" for users, and that Napster' s future

revenue was "directly dependent upon 'increases in its userbase'."84 Thus, Napster directly

benefited financially from the additional registered users drawn to the infringing material."

Second, the court found that Napster had the "right and ability to supervise its users'

conduct."86 It held that Napster exercised supervision through its terms of service which allowed

it to block an infringer' s access or account for violation of law or "for any reason in Napster' s

sole discretion, with or without cause."" The court noted that the only way to escape such

liability was if Napster had exercised its right to police to the fullest extent within the system's

architecture, and that "turning a blind eye to detectable acts of infringement for the sake of profit

gives rise to liability."s The court further said that Napster' s search function fell within

premises that it had the ability to police, suggesting that a right to supervise could include basic

proactive duty to monitor where made possible by a search function.89 The Napster court's

ruling seems to suggest that an operator must either totally control its premises, or design its

system so that it retains no control whatsoever over users; however, anything in between could


82 A&M Records v. Napster, 239 F.3d 1004, 1023 (9" Cir. 2001).
83 Id. at 1023.
8 4Id
8 5 Id.
8 6 d.
87Id. (quoting Napster's Terms of Use).
88Id. at 1023-24.
89 Id. at 1024 ("Napster .. has the ability to locate infringing material listed on its search indices, and the right to
terminate users' access to the system. The file name indices, therefore, are within the 'premises' that Napster has
the ability to police.").










result in liability. The Ninth Circuit further described this element in its overturned Grokster

opinion, noting that a registration and log-in requirement could indicate control.90

As the Supreme Court has yet to detail vicarious liability beyond the edges of the doctrine,

the Seventh Circuit' s dicta on the subj ect in Aimster is also important. Judge Posner took a more

restrictive view, stating that it refers "to the liability of a principal, such as an employer, for the

torts committed by his agent, an employee for example, in the course of the agent' s

employment."91 Posner argued that vicarious liability was intended to provide relief where

seeking a remedy against the agent direct infringers would be difficult, and where the principal

possessed a right to stop the infringing actions.92 He commented that the Sony Court could have

imposed vicarious liability on the VCR, because it was nearly impossible to sue viewers for fast-

forwarding through commercials, but it was possible for Sony to eliminate the fast-forward

button that enabled users to skip them.93 Thus, through a design change, Posner argued, Sony

could have reduced the amount of infringement. 94 Likewise, he said, Aimster would have

reduced the amount of infringing activity by monitoring its system.95 In the end, whether or not

Aimster failed to monitor its system to prevent obvious infringing activity, Judge Posner

declined to apply the vicarious infringement doctrine to Aimster, stating that the argument was

"academic" and decided against Aimster on contributory liability grounds instead.96



90 See M.G.M. v. Grokster, 380 F.3d 1154,1165 (9 h Cir. 2004), rsv 'd and remanded by 545 U.S. 943 (2005)("It
does not appear from any of the evidence in the record that [Grokster] has the ability to block access to individual
users .. given the lack of a registration and log-in process, even Grokster has no ability to actually terminate access
to filesharing functions .. .").
91 In re Aimster, 334 F.3d 643, 654 (7" Cir. 2003).
92 See id.
93 Id.
94 Id
95 Id
96 Id. at 655 ("Whether failure to do so made it a vicarious infringer notwithstanding the outcome in Sony is
academic, however; its ostrich-like refusal to discover the extent to which its system was being used to infringe
copyright is merely another piece of evidence that it was a contributory infringer.")










Right & Ability to Control

Notwithstanding Aimster's reluctance to apply the doctrine, the Napster ruling on vicarious

liability is helpful in applying the theory to YouTube largely due to similar factual situations in

that Napster and YouTube act as passive conduits for its users. As such, the first question that

must be addressed is the extent to which YouTube has the right and ability to control its users'

conduct. There are a number of ways which YouTube appears to exert significant control over its

users. First, the click-wrap Terms of Use agreement that all uploading users must first agree to is

binding and non-negotiable.97 It requires users to agree, among other things, to "not submit

material that is copyrighted .. unless you are the owner of such rights or have permission from

their rightful owner to post the material. .."98 As required by DMCA @512, the Terms of Use

also provides for the termination of repeat infringers, but fails to define what constitutes repeat

infringement, 99 Other than saying that, "[w]e decide whether we believe your violation of our

Terms of Use should result in termination of your account."1oo This gives YouTube enormous

discretion and power over regulating its users' activities, and is quite similar to Napster' s right to

block access for any reason whatsoever. It differs from Napster in that there are basic guidelines

given that describe what be a violation, however, is analogous in that the final decision is up to

and according to YouTube's "belief."







97 YOuTube Terms of Use, supra note 16. Though not directly relevant
to this discussion, click-wrap agreements have been criticized as contracts of adhesion with users having insufficient
bargaining power against websites forcing them to accept terms and conditions. See e.g., Robert A. Hillman &
Jeffrey J. Rachlinski, Standard-Forin C ,omel r,,; in the Information 4ge, 77 N.Y.U. L. REV. 429 (2002).
Courts have upheld click-wrap agreements where users are required to accept the terms prior to registering the use
of the website. Id. at 487.
98 YOuTube Terms of Use, #6-D, supra note 16.
99 Id. at #7-A.
'0" YouTube Community Guidelines, http:/Avivi.youtube.com/t/communitv_guidelie (last visited Jan. 31, 2008).










YouTube also exercises control by requiring that user' s agree to abide by its "Community

Guidelines." 1ot The Community Guidelines outline what types of videos are appropriate for

uploading to YouTube, and YouTube reserves the right to disable access to non-compliant

videOS. 102 The guidelines are written in a very informal style and give examples of non-

acceptable uses, such as pornography and sexually explicit videOS. 103 It also includes a request

to "respect copyright," stating that users should, "only upload videos that you made or that you

have obtained the rights to use."104 It further states that users should not, "upload videos you

didn't make, or use content in your videos that someone else owns the copyright to, such as

music tracks, snippets of copyrighted programs, or videos made by other users, without their

permission."'os Again, these guidelines are more explicit than Napster' s standardless discretion

to block access.

Lastly, however tenuous it may be for a court to impose an affirmative duty to monitor as

part of the right of control, YouTube's search function is quite analogous to Napster' s in which a

duty to monitor was imposed. If YouTube receives complaints of specific infringing content, or

even suspects certain infringing content on its servers, it can perform simple searches to weed

out some of the most obvious infringing content. With the capability of searching tagged videos,

YouTube could search for and remove content that is likely infringing simply according to the

video's tag. In addition, as technology advances, automatic video filtering software may be able

to perform such "search and destroy" functions.





101 Id.
102 See id.
103 Id
104Id~
los Id.










However, this is troublesome for a number of reasons. First, not all videos are tagged, and

thus some videos would not come up in searches. Second, just because a video is tagged with a

word commonly associated with an infringing video does not meant that it is infringing. For

example, tagging a video "office" of a user-created video shot in an office might be flagged as

potentially infringing if YouTube were to perform searches to eliminate infringing videos of

NBC-Universal's The Office. Finally, videos can be deliberately mis-tagged, either by

misspelling the tags to avoid filters, or taken out of the search pool entirely by utilizing

YouTube's private video feature.

Direct Financial Benefit

The second inquiry that must be made to prove vicarious liability is whether YouTube

receives a direct financial benefit from the infringing videos on its website. The direct financial

benefit requirement under the common law vicarious liability standard is distinct from the

similar standard required under (5 12(c) of the DMCA safe harbor, which will be examined

later. 106 As previously noted, there is a circuit-split in defining the extent to which an entity

must benefit financially from infringement. The Second Circuit, the controlling law of the

pending YouTube cases, generally requires a more direct relationship between the infringing

activity and financial benefit derived therein, 107 while the Ninth Circuit applies a more liberal

and broad standard. 10s According to the Ninth Circuit's standard, YouTube could be liable



106 See in~fra notes 234-240 and accompanying text.
'07 See Softel, Inc. v. Dragon Med. & Scientific Communications, Inc., 118 F.3d 955, 971 (2d Cir. 1997)(failing to
apply the standard where "evidence is too attenuated to establish a sufficiently "direct" financial interest in the
exploitation of copyrighted materials"): Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307-08 (2d Cir.
1963)(finding vicarious liability because defendant received 10-20% of the proceeds from the infringing conduct.).
'0s See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1023 (9th Cir. 2001l)(finding Napster liable for vicarious
infringement because the future of the business relied upon building a network of infringing users to advertise to):
Fonovisa v. Cherry Auction, 76 F.3d 259, 263 (9th Cir. 1996) (finding a direct financial benefit by swap-meet
landlord when lessees paid minimal rental fees and defendant received no commission or proceeds from the sales of
bootleg music).










similar to Napster, in that infringing works acted as a "draw" to bring users to the website. 109

However, producing evidence to prove this could be difficult. To prove direct financial benefit

under the Ninth Circuit' s standard, plaintiffs would have to Birst show that infringing videos were

ubiquitous on YouTube, and that as the number of infringing videos increased, so too did

YouTube's users.

In contrast, proving direct financial benefit under the more strict Second Circuit standard,

plaintiffs must show a more direct path of financial benefit related to infringing videos.

YouTube has made a clear effort to characterize its website as the "premier destination to watch

and share original videos worldwide.'""1 This characterization can be construed as evidence that

can erase the attenuated connection between possible increases of users in relation to the

increasing amount of infringing videos. It posits that users come to YouTube to showcase their

original videos, and that any draw to YouTube for illegal purposes is merely incidental to the

stated purpose of YouTube. It would challenge plaintiff s to show a more precise financial

relationship between infringing videos and potential profits by YouTube.

As evidence of more direct financial benefit, YouTube has numerous advertisements on its

website, yet posts no advertisements on pages that play videos. This may be a deliberate choice

in order to avoid imposition of the direct financial benefit standard so that advertisements never

appear on pages which play potentially infringing videos. Advertisements do appear on the

YouTube front page, as well as on search results pages with thumbnails of potentially infringing

videos. In August, 2007, YouTube instituted an advertising policy in which select partners could

include a small overlay advertisement over the bottom twenty percent of the playing video. 11


109 See A&M Records v. Napster, 239 F.3d 1004, 1023 (9" Cir. 2001).
110 About YouTube, http://www.youtube.com/t/about (last visited Jan. 31, 2008).
111 YouTube Blog, You Drive the YouTube Experience, http://www.youtube.com/blog?entrv=rQpNsTzbq (last
visited Jan. 31, 2008).









The advertisements only would appear on videos of selected YouTube partners, and would share

in the advertising revenue with YouTube. 112 However, regular user uploaded videos continue

play without any advertisements on the webpage.

While the Einal resolution of the vicarious liability issue is far from certain, as will be

explored, the issue may be mooted if YouTube qualifies for one of the DMCA @512 safe

harbors. 113 Another possible defense, which will also be discussed for contributory liability, is

Sony 's staple article of commerce doctrine, also know as substantial noninfringing use. 114 The

doctrine's current status and application has been thrown into question as a result of dueling

concurrences interpreting it by the Grokster Court. 11 However, prior to the Grokster ruling, the

Ninth Circuit in Napster suggested that the staple article of commerce doctrine was inapplicable

to defending against vicarious liability because the Sony Court only tr-uly considered contributory

liability when fashioning its argument. 116 Since the Ninth Circuit's determination was

nonbinding dicta, it is plausible that a future court could apply the doctrine similarly to vicarious

liability as it would in limiting contributory liability.

Traditional contributory liability

As noted, contributory liability is a close relative of vicarious liability, and has been

applied more substantially by the courts in secondary liability cases. 11 The traditional definition

of contributory infringement comes from the Second Circuit and is "one who, 0I ithr knowledge of

the infringing activity, induces, causes or materially contributes to the infringing conduct of


112Id.
113 See in~fra notes 234-240 and accompanying text
114 See in~fra notes 142-190 and accompanying text.
11' See M.G.M. v. Grokster, 545 U.S. 913, 942-966 (2005)(Ginsburg, J., concurring: Breyer, J., concurring).
''6 See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2001)("we note that Sony's 'staple article
of commerce' analysis has no application to Napster' s potential liability for vicarious copyright infringement. )
11- See Grokster, 545 U.S. at 931-32; Sony v. Universal City Studios, 464 U.S. 417, 439-43 (1984):1In re 4imster,
334 F.3d 643, 653-55 (7" Cir. 2003).










another."ll The Supreme Court simplified it in Grokster saying that "one infringes

contributorily by intentionally inducing or encouraging direct infringement."119 Unlike vicarious

liability, which focuses on a defendant's ability to control a third party, contributory liability

focuses on the knowing connection between the defendant and the third party's alleged infringing

act.120 The assistance may come in the form of either inducement, causation, or material

contribution to the infringing activity. 2

However, the Supreme Court has not offered quite the same precision that lower courts

have exercised when applying contributory infringement. The Sony Court avoided

distinguishing and further defining vicarious from contributory liability, instead focusing on

whether either was exempted from secondary liability under the staple article of commerce

doctrine as a device capable of substantial noninfringing uses. 122 The doctrine applies where

contributory infringement is found for distributing a device used to infringe. The application of

the staple article of commerce as a threshold issue to secondary liability continues to be forceful,

controversial, and will be fully addressed below. 123 The Supreme Court recently added to the

confusion, applying the new inducement standard in Grokster in lieu of the traditional

contributory infringement doctrine. 124 While the Court's reluctance to address the basics of

contributory infringement may call into the question the continuing power of the doctrine, it is





its Aapster, 239 F.3d at 1022 (citing Gershwin Publ 'g Corp v. Columbia artists ~git., Anc., 443 F.2d 1159, 1162
(2d. Cir. 1971) and Fonovisa, Anc. v. Cherry auction, Anc., 76 F.3d 259, 264 (9th Cir. 1996)).
119 Grokster, 545 U.S. at 930.
120 See id.
121 See Aapster, 239 F.3d at 1022(citing Gershwin Publ 'g Corp v. Columbia artists ngint., Anc., 443 F.2d 1159,
1162 (2d. Cir. 1971) and Fonovisa, Anc. v. Cherry auction, Anc., 76 F.3d 259, 264 (9th Cir. 1996)).
122 See Sony, 464 U.S. at 439-43.
'23 See in~fra notes 142-190 and accompanying text..
124 See Grokster, 545 U.S. at 931-32.









also arguable that in both Sony and Grokster, the Court chose to make more lofty policy

considerations than in making a formalistic application of a common law doctrine.

Knowledge

Both the Seventh Circuit in Aimster and the Ninth Circuit in Napster applied the common

law of the circuit courts differently and are good examples to use in comparing YouTube' s

possible liability for contributory infringement. In particular, their application of the knowledge

requirement of contributory liability yields quite different results. In Napster, the court declined

to extend Sony's staple article of commerce doctrine because it determined that Napster had

actual knowledge of specific infringing activity. 125 The Napster court distinguished Sony's

application of the staple of article of commerce doctrine by differentiating the architecture of

Napster' s system from Napster' s conduct in relation to the system. 126 While it held that it would

follow Sony and not impute knowledge where the software was merely capable of infringement,

it departed from it by highlighting Napster' s own actions after distribution of the software which

demonstrated Napster knew or had reason to know of its users' infringement. 127 As a result, the

court said that where "a computer system operator learns of specific infringing material available

on his system and fails to purge such material from the system, the operator knows of and

contributes to direct infringement."128 Napster was found to be liable under this standard

because in terminating the accounts of users that infringed, it failed to delete the nearly 12,000

infringing files they uploaded. 129




125 See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1020-22 (9th Cir. 2001).
126 See id. at 1020-21.
1 27 Id
128 Id. at 1021 (emphasis added)(referring to Relgious Tech. Center v. Netcom On-Line Comm. Serys., 907 F.Supp
1361, 1374 (N.D. Cal. 1995).
129 Id. at 1020 n.5.










The Napster court failed to define what "specific" meant, whether it an actual hyperlink to

infringing content, or merely notice that specific infringing content was somewhere on its

system. A potential problem for this strict interpretation is that (512 infringement notices

provides a service provider with actual knowledge in the form of the notice. In order for the

provider to keep within the safe-harbor, it then must disable access to the allegedly infringing

video, thus negating the argument put forth in Napster of "doing nothing" in the face of actual

knowledge.

The Seventh Circuit in Aimster disagreed with the Ninth Circuit' s assertion that actual

knowledge was required, holding that merely constr-uctive knowledge can be sufficient where

there is a "willful blindness" of infringing activity on the part of a defendant. 130 The court

analogized its holding to criminal law' s imputation of criminal intent where "one who, knowing

or strongly suspecting that he is involved in shady dealings, takes steps to make sure that he does

not acquire full or exact knowledge of the nature and extent of those dealings." 131 Similarly,

where a service provider makes an "ostrich-like refusal to discover the extent to which its system

[is] used to infringe copyright is merely another piece of evidence that it was a contributory

infringer."132 Aimster was designed so that it would piggy-back on AOL's Instant Messenger

service, which by design, prevented Aimster from learning of the uses of its software due to

AOL Instant Messenger' s encryption. 133 The court held that immunity from contributory

liability should not be granted where Aimster used the encryption as a shield against actual

knowledge of the program' s unlawful uses. 134



130 See In re 4imster, 334 F.3d 643, 650 (7th Cir. 2003)("Willful blindness is knowledge, in copyright law .").
131 Id. at 650 (referring to U.S. v. Giovannetti, 919 F.2d 1223, 1228 (7th Cir. 1990).).
132Id. at 655.
' See id. at 650-51.
134Id~










Though the conflict between the Seventh and Ninth Circuits on this issue was set up, the

Supreme Court avoided resolving the issue in its opinion. 135 In addition, while the Ginsburg and

Breyer concurrences expounded on the staple article of commerce doctrine, they did so without

further deciding the conflict set up by the Seventh Circuit on the knowledge requirement. 136

YouTube's knowledge follows the facts of Napster more than Aimster. Where Aimster sought to

avoid liability by placing its head in the sand, Napster was simply caught red-handed in not fully

responding to actual knowledge of infringement. It will take in depth-discovery to know truly

whether YouTube's performance was similar to Napster, however, it is safe to say that it has not

taken Aimster's total "ostrich-like" approach to avoiding knowledge of infringement.

To its credit, YouTube has taken a strict stance in removing videos in response to notice

according to DMCA @512 dictates, so much so that it questionably steps on the toes of fair use.

By submitting to g512's strict notice and takedown regime, YouTube likely immunizes itself

from failing to act on knowledge of specific infringing content by disabling access to it right

away. However, the word "specific" is largely undefined in this context. A court might interpret

it to mean that when YouTube is notified of an infringing copy of a specific episode or video, it

has a duty to make a simple inquiry beyond the specific hyperlinked video complained of though

its search function. In fact, @512 calls for only the notice of "information that is reasonablyy

sufficient' to permit the service provider to 'locate' this material."13 Thus, even representative

lists of infringing content sent to YouTube can constitute actual knowledge, so long as it is

reasonably sufficient to allow YouTube to locate the infringing videos, presumably through its




135 See M.G.M. v. Grokster, 545 U.S. 913, 930-31 (2005).
136 See Grokster, 545 U.S.at 942-966 (Ginsburg, J., concurring: Breyer, J., concurring).
'37 ALS Scan, Inc. v. RemarQ Conununities, Inc.,239 F.3d 619, 625 (4th Cir. 2001)(citing 17 U.S.C.
#512(c)(3)(A)(iii)).










search function. 138 Under this standard, knowledge of infringing material would be rather easy

to prove.

Material Contribution

The second prong of the traditional contributory infringement test is that YouTube' s

actions materially caused or contributed to the infringement by its users. 139 (Liability by

inducement will be addressed separately below.) Material contribution is the causal relationship

between YouTube's website and the ability for users to infringe on it. The Ninth Circuit applied

this in the context of file-sharing websites, saying that but-for the distribution of a software

permitting infringing acts, users would be unable to commit copyright infringement with such

ease. 140 The Ninth Circuit also found material contribution where a website that enabled users to

infringe continued to operate as such, despite knowledge of infringing activity. 141 The Supreme

Court in Sony expressly approved of the idea that the distribution of a device capable of

infringement can result in contributory infringement. 142 However, again, the Court' s focus then

turns to the staple article of commerce doctrine which can excuse secondary liability if it is found

that YouTube's website is capable of substantial noninfringing uses.

Substantial noninfringing use

Whether YouTube is liable as a contributory infringer in part rests upon the Supreme

Court' s test from Sony immunizing devices capable of substantial noninfringing uses. In Sony,

the Supreme Court promulgated a non-traditional test for contributory liability where a defendant

knowingly distributes a device capable of infringement. 143 The Court held that the sale of


'3s See id.
139 Gershwin Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971).
140 See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2001).
141 See Ellison v. Robertson, 357 F.3d 1072, 1078 (9th Cir. 2004).
'42 See Sony v. Universal City Studios, 464 U.S. 417, 439-43 (1984).
'43 Id. at 442.










copying equipment was not contributory infringement where it was "widely used for legitimate,

unobj ectionable purposes."144 "Indeed, it need merely be capable of substantial noninfringing

uses," the Court famously stated. 145 The test concerned itself less with the traditional elements

of knowingly and materially contributing to a third party's infringing activity, and more with

addressing the idea that certain types of copying equipment should not receive a blanket

prohibition just because of some infringing capabilities. 146 The Court imported the staple article

of commerce doctrine from patent law, which worked to protect the public interest in access to

devices that would otherwise be deterred or removed from the marketplace due to excessive

contributory liability. 147 The Court said the doctrine strikes[] a balance between a copyright

holder' s legitimate demand for effective--not merely symbolic--protection of the statutory

monopoly, and the rights of others freely to engage in substantially unrelated areas of

commerce."148 In a sense, it was a maturation by the Court in its secondary liability

jurisprudence, recognizing that the traditional secondary liability regime could ultimately

swallow up well-meaning technological innovators without added protection.

The Sony Court recognized two substantial noninfringing uses of the Betamax video tape

recorder at issue. 149 First, it found that a number of copyright holders expressly authorized home

taping of their programs. 1so Second, it determined that recording programming for time-shifting

purposes was a fair use. 1 The Court remarked that it need only find a commercially significant

number of the uses be non-infringing, and it need not explore all of the different potential uses

144Id~
145 Id
146 See id.
'47 See id. at 440-41.
14s Id. at 442.
149Id~
'50 Id. at 443-47.
151 Id. at 447-56.










for the device. 152 However, it failed to further define what "substantial" and "commercially

significant" meant. 153

As a result, the Court left an undeniable gap in defining what actually constituted a

substantial noninfringing use, with lower courts attempting to fill this gap.154 In 2005, the

unanimous Grokster Court chose not to revisit Sony's staple article of commerce rule, declining

to "add a more quantified description of the point of balance between protection and commerce

with knowledge that unlawful use will occur."" However, the Court' s punting of the issue for

"further consideration of the Sony rule for a day when that may be required," was tempered by

wildly differing concurring opinions expounding on the matter. 156 JUStice Ruth Bader Ginsburg,

joined by Chief Justice Rehnquist and Justice Kennedy, argued that Sony should be interpreted

strictly, and thus under the Grokster facts, it would not have found substantial noninfringing

use. 1 Meanwhile, Justice Stephen Breyer, joined by Justices O'Conner and Stevens, argued

that Ginsburg's interpretation was too "strict," and that under the facts, Grokster has a number of

substantial nominfrmnging uses. 5

It is questionable whether Ginsburg's test was more "strict" as Breyer asserted, or that

Breyer' s interpretation of Sony was actually more liberal than the Court had previously applied.

Either argument is plausible since Grokster was one of the few times the Court had occasion to

further develop Sony. What is clear is that what was a three-three tie of concurring opinion is


'52Id. at 442.
' See id.
15 Se~e e.g., In re Aimster Copyright Litigation, 334 F.3d 643, 653 (7th Cir. 2003)1 A&M Records Inc. v. Napsterl
Inc., 239 F.3d 1004, 1020 (9" Cir. 2001); Matthew Bender & Co., v. West Pub. Co., 158 F.3d 693, 706-707 (2d Cir.
1998); Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 842-847 (11"h Cir. 1990);
Vault Corp. v. Quaid Software, Ltd., 847 F.2d 255, 262 (5ti' Cir. 1988).
1 M.G.M. v. Grokster, 545 U.S. 913, 934 (2005).
156Id~
'57 Id. at 942 (Ginsburg, J., concurring).
' Id. at 949 (Breyer, J., concurring).









now a two-two tie, after the death of Chief Justice Rehnquist and the retirement of Justice

O'Conner. As such, a maj ority of the present Court has no stated opinion on this matter since

Chief Justice Roberts and Justice Alito are new additions to the Court, and Justices Thomas,

Scalia, and Souter chose not to engage in the battle over the meaning of Sony. In addition, the

Grokster unanimous maj ority written by Justice Souter, of course j oined by Justices Thomas and

Scalia, explicitly chose not to further develop Sony. 159 Thus, it is entirely possible that Sony

could be could be interpreted under either the Breyer of Ginsburg interpretation, or neither.

Therefore, in order to gauge YouTube's potential liability as a contributory infringer and its

potential defense of substantial noninfringing use, both concurring views must be applied as

having equal force.

Breyer's Interpretation

Justice Breyer' s interpretation of Sony is more forward-looking and receptive to finding

substantial noninfringing uses in new technologies. In his concurrence, he emphasized the

importance Sony' s balance between a copyright holder' s rights with "the rights of others freely to

engage in substantially unrelated areas of commerce."160 Breyer justified the continuing power

that Sony had in fostering technological innovation, as "providing entrepreneurs with needed

assurance that they will be shielded from copyright liability as they bring valuable new

technologies to market."161 This strong technology protecting goal of Sony, as Breyer saw it,

ensured that courts would avoid the imposition of contributory liability "unless the product in

question will be used almost exclusively to infringe copyrights."162 In Other words, under




159 Id. at 934 (majority opinion).
160 Id. at 956 (Breyer, J., concurring)(quoting Sony, 464 U.S. at 442).
161 Id. at 957.
162 Id. at 957 (emphasis in original).










Breyer' s interpretation of Sony, it is relatively easy to justify noninfringing uses unless the

product is used for practically no other purpose than to infringe copyright.

In applying the Sony standard, Breyer looked to the meaning of "capable" and

"substantial" in Sony's "capable of substantial noninfringing uses" test. 163 Breyer interpreted the

word "capable" to suggest a forward looking approach--that a court should not be locked into a

snapshot of time in looking at a device, but instead able to reasonably proj ect "potential future

uses."164 However, this is tempered by the word "substantial" and Sony's reiteration of it as

"conanercially significant noninfringing uses."165 Yet, Breyer concluded that just one

noninfringing use could suffice if it occurred "in significant enough numbers to create a

substantial market for a noninfringing use."166 Thus, if the amount of noninfringing use was

enough to develop a conanercially significant separate market for the device for those uses alone,

the device would fit within Sony 's boundaries.

He also compared the roughly 9% of noninfringing uses of the Betamax found by the Sony

Court to the estimated 10% noninfringing uses of the Grokster software. 167 This may suggest a

quantifiable measure of noninfringing uses around 10% so long as the device is found to have a

reasonably probable number of potential noninfringing uses. Without a factually detailed

analysis of the videos on YouTube, it is difficult to assess a quantifiable number of noninfringing

uses. A 2007 academic study of a sample of videos on YouTube (2.6 million videos over three

months) revealed that 14,607, or 0.5% of videos analyzed, were categorized as "Removed,"

meaning the video was either deleted by the user or disabled by YouTube for violating terms of



163 Id. at 950-55.
164 Id. at 953-54.
165 Sony v. Universal City Studios, 464 U.S. 417, 442 (1984)(emphasis added).
166 Grokster, 545 U.S. at 951 (Breyer, J., concurring)(quoting Sony, 464 U.S. at 447 n.28(emphasis added)).
167 Id. at 952.










use (copyright or content). 168 While it examines only a sample of the millions of videos on

YouTube, it implies that the number of infringing videos may be small relative to the number of

noninfringing videos. However, such a conclusion cannot be meaningfully drawn, because a

video may be infringing, yet not subj ect to a takedown notice from its owner because it has not

yet been discovered by the owner. Thus, such videos are still on YouTube's servers, and as such

this statistical evidence is anecdotal at best.

Aside from numerical evidence, significant observable evidence suggests that user-

generated videos on YouTube represent a substantial noninfringing use. YouTube allows its

users to share user-generated videos around the world. Justice Breyer recognized user-created

video-sharing as one of the growing noninfringing uses of Grokster. 169 Without a website like

YouTube, an individual that wants to construct his own website to share original videos needs

significant web-publishing knowledge, and a modest monetary investment to pay for the hosting

service and a domain name. Instead, YouTube provides this service cost-free to users, thus

generating a significant market for user-generated videos.

YouTube also created a separate market to share advertising revenue with its biggest user-

generated producers. 170 Users located in the U.S. and Canada that have attracted large audiences

with their original videos can apply to allow advertising overlays on their videos and share in the

profits with YouTube. 1 The YouTube Partner Program is another example of how user-

generated content is a legitimate use of YouTube that is commercially significant. If YouTube is



168 Xu Cheng, Cameron Dale, & Jiangchuan Liu, Understanding the C it1, e. ar,,,r. oflnternet Short Video
lia, as,, You Tube as a Case Study at 3, Simon Fraser University Technical Report (July 2007) available at
http ://arxiv.org/PS_cache/arxiv/pdf/0707/0707.3670v1.pdf (last visited Feb. 5, 2008).
169 Grokster, 545 U.S. at 954 (Breyer, J., concurring).
170 YouTube Blog, Partner Program Expands, http://www.youtube.com/blog?entry=TjbF_q~dy (last visited Feb.
5, 2008)
'71 YouTube Partner Program, http://www.youtube.com/partners (last visited Feb. 5, 2008)..










willing to share advertising revenue with its most popular users, it naturally follows that a

commercially significant noninfringing market exists for user-generated content.

In addition, YouTube has become a maj or social networking website centered around

sharing videos with others. Users create profiles and identify themselves through their original

videos. Quite often, these videos comment on movies, television, current events, politics, and

other ruminations of the user. Other videos feature original music, performances, and other

creative works. As an integral part of any social networking website, users interact with one

another by responding to other users' videos by commenting, discussing, and criticizing. The

social networking function acts similar to that of a public forum, where users are free to express

themselves within YouTube's limits of appropriateness and copyright law.

YouTube also encourages political speech by devoting an area of its website to the 2008

Presidential election called YouChoose '08.172 YOuChoose allowed each campaign to create its

own YouTube page free of cost, and encouraged individual users to post videos responding to

the candidates and particular issues. 173 For example, during the 2008 Democratic Presidential

primaries in early February, Yes We Can2, a music video endorsing Barack Obama produced by a

number of celebrities, garnered over 3.7 million views in just its first week on YouTube. 174

YouTube also co-hosted debates for both political parties' candidates and encouraged users to

submit questions to the candidates through the website. 7






172 Y~uChoose '08, http://www.youtube.com/youchoose (last visited Feb. 5, 2008).
173 See Id.
174 Mark Memmott & Jill Lawrence, Yes We Can Has Topped 3. million Views, USA TODAY, available at
http://blogs.usatoday.com/onpolitics/20080/e--cnhstm (last visited Feb. 9, 2008).
'75 Katharine Q. Seelye, New Presidential Debate Site? Clearly, YouTube, N.Y. TIMES, June 13, 2007, available at
hopll w\ il \ .nytimes.com/2007/06/1 3/us/politics/1 3cnd-youtube. html?pagewanted= 1&_r-1&ref=politics (last visited
Feb. 5, 2008).










Finally, YouTube has demonstrated commercially significant noninfringing uses through

content partnerships with larger copyright owners. 176 One such agreement is with CB S-one of

America' s most-watched television networks. 1 Other partnerships include Hollywood

Records, YES cable sports network, the National Basketball Association, and the National

Hockey League. 1 The videos are posted directly by the copyright owners to their YouTube

pages, and are thus akin to the authorized copies from Sony made by Betamax users of shows

that gave explicit permission to be copied, such as M\~r. Roger 's Neighborhood. 179

In analyzing potential future uses, Breyer referred to anecdotal evidence and extrapolated

from the whole record that nothing in it "suggests that this course of events will not continue to

flow naturally as a consequence of the character of the software taken together with the

foreseeable development of the Internet and information technology."lso Accordingly, as an

Internet-based technology, Breyer' s test would give great deference to YouTube and its potential

noninfringing uses. YouTube's argument is strengthened because, from its inception, YouTube

marketed the website as a place for users to share their original content on the Internet. This

capacity has only grown over time, and is evident from the evidence noted above that its already

fully engaged in a number of substantial noninfringing uses.

Ginsburg's Interpretation

Compared to Justice Breyer' s interpretation, Justice Ginsburg's analysis is in effect more

strict. Justice Ginsburg disagreed with Breyer' s characterization of the test as only applicable

176 Miguel Helft, Google Courts Small TouTube Deals, and Very Soon, a Larger One, N.Y. TINIES, Mar. 2, 2007
available atll! htt un \\ .nytimes.com/2007/03/02/technology/02googehm (last visited Feb. 5, 2008).
177 YouTube Press Release, CBS and TouTube Strike Strategic Content and, i.7 m ru ns;, Partnership,
http://www.youtube.com/press_room entry?enr~X~l-W (last visited Feb. 5, 2008).
178 Helft, supra note 176.
1"9 See MGM v. Grokster, 545 U.S. 913, 951 (2005)(Breyer, J., concurring)(citing Sony v. Universal City Studios,
464 U.S. 417, 445 (1984).).
'so Id1. at 955 (emphasis in original). This reasoning was similarly followed by~ Judge Richard Posner in his opinion
giving deference to future potential uses. In re 4iister, 334 F.3d 643, 652 (7 Cir. 2003).










where a product "will be used almost exclusively to infringe copyrights."ls Instead, she found

that Grokster was "overwhelmingly used to infringe" and that "the infringement was the

overwhelming source of revenue from the products."18s2 Based on Ginsburg' s finding according

to the record evidence, roughly 75% of all files shared with Grokster' s software were

infringing.18s3 JUStice Ginsburg also disregarded Breyer' s numerical contemplation of a 10%

noninfringing use threshold as unfounded by copyright owners' anecdotal declarations, not

statistically reliable evidence.18s4 She argued that simply because there were a large number of

noninfringing uses, it did not follow that they outnumbered the infringing uses. l Further, the

number of noninfringing use may have been large, yet dwarfed by the volume of infringing

uses.ls

Ginsburg' s "overwhelmingly use to infringe" standard found no evidence of fair use or

enough evidence of noninfringing uses. l It is unclear, however, the amount of evidence

required under her standard to constitute substantial noninfringing uses. What is clear is that the

amount is substantially more than Breyer called for. Most notably, while Breyer gives new

technologies great deference, Ginsburg appears to place a rather high burden on new

technologies to prove noninfringing uses when anecdotal evidence suggests "overwhelming

infringing use." Ginsburg's failure to apply the standard with merely "anecdotal evidence" of

noninfringing uses suggests that she would require a more statistically reliable analysis of the

noninfringing uses. This results in a much different application in practice of the commercially


'81 Grokster, 545 U.S. at 944 n. 1 (Ginsburg., J. concurring)(quoting Justice Breyer's concurring opinion, 545 U.S. at
957).
182Id. at 948.
183 Id. at 947 n.3.
184 See id. at 946-47, n.3.
1 Id. at 948.
186Id~
' See id. at 948.










significant or substantial noninfringing use standard, and one that is rather difficult to prove

without extensive discovery and fact-finding.

Applying Ginsburg's test to YouTube proves problematic for this reason. The academic

study based on a sampling of YouTube videos concluding roughly 0.5% were "removed" could

be similarly characterized as mere anecdotal evidence.ls However, "removed" does not

necessarily mean a video was removed for infringing copyright--it could also mean a violation

of other YouTube Terms of Use--or simply removal by the user. It is unclear whether the 2.6

million videos analyzed in the study is a significant sample size because the number of videos on

YouTube is not publicly known. However, utilizing Google's video search engine to find all

videos on the domain "youtube.com" returned over 146 million videos.18s9 Another study of the

most popular videos on YouTube, as identified by YouTube, concluded that 9.23% of the sample

videos were removed precisely for copyright infringement. 190 However, the sample constituted

only 6,725 videos, and were only the "most-viewed" videos on YouTube over a three and a half

month period. 191 Thus, without a greater sample size, it is possible that studies such as these

would be regarded as similar anecdotal evidence, and could require a more fully developed

record under Justice Ginsburg's standard.

In short, Justice Ginsburg' s definition of what is a substantial noninfringing use is unclear,

and more shaped by how it differs from Justice Breyer' s concurrence than what she actually



1ss Cheng, Dale, & Liu, supra note 168.
189 The search can be replicated by simply entering the following URL, which is set to perform the search as stated
http://video.google. com/video search?q= site%3 Ayoutube.com& site search. The search uses Google's video search
engine to find videos only hosted by YouTube, as compiled by Google's search engine. The number of videos
returned is only an estimate, but a fairly reliable quantification of all videos on YouTube. The number, however,
cannot take into account multiple copies of the same videos, which are common on YouTube, and does not account
for private videos.
190 Bri Holt, Heidi R. Lynn, & Michael Sowers,Vidmeter.com, Analysis of Copyrighted Videos on You Tube, March,
2007, available at http://www.vidmeter.com/i/vidmeter~copyrigtrptpd (last visited Feb. 9, 2008).
191 Id.










argues it means. The main point made by Justice Ginsburg is that where a device is

overwhelmingly used to infringe, it will be difficult to prove substantial noninfringing uses.

However, without a more clear direction as to what constitutes an "overwhelming amount,"

Ginsburg's standard proves difficult to apply. It perhaps suggests a "know it when you see it"

standard that, when found by a court, must then be rebutted with a substantial amount of

statistical evidence, not merely anecdotal evidence. It is clear, however, that her concurrence

would encourage a further development by the Court of the standard in a more strict manner as

she suggests.

Inducement

While the continuing influence of the Sony doctrine may be called into question after

Grokster, in the process, the Supreme Court added a powerful new tool for content owners to

prove apply secondary infringement on new technologies. The Court' s introduction of the new

inducement doctrine under secondary liability shifts the focus from the actual and potential

noninfringing uses of a device, to the intent by which an alleged contributory infringer actively

induced or encouraged infringement. 192 The Grokster Court held that "one who distributes a

device with the obj ect of promoting its use to infringe copyright, as shown by clear expression or

other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement

by third parties."193 In So holding, the Court seems to acknowledge the fact that as technology

progresses, it is difficult to innovate without sometimes creating devices with mixed uses that




192 M.G.M. v. Grokster, 545 U.S. 913, 941 (2005)
"Sony .. struck a balance between the interests of protection and innovation by holding that the product's
capability of substantial lawful employment should bar the imputation of fault and consequent secondary
liability for the unlawful acts of others. .. Here, evidence of the distributors' words and deeds going
beyond distribution as such shows a purpose to cause and profit from third-party acts of copyright
infringement." Id.
193 Id. at 936-37.










may be put to infringing uses. 194 This is particularly true when dealing with digital technologies

which by way of design allow for the making of perfect copies.

The inducement rule excludes "ordinary acts incident to product distribution" such as

offering technical support or product improvements and updates. 195 IHStead, courts should look

for "purposeful, culpable expression and conduct."196 First, the Court recognized the most

common form of inducement is by advertisement or solicitation designed to stimulate infringing

use by others. 197 It noted that whether such messages are communicated to the public is

inconsequential, because their mere existence, even in internal documents, proves by a

defendant' s own statements their unlawful purpose. 198 For example, it found that Grokster's

advertising and promotional materials attempted to show that it could fill the void created by the

shut-down of Napster, the previous music-sharing kingpin, even though much of it was never

distributed to the public. 199

Second, the Court' s finding of Grokster' s unlawful obj ective was given added significance

by Grokster' s failure to develop filtering tool or other mechanisms that would reduce the amount

of infringing activity on the software.200 Defendants further failed to block repeat infringers

from its website, rej ected offers from other companies to install filtering technology, and blocked

access to its servers of entities it believed were trying to monitor its website.201 This suggests

that the Court could find legitimate filtering or other infringement-preventative measures as

mitigating factors against finding intentional inducement. YouTube has been working to

194 See id. at 941.
195 Id. at 937.
196Id~
197 Id.
198 Id. at 938.
199 Id. at 939.
200 Id
201 Id. at 926-27.










develop content filtering software and announced a test-version in October, 2007.202 The future

of filtering will be addressed in Chapter 5.

Third, the Court found that Grokster's reliance upon advertising for revenue complemented

the direct evidence of unlawful objective.20 Grokster placed advertisements on the computer

screens of its users through its software.204 As a result, the more the software was used, the

greater advertising revenue became.205 Since Grokster' s profit relied upon high-volume use, and

the record demonstrated that 90% of Grokster' s uses were infringing, Grokster had a commercial

incentive in encouraging infringement.206 The Court noted, however, that advertising alone,

without high-volume infringing use, would not justify and inference of unlawful intent. 207

For the purposes of this analysis, YouTube' s actions are of course limited to what is

publicly known without having the power of discovery of internal communications and

documents. YouTube allowed its first upload on April 23, 2005, a video made by a friend of

YouTube's founders at the local zoo.208 YOuTube's self-described purpose in the early months

was stated on its website: "YouTube is the first online community site that allows members to

post and share personal videos."209 For a time, it' s homepage adorned the tag-line calling

YouTube "Your Digital Video Repository."210 On July 20, 2005, it changed it "Upload, tag and



202 Rachel Rosmarin, Hl~nuns;, Video Pirates, Forbes.com, Oct. 15, 2007, available at
bli w\ it .forbes.com/technology/2007/10/15/youtube-ogevdodtc-nentc r11tcruuehm
(last visited Feb. 10, 2008).
2 Id. at 939-40.
2 Id. at 940.
20 Id
206 Id
207 Id
208 Me at the zoo (First YouTube Video), http1 u\ \\ l\youtube.com/watch?v=jNQXAC9IVRw (last visited Feb. 9,
2008).
209 About Us (via InternetArchire.org Wayback Machine), Apr. 28, 2005,
http://web.archire.org/web/20050428 171 556/www.youtube.com/about.php (last visited Feb. 9, 2008).
210 YouTube Homepage (via InternetArchire.org Wayback Machine), June 14, 2005,
http://web.archire.org/web/20050614234125 Ilulp w\ int\.youtube.com/ (last visited Feb. 9, 2008).










share your videos worldwide! "211 Then on December 16, 2005 it adopted its now famous tag-

line "Broadcast yourself."212 In Short, as seen through its self-identifying tag-lines promoting the

website from its inception, YouTube's emphasis appears to have always been the sharing of

personally made videos. As a result, it is difficult to assign YouTube the unlawful obj ective of

inducing infringement merely though its promotion.

However, it may be argued that YouTube took other "affirmative steps taken to foster

infringement."213 Such culpability may be found through affirmative steps by characterizing

YouTube' s action of deliberate ignorance of infringing videos that acted as a maj or a draw to the

website. While it is difficult to peg exactly when YouTube became a social phenomena, three

examples from late 2005 and early 2006 suggest that a great deal of attention was brought to

YouTube through popular infringing videos.214 The first notable instance was Jon Stewart' s

infamous October 2006 appearance on CNN' s Crossfire in which he pleaded with the show's

hosts to "stop hurting America."215 More people reportedly viewed the clip on YouTube than

did its original airing on CNN.216 It is unclear whether CNN requested the video to be taken

down, but copies of the broadcast currently persist on YouTube. 217

In December 2005, a wildly popular music video spoof from NBC's Saturdaly Night Live

titled Lazy Sunday: Chronicles ofNarnia appeared on YouTube by a multitude of users.218



211 Y~uTube Homepage (via InternetArchive.org Wayback Machine), July 20, 2005,
http://web.archive.org/web/2005072007333, Ilulp un \\\\.youtube.com/ (last visited Feb. 9, 2008).
212 Y~uTube Homepage (via InternetArchive.org Wayback Machine), Dec. 16, 2005,
http://web.archive .org/web/2005121611 4757, 1lulp w\ \\ t .youtube.com/ (last visited Feb. 9, 2008).
213 Grokster, 545 U.S. at 936-37.
214 Paul Boutin, Videos that Put YouTube on the Map, NPR.org, Oct. 19, 2006, available at
http://www.npr.org/templates/story/storyphstrd=294 (last visited Feb. 9, 2008).
215 Id
216 Id
217 JOn Stewart on Crossfire, http://www.youtube.com/watch?v=aFQFB5YpDZ (last visited Feb. 9, 2008).
218 Id










NBC ordered YouTube to remove the video, and on February 16, 2006, YouTube acknowledged

on its official blog the video's enormous popularity and NBC's takedown request.219

Responding to upset users for taking the videos down, YouTube stated "we know how popular

that video is but YouTube respects the rights of copyright holders" and referred its users to watch

a free copy of the video on NBC's website.220 The period of time from which the video first

appeared on YouTube to when it acknowledged removal was over a month. It could be argued

that its acknowledgement of the huge popularity of the video suggests that YouTube could have

intentionally disregarded the infringing nature of the video hoping it might help new users

discover the website.

Lastly, in late April 2006, Comedy Central star Stephen Colbert' s performance at the

White House Correspondents' Dinner, originally aired by C-SPAN, appeared on YouTube.221 A

total of 41 different clips on YouTube were viewed nearly 2.7 million times in the first forty-

eight hours after the event aired.222 Seeking to sell DVD's of the event, C-SPAN ordered

YouTube to take the videos down.223 In an official explanation to its concerned users assertion

that the speech should be considered in the public-domain, YouTube remarked that:

Unfortunately, CSPAN has asserted that the video footage uploaded was broadcasted and

owned by them. When we become aware that there are videos on the site that were

uploaded without the copyright owners permission we remove them and in most cases,

(as was the case with the CSPAN videos) we become aware because the copyright owner


219 Lazy Sunday, YouTube Blog, Feb 16, 2006, http://www.youtube.com/blog?entry=jNQXAC9I~ (last visited
Feb. 9, 2008).
220 Id
221 NOam Cohen, A Comedian'sRiff on Bush Prompts an E-Spat, N.Y. TIMES, May 8, 2006, available at
lul w\ it .nytimes.com/2006/05/08/technology/08colbethmle=189656000&en=9489362d46bfc588&ei=
5070 (last visited Feb. 9, 2008).
222 Id
223 Id










contacts us and requests that the video be taken down. Copyright laws can be a tricky and

a somewhat complicated matter but we want our community to be one where everyone's

creative rights are respected.224

YouTube subsequently took the video known, but again, its nod to its users that it did so only

because C-SPAN asked it to do so demonstrates a possible nascent complicitness in the

infringing action of its users.

Other overt acts by YouTube do not suggest active inducement but instead are somewhat

mitigating. For example, in March 2006, YouTube implemented a new policy limiting all new

user uploads to ten minutes in length.225 YOuTube admitted that the reason for this change in

policy was to eliminate copyright infringing videos.226 "We poked around the system a bit and

found that these longer videos were more likely to be copyrighted videos from TV shows and

movies than the shorter videos posted," stated YouTube in an official blog posting on its

website.227 Thus, while the statement is an admission of YouTube' s knowledge that its previous

policy enabled infringement, the effect of limiting a video to under ten minutes attempts to

prevent the type of known infringement.

However, a reasonable question remains as to why it took YouTube nearly a year into its

existence to realize that most of the longer clips on its web site were of infringing TV show and

movies? The Ninth Circuit' s recent holding in Perfect 10 v. Amazon suggests that intent could

be imputed to form the basis for contributory liability outside the Supreme Court's inducement





2 Stephen Colbert Goes to Washington, YouTube Blog, May 4, 2006, http://www.youtube.com/blog?entrv=assC--
885ys (last visited Feb. 9, 2008).
2 Your 15 Minutes of Fame..ummm...Make that 10 Minutes or Less, YouTube Blog, Mar. 26, 2006,
http://www.youtube.com/blog?entrv=oorj~vHVs (last visited Feb. 9, 2008).
226 Id.
227 Id.










standard.228 The Ninth Circuit interpreted Grokster to mean that contribution to infringement

must be intentional.229 However, it also noted that Grokster said that contributory liability must

be read within the "rules of fault-based liability derived from the common law," which allow for

intent to be imputed.230 The court noted tort law' s imputed intent where an actor commits an

act in which the consequences are certain or substantially certain to occur.231 It also found that

the Grokster Court recognized imputed intent in the staple article of commerce doctrine, and

under the inducement doctrine where an actor takes steps substantially certain to result in

infringement. 232

As a result, the Ninth Circuit applied a special contributory infringement test, within the

confines of Grokster, finding liability for a computer system operator if it "'has actual

knowledge that specific infringing material is available using its system' and can 'take simple

measures to prevent further damage' to copyrighted works, yet continues to provide access to

infringing works."233 Under this test, YouTube could be liable for knowing of popular

infringing videos and not taking simple measures to prevent further infringement. Evidence

suggests that YouTube had prior knowledge of a video like Lazy Sundaly because of its

acknowledgement of the video' s popularity among the YouTube community. If further evidence

shows that YouTube's knowledge of the infringing content was significantly prior to the time of

it taking remedial measures by taking the videos down at NBC's request, intent could be imputed


228 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1170-73 (9 h Cir. 2007).
229 Id. at 1170 (citing Grokster, 545 U.S. at 930).
230 Id. at 1170-71 (citing Grokster, 545 U.S. at 934-35).
231 Id. (citing RESTATEMENT (SECOND) OF TORTS 8A cmt. b (1965), "If the actor knows that the consequences are
certain, or substantially certain, to result from his act, and still goes ahead, he is treated by the law as if he had in
fact desired to produce the result.")
232 Id. (citing Grokster, 545 U.S. at 932).
233 Id. at 1173 (emphasis in original)(internal citations omitted, citing A&MRecords v. Napster, 239 F.3d 1004,
1022 (9" Cir. 2000), and Religious Technology Center v. Netcom On-Line Communication Services, Inc.,
907 F.Supp. 1361, 1375 (9th Cir. 1995)).









under the Ninth Circuit' s standard for YouTube' s inaction. It could also be argued that intent

should be imputed as it could be seen as an admission of having intentionally delayed until the

website reached a large enough number of viewers to be viable without reliance upon infringing

content as a draw.

In sum, it is unlikely that YouTube could be found liable for inducement based on the

information in the public record. However, discovery may reveal relevant statements made by

YouTube executives and software developers which may or may not suggest actions intended to

induce infringement by its users. While the building of YouTube's popularity can be traced to a

number of infringing videos in its first year of existence, such evidence is merely anecdotal and,

taken alone, proves nothing as to YouTube's intent. Aside from inducement, it is possible that

the Ninth Circuit' s imputed intent test of contributory liability could be applied to YouTube

under the general contributory infringement standard if further evidence is found to suggest that

YouTube knew of significant infringing videos and failed to make timely remedial measures to

eliminate harm caused by the videos.

DMCA @512 Immunity

YouTube may be immunized from infringement if it is found to fall under the safe harbor

of @5 12 of the Digital Millennium Copyright Act (DMCA). 234 It, however, does not protect

YouTube from any infringing acts it may have committed through its own volition, such as the

transcoding of video into a new format when a user uploads a video to the website. 235 As

described in Chapter 3, the DMCA Safe Harbor is a statutory limitation to liability aiming to





234 17 U.S.C. # 512 (1999).
235 This activity could potentially be argued as parallel to a caching function, merely incident to using the website,
and thus could be immunized under #512(b). However, greater technical expertise is required to completely analyze
this argument, and is thus outside the scope of this study. However, the potential question looms.










protect online service providers from copyright infringement.236 The safe harbor covers

traditional internet service providers transmitting infringing content, online caching, information

residing on a system at the direction of a user, and information location devices.237 Under

~512(c), an online service provider "shall not be liable for monetary relief .. for infringement

of copyright by reason of the storage at the direction of a user of material that resides on a

system or network controlled or operated by or for the service provider .."238 Under this

section, "online service provider" has been broadly interpreted as anyone providing services

online, as seen through courts' application of it to Amazon.com, eBay.com, and Aimster.239

Since YouTube's basic operating structure is web-based, and the website's videos are uploaded a

the direction of its users, section 512(c) is most applicable.240

Two Prerequisites for all Safe Harbors

However, the inquiry of whether the safe harbor applies to YouTube begins with two

prerequisite tests under (512(i). An online service provider claiming any one of the four safe

harbors must first pass a two-part threshold test.241 First, it must accommodate and not interfere

with standard technological measures intended to protect a copyrighted work.242 Standard

technological measures must be developed and agreed upon by an open consensus of multi-

industry parties.243 Although YouTube has experimented with video filtering to prevent

infringement, it is not a standard technological measures under the statute because it is not a


2 H.R. Rep. 105-796, at 72 (1998)(Conf. Rep.).
23#512(a)-(d).
23#512(c)(1).
239 512(k)(1)(B). See also Corb~is Corp. v. Amazon.com, Inc., 351 F. Supp 2d 1090, 1100 (W.D. Wash. 2004);
Hendrickson y. eBay, Inc., 165 F. Supp 2d 1082, 1088 (C.D. Cal. 2001): In re 4imster Copyright ~r~lteore.. 334
F.3d 643, 655 (7th Cir.2004).
"40 512(c).
2 1# 512(i).
24#512(i)(1)(B).
24#512(i)(2)(A).










multi-industry developed process, but instead internal software developed by Google.244

However, a question persists as to whether YouTube' s tolerance of third party programs which

facilitate users in downloading YouTube videos violates standard technological measures that

would allow YouTube to block such software.

The second threshold test is that an online service provider must adopt and reasonably

implement a repeat mnfringer termination pohiCy.24 What exactly is a repeat infringer

termination policy has been much debated due to a lack of specificity in the language of the

statute.246 While there is no active duty to monitor and thus terminate, it is reasonable for a

provider to terminate those that "repeatedly or blatantly" infringe.247 Other courts have required

the implementation of a procedure to receive complaints which is reasonably implemented so

long as it does not tolerate "flagrant or blatant" infringement.248 In practice, this requirement

causes providers to be overly cautious in terminating users to avoid violating this condition.

As such, YouTube's current policy is intentionally overprotective, basing user termination

upon the number of DMCA notices it receives for that user' s videos. 249 This is problematic

because the nature of the notice-takedown system produces non-adjudicative results. A notice

sent to YouTube alleging infringement is just that, an allegation with a rebuttable presumption

by the user with a counter-notice. Inevitably, few users will choose to file a counter-notice



2 See Andy Greenberg, YouTube 's Filter Faily to Please, FORBEs, Oct. 18, 2007, available at
1lutp \\ \\ \\.forb~es.com/2007/10/1 8/google-viacom-video-tech-cx~ag_10 18youtube.html (last visited Feb. 10, 2008).
24 512(i)(1)(A).
2 See e.g. David Nimmer, Repeathlfringers, 52 J. COPYRIGHT Soc'Y U.S.A. 167 (2005); Andres Salvicki,
Comment: Repeatlnfringenient in the Digital Millennial Copyright 4ct, 73 U. CHI. L. REV. 1455 (2005).
247 Id.
2 See Corbis Corp. v. Amazon.com, Inc., 351 F. Supp 2d 1090, 1102 (W.D. Wash. 2004). See also In re 4inster
Copyright ,,~l ,;o t. 252 F. Supp 2d 634, 659 (N.D.Ill.2002), affd, 334 F.3d 643 (7th Cir.2004).
249 David King, The Official Google Blog, Latest contentlID tool for TouTube,
http ://googleblog.blogspot. com/2007/10O/latest-content-id-tool-for-youtube.html (last visited Feb. 12, 21 r IslA Our
strict repeat-infringer policy, which has been in place since our launch, terminates accounts of repeat infringers
based on DMCA notices.").










because they do not know how to, or see it as futile in the face of a more powerfully situated

copyright owner. Thus, simply because a user fails to file a counter notice does not mean that

the video taken down was actually infringing. The only way to truly define a "repeat infringer"

is if, after filing counter-notice, the copyright owner sues the alleged infringer and obtains a

positive judgment from a court. Thus, the fact that very few alleged infringers will ever be

formally adjudicated before being labeled a "repeat infringer" is troublesome because

YouTube's rationalizations for labeling its users is essentially a one-sided affair which has the

effect of chilling free speech. Despite the First Amendment concerns of YouTube's users, the

policy enables YouTube to neatly fit within its requirement to terminate repeat infringers by

virtue of being over-inclusive. This issue will be further explored in Chapter 5.

In addition the Ninth Circuit interpreted "reasonably implemented" to mean a "working

notification system [that] does not actively prevent copyright owners from collecting

information needed to issue such notifications."250 Because YouTube's termination policy is

tied to DMCA takedown notices, other related YouTube policies make the policy somewhat

ineffective by limiting copyright owners' ability to locate infringing videos and thereby issue

notices. For example, YouTube enables its users to be completely anonymous--all a user needs

to sign up is an email address, the rest of the information provided has no guarantee of

truthfulness. If a user' s account is terminated, they may simply create a new email address and

thereby create a new YouTube account under a false name. In addition, user' s can make videos

"private" that are available only to "friends" and not subject to search on YouTube.251 User's

also can improperly tag a video, and then embed it to play on other websites and blogs, making it



25 Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1109 (9th Cir. 2007).
21 See Complaint, Viacom, Inc. v. YouTube, Inc., 2007 WL 775611 at 18 (S.D.N.Y. filed Mar. 13, 2007)(No. 07-
2103).










very difficult to locate infringing content.252 In addition, YouTube limits search results to 1,000

videos, thereby not allowing all possible videos to be returned in a search if more than 1,000

exi st. 253

All of these factors make it more difficult for copyright owners to locate infringing content

in order to send notices, however, because YouTube's termination policy is rather aggressive and

deliberately over-inclusive, it will likely be found to be within the framework of this preliminary

requirement. The statute only requires "reasonable" implementation, since perfect

implementation would be relatively impossible. In addition, the ambiguity of "termination in

appropriate circumstances" allows YouTube the flexibility to determine who is a repeat

infringer, so long as it consistently terminates based on repeated "blatant" or "flagrant"

infringement. 254

Specific Requirements Under g512(c)

Assuming YouTube passes the two threshold requirements of eligibility under (512(i), it

must then fit within all of $512(c) requirements to be immunized from liability for infringement

by reason of its users' ability to upload videos to YouTube servers. An online service provider

must meet three basic requirements to be eligible. In brief, the requirements do not allow

immunity where the provider is an intentional contributory or vicarious infringer, or upon failure

to abide by the notice-takedown requirements.








2 See id. at 132.
2 See id. at '-0.
2 See H.R. Rep. 105-551(II), at 61 (1998). See also Corbis Corp. v. Amazon.com, Inc., 351 F. Supp 2d 1090, 1102
(W.D. Wash. 2004); In re 4imster Copyrightletes~,lre. ,. 252 F. Supp 2d 634, 659 (N.D.Ill.2002), affd, 334 F.3d 643
(7th Cir.2004).










Knowledge

First, YouTube cannot have "actual knowledge that the material .. is infringing" unless it

"acts expeditiously to remove, or disable access to, the material."25 COurts applying the statute

have regularly found that evidence produced by a copyright holders of a substantially compliant

DMCA takedown notice sent is sufficient to prove actual knowledge.256 If in COnnection with

any DMCA takedown notice received, YouTube is shown to have not expeditiously removed the

material complained of, YouTube can risk losing the safe harbor. It is uncertain whether the safe

harbor is lost for all infringing works, or merely for infringing works it had knowledge of. The

statute refers to "the material," thereby suggesting the safe harbor is limited to the complained of

infringing material.257 In addition, the safe harbor was intended to protect incentives for

innovative service providers that may encounter infringement in the course of their activities. 258

Conversely, the statute also refers to actual knowledge of "an activity using the material on the

system or network."259 The word "activity" suggests that a provider can be liable for providing

the means by which to infringe, similar to the distribution of a device capable of infringement

argument used against Sony and Grokster.260 This brings up the question of whether under this

part of the safe harbor, a substantial noninfringing use argument may find a revival.




25#512(c)(1)(A).
256 See Corbis v. Amazon.com, 351 F. Supp 2d 1090, 1107(W.D. Wash. 2004)(citing Ellison v. Robertson, 357 F.3d
1072, 1075 (9th Cir. 2004)(DMCA compliant notice sent to service provider); ALS Scan, Inc. v. RemarQ
Communities, Inc., 239 F.3d 619, 620-21 (4th Cir. 2001)(pre-suit letter substantially complying with DMCA sent to
service provider); Hendrickson v. Amazon.com, Inc., 298 F. Supp 2d 914, 915 (C.D. Cal. 2003)(plaintiff attempted
to notify service provider); Hendricksonyv. eBay, Inc., 165 F. Supp 2d 1082, 1084-85 (C.D. Cal. 2001)(non-
DMCA-compliant cease and desist letters sent); Costar Group Inc. v. Loopnet, Inc., 164 F. Supp 2d 688, 703 (D.
Md. 2001l)(plaintiff sent DMCA notification of claimed infringement)).
27 #512(c)(1)(A)(i).
25 H.R. Rep. 105-551(II), at 49-50 (1998)("it provides greater certainty to service providers concerning their legal
exposure for infringements that may occur in the course of their activities. ).
259# 512(c)(1)(A)(i).
261) See MGM v. Grokster, 545 U.S. 913, 919-20 (2005): Sony v. Universal City Studios, 464 U.S. 417, 439 (1984).









In the absence of actual knowledge, YouTube cannot be "aware of facts or circumstances

from which infringing activity is apparent."261 The legislative history called this the "red-flag"

test, such that a similarly situated reasonable person would see the facts and circumstances as

raising a red flag of infringement.262 Borrowed from Congress' discussion of the parallel "red

flag" knowledge under (512(d), clear "pirate" websites that use language to "make their illegal

purpose obvious" clearly raise a red flag.263 Yet, it still requires no duty to monitor by YouTube

other than to make reasonable investigations when a red flag arises. Like actual knowledge,

upon "red flag" knowledge, YouTube must act expeditiously to remove or disable access to the

infringing matenial.2

Viacom and other plaintiffs have raised a number of possible "red flags" by YouTube,

such as the description terms and search tags containing well-known trademarks and terms

identifying copyrighted works.265 But, without more, such an argument insists upon a certain

duty of monitoring that YouTube is simply not required to take according to the statute. There

are infinite numbers of copyright owners. In fact, every video on YouTube is subj ect to

copyright, whether owned by a user for their original work, or a corporate copyright owner. To

require YouTube to monitor its user tags and video descriptions merely because they may

suggest infringement places an insurmountable duty to monitor on the website based on the fact

all videos on YouTube are somehow copyrighted.

Direct Financial Benefit/Right & Ability to Control





261# 512(c)(1)(A)(ii).
262 H.R. Rep. 105-551(II), at 53 (1998).
263 Id. at 57.
264# 512(c)(1)(A)(iii).
265 COmplaint, Viacom, Inc. v. YouTube, Inc., 2007 WL 775611at 136 (S.D.N.Y. filed Mar. 13, 2007)(No. 07-2103).










The second prohibited activity under (512(c) is that YouTube may not receive a "financial

benefit directly attributable to infringing activity," where it has the right and ability to control the

activity.266 The Ninth Circuit has recognized the likeness in this test and the common law test

for vicarious liability, and has interpreted it similarly.26 Thus, for YouTube to receive a "direct

financial benefit," the infringing content must act as a "draw" for users, not simply an "added

benefit."268 Since YouTube is solely advertising-supported, and users pay nothing to access or

upload to the site, advertising revenue is neither a "draw" nor "added benefit" to users.

Recognizing such a possible weakness, Viacom and other plaintiffs have made it a point in their

pleading to highlight YouTube' s value in its purchase price by Google of $1.65 billion, allegedly

derived greatly from the popularity of infringing videos on YouTube.269

According to the legislative history, Congress envisioned a direct financial benefit as

applied to websites requiring user-access fees, not free advertising-supported websites like

YouTube. 270 It said that direct financial benefit would not be found, for example, for one-time

setup fees or where infringing users were charged the same access fee as noninfringing users. 271

As stated, YouTube requires no user fees of any kind since it is advertising supported.

Nevertheless, Congress may have given a clue of how to apply its intention regarding advertising

supported websites when it said that direct financial benefit may be found in "fees where the




266 512(c)(1)(B)("does not receive a financial benefit directly attributable to the infringing activity, in a case in
which the service provider has the right and ability to control such activity").
267 Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1117 (9th Cir. 2007)("Based on the "well-established rule of
construction that where Congress uses terms that have accumulated settled meaning under common law, a court
must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these
terms.").
268 Id.
269 COmplaint, Viacom, Inc. v. YouTube, Inc., 2007 WL 775611at ff~ 9, 27, 28, 36, 37 (S.D.N.Y. filed Mar. 13,
2007)(No. 07-2103).
"7 H.R. Rep. 105-551(II), at 54 (1998).
271 Id.










value of the service lies in providing access to infringing material."27 Although this is still fee-

specific, it shows that a direct financial benefit may be found where the value of fees is tied to

the providing of access to infringing material. In other words, as more infringement occurred,

the more fees the website would collect. An analogous argument could be made against

YouTube. YouTube' s revenue is tied to the number of views of its advertisements on the

website. The more users that visit YouTube, the more advertisements are viewed. If users are

shown to visit YouTube with the intent to view infringing videos, then it follows that the more

infringing videos YouTube hosts, the more viewers it will attract, and the more advertising

revenue it will earn.

With this logic in mind, YouTube has clearly designed its advertising strategy to avoid any

implication of such reasoning of direct financial benefit tied to its advertising. YouTube

deliberately does not place ads on any webpage showing a video in order to avoid any tie of the

advertisement to the video should it be found infringing. It only places its ads on the YouTube

homepage, search pages, and the pages of licensed partners, whom it likely shares advertising

revenue with. YouTube's careful avoidance of ad placement on pages possibly containing

infringing videos works allows it to gain ad revenue without fear that the ads will be found

directly attributable to infringement.

If it is established that YouTube receives a direct financial benefit, it must also be shown

that it has the right and ability to control the infringing activity.273 This presents somewhat of a

problem for YouTube because, as a service provider, it must always exercise some areas of

control in being able to terminate repeat infringers and respond to takedown notices. In addition,

YouTube investigates user complaints regarding pornography, spam, and other content deemed


22 Id.
273 512(c)(1)(B).










inappropriate under its "Community Guidelines."274 However, with this in mind, courts have

recognized that finding liability from such a loophole would be "inconsistent with the statutory

scheme."'275

Expeditious Removal

Lastly, @512(c) calls for the expeditious removal of claimed infringing material in DCMA

takedown notices.276 YOuTube attempts to communicate this process to its users by providing

nearly the exact wording of the notice-takedown statute in its Terms of Use.277 YOuTube also

has a designated Copyright Agent, as required by the statute.278 In practice, when YouTube

receives a DMCA notice of infringing material it then sends an email to the registered address

of the user stating who made the complaint and informing the user of their right to file a counter

notice under (512(g). YouTube's Terms of Use also contains instructions outlining the counter-

notice requirements and instructions for sending it.279 Upon receiving a counter-notice,

YouTube is of course required to put back the removed content within fourteen business days

unless the complaining copyright holder sues the user.280

Linking Websites: SouthParkzone.com Case Study

A video linking website is a website that offers users the opportunity and ability to easily

locate and view unauthorized copies of popular full-length TV shows and movies. This section

is not about linking to authorized versions of a work, such as providing links to a user to view a


2 YouTube Community Guidelines, supra note 96.
2 Perfect 10 v. Cybernet Ventures, Inc., 213 F. Supp 2d 1146, 1181 (C.D. Cal. 2002). See also Costar Group, Inc.
v. Loopnet, Inc., 164 F. Supp 2d 688, 704 (D. Md. 2001)( "as the concept is used in the DMCA, cannot simply mean
the ability of a service provider to remove or block access to materials posted on its website or stored in its
system.").
27#512(c)(1)(C).
2 Terms of Use #8(A), supra note 16.
27#512(c)(2).
2 Terms of Use #8(B), supra note 16.
so0 512(g)(2).










TV episode on the copyright holder' s website or one that is licensed to play the video. Such

linking is protected by the First Amendment, the basic operation of the Internet, and is the

preferred and encouraged behavior of most copyright owners. Having viewers watch online

video content on the owner' s website or a licensed website enables the copyright owner to reap

the monetary rewards of its work through user-fees or advertisements. This section is also not

about individuals linking to infringing works on message boards or blogs. While of questionable

legality, such sharing is often protected by fair use because it appropriately adds some degree of

comment, criticism, and public discussion regarding the contents of the video. As such, each

individual occurrence requires a case-by-case analysis.

What is section is about are websites that systematically and intentionally link to--and

deliberately never host--copies of unauthorized videos residing on other websites' servers. 281

These websites exist for the sole purpose of providing users with aggregated and organized hubs

of popular TV shows and movies, by whatever means necessary. They are problematic for

copyright owners seeking to protect their works because they are not always easy to locate, and

when one site is shut down, three or more others typically appear to take its place. They are

often operated by anonymous webmasters and are sometimes themselves located offshore--it

can simply be very difficult to determine the details.

The number of video linking websites on the Internet is beyond a quantifiable number, and

of unlimited genres. Online Video Guide, an online directory of linking websites and one of

Time magazine' s Top Ten websites of 2006,282 liSts over 250 different linking websites just for






2 See generally Delaney, supra note 8.
2 Lee S. Ettleman, 2006 Top Ten Websites of the Year, TIME, available at
hopl1 w\ il \ .time.com/time/topten/2006/websites/10.htm (last visited Feb. 13, 2008).










TV shorts and movies.283 The 250 are a "best-of" listing, not a full compilation. There are

specialized linking websites which devote themselves to specific television shows. The subject

of this case study, Southparkzone.com, is just one such example. Other websites act as

directories for large numbers of television shows and movies, such as alluc.org (pronounced all-

you-see).284 Alluc.org links to copies located on other websites all over the Internet, and is

physically located in Norderstedt, Germany.285 The common tie among all linking websites is

the refusal to host any content on their own servers, instead linking to hosting websites like

YouTube, DailyMotion, Veoh, or other lesser-known websites in foreign countries.

SouthParkzone.com (SPZone) was chosen for this case study because it provides a vivid

example in which to analyze the abstract nature of linking websites.286 (See Figure 4-1). SPzone

is a website of unknown hosting origin, but available on the Internet in English. Curiously, it' s

Terms and Conditions states, "the material on the Website is designed to comply with Dutch law

and we cannot be held responsible for any non-compliance with applicable local laws in any

other jurisdiction."287 However, this does not mean the website is necessarily located or run in

the Netherlands. 288 It can simply be there to confuse copyright holders or demonstrate a lack of

knowledge in copyright law.




283 Online Video Guide, Featured TV and Movie Websites, http://www.ovguide.com/movies-ty.html (last visited
Feb. 12, 2008).
284 Alluc.org Homepage, www.alluc.org. (last visited Feb. 12, 2008).
285 Alluc.org Disclaimer & Imprint, http://wwwl5 .alluc.org/alluc/imprint.html (last visited Feb. 12, 2008).
286 SouthParkzone.com Homepage, b1lip w\ il \t .southparkzone.com (last visited Feb. 27, 2008). See also Fig. 1.
287 Southparkzone.com Terms & Conditions, http://www.southparkzone.com/termsandcondiin~h (last visited
Feb. 14, 2008). Whether or not the website is located or run in Holland exhibits one of the primary problems for
copyright owners in controlling their works on linking websites, since they are deliberately difficult to track down to
be sued.
288 The Netherlands has signed on as a party to the World Intellectual Property Organization's (WIPO) international
copyright treaty concerning copyright on the Internet, but it has yet to implement it in force. WIPO WCT
Contracting Parties, http://www.wipo.int/treaties/en/ShowResulsjpanentayid1 (last visited Feb. 14,
2008).










SPZone provides users with streaming videos of every episode of Southr Park from all

eleven seasons as well as a streaming copy of the .Litthr Park full-length feature film. The

episodes are indexed by season and offer descriptions of each episode. Instead of redirecting

visitors to other websites to watch the episodes, SPZone plays an embedded commercial-free

copy of the show on its own website (See Figure 4-2). The video plays in a "frame" surrounded

by textual advertising bars above and below the video. It can also be viewed in full-screen mode

without the advertisements. Regardless of how a video is viewed, the SPZone logo appears at all

times on the top right corner of the video. As the video plays within the frame on SPZone

website, users are given a number of additional options on a menu bar below the video. Users

are able to download the video, either legally through Amazon.com, or for "free" from file

sharing website Rapid Share. They may also send a link to the video to friends through the

website. Users also have the ability to report that a video is no longer working, and suggest new

links to episodes as they are found.

SPZone is a relatively popular linking website. According to the Internet rating website

Alexa.com, in February 2008, SPZone was the 3,189th most visited website on the Internet.289

While that pales in comparison to the number two ranking of YouTube, 290 it is more than the

websites of the Houston Chronicle (4,25 8), 291 the Atlanta-Journal Constitution (6, 85 1), 292 Or the

Dallas Cowboys (8,377).293 Most notably, SPZone' s traffic ranking is higher than the show' s

official Comedy Central website(5,288).294 In addition, SPZone's advertising agent, AdBrite,



289 Alexa.com traffic ranking for Southparkzone.com,
Ilipll u\ ll\\.alexa.com/data/details/traffic_details/sotprzn~o (last visited Feb. 12, 2008).
Ilip ]ll u\ ll \ alexa.com/data/details/traffic_details/yotb~o (last visited Feb. 12, 2008).
291 I'll ll ll llx.8X.COm/data/details/traffic_details/cho~o (last visited Feb. 12, 2008).
292 Illy1 ll ll ll .810X8. COm/data/details/traffic_details/aj c.com (last visited Feb. 12, 2008).
293 Illy1 ll \ ll .ll.1X8.COml/data/details/traffic_details/alsoby~o (last visited Feb. 12, 2008).
Ilip ]11 u\ ll\\.alexa.coml/data/details/traffic_details/otpr~oeyeta~o (last visited Feb. 12, 2008).










markets that pages with its "under and above video" ad banners on the website receive over

1,000,000 page views per day, and over 65,000 unique visitors per day.295 It allso notes that the

maj ority of its user traffic originates from the United States and the United Kingdom. 296

Jurisdictional Problems

For SPZone to be subj ect to any liability under the jurisdiction of U. S. Federal Courts, two

very large hurdles must be overcome: (1) locating the operators of the website in order to serve

the lawsuit and (2) having the ability to sue them under U. S. jurisdictional law. First,

determining who actually runs the website is problematic. Nowhere does the website state who

runs the website, save for postings by a user called "theniek." More information beyond an

Internet moniker is needed in order to file a lawsuit against a person, such as a name, address, or

even email address. This is a common problem copyright owners face when dealing with linking

websites, and a reason why owners rarely choose to file lawsuits against faceless and nameless

individuals. Even when a court allows a lawsuit to be filed against anonymous individuals, it can

often result in a futile attempt to discover an individual's identity. For example, in Universal's

suit against the linking website Youtypc.com, the creators of the website were actually named,

yet failed to show up to court or even send lawyers on their behalf. 297 As a result, a default

judgment was issued against them, which forces the copyright owner plaintiffs to go to extensive

trouble to have it enforced.298

Second, if, as SPZone purports, it is located in the Netherlands, jurisdictional problems

increase dramatically. While these jurisdictional issues are beyond the scope of this study, it is


295 AdBrite, Advertise on South Park Zone, under and above video,
htt u\ \\ adbrite.com/mb/commerce/purchase~form.php oi=19932&afsid=1 (last visited Fed. 14, 2008).
296 Id.
297 Judgment Against Defendants Billy Duran and Sam Martinez Pursuant to Entry of Default, Universal City
Studios, Inc. v. Youtypc.com, No. 07-4181 (C.D. Cal. decided Dec. 3, 2007).
298 Id.










important to briefly note the problem. The main obstacle is that U.S. copyright law has no

extraterritorial effect, meaning that infringing acts occurring outside of the United States are not

actionable under the Copyright Act.299 However, it is possible that when one of the (106

exclusive rights are violated within the United States, it becomes actionable under U. S. law.300

Since the actual viewing of many SPZone videos occurs in the United States, it is plausible that

regardless of its actual location, SPZone's facilitation of the infringing acts takes place in the

U. S. and is therefore subj ect to jurisdiction. However, for the sake of simplicity and for the

purposes of this analysis, it is assumed that SPZone is either somehow amenable to U. S.

jurisdiction through infringing acts occurring within the United States, or is run by persons

subj ect to personal jurisdiction by U. S. Federal Courts within United States' territory.

Direct Liability

The basic legal argument commonly made by linking websites like SPZone is that because

they do not host any material on their websites, they cannot be directly liable for copyright

infringement. SPZone's "disclaimer" page attempts to make this clear, saying,

"SouthParkZone.com does not host any videos nor e isodes of South Park. This website does not

host any videos or video files. No video files are stored on this server."301 It also states that it

does not upload videos to other hosting websites and then link back to them, which would allow

it to appear innocent while actually directly infringing.302



299 MELVILLE B. NINIMER & DAVID NINIMER, NINIMER ON COPYRIGHT, #17.02 (2007)(hereinafter NINIMER ON
COPYRIGHT). See generally, Roberto Garza Barbosa, International Copyright Law and I ,re gan. 4 M~echanism for
Anproveinent, 11 MARQ. INTELL. PROP. L. REV. 77 (2007); William Patry, Choice ofLaw andlnternational
Copyright, 48 AM/. J. COMP. L. 383 (2000); Jane Ginsburg, Extraterritoriality andl~udtiterritoriality in Copyright
Infringement, 37 VA. J. INT'L L. 587 (1997).
300 NINIMER ON COPYRIGHT at #17.02.
301 Southparkzone.com Disclaimer, http://www.southparkzone.com/disclaimer.ph (last visited Feb. 12,
2008)(emphasis in original).
302 Id. ("SouthParkZone.com does not upload. We do not upload any videos to these websites or encourage
uploading of copyrighted material.").










Assuming all this is true, then SPZone indeed is not a direct infringer according to the

"server test" developed by the Ninth Circuit, which finds direct infringement for linking only

when infringing material resides on the defendant's server.303 Thus, to directly violate any of the

~106 exclusive rights, SPZone would have to possess actual copies of the protected works and

either play them or reproduce them. There is one sentence in its Terms and Conditions that

suggests SPZone might occasionally upload files to a hosting website and link to them in such a

fashion.304 Despite this statement, since SPZone contends that it simply places the episodes in a

frame on its website through an elaborate source-code, the copy is never actually on its servers.

Of course, this deliberate avoidance of hosting infringing copies does not protect SPZone from

copyright infringement for use of the images of the .GLitth ParkPPPPP~~~~~~~PPPPPP characters prominently displayed

on the homepage, secondary liability, as well as potential trademark infringement lawsuits.

Secondary Liability

As described in Chapter 3, linking to infringing content can, in some cases, constitute

secondary copyright liability.305 In the case of SPZone, it is largely given that the videos played

through website are infringing and unauthorized by Comedy Central, owner of .Litth Park. It

makes a number of statements acknowledging Comedy Central's trademark and copyrights in

.0;;;/// ParkPPPPP~~~~~~~PPPPPP and states explicitly that it is fan site not-authorized by Comedy Central or the






3 Perfect 10 v. Google, Inc., 416 F. Supp. 2d 828, 838-43 (C.D. Cal. 2006) aff'd by Perfect 10, Inc. v.
Amazon.com, Inc., 508 F.3d 1146, 1159 (9th Cir. 2007).
3 Referring to the videos linked to on the website, SPZone says, "You understand that the information supplied to
us is by a third party. Rarely, is the information created by us and as such, we cannot take responsibility for this
information. We fully appreciate the work of our third parties and take no credit for their efforts."
Southparkzone.com Terms & Conditions, supra note 283.
3 See Batesville Services, Inc. v. Funeral Depot, Inc., 2004 WL 2750253 at *12 (S.D. Ind. Nov. 10, 2004);
Ticketmaster, Corp. v. Tickets.com, Inc., 2000 WL 525390, *2 (C.D. Cal. 2000); Intellectual Reserve, Inc. v. Utah
Lighthouse Ministry, Inc., 75 F. Supp 2d 1290 (D. Utah 1999); Bernstein v. J.C. Pennev, Inc., 50 USPQ2d 1063
(C.D. Cal. 1998).










creators of the show.306 As a result of the nature of the website, SPZone would likely be found

liable under all three modes of secondary liability: vicarious infringement, contributory

infringement, and inducement. A prerequisite for any secondary liability claim is of course

direct infringement by a third party.307 This requirement is fulfilled every time a SPZone user

views an unauthorized copy of.winrlrPark, Comedy Central's public display and performance

rights are directly infringed. In addition, Comedy Central's distribution right may be violated by

the hosting website that SPZone links to.

Vicarious liability

The common law standard of vicarious infringement requires: (1) an act of direct

infringement by a third party, (2) the right and ability to supervise the infringing activity, and (3)

a direct financial benefit received from the exploitation of the work.308 This traditional common

law standard originating from the Second Circuit, and approved by the Ninth Circuit and the

Supreme Court applies to SPZone because, unlike YouTube, it is not a dual-use technology with

noninfringing uses.309 Recently, the Grokster Court confirmed the vicarious liability elements as

profiting directly from infringement where with, "a right and ability to supervise the direct

infringer, even if the defendant initially lacks knowledge of the infringement."310





306 Southparkzone.com Disclaimer, supra note 297 ("South Park is a registered trademark of Comedy Central and
its' related companies. All related videos, clips, images etc. are copyrighted and owned by their respective owners.
SouthParkzone.com is a fan site and is in no way associated with or authorized by Comedy Central, Comedy
Partners or the Creators of South Park, Matt Stone and Trey Parker.").
307 See M.G.M. v. Grokster, Inc., 545 U.S. 913, 931 (2005)(citing way, 1-., Bernstein &~ Co. v. H.L. Green Co., 316
F.2d 304, 308 (2d Cir. 1963); Dreamland Ball Room, Inc. v. \hope-, *, Bernstein &~ Co., 36 F.2d 354, 355 (7th Cir.
1929)).
308 See id.
309 See Grokster, 545 U.S. at 930-31; Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 435
(1984); Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 262 (9t Cir. 1996).Shapiro, Bernstein & Co. v. H.L.
Green Co., 316 F.2d 304, 307 (2d Cir. 1963); Gershwin Publishing Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d
1159, 1162 (2d Cir. 1971); Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 262 (9th Cir. 1996).
310 Grokster545 U.S. at 930 n.9.










The right and ability to control the direct infringement is directly related to the function of

SPZone's website. While it has presumably no control over infringement committed by hosting

websites, it has absolute control over the direct infringement of the users of its own website. 311

SPZone selects the copies of episodes to link to and actually inputs the code into its website in

order to facilitate the playing of the video within the frame on its website. If it did not want a

user to be able to view a video within a frame on its website, it surely could choose to do so.

Instead, SPZone made the conscious decision that users should be able to view the infringing

videos on its website without navigating away from it. In addition, when a user chooses to view

an episode, they are given only one choice of a copy to watch, showing that SPZone picks some

copies over others to link to. This shows SPZone's ability to control its users viewing of the

infringing content.

However, the Ninth Circuit recently noted in Perfect 10 v. Amazon. com, that this type of

ability to control by virtue of the website's basic function, is likely more of a factor for

contributory infringement than vicarious infringement.312 The argument follows that when users

view the episodes and directly infringe the public performance and display rights, they

technically do so through the hosting websites, not SPZone. As such, SPZone has no ability to

control the actions of either the users or the hosting websites, and thus cannot be vicariously

liable. However, "the lines between direct infringement, contributory infringement, and

vicarious liability are not clearly drawn."313 As a result, while the above argument may forbid

vicarious liability on a technicality, as we will see, contributory infringement is less forgiving.


311 The Ninth Circuit correctly points out in Perfect 10 v. 4mazon.com, 508 F.3d 1146, 1174 (9th Cir. 2007), that this
type of ability to control by virtue of the website's basic function, is likely more of a factor for contributory
infringement than vicarious infringement. However, "the lines between direct infringement, contributory
infringement, and vicarious liability are not clearly drawn." Sony, 464 U.S. at 435 n. 17.
312 508 F.3d 1146, 1174 (9th Cir. 2007).
313 Sony, 464 U.S. at 435 n. 17.










The direct financial benefit element is met through SPZone's advertising revenue, and

falls within both the broader Ninth Circuit' s test for financial benefit,314 as well as the Second

Circuit' s narrower test requiring an "obvious and direct financial interest in the exploitation of

copyrighted materials."315 In its "Disclaimer," SPZone asserts it is a non-profit website, and that

it receives no revenue from advertising appearing on its site other than to pay for web-hosting

costs.316 However, the purpose and use of a financial benefit is irrelevant. The question of direct

financial benefit is ambivalent to this, it simply asks whether or not one exists that is somehow

related to the infringing conduct. The entire purpose of the SPZone website is to enable users to

easily access and watch commercial-free Southl Park episodes in a central location. As a result,

all income related to the website is by default related to this action. What the advertising

revenue is then used for is irrelevant to the vicarious liability inquiry.

Contributory liability and inducement

While vicarious liability is based on the failure to cause a third party to cease its direct

infringement, contributory liability is based on SPZone's failure to stop its own actions

facilitating third-party infringement.317 The three basic elements of contributory infringement

are (1) an act of direct infringement by a third party, (2) where the defendant has knowledge of

the infringing activity, and (3) the defendant induces, causes, or materially contributes to the


314 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1023 (9th Cir. 2001) (finding Napster liable for vicarious
infringement because the future of the business relied upon building a network of infringing users to advertise to):
Fonovisa v. Cherry Auction, 76 F.3d 259, 263 (9th Cir. 1996) (finding a direct financial benefit by swap-meet
landlord when lessees paid minimal rental fees and defendant received no commission or proceeds from the sales of
bootleg music).
315 Shapiro, Bemstein & Co. v. H. L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963)( stating that, "an obvious and
direct financial interest in the exploitation of copyrighted materials" may result in the imposition of liability upon
the beneficiary of that exploitation; finding chain store liable for the infringing acts of retained operator running its
record departments).
316 Southparkzone.com Disclaimer, supra note 297 ("We do not receive any monetary compensation for running this
website. The website is essentially hosted for free, but due to increased webhosting costs we have been forced to
place ads on the site. However the income from the ads only goes to the server operators who use this income to pay
for webhosting.")
317 See Perfect 10 v. Amazon.com 508 F.3d 1146, 1175 (9th Cir. 2007).









infringement. 318 Since inducement was treated by the Supreme Court separately, it will be dealt

with separately here as well. As previously stated, direct infringement by users of the website is

assumed by virtue of their watching the videos through the website. In addition, any argument

of substantial noninfringing use is simply implausible. SPZone's only function is to provide its

users with the ability to watch copies of .Litth Park through its website. While it could argue

that its episode descriptions are noninfringing, the website need not provide infringing links in

order to provide episode recaps and descriptions of a popular television show.

The knowledge requirement is met through SPZone's statements and actions. SPZone

makes it known in its "Disclaimer" that it only links to videos from the hosting websites

Myspace.com, Gofish.com, and Dailymotion.com.319 It is assumed that none of these websites

are authorized to distribute episodes of .South Park. As a result, this statement by SPZone

regarding the origins of its linked-to episodes reveals its knowledge of the infringing nature of

the videos. SPZone could easily link to authorized versions of the show on Comedy Central's

website, but it chooses not to.

A number of other factors add to the notion that SPZone possesses a great deal of

knowledge of the infringing nature of the linked-to videos. For example, it allows users to notify

the website when an episode is no longer working, and allows users to submit new links to

replace them. Why would a video be subj ect to removal on a hosting website if it was an

authorized copy? Similarly, if the copies were authorized, when why is SPZone itself not able to

upload copies to a hosting website? The infringement of the videos is rather open and notorious,

but SPZone' s own actions add to the basis of its knowledge of infringing actions.



318 Grokster, 545 U.S. at 930.
319 Southparkzone.com Disclaimer, supra note 297 ("SouthParkZone.com only adds videos of Dailymotion. This
website does only [sic] add videos if they are available on Myspace.com, Dailymotion.com and Gofish.com.").










The second element to contributory infringement is the causal relationship between

SPZone's actions and the direct infringement of its users. The standard here is "material

contribution," and as stated above with vicarious liability, but for the SPZone website, users are

unable to view the links as organized by the website. The website's design enables users to

locate videos which can be difficult to aind or even hidden on other hosting websites. Without

SPZone' s aggregation and organization of links, a user would simply have no other use for the

website. SPZone's very existence as a linking website, thus, materially contributes as it is the

means by which its users infringe.

Inducement

The inducement standard, as articulated by the Grokster Court, states that "one who

distributes a device with the obj ect of promoting its use to infringe copyright, as shown by clear

expression or other affirmative steps taken to foster infringement, is liable for the resulting acts

of infringement by third parties."320 In addition, Grokster spoke about an actor' s unlawful

obj ective in contributing to a Einding of inducement. 321 SPZone is a device which enables a user

to easily access and view infringing videos. The website serves little purpose other than

providing such means to view the videos, and makes it rather clear that is its purpose, which is an

unlawful obj ective against traditional notions of copyright law.

SPZone makes a number of clear statements that promotes the site's usefulness to infringe.

On its homepage, the website places a banner in bold capital letters reading "ALL EPISODES,

ALL SEASONS, FREE!!! "322 While this statement does not outright suggest that the episodes

are infringing, it implicitly suggests that you otherwise have to pay to view the show elsewhere,



320 Grokster, 545 U.S. at 919.
ri1 Id. at 938-39.
3 Southparkzone.com Homepage, http://www.southparkzone.com (last visited Feb 15, 2008).










such as buying a DVD or watching an authorized version on Comedy Central's website. The

homepage tag line at the top of the web browser also proclaims South Park episodes, Watch and

Download every sing South Park episode."323 The "Disclaimer" section of the website also

includes an excerpted interview with .Sonlr Park'PP~~~~~~PPPPP~~~~~s creators in which they are quoted to say they

do not oppose illegally downloading episodes of the show. 324 While the show' s creators may

express a feeling of sympathy with infringers, they likely contracted away to Comedy Central the

right to authorize making copies, distribution rights, and public display and performance rights.

Therefore, SPZone' s flaunting of their statement can be read as meant to encourage further

infringement.

In addition to statements made by SPZone, it induces infringement through a number of

additional affirmative steps. For example, when viewing an episode, the user is shown a button

which allows them to download a copy of the show. While one of the options is to legally

purchase a copy from Amazon.com, the other option is to download it for free through a fie

sharing website Rapidshare.com. SPZone also gives instructions of how to use the Eile sharing

website.325 This is another affirmative step taken to foster infringement through the website.







323 Id.
324 Southparkzone.com Disclaimer, supra note 297:
Here's an interview with Matt Stone and Trey Parker about downloading South Park episodes:
From: Reason Magazine imprl //nn.reason.com new s diall ll6787.html). .
Stone: We're always in favor of people downloading. Always.
Reason: Why?
Stone: It's how a lot of people see the show. And it' s never hurt us. We've done nothing but been successful
with the show. How could you ever get mad about somebody who wants to see your stuff?
Parker: We worked really hard making that show, and the reason you do it is because you want people to see


325Download Help, http://www.southparkzone.com/help_rapidshrpp (last visited Feb 15, 2008).









DMCA @512 Immunity

As demonstrated above, SPZone faces a great deal of potential liability for providing its

users with infringing links. However, were it to fit within the DMCA @512(d) safe harbor

intended to protect Internet linking as an "Information Location Tool," potential liability would

be limited.326 Section 512(d) operates in the exact manner as 0512(c), except that instead of

protecting infringing content at the direction of a user, it limits liability where "by reason of the

provider referring or linking users to an online location containing infringing material or

infringing activity."327 At first glance, it seems that SPZone fits neatly within this definition. It

simply links users to locations of infringing activity. Unfortunately for SPZone, it does not fair

very well under the statute.

The two prerequisites of @512(i), repeat infringer termination policy and accommodating

standard technological measures, do not generally apply to linking websites or to SPZone.

SPZone appears to not interfere with any standard technological measures in linking to

infringing content on other hosting websites. However, as for repeat-infringer termination, a

literal reading of the statute suggests that it is an essential prerequisite to gaining immunity under

any of the (512 safe harbors. After all, @512(i) states that "the limitations on liability established

by this section shall apply to a service provider only if the service provider" adopts and
reasonably ~ ~ ~ imlmnssc oiy328 Under such a strict reading, the (512(d) inquiry would


end there, since SPZone simply has no such user-termination policy.

However, a closer reading of the statute suggests that it only requires "a policy that

provides for the termination in appropriate circumstances of subscribers and account holders of



326 17 U.S.C. # 512(d) (1999).
32#512(d).
328 512(i)(1)(emphasis added).









the service provider' s system or network who are repeat infringers."329 Since SPZone offers

linked-to streaming videos through its website, it requires no registration for its users, and thus

has no need for a termination policy for repeat infringers. It is therefore not an "appropriate

circumstance" which would require a repeat-infringer termination policy to even exist.

Furthermore, to hold to the more strict reading of the statute would end the inquiry of whether

SPZone, or any linking website for that matter, was eligible for a safe harbor of any kind. This

would obviate Congress' clear intent to protect, in certain circumstances, the linking to

infringing content by protected service providers because the very act of linking typically

requires no user-agreement or registration and would be over-burdensome to the operation of the

Internet.

Next, assuming the statute is read to conclude that SPZone meets the eligibility

requirements of g512(i), it must then meet the requirements of g512(d). Unfortunately for

SPZone, this is where its problems truly begin. Section 512(d)(1) generally mirrors the

requirements under (512(c)(1)(A) of actual knowledge or "red flag" knowledge.330 As

previously noted, SPZone makes a number of statements on its website which can be inferred to

impute knowledge that the linked-to videos were infringing copies. Its basic acknowledgement

that it is not associated with South Park, Comedy Central, or any other creators of the show at

least suggest "red flag" knowledge, in that a reasonable person equipped with that information

would conclude that SPZone probably lacked the right to facilitate access to the infringing

videos. In addition, it fails to meet (512(d)(2). As suggested above regarding vicarious

infringement, SPZone receives a financial benefit from its advertising directly attributable to the

linking to infringing content. Finally, @512(d) incorporates the notice-takedown process from


329 512(i)(1)(A)(emphasis added).
330 C~f: 512(c)(1) with 512(d)(1).










~512(c)(3). Nowhere on SPZone's website is there any mention of the DMCA notice procedures

for taking down infringing linked-to videos, largely because the entire purpose of the website is

to link to infringing videos.
































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CHAPTER 5
FUTURE OF ONLINE VIDEO

This study has examined the role of Copyright in the digital video environment of

YouTube and video linking websites. Specifically, this study attempted to assess the legal

problems facing YouTube and linking websites under copyright law. This chapter now aims to

propose solutions that would be amenable to all parties involved, while preserving the First

Amendment and fair use rights of individuals within the greater copyright landscape

Chapter 1 set out the problem created by streaming online video by hosting websites, and

websites that link to them. Websites like YouTube offer Internet users unprecedented

opportunity to post user-generated content and share it world-wide with friends and strangers

alike. It gives individuals a newfound power to broadcast their creativity across the globe.

However, like many user-directed technologies, the use that it is put to is at the hands of the end-

user. As a result, YouTube is as capable of hosting infringing content at the direction of its users

as it is capable of sharing original, user-generated content. The popularity of main-stream TV

shows and motion pictures resulted in users uploading large numbers of unauthorized copies to

hosting websites like YouTube. In order to facilitate users in finding such popular videos, a

large number of video linking websites appeared providing users with a centralized database of

links to infringing content. This chapter identified this as a very recent phenomena, which has

copyright owners greatly concerned about the future of their ability to exclusively market their

copyrighted works.

Chapter 2 of this study then examined the literature of how copyright law has struggled to

adapt to changes in technology. It identified the lack of recent scholarship on linking to

copyright infringing content, and the lack of scholarship regarding video hosting websites such

as YouTube due to the recent nature of the technology. It discussed the tension over copyright









law' s direction between copyright owners and developers of new technology. This tension often

leaves out the interests of the end-user and results in a highly detailed codified law full of

specific limitations and loopholes for interested parties.

Chapter 3 of this study laid out the case law and statutory context within which YouTube

and linking websites would be analyzed. It identified that copyright owners have rights of action

for direct infringement against hosting websites, and secondary infringement for both hosting

and linking websites. It also outlined the law of linking on the Internet. Finally, the chapter set

out the function of the DMCA @5 12 safe harbors and the statutory defense of fair use, both of

which must be kept in mind when considering any copyright infringement lawsuit.

Chapter 4 of this study then analyzed hosting and linking websites through two individual

case studies. Hosting websites were studied through the Internet's leading video-sharing website

YouTube, and video linking websites were analyzed through the example of

SouthParkzone.com, a website linking to unauthorized copies of a popular animated TV sitcom.

The chapter concluded that YouTube may be directly liable for the hosting of infringing content.

However, possible vicarious infringements by YouTube were unlikely due to its carefully placed

advertising away from user-uploaded videos. It also is an unlikely contributory infringer by

inducement, and is capable of substantial noninfringing uses. In addition, the chapter found

YouTube is likely eligible for the DMCA @512(c) safe harbor. As for linking websites, the

chapter first noted the jurisdictional problems created by off-shore linking websites. Setting that

aside, the chapter concluded that linking to infringing content by SouthParkzone.com for the sole

purposes of disseminating unauthorized content could result in a finding of secondary liability.

The present chapter analyzes four maj or problems identified from this study, and attempts

to provide broadly applicable solutions that would best serve the interests of all parties involved:










copyright owners, developers of new technologies, and the end-users. First, this chapter will

make the case that First Amendment considerations within secondary infringement can be found

in Justice Breyer' s interpretation of the substantial noninfringing use standard, and it would

therefore be wise for future courts to embrace his broad interpretation. Next, this chapter will

identify the burden-shift associated with the implementation of the (5 12 safe harbor notice-

takedown system, the drawbacks of automatic filtering for end-users, and then identify a possible

solution to ensure users'rights within the filtering process. Then, this chapter will compare two

sets of principles put forth by members of the copyright industry and a fair use rights interest

group dealing with user-generated content and fair use, and attempt to find common ground

between them concerning automatic filtering. Finally, this chapter will propose a First

Amendment based solution for finding liability for linking websites.

Innovation Leading to Creativity: Justice Breyer's Substantial Noninfringing Use
Standard

There has long been a struggle between the Constitutional protections of the First

Amendment and the incentives of Copyright. However, the Supreme Court has justified

limiting freedom of expression under the First Amendment for the sake of furthering creativity

inspired by the Copyright Clause.2 The Court noted that the Copyright Clause and the First

Amendment were adopted at about the same time, and that this proximity demonstrates the

Framers'intent of the two doctrines' compatibility.3 The two are not mutually exclusive, the

Court stating instead that indeedee, copyright's purpose is to promote the creation and




SSee generally, Michael D. Birnhack, NIMMER ON COPYRIGHT, #19E.01, (David Nimmer & Melville Nimmer eds.,
Matthew Bender, New York 2007)(discussing the history of the conflict and contemporary criticisms of copyright
law and the First Amendment).
2 See Eldred v. Ashcroft, 537 U.S. 186, 218-22 (2003); Harper & Row Publ., Inc. v. Nation Enter., 471 U.S. 539,
555-60 (1985).
3 Eldred, 537 U.S. at 219; Harper &~ Row, 471 U.S. at 558.










publication of free expression."4 The Court noted two additional built-in First Amendment

safeguards in copyright law. First, the idea-expression dichotomy prevents copyright law from

limiting the spread of ideas, only the unique expression of them.6 Thus it follows that "every

idea, theory, and fact in a copyrighted work becomes instantly available for public exploitation at

the moment of publication."' Second, the doctrine of fair use, as previously explained, allows

free use of protected expression when used appropriately for comment, criticism, parody, news

reporting, or educational uses.8 Both copyright' s protection of only the expression of ideas and

the fair use doctrine ensure that First Amendment rights reserve space within copyright law.

However, within the secondary infringement doctrines, such First Amendment concerns

have sometimes taken a backseat to balancing copyright owner's interests with innovation

protecting goals. This can be seen clearly in Sony's substantial noninfringing use doctrine,

protecting from secondary liability innovators of dual-use devices capable of both infringing and

noninfringing uses.9 The doctrine focuses on the acceptability of devices under copyright law,

and generally fails to gauge the impact that declaring a device infringing may have on end-user

creativity .

Nevertheless, it can be logically argued that First Amendment concerns are represented

deep within the Sony doctrine. The substantial noninfringing uses test exists in large part to

preserve technological innovation where copyright law may unintentionally inhibit it. 10 As

freedom for technological innovation increases, so too increases creative freedoms from end-


SEldred, 537 U.S. at 219 (emphasis in original).
SId. at 219-20.
6 Id. at 219.
SSee Eldred, 537 U.S. at 219: Feist Publ'n., Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 349-50 (1991).
SSee 17 U.S.C #107; Eldred, 537 U.S. at 219-20: Harper &~ Row, 471 U.S. at 560("latitude for scholarship and
comment"): Campbelly. Acuff-Rose Music, Inc., 510 U.S. 569 (1994Vl.nlodi as fair use).
9 See Sony v. Universal City Studios, Inc., 464 U.S. 417, 442 (1984).
'O See Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Inc., 545 U.S. 913, 956-57 (2005)(Breyer, J., concurring).










users of the technology. 1 Indeed, within the Sony opinion is a deference to First Amendment

creative interests through the encouragement of innovative noninfringing technology. 12 It said

copyright is merely the "means by which an important public purpose may be achieved .to

motivate the creative activity of authors .. by the provision of a special reward, and to allow the

public access to the products of their genius after the limited period of exclusive control has

expired."13

The substantial noninfringing use test does this in part by providing clarity to innovators

that they will be free from liability in bringing their technologies to market when they are

capable of substantial noninfringing uses. 14 It follows that the more comfortable an innovator

feels in bringing its product forward, the less likely it will be to restrict the expressive activities

of its users. Internet video hosting technologies like YouTube allows individuals to express

themselves creatively like never before, and the less threatened innovators feel by potential

litigation, the freer they will be in allowing users to be fully creative.

Unfortunately, the present interpretation of the substantial noninfringing use doctrine

remains unclear. Although the Supreme Court' s new inducement test in Grokster granted a new

tool of fighting infringement for copyright owners, the continuing power of Sony' s test remains

questionable because the maj ority opinion avoided deciding the matter entirely. 1 While the

Court did not overrule Sony, the two concurring opinions interpreting the doctrine split evenly





11 See Kevin A Lemley, The Innovative M~edium Defense: A Doctrine to Promote the M~ultiple Goals of Copyright
in the Wake ofAdvancing Digital Technologies, 110 PENN. ST. L. REV. 111, 112-13 (2005).
12 See Sony, 464 U.S. at 429.
13 Id.
14 Grokster, 545 U.S. at 956-57.
'5 Id. at 924 (majority opinion)("It is enough to note that the Ninth Circuit's judgment rested on an erroneous
understanding of Sony and to leave further consideration of the Sony rule for a day when that may be required.").










between six justices. 16 This split is further complicated by the fact that Justice O'Connor and the

late Chief Justice Rehnquist are no longer on the court, Justices Souter, Scalia, and Thomas

declined to comment on the matter, and the Court' s new additions, Chief Justice Roberts and

Justice Alito, have not yet had an opportunity to weigh in on the matter.

Despite this uncertainty, Justice Stephen Breyer' s concurring opinion in Grokster subtly

implies the importance of fostering creative freedom through the continuing interpretation of the

Sony substantial noninfringing use doctrine. 1 His interpretation sought to promote the

development of innovative technology through a broadly applicable substantial noninfringing use

test. Is Although never directly mentioning the First Amendment, Justice Breyer expressed the

concern that no test should result in a "significant diminution in the amount or quality of creative

work produced," which he declared as the basic obj ective of copyright law. 19 As a result, should

the Court revisit the application of the Sony test in the future, it would find Justice Breyer' s

interpretation useful.

Justice Ginsburg, no doubt, gives a thoughtful analysis of the doctrine from her point of

view as well. Justice Ginsburg disagreed with Breyer' s characterization of the test as only

applicable where a product "will be used almost exclusively to infringe copyrights."20 IHStead,

she found that Grokster was "overwhelmingly used to infringe" and that "the infringement was

the overwhelming source of revenue from the products."21 She argued that simply because there

were a large number of noninfringing uses, it did not follow that they outnumbered the infringing


16 C~f Grokster, 545 U.S. at 942-49 (Ginsburg, J., concurring) with Grokster, 545 U.S. at 949-66 (Breyer, J.,
concurring).
'7 See Grokster, 545 U.S. at 957-66 (Breyer, J., concurring).
1s See id.
19 Id. at 961.
20 Grokster, 545 U.S. at 944 n. 1 (Ginsburg., J. concurring)(quoting Justice Breyer's concurring opinion, 545 U.S. at
957).
21 Id. at 948.










uses.22 Further, the number of noninfringing use may have been large, yet dwarfed by the

volume of infringing uses.23 However, following Justice Ginsburg' s concurrence would

ultimately result in too many useful communicative devices being stifled due to not being able to

meet her high evidentiary standard of substantial noninfringing use.24 JUStice Breyer' s

concurring opinion, though merely persuasive, offers an analysis of why the substantial

noninfringing use standard should continue to be interpreted broadly to allow for fullest

development of innovative noninfringing uses.

In short, Justice Breyer would have found the Grokster peer-to-peer fie sharing software to

have been sufficiently capable of substantial noninfringing use, although it probably would still

be found liable under the inducement standard.25 He stated that "the Sony standard seeks to

protect not the Groksters of this world .. but the development of technology more generally."26

In applying the test to the Grokster facts, he found that importance should be placed on Sony' s

use of the word "capable" in "capable of substantial noninfringing uses. 27 JUStice Breyer read

it to mean that potential future uses of the product were essential to determine "capability."28

Within the context of the Grokster software, Justice Breyer identified a large number of

legitimate noninfringing uses the software can be put to since it could be used to share any type

of Eile. 29 The capability should be rooted in "plausible, not simply a theoretical, likelihood that

such uses will come to pass."30 Specifieally, the software could be used for the swapping of



22Id. at 948.
23 Id
24 See Grokster, 545 U.S. at 942-49 (Ginsburg, J., concurring).
25 Id. at 955 (Breyer, J., concurring).
2 6Id
27 Id. at 953 (quoting Sony, 464 U.S. at 442).
28 Id. at 953.
29 Id. at 954.
30Id. at 958










research information, public domain films, historical recordings and educational materials,

original digital photos, "shareware" and "freeware," secured licensed music and video files,

news broadcasts past and present, user-generated audio and video, and all other "free and open

content."31 Due to the natural progression of the incredible growth of the Internet, Justice Breyer

found no reason to believe that such noninfringing uses would not continue to rise.32 He also

noted that while it is tempting to shut down technology with infringing uses, the unforeseen

benefits of it can far outweigh the early costs, as seen through the copyright industry's later

exploitation of the home video market after its initial resistance to the VCR.33 Thus, he

concluded that a broad, forward-looking substantial noninfringing use test was essential to

protect innovative technologies.34

It is in Justice Breyer' s restrained view where the tacit First Amendment considerations

can be found, finding that courts should resist jumping too fast to suppress innovation.35 As

stated above, the Sony rule adds substantial clarity for developers of new products to assess their

potential legal liabilities in bringing a new product to market. 36 The "price of a wrong guess," as

Justice Breyer points out, can result in up to $30,000 per infcringed work.37 Thus, the greater

legal certainty an innovator has, the more likely they are to extend greater creative freedoms to

its end-users. Greater freedom for innovation begets equally great freedom of expression by

virtue of the use of incredible new technologies capable of spreading ideas to more people

around the world faster and through more creative media such as online video.



31 Id. at 954.
I2d. at 955
33Id
34See id.
35See id.
I6d. at 957.
r7 Id. at 960.










The real effect of the rule is the deterrence from developing products specifically to

infringe copyrights.38 While it may have a slightly chilling effect, it only truly chills what it

aims to eliminate in the first place--products with the sole intent of infringing copyright.39 In

fact, Breyer remarked that Sony "recognizes that the copyright laws are not intended to

discourage or to control the emergence of new technologies," but instead, through an incentive

system, aims to "help disseminate information and ideas more broadly or more efficiently."40

This is a maj or nod toward the First Amendment, demonstrating a twin purpose of the substantial

noninfringing use doctrine in aiding the spread of creative expression.

Most importantly, Justice Breyer asked whether his interpretation of the substantial

noninfringing use standard "lead[s] to a significant diminution in the amount or quality of

creative work produced?"41 This is a simple reiteration of the previously mentioned idea that

free innovation naturally leads to greater First Amendment creative outcomes. In Grokster,

Justice Breyer measured the impact on creativity through copyright industry revenues, finding

that allegedly declining profits in the music industry were largely not substantial.42 However, in

today's Internet world, while industry revenue is important, equally important is the creative

impact of user-generated content. As a result, future applications of the substantial noninfringing

use test would be most beneficial to the First Amendment goal of encouraging creativity by

following Justice Breyer' s broad, innovation-protecting test.







38Id. at 957.
3 9 Se d.
o0 Id. (emphasis added).
41 Id. at 961.
I2d. at 962.










Safe-Harbor Burden Shifting: The Future is in the Filter

Despite the uncertainty regarding substantial noninfringing uses, what is certain is that if a

defendant prevails against YouTube and other websites on a secondary liability theory, the

Digital Millennium Copyright Act (DMCA) (512 safe harbor offers an important potential

escape hatch from liability. It also functions as an effective mechanism for copyright owners to

remove unauthorized copyrighted content from video-sharing websites outside of the judicial

process. Yet, while the legal battles ensue over the application of the safe harbor to YouTube

and other websites, this effective tool for copyright owners and hosting websites alike creates a

problem for end-users by creating an extra-judicial process with little power of appeal for the

end-user.43 In addition, as will be explained below, the development of filtering technologies,

which is not covered directly by the DMCA, takes the process to an even greater extra-judicial

level, with absolutely no power to the end-user in its current developmental state.

The notice-takedown process under DMCA @5 12 shifts the burden of proof to the end-user

in an extra-judicial manner that is unique within copyright law. The traditional copyright

litigation process generally calls for private enforcement empowered by the copyright statute. In

order to prevent infringement, or obtain damages for past infringement, a copyright owner must

file a complaint in a federal court seeking injunctive or monetary relief. As in any civil trial, the

burden to prove copyright infringement is placed upon the complaining party.

However, as many commentators have noted, the DMCA's notice and takedown rules turn

this normal process around.44 It ultimately places upon the end-user the burden to prove their



43See generally 17 U.S.C. # 512(c)(3) & 512(g).
44See Jennifer M. Urban & Laura Quilter, Efficient Process or "Chilling Effects"? Takedown Notices Under
Section 512 of the Digital Millennium Copyright Act, 22 SANTA CLARA COMPUTER & HIGH TECH. L.J. 621, 637-38
(2006); Emily Zarins, Notice Versus Knowledge Under the 111C4 's Safe Harbors, 92 CAL. L. REV.
257, 291-95 GI lr'4); Colin Folawn, Keighborhood Watch: The .1;o..ar ofRights Caused by the Notice
Requirement in Copyright Enforceinent Under the 111C4, 26 SEATTLE U. L. REV. 979 (2003); Alfred C. Yen,










use is authorized or fair. When a copyright owner issues a notice of infringement to a service

provider, as laid out in (512(c)(3), the provider must expeditiously remove the complained of

content, or risk losing the safe harbor.45 The copyright owner' s notice must meet certain simple

formalities, as required by the statute, to aid in the provider' s removal of the content.46 The only

legally significant element of the notice is that the copyright owner must state a good faith belief

that the use of the material is unauthorized, and affirm under the penalty of perjury that the

notice is accurate.47 COpyright owners may also be liable for damages and attorney's fees

resulting from material misrepresentations made in the notices.48 Beyond these two legally

significant constraints, copyright owners are otherwise free to send notices to take down

allegedly infringing content without great concern for the effect on end-users. In addition, a

recent study of takedown notices revealed that copyright owners were often over-zealous in

sending notices and they were frequently used by rivals for anti-competitive purposes.49

The burden shift begins when service providers are left with no other choice than to take

the material down in order to remain within the safe harbor upon receiving a notice. In order

for the end-user to restore the burden to the copyright owner alleging infringement, the user must

then file a sufficient counter-notice stating their good-faith belief that they have the right to use

Internet Service Provider Liability for Subscriber Copyright Infringement, Enterprise Liability, and the First
Amendment, 88 GEO. L.J. 1833, 1888 (2000). See also Lawrence Lessig, Make Way for Copyright Chaos, N.Y.
TIMES, Mar. 18, 2007 (Op-Ed Contribution) available at
http://www.nytimes.com/2007/03/18/opinion/8esghtle=31870400&en=5a2a6ea9bc52f3fc&ei= 5 124&part
ner-permalink&exprod=permalink (last visited Feb. 18, 2008).
45 #512(c)(1)(C).
46 #512(c)(3)(A). The notice must substantially comply by providing (i) identification of the copyrighted work or a
representative list of multiple works; (ii) identification of the infringing material; (iii) information reasonably
sufficient to locate the material; and (iv) contact information; (v) a physical or electronic signature; (vi) a statement
of good faith that the use of the material is not authorized; and (vii) a statement under penalty of perjury that the
notice is accurate. Id.
47 #512(c)(3)(A)(v)-(vi).
48 #512(f)(1).
49 See Jennifer M. Urban & Laura Quilter, Efficient Process or "Chilling Effects"? Takedown Notices Under
Section 512 of the Digital Millennium Copyright Act, 22 SANTA CLARA COMPUTER & HIGH TECH. L.J. 621, 637-38
(2006).










the content in question.so Then, after counter-notice is received, the service provider, has

fourteen business days to reinstate the content, unless they are first notified by the original

complainant that a lawsuit has been Eiled seeking an injunction against the end-user." Only after

the entire notice-takedown process takes place, and a lawsuit is Eiled in federal court against the

end-user, is the burden of proof once again restored to the copyright owner plaintiff.

This burden shift results in a number of chilling effects on user creativity. First, most users

are largely unaware and undereducated regarding the DMCA notice-takedown process. Thus,

when users are faced with their first complaint and their video is disabled, they are often left

baffled as to why their video was disabled, and what, if any, recourse they may take. Second,

and more than anything else, should they understand their rights to counter-notice, they are likely

intimidated by the possibility of being sued by a powerful media conglomerate if they challenge

the counter-notice. This intimidation factor was obviously not intended by Congress in

formulating the rules, but it is the effective result. Third, as a study of a sample of takedown

notices revealed, the process is rather susceptible to abuse.52 Though it did not particularly

concentrate on (512(c), it found that notices were often issued without a good understanding of

copyright law and were often used for competitive purposes against rivals.53

A number of suggestions have been made to alleviate the chilling effect and resulting

burden shift by (512(c). Some have suggested that some semblance of due process should be

built back into the system.54 This could be done by delaying the takedown until opportunity for


so #512(g)(3).
51 #512(g)(2)(C).
52 Jennifer M. Urban & Laura Quilter, Eff cient Process or 1 /tell, a Effects "? Takedown Notices Under Section
512 of the Digital Millennium Copyright Act, 22 SANTA CLARA COMPUTER & HIGH TECH. L.J. 621, 687-88 (2006).
53 Id. at 683-85.
54 See id. See also Malla Pollack, Rebalancing Section 512 to Protect Fair Users from Herds ofi~ice-
Trampling Elephants, or A Little Due Process Is Not Such a Dangerous Thing, 22 SANTA CLARA COMPUTER &
HIGH TECH. L.J. 547 (2006).










counter-notice has expired, although it would admittedly prevent the ability of copyright owners

to force removal of trly infringing time-sensitive content.55 Another suggestion is to limit (512

notices to commercial uses only, yet this would require further extra-judicial judgment calls on

fair use. 56 A suggestion from outside the scope of the DMCA proposes using Anti-SLAPP suits,

primarily used in fighting frivolous defamation lawsuits, against service providers for improperly

labeling a user a "repeat infringer" based solely upon DMCA notices without further

adjudication. 57 Although the statute could arguably be improved in a number of ways, because it

has operated for over ten years within the industry, it is unlikely that substantial revision will

occur regarding the notice-takedown procedures.

However, the introduction of filtering technologies into the process has raised further

burden shifting questions. Though in no way required by (512, service providers are

increasingly being encouraged to install filtering technology to catch infringing material before it

goes public on a website, as seen through YouTube's recently announced pilot filtering program

in conjunction with copyright owner partners.' Additionally, service providers other than

YouTube and various copyright owners have also begun exploring filtering standards and issued

a set of principles that will be addressed in the next section. 59



55Urban & Quilter, supra note 49,at 688-89.
56 Malla Pollack, supra note 54.
57A "SLAPP" lawsuit is a "strategic lawsuit against public participation," and looks to counterbalance the chilling
effect of frivolous defamation lawsuits by giving the wrongly sued a private right of action against the frivolous
accuser. See Lauren McBrayer, The DirecTV Cases: Applying Anti-SLAPP Laws to Copyright Protection Cease-
and-Desist Letters, 20 BERKELEY TECH. L.J. 603 (2005).
58 See YouTube Video Identification Beta, http://www.youtube.com/t/video id about (last visited Feb. 16, 2008).
See also Miguel Helft, Google Takes Step on Video Copyrights, N.Y. TIMEs, Oct. 16, 2007, available at
http1 un \\\\.nytimes.com/2007/10/16/business/16video htl?_&ref=business&pagewanted=all&oref=slogin (last
visited Feb. 20, 2008); Andy Greenberg, You Tube 's Filter Fails to Please, FORBEs, Oct. 18, 2007, available at
http://www.forb~es.com/2007/10/1 8/google-viacom-video-tech-cx~ag_10 18youtube.html (last visited Feb. 20, 2008);
Matthew Bellioni, You Tube Can 't Filter Two Sets of Critics, HOLLYWOOD REPORTER, Oct. 26, 2007, available at
htl1 \p w\ il .hollywoodreporter. com/hr/content~display/business/news/e3 ia9a3 9f26ada8cfl664 17fl57b5a94eee (last
visited Feb. 20, 2008).
59 See UGC Principles, infra note 64 and accompanying text.










The hallmark of the current filtering technology is that is a cooperative effort between the

copyright owner and service provider.60 The filter operates only where a copyright owner

provides the service provider with copies of works it seeks to protect. 61 In fact, without

cooperation from copyright owners, the filter itself could result in copyright infringement. The

filter then matches the supplied copyrighted material against videos on their website, and

depending on how the filter is set to operate, may remove videos or prevent them from being

uploaded in the first place.62 This j oint development of the technology between innovators and

copyright owners avoids Kevin Lemley's "technological veto," working against the usual

tendency of copyright owners to stifle innovative technologies and instead to manage the new

technology to work best for both parties involved.63 In addition, as Tim Wu noted, with new

technologies, copyright owners typically buy-off innovators.64 However, with filtering as it is

currently being developed, it seems that copyright owners are being slowly bought-off by the

powerful innovators such as Google with the innovators dictating the terms of the filter, forcing

copyright owners to accede. The prevention of videos from being uploaded in the first place, or

pre-live filtering, also begs the question of whether such a process can quickly become an

unintentional prior restraint on free speech.

However, the biggest problem is that automatic filtering obviates the safe harbor' s

preference that removal of allegedly infringing material stem from either actual or "red flag"

knowledge, or via specific takedown notice procedures.65 Pre-live filtering takes the extra-



60 See supra note 58.
6 1 Id
6 2Id
63 See Kevin A Lemley, The Innovative M~edium Defense: A Doctrine to Promote the M~ultiple Goals of Copyright
in the Wake ofAdvancing Digital Technologies, 110 PENN. ST. L. REV. 111, 112-13 (2005).
64 See Tim Wu, The Copyright Paradox, 2005 SUP CT. REV. 229, 248 (2005).
65 #512(c)(1)(C).










judicial nature of takedown one step further, and actually takes the process out of the jurisdiction

of the DMCA since it involves no takedown notice in the first place. If a video is summarily

removed from a website by a filter, there is no statutory-based guaranteed right of counter-notice,

and the video never goes "live" on the website in the first place. This is not to say that such a

program is not fully within the private contractual rights of the service provider and copyright

owner, however, it appears to seek approval from within (512, while at the same time avoiding

its larger intent of due process rights of the end-user.

The intent of the safe harbor was to provide copyright owners an efficient process to fight

infringement, while providing greater certainty of service providers' potential legal liabilities.66

However, it is clear that Congress simply did not anticipate the enormous scale of the resulting

problem created by the safe harbor. It is also clear that the future direction of infringement

prevention lies not just in takedown notices, but in developing efficient and fair filtering

technology.67 However, it is not currently within the dictates of the (512 safe harbor statute to

ensure the right of end-users to somehow appeal should they disagree with an automatic filter' s

removal. As the Supreme Court said in Sony, the legislative option is always available

concerning new technologies, "but it is not our j ob to apply laws tht have not yet been written."68

Thus, it is necessary to amend @512(c) to allow for pre-live filtering in order to guarantee

the due process rights of end-users in the filtering process. Although it has been argued that the

safe harbor is already over-legislated,69 the fact remains that without such an amendment, users




66 H.R. Rep. 105-551(II), at 49-50 (1998)("[Section 512] provides greater certainty to service providers concerning
their legal exposure for infringements that may occur in the course of their activities").
67 See supra note 58.
68 Sony v. Universal City Studios, 464 U.S. 417, 431 (1984).
69 See e.g. Tim Wu, Copyright Conununications Policy, 103 MICH. L. REV. 278, 344 (Gi r'll ; Jessica D. Litman,
Copyrightles;* J,te.. and Technological C As s;.., 68 OR. L. REV. 275, 276 (1989).









will have absolutely no guarantee of due process expectations when their videos are immediately

removed by a filter. The preamble to g512(c) currently reads:

(c) Information Residing on Systems or Networks At Direction of Users.-

(1) In general.-- A service provider shall not be liable for monetary relief .. for
infringement of copyright by reason of the storage at the direction of a user of material that
resides on a system or network controlled or operated by or for the service provider, if the
service provider--.7

The proposed amendment would add a fourth category of immunity and should read as follows:

(D) institutes filtering technology of the initial user-directed upload, if in cooperation with
a copyright owner, subj ect to the following conditions:

(i) If a filtering technology finds material to be infringing, a service provider may block the
content from appearing on the website only if it first notifies the subscriber.

(ii) Such notice shall include identification of the blocked material, the copyright owner
requesting the blocking, and instructions on how to file a counter-notice as set forth in
section (g)(3).

(iii) Upon receipt of a counter-notice, the service provider must immediately unblock the
material. Only upon notice of a lawsuit filed by copyright owner seeking injunctive relief
may service provider continue blocking the material.

(iv) "filtering technology" means any automated process having the ability to block
infringing content, incorporated by a service provider into the process of uploading content
at the direction of a user.

(v) "in cooperation with a copyright owner" means that a service provider's filter is limited
to blocking material as directed by a copyright owner, in which the owner possesses the
exclusive right to prohibit its distribution, public display, public performance, or
reproduction

The proposed amendment would add a fourth category of immunity, in a similar fashion to

~512(c)(1)(C)'s grant of immunity for compliance with the notice-takedown procedures. It

would have the effect of encouraging the development of filtering in cooperation with copyright

owner partners, as is the current industry norm.n The filter' s immunity would only be effective



0 #512(c)(1).
71See supra note 58.









where it was developed in cooperation with copyright owners, and would only apply to litigation

brought by that copyright owner against the service provider. It also mirrors current filtering

technology, in which a copyright owner must opt-in to using the filter by submitting copies of

what it wants to prevent access to.72 This would encourage copyright owners and websites to

work together to provide a solution amenable to both parties.

Most importantly, since filtering is inevitably part of the long-term solution, as evidenced

by the current testing, it is essential to guarantee end-users the right to challenge the blocking.

Currently, if a filter automatically blocks an upload, the user has absolutely no recourse against

the service provider or copyright owner. This amendment would, at the least, incorporate

blocking as a result of filtering into the counter-notice process according to g512(g)(3). While

such an amendment would not be without great criticism for expanding the safe harbor, it brings

much-needed assurance to the end-user that their rights will not be wholly usurped by the

interests of copyright owners and service providers in the filtering process that seems to be

increasingly more likely in the process. Though copyright scholars such as Jessica Litman

caution against the "fact-specific" statutes dictated by the copyright industry, the addition to the

law suggested above gives end-users greater control over the process rather than the incumbent

copyright industry.'

Filtering User-Generated Content While Preserving Fair Use

Whether or not filtering legislation is adopted, it is without question that hosting websites

such as YouTube make extremely valuable contributions to promoting the progress of useful arts

as the Constitution encourages through copyright.74 In early 2008, it was estimated that 48% of



72 See id.
73 See Jessica D. Litman, Copyrightlege J,te,.. t and TechnologicalC14, ig.., 68 OR. L. REV. 275, 276-77 (1989).
74 U.S. CONST., art I, sec 8, cl. 8.










all American Internet users had visited a video-sharing website such as YouTube.75 The same

study found that 22% of Americans shot their own videos, and 14% of uploaded them to the

Internet-more than triple the number than responded to the same question in 2006.76 Never

before have individuals had such enormous power to communicate across the world their ideas,

passions, and creative works. It is hard to deny the increase in visual creativity inspired by user-

generated content (UGC) hosting sites. As professor Joseph Liu noted, it is digital technology

that allows the consumer to assume an active role with greater autonomy in selecting the manner

in which to consume copyrighted works." With the rise of user-generated content, consumers

now have greater autonomy

YouTube makes a significant contribution by making the ability to communicate possible,

free of charge, to all users of the Internet. On YouTube alone, the amount of comment, criticism,

parody, satire, and political speech is astounding relative to the previous methods available to

individuals to express themselves publicly. However, one of the greatest dangers that user-

generated content faces is the attempts to control new media like YouTube by incumbent

copyright owners who are uncomfortable losing their audiences to the Internet. It is rather easy

for the promise of completely legal and original user-generated content to become swallowed up

by the legal battles over control of this new media. Even more problematic is the suppression of

fair-use content, which may be summarily dismissed as infringing due to the unbalanced notice-

takedown process that skews in favor of copyright owners.'" While it is fair for copyright





75 Lee Rainee, Increasing Use of Video we aa,,, Sites, PEW INTERNET & AMlERICAN LIFE PROJECT, Jan 9, 2008, at 1
available at http://www.pewinternet.org/pdfs/Pew_VideosaigmmaO.d (last visited Feb. 16, 2008).
76 Id. at 3.
n7 Joseph P. Liu, Copyright Law 's Theory of the Consumer, 44 B.C. L. REV. 397, 406-07 (2003).

78See supra notes 44-57 and accompanying text.










owners to vigorously defend the exclusive rights in their works, it is not justified at the price of

chilling end-user creativity.

With these conflicting interests in mind, two sets of industry-generated standards have

been developed to encourage protection of original and fair use user-generated content. The

first-ever set of nonbinding UGC principles was agreed to by a number of copyright industry

companies and hosting websites on October 18, 2007.79 On the content side were CBS, Viacom,

NBC-Universal, Fox Entertainment Group, and The Walt Disney Company, and agreeing on the

UGC side were DailyMotion, Microsoft, My Space, and Veoh Networks.so Notably absent from

this group, of course, was Google and YouTube, who had reportedly been in discussions about

joining the group, as well as representatives of a number of other motion picture studios and any

of the music industry."

The principles recognize the common goal of "bringing more content to more consumers

through legitimate channels."82 The UGC Principles read much like a statute, and as noted

below, reflect a number of elements directly out of the DMCA @512 safe harbor.8s3 It also largely

focuses on the ability of filtering technologies to recognize copyrighted content and sets out a

formulaic method in its application. Common filtering technologies require copyright owners to

submit full-length copies of their copyrighted works called the "reference material."84 The

filtering technology then takes the "reference material" and analyzes it against user-generated



79 User Generated Principles, http://www.ugcprinciples.com (last visited Feb. 17, 2008)(hereinafter UGC
Principles).
so Press Release, User Generated Content Principle s, http://www .ugcprinciples. com/pres s_release.html (last visited
Feb. 17, 2008).
st Merissa Marr & Kevin J. Delaney, Disney, Microsoft Lead Copyright Pact, WALL ST. J., Oct. 19, 2007, available
at http://online.wsj .com/public/article/SB 11926978872 1663302.html (last visited Feb. 17, 2008).
82 Press Release, User Generated Content Principles, supra note 80.
83 See infra note 91 and accompanying text.
84 See supra note 58.










uploads looking for digital commonalities in the works."' The highlights of the fifteen-point

principles are summarized as follows:

UGC websites should inform users of copyright policies and prominently display
them during the upload process86
"Content identification technology"(filtering) should be used to the point technically
feasible to eliminate infringing material with the participation of copyright owners by
submitting "reference material" that filters use to match against infringing content, at
according to the requests of the copyright owner"
Filtering should consider the interests in blocking infringing content, protecting
wholly original and authorized content, and accommodating fair use
UGC hosting websites should be permitted to utilize human review89
"When sending notices and making claims of infringement, Copyright Owners should
accommodate fair use"90
Comply with the notice-takedown requirements of the DMCA, accommodation of
standard technological measures, and repeat infringer policies.91

In response to the industry's UGC Principles, the Electronic Freedom Foundation (EFF),

an Internet civil-liberties interest group, issued a response set of principles regarding the

preservation of fair use of user-generated content. 92 The EFF was j oined by a number of other

similarly interested groups,93 and put forth six basic principles of its own aimed at preserving fair

use of user-generated content. The six principles are summarized as:

*Preserve transformative, creative works "employed for purposes of comment,
criticism, reporting, parody, satire, or scholarship"94

85See id.
86 UGC Principles, supra note 79, at 11-2.
87See id. at 13(a)-(c), (e), (g)-(i).
88Id. at 13 (d).
89Id. at 13(f).
90 Id. at 16.
91 Id. at 17-9, 11, 14-15.
92 Electronic Freedom Foundation, Fair Use Principles for User Generated Video Content,
blllp w\ il \t .eff.org/files/UGCFair Use BestPractices_0.d (last visited Feb. 16, 2008)(hereinafter Fair Use
Principles).
93 Other groups signing on to the fair use principles includes the Center for Social Media, School of
Communications, American University; Program on Information Justice and Intellectual Property, Washington
College of Law, American University; Public Knowledge; Berkman Center for Intemnet and Society at Harvard Law
School; the American Civil Liberties Union of Northemn Califomnia; and the Fair Use Project at Stanford Law
School's Center for Intemnet and Society. Id.
94 Fair Use Principles, supra note 92, at 11.










When automatic filtering takes place, it should not automatically result in a
takedown. Automatic takedown should be subject to a "three strikes" rule
requiring filtering technologies to be able to confirm (1) the video track matches
the video track submitted by the copyright owner, (2) the audio track matches the
copy submitted by the owner, and (3) nearly all of the challenged content is of a
single copyrighted work. If all three strikes are not met, the video should be
subj ect to human review before a notice is sent95
Hold to the DMCA' s requirement of a receiving a "notice" prior to taking down
content of questionable copyright96
Promptly notify users of a takedown of their content97
Allow users an informal "appeals" process where they can request a
reconsideration and explanation of the takedown98
Promptly reinstate UGC when a proper counter-notice is served.99

Both the industry's UGC Principles and the Fair Use Principles aim to meet the broader

needs of the copyright industry, online technologies, and the end-user. Both guidelines are

altogether useful, offering a roadmap of best practices for any UGC startup or content owner

looking to protect their copyrighted works. However, the UGC Principles tend to place most of

the focus on adopting filtering technologies and reiterating responsibilities all parties must

adhere to under DMCA @512. 100 It does little other than say that all should be done while

"accommodating fair use,"'ot which is already implied by the statutory fair use defense. 102 At the

same time, the Fair Use Principles attempt to restrict filtering technologies through its "three

strikes" requirement for automatic removal and emphasis on human review when it is not met. 103

This has the net effect of rendering filtering ineffectual due to the heavy reliance on human

review, which can impose great costs and prove wholly impractical due to hgh volume.


95 Id. at 12.
96 Id. at 13.
97 Id. at 174.
98 Id. at 15.
99 Id. at 16.
100 See UGC Principles, supra notes 86-88 and accompanying text.
10' Id. at 16.
102 17 U.S.C. #107 (1999).
103 See Fair Use Principles, supra notes 94-99 and accompanying text.









However, a compromise may yet arise between both proposals which protects fair use.

Filtering technologies are only in their infancy, and must be allowed to fully develop through

trial and error. YouTube's partnership with copyright owners in developing the technology is an

encouraging step towards thiS. 104 Equally encouraging is the acknowledgement by all parties

involved in both proposals that some amount of human review will ultimately be necessary in

order to determine fair use. This, however, makes UGC websites nervous, contemplating

hundreds of additional employees for the sole purpose of screening videos. 1os Yet, increasing

filtering precision will alleviate this, as well as creating incentives to increase filtering accuracy.

Without a doubt, filtering is a large part of the future of UGC websites. The development

of similar technology helped build Google's search tools, and benefited the Internet in numerous

ways. Therefore, a middle-position can be found through a slight adjustment to the Fair Use

Principles' "three strikes" rule, within the context of the UGC Principles' commitment to further

developing filtering technologies. The Fair Use Principles' "three strikes" rule proposes that a

website only allow automatic removal of content identified by a filtering mechanism where (1)

the video track matches the video track of a work submitted by the copyright owner, (2) the

audio track matches the audio track of "that same copyrighted work," and (3) "nearly the entirety

(e.g., 90% or more) of the challenged content is comprised of a single copyrighted work (i.e., a

'ratio test')."106

It is unquestionable that this test will find a great deal of infringing content, but it is over-

restrictive in favor of fair use and would not allow a carefully developed fi1ter to do its j ob.

Requiring a filter to Eind both significantly infringing video and audio content derived from the


104 Y~uTube Video Identification Beta, http://www.youtube.com/t/video_id about (last visited Feb. 16, 2008).
'05 See Andy Greenberg, YouTube 's Filter Fails to Please, FORBEs, Oct. 18, 2007, available at
1lutp \\ \\ \\.forb~es.com/2007/10/1 8/google-viacom-video-tech-cx~ag_10 18youtube.html (last visited Jan 28, 2008).
106 See Fair Use Principles, supra note 92.









samne copyrighted content would prove to under-report blatantly infringing content, and as a

result over-burden human reviewers. For example, a video could still be infringing through its

visual material even without its original audio tracking if the visual content is simply copied

verbatim from the original. Just the same, the reediting of a work visually within the tenets of

fair use, but overlaid with an unauthorized full-length song without a fair-use basis, similarly

infringes the copyright of the music owner.

There is little doubt that the fair use test was not developed with bright line rules in mind,

but instead on a case-by-case basis in a courtroom. 107 However, the digital world, and filtering

in particular, needs bright line rules of some kind in order to function. At its very basis, a

computer filtering program is nothing more than a complicated series of commands based upon

small bright line if-then statements. A filter is thus built upon the same basic architecture--it

only filters what you tell it to filter.

Therefore, the following test should be applied to allow for fair use within the framework

of filtering. First, a "three strikes" test should remain in order to limit the amount of videos

summarily identified and removed. However, the test must take into account that a video may be

infringing by either audio or visual means, not just both. A reworked "three strikes" test would

allow that automatic removal where (1) the video track matches the video track of a work

submitted by the copyright owner, or (2) the audio track matches the audio track of a work

submitted by the copyright owner, and (3) the matching video or audio track consists of nearly

all of the allegedly infringing work.

The filter will then use the "three strikes" test to ascertain a "fair use ratio score," taking

into account the proportions of matching video and audio tracks. Every video on a website starts

'07 Campbell v. Acuff-Rose Music, Inc. 510 U.S. 569, 577 (1994) ("The fair use doctrine thus "permits [and
requires] courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very
creativity which that law is designed to foster. Stewart v. Abend, 495 U.S. 207, 236 (1990)").










will an assumed full fair use ratio score. The longer a matching video or audio segment, the

lower the resulting score. Very short or brief matches will not result in significant point

decreases to preserve users ability to comment and criticize. For example, a video track spliced

with still screens of commentary would have a lower score than the same video un-spliced

because the original video track would only match in smaller segments. Three levels of scores

will then result. The lowest level will result in summary removal of a video as infringing, which

will only result in videos where almost the entire video consists of identical video or audio

tracking. The middle level score will raise a "red flag" of infringement, resulting in human

review. Finally, videos with the highest scores will remain on the website and only be subj ect to

removal upon the receipt of a DMCA takedown notice from a copyright owner. In addition, as

the Fair Use Principles suggest, users whose videos are automatically removed by the filter

should have the ability to appeal to the website seeking reinstatement or explanation for removal.

This modification of the three strikes test and subsequent point system has three purposes.

First, it stands to preserve the incentive for UGC websites to institute and rely upon filtering

programs by giving them standards by which to design and improve filters. Such innovation, for

example, can already be seen in YouTube' s development of "hashing" technology, which,

through an unique algorithm, recognizes exact copies of previously removed videos and blocks

the re-upload of that same exact file. 10s Second, it gives copyright owners confidence that the

most blatantly infringing videos will be removed. Third, it takes the principles of fair use into

account in the filtering process, which before now was largely only paid lip service by the



'os Official Google Blog, Latest ContentlID Tool for Tou Tube, http ://googleblog.blogspot. com/2007/10O/latest-
content-id-tool-for-youtube.html (last visited Feb. 18, 2008). Hashing takes a video and creates a one-way
numerical code for it known as the "hash value" through a complex algorithm. The hash value is simply used to
detect any differences in two works. No two videos can ever have the same identical hash value, unless they are the
same exact video. See HARRY NEWTON, NEWTON S TELECOld DICTIONARY, "hash" "hash value"(CMP Books, San
Francisco 2004).










industries, agreeing that it would be "accommodated."109 This proposal, however, is not without

its weaknesses. It may not allow parodies and satires to which entire video or audio segments

might be integral. However, that is why there is a human review and appeal process. The

additional costs imposed with human review would theoretically decrease as the filtering process

improves.

It is also interesting to note that both proposals mirror significant parts of the (5 12 safe

harbor. A relevant question is whether this is evidence of the safe harbor' s success or a result of

its failures? In a way, the (512 safe harbor has resulted in the involved parties sitting at the same

table and having legitimate conversations regarding fair use rights for user-generated content.

Often, users' rights are ignored by competing industries, yet there is somewhat of the opposite

effect here, with two proposed sets of principles somehow addressing fair use concerns. It can

also be seen as the beginning of establishing cross-industry standard technological measures for

filtering, as one of the (5 12 conditions for eligibility requires whenever a new security measure

is adopted. 110 Another positive result is that is has taken the DMCA, a formalistic, black-and-

white statute, and allowed for more gray area providing breathing room for fair use.

Conversely, the negative influence of @512 can also be seen in the principles, namely the

formulaic handling of an inherently malleable standard of fair use. Previously, for example,

UGC websites were afraid of allowing human review of videos due to concerns that it would

result in the loss of the safe harbor by missing too many "red flags." Both the UGC Principles'

and Fair Use Principles' call for allowing for human review to determine fair use where

appropriate shows the DMCA' s failure to anticipate such needs to protect fair use. Many

copyright scholars have argued that copyright legislation has more often than not taken the form


109 See UGC Principles, supra note 79.
110 17 U.S.C. 512(i) (1999).










of "fact-specific" statutes aimed at approving or disapproving certain technologies, and that are

quickly turned irrelevant as new technology takes over. 11 Such specific statute-like principles,

especially the industry's UGC Principles, face the exact same dangers. They get so bogged

down in the details that they fail to see the big picture at hand, protecting the statutory right of

fair use.

First Amendment Test for Linking Websites

Finally, as previously detailed in the Chapter 4 case study of SouthParkzone.com, video

linking websites are some of the most popular forms of watching copyrighted works on the

Internet. 112 Their popularity stems from the aggregation of favorite TV shows and movies, often

found with the commercials conveniently removed. 113 The natural solution for television

copyright owners is to respond to this growing demand for online programming by building user-

friendly websites enabling users to view their favorite programming in an on-demand fashion.

As for the motion picture industry, there must be some urgency to develop web-based viewing of

full-length motion pictures to legitimize online viewing, similar to the success of iTunes in

legitimizing digital music for the recording industry. Yet, in the interim while the copyright

owners struggle to build legitimate viewing audiences online, and streaming technologies near

high-definition quality, linking websites will likely continue to grow in popularity.

As previously noted in the Chapter 4, it can be difficult for copyright owners to pin

liability to video linking websites for a variety of reasons. This is not simply due to off-shore

servers causing jurisdictional difficulties, but also due to First Amendment protection of linking



'" See e.g. Jessica D. Litman, Copyrightle ge J,te,.. t and Technological 14, ig.. 68 OR. L. REV. 275, 276 (1989).
See also Tim Wu, Copyright Communications Policy, 103 MICH. L. REV. 278, 292-97 (01 r'4); Jane C. Ginsburg,
Copyright and Control Over New Technologies ofDissemination, 101 COLUM. L. REV. 1613, 1619-20 (2001).
112 See Kevin J. Delaney, Free Viewing -- Threat for Big Media: Guerrilla Video Sites, Wall St. J., p.A1, Apr. 17,
2007.
1 13 Id










as a speech-related expression. However, copyright protection is often at-odds with the First

Amendment. 114 Linking can possess a speech element in addition to its functional element of

directing an Internet user to another web address. 11 The expressive element of a link retains

First Amendment protection, and therefore, a court-issued injunction restricting linking may be

subj ect to a higher level of scrutiny by an appellate court. 116

Although courts have issued injunctions for linking to infringing material based upon

secondary copyright infringement, none doing so have directly addressed the related First

Amendment issue. 11 One court found the fair use doctrine to sufficiently address the First

Amendment when considering linking to infringing material.ll Another court dismissed the

notion of First Amendment protection for linking to infringing material without further

articulation, stating simply that "the First Amendment does not give defendants the right to

infringe on legally recognized rights under the copyright law."119

The only maj or decision directly addressing First Amendment implications of enj oining

linking is thriversal City Studios v. Reimerdes, and its affirming opinion by the Second Circuit in

thriversal City Studios v. Corley. 120 However, Reimerdes application is distinguishable from

linking to infringing material because it addressed linking to websites containing illegal material



114 See generally, Michael D. Birnhack, NININER ON COPYRIGHT, #19E.01, (David Nimmer & Melville Nimmer
eds., Matthew Bender, New York 2007)(discussing the history of the conflict and contemporary criticisms of
copyright law and the First Amendment). See supra notes 1-8 and accompanying text.
11' See Universal City Studios v. Reimerdes, 111 F. Supp 2d 294, 339 (S.D.N.Y. 2000) aff'd by Universal City
Studios v. Corley, 273 F.3d 429, 455 (2d Cir. 2001).
""6Id. See also Suntrust Bank v. Houghton Mifflin Co., 268 F.3d 1257 (11th Cir. 2001)(finding that preliminary
injunction limiting the dissemination of the allegedly infringing book The Wind Done Gone was improper prior to
trial due to First Amendment considerations).
1'7 See generally Mark Deffner, Note, Unlawful Linking: First 4mendinent Doctrinal Dayse,, Iri,. in Cyberspace, 3
MINN. INTELL. PROP. REV. 111 (2002).
Its Arista Records, Inc. v. Mp3Board, Inc., 2002 WL 1997918, *12-13 (S.D.N.Y. 2002).
119 Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc., 75 F. Supp 2d 1290, 1295 (D. Utah 1999).
'20 See Universal City Studios v. Reimerdes, 111 F. Supp 2d 294, 339 (S.D.N.Y. 2000) aff'd by Universal City
Studios v. Corley, 273 F.3d 429, 455 (2d Cir. 2001).










specifically barred by anti-circumvention law of the DMCA. 121 At issue were links to code and

computer programs known as DeCSS which enabled users to circumvent DVD piracy-preventing

security measures. 122 The pertinent question was whether the linking to illegal material as

described by (1201 of the DMCA violated the First Amendment. 123 The court determined that

the DeCSS program violated (1201 of the DMCA prohibiting circumvention devices, and as a

result, linking to the code and copies of the program itself could be enj oined. 124

Since the court recognized a speech element in addition to a non-speech element in linking,

it had to justify the injunction under First Amendment theory so as not to render the speech-

aspects of linking meaningless. 125 It had already wrestled with the greater question of whether

~1201 itself violated the First Amendment, concluding that it did not as a content-neutral

restriction on the non-speech related purpose of a link as directing a user to the illegal material,

DeCSS. 126 The court cited the traditional content-neutrality test, saying that "when 'speech' and

'nonspeech' elements are combined in the same course of conduct, a sufficiently important

governmental interest in regulating the nonspeech element can justify incidental limitations on

First Amendment freedoms."12 It applied the test to the injunction against DeCSS itself, finding

that enj oining the program and code furthered the important government interest of protecting

digital media from piracy. 128






121 Id
1221d. at 303-305.
123 Id. at 339.
'2 Id. at 340.
125 The court also determined that the injunction was not a prior restraint. Id. at 333-34.
126 Id. at 327-33.
'27 Id. at 328 (quoting United States v. O'Brien, 391U.S., 376, 377 (1968)).
12s Id










The court then took the same test and applied it to linking to copies of the DeCSS program

and code. 129 It similarly found preventing the linking furthered the important government

interest of preventing piracy, yet it str-uggled in coming to the conclusion that it promoted[] a

substantial government interest that would be achieved less effectively absent the regulation." 130

It was concerned because limiting linking would have no effect on linking by websites outside of

the United States free to continue posting DeCSS. 131 It was most concerned with the overall

chilling effect that enjoining linking would potentially have. 132 The broad injunction from

linking to websites containing DeCSS would likely have resulted from self-censorship and in

websites removing links rather than testing their cases in court. 133

In order to prevent these chilling effects, the court fashioned a test for both the finding of

liability and issuing injunction of linking to illegal circumvention technology. 134 The court

compared the chilling effects of limiting linking to the threat of defamation lawsuits and the

resultant chilling effect on the press. 135 It remarked that in either defamation or linking, the

solution to prevent chilling effects was similar: adopting "a standard of culpability sufficiently

high to immunize the activity, whether it is publishing a newspaper or linking, except in cases in

which the conduct in question has little or no redeeming constitutional value." 136 The court

found that within defamation law, this was accomplished through the N. Y. Times v. Sullivan






129 Id. at 339.
130Id.
131 Id. at 340.
132Id.
133 Id.
134 Id. at 341.
135 Id. at 340.
'36 Id. at 340 (emphasis added).









actual malice test. 137 The Sullivan test requires a showing, by clear and convincing evidence,

that the allegedly defamatory statement was made with actual malice, meaning that it was made

with knowledge of or reckless disregard for its falsity. 138

Accordingly, the Reinterdes court put forth a test which incorporated the elements of the

actual malice standard in order to capture the forbidden purpose of linking to DeCSS, which it

saw as the heart of the problem. The court' s test would forbid injunction or liability for linking

to a website containing circumvention technology, "absent clear and convincing evidence that

those responsible for the link (a) know at the relevant time that the offending material is on the

linked-to site, (b) know that it is circumvention technology that may not lawfully be offered, and

(c) create or maintain the link for the purpose of disseminating that technology."139 The Second

Circuit acknowledged this test, but did not find need to adopt it in rendering its decision. 140

It is questionable whether the Reinterdes fault-based test fashioned in the image of Sullivan

could be applied to linking to infringing content. However, a slightly refashioned test, as applied

to linking-to infringing content, could be highly effective. The reworked standard would forbid

injunction or liability for linking-to a website containing directly infr~inging material, absent

clear and convincing evidence that those responsible for the link (a) know at the relevant time

that the offending material is on the linked-to site, (b) know that it is infringing material that may

not lawfully be copied, and (c) create or maintain the link for the sole purpose of disseminating

that material.




137 Id. 340-41(citing New York Times Co. v. Sullivan, 376 U.S. 254, 279-80 (1964)). The Sullivan test requires a
showing, by clear and convincing evidence, that the allegedly defamatory statement was made with actual malice,
meaning that it was made with knowledge of or reckless disregard for its falsity.
13s Sullivan, 376 U.S. at 279-80.
139 Reimerdes, 111 F. Supp 2d at 341.
'40 Universal City Studios, Inc., v. Corley, 273 F.3d 429, 456-57 (2d Cir. 2001).









The reworked test places the linking party's knowledge at great significance, looking to

punish linking-to infringing content only where invidious intent is found. One of the greatest

fears of limiting linking of infringing material is the expressive value that viewing full-length,

albeit sometimes infringing, video can bring to a discussion of matters of public importance.

Blogs and online news articles regularly refer to and link to video that may facially be infringing

in order to draw attention to contrasts or make comments or criticisms regarding the subj ect of

the video. For example, this test would not find liability where a blogger includes in a frame

directly above or below the comment or criticism regarding it, an unauthorized copy of a

segment of a newscast not regularly distributed on the Internet, because it is not offered for the

sole purpose of disseminating infringing content. Such linking is not meant to avoid the

authorized channels for dissemination of the broadcast, but instead to offer to Internet users the

opportunity to view the pertinent segment of the newscast in relation to the comment or criticism

accompanying the link to it.

In contrast, this test would find liability where a website exists for the sole purpose of

disseminating infringing material, such as described in the case study of SouthParkzone.com. In

such a case, the website owner clearly knows of the infringing nature of the linked-to videos, has

knowledge that it personally lacks the right to distribute those videos, and links to them for the

sole purpose of disseminating them to the public. The test would cause no chilling effects for

the blog or news-purpose linker because there are other legitimate purposes of disseminating the

link as found in fair use comment and criticism. While it is true that the link has the purpose of

disseminating the material to the public, it is not the sole purpose, and thus the test would fail

save for the most blatantly infringing circumstances.










Digital technologies will always be capable of infringement due to the nature of digital

technology itself always enabling the perfect copy of something. Furthermore, linking is an

essential part of the Internet. Therefore, the real question must look to intent of the linking party.

As such, the reworked Reimerdes test above attempts to address the intent of the linking party,

over the strict element of whether or not it was simply a secondary infringer. This follows the

Supreme Court' s recent shift in copyright jurisprudence towards a more fault and intent based

liability, rather than one of strict liability for infringement. 141

Conclusion

This study has attempted to answer the greater questions concerning copyright

infringement liability of YouTube and linking websites. The case study analysis of Chapter 4

attempted to answer a number of these legal questions. First, YouTube may be liable for certain

aspects of direct infringement related to the transcoding of uploaded video and the playback of

that video to a worldwide audience. However, it may ultimately be saved from direct liability

either through the passive-conduit exception to liability or a novel interpretation of ephemeral

copies. Second, YouTube may be liable as a vicarious infringer, with the outcome largely based

upon how liberally a court interprets the direct financial benefit requirement. As for YouTube's

liability under contributory infringement, it is doubtful that it acted with the requisite level of

knowledge of infringing activity for traditional contributory liability or inducement based upon

current public knowledge. However, that is not to say that discovery may ultimately reveal

certain instances of implied knowledge of infringement. In addition, YouTube has a number of

current substantial noninfringing uses, a number of which are commercially significant. Finally,





141 See Alfred C. Yen, Third Party Liability After Grokster, 91 MINN. L. REV. 184, 228 (2006). But see Tim Wu,
The Copyright Paradox, 2005 SUP. CT. REV. 229, 249-51 (2005)(bringing intent into copyright law goes too far).









YouTube may eventually find immunity under (512 of the DMCA, absent a showing of "red

flag" knowledge through discovery proceedings.

As for the potential secondary liability for linking websites such as SouthParkzone.com,

many of the linking hubs that intentionally facilitate the promotion of copyright infringing video

are possible secondary infringers. Specifically to SouthParkzone.com, it is most likely liable as a

vicarious infringer, and may be found as a contributory infringer through inducement and

providing the means by which to infringe. The safe-harbor would likely not apply due to the

website's knowledge of the infringing nature of the linked-to videos. However, all possible

liabilities aside, the fact that many linking websites, including SouthParkzone.com, are outside

the jurisdictional reach of American courts poses a great hurdle in imposing liability.

Despite these preliminary findings, all future deference naturally goes to the courts

deciding the cases. In short, YouTube has become such a cultural mainstay it is difficult to

imagine any court finding the degree of liability alleged by Viacom and other plaintiffs that

would largely have the effect of shutting down the website and set back the Internet for a long

time. The most likely scenario is that YouTube will ultimately not be found liable, or the matter

will settle out of court. As for linking websites, the problem exists in so many different

geographic locations it may be difficult for copyright owners to sufficiently shut them down

through litigation, save for a test case here or there. The bottom line is that copyright law must

be used for bringing about creativity, and not for anti-competitive purposes among competitors.

Will the Internet continue to shine brightly as a haven for sharing creativity, comment, criticism,

and promoting democracy, or will it return to the often over-regulated ways of copyright law?

That is one of the most important questions of our time.










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Mitchell P. Goldstein, Service Provider Liability for Acts Committed by Users: What You Don 't
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Craig A. Grossman, From Sony to Grokster, the Failure of the Copyright Doctrines of
Contributory Infr~ingement and Vicarious Liability to Resolve the War Between Content
and Destructive Technologies, 53 BUFF. L. REV. 141 (2005).

Steven E. Halpern, New Protections for Internet Service Providers: An Analysis of '7he Online
Copyright Infr~ingement Liability Limitation Act, 23 SETON HALL LEGIS. J. 359, 406-07
(1999).

David L. Hayes, Advanced Copyright Issues on the Internet, 7 TEX. INTELL. PROP. L.J. 1 (1998).

Cassandra Imfeld & Victoria Smith Ekstrand, The M~usic Industry and the Legislative
Development of the Digital M\~illennium Copyright Act 's Online Service Provider
Provision, 10 Colynv. L. & POL'Y 29 (2005).

William M. Landes & Richard A. Posner, An Economic Analysis of Copyright Law/, 18 J. LEGAL
STUD. 325 (1989).

F. Gregory Lastowka, Free Access and the Future of Copyright, 27 RUTGERS CO1VP. & TECH. L.
J. 293 (2001).









Kevin A Lemley, The Innovative M~edium Defense: A Doctrine to Promote the M~ultiple Goals of
Copyright in the Wake ofAdvancing Digital Technologies, 1 10 PENN. ST. L. REV. 11 1
(2005).

Mark A. Lemley, Property,1IntellectualProperty/, and Free Riding, 83 TEX. L. REV. 1031 (2005).

Mark A. Lemley & R. Anthony Reese, Reducing Digital Copyright Infr~ingement Without
Restricting Innova~tion, 56 STAN. L. REV. 1345 (2004).

Jessica D. Litman, Copyright Legislation and Technological Change, 68 OR. L. REV. 275 (1989).

Joseph P. Liu, Regulatory Copyright, 83 N.C. L. REV. 87 (2004).

Joseph P. Liu, Copyright Law 's Theory of the Consumer, 44 B.C. L. REV. 397 (2003).

Joseph P. Liu, Owning Digital Copies: Copyright Law and the Incidents of Copy Ownership, 42
WMv. & MARY L. REV. 1245 (2001).

Louise Longdin, Note & Comment, Hyperlinking and Copyright Infr~ingement, 13 NEW
ZEALAND BUS. L. Q. 33 (2007).

Glynn S. Lunney, Fair Use and Market Failure, 82 B.U. L. REV. 975 (2002).

Peter S. Menell, Envisioning Copyright Law 's Digital Future, 46 N.Y.L. SCH. L. REV. 63 (2003).

Lauren McBrayer, The DirecTV Cases: Applying Anti-SLAPP Laws to Copyright Protection
Cease-and-Desist Letters, 20 BERKELEY TECH. L.J. 603 (2005).

Neil W. Netanel, Impose a Noncommercial Use Levy to Allow Free Peer-to-Peer File Mai~l ing1,
17 HARV. J. L. & TECH. 2 (2003).

Christopher D. Newkirk & Thomas A. Forker, Does You Tube 's Bright Past M~ean a Cloudy
Future?, 19 No. 1 INTELL. PROP. & TECH. L. J. 1 (2007).

Alina Ng, Copyright 's Empire: Why the Law Matters, 11 MARQ. INTELL. PROP. L. REV. 337
(2007).

David Nimmer, Appreciating Legislative History the Sweet and Sour Spots of the DM~CA 's
Commentary, 23 CARDOZO L. REV. 909 (2002).

David Nimmer, Repeat Infr~ingers, 52 J. COPYRIGHT Soc'Y U. S.A. 167 (2005).

Malla Pollack, Rebalan2cing Section 512 to Protect Fair Users from Herds of2~ice-Trampling
Elephants, or A Little Due Process Is Not Such a Dangerous Thing, 22 SANTA CLARA
CO1VPUTER & HIGH TECH. L.J. 547 (2006).

William Patry, Choice ofLaw and International Copyright, 48 A1V. J. CO1VP. L. 383 (2000).









Randal C. Picker, Copyright as Entry Policy: The Case ofDigital Distribution, 47 ANTITRUST
BULL. 423 (2002).

Michelle A. Rayn, Navigating Terra Incognita: Why the Digital M\~illennium Copyright Act Was
Needed to Chart the Course of Online Service Provider Liability for Copyright
Infringement, 60 OHIO ST. L.J. 755 (1999).

R. Anthony Reese, The Public Display Right: The Copyright Act 's Neglected Solution to the
Controversy Over RAM~ Copies, 2001 U. OF ILL. L. REV. 83 (2001).

Mark Sableman, Link Law Revisited: Internet Linking at Five Years, 16 BERKELEY TECH. L.J.
1273 (2001).

Paul A. Samuelson, The Pure Theory of Public Expenditure, 36 REV. OF EcoN. & STATISTICS
387 (1954).

Andres Sawicki, Comment: Repeat Infr~ingement in the Digital M\~illennium Copyright Act, 73 U.
CHI. L. REV. 1455 (2005).

Christina Scelsi, You Tube, 24-FALL ENT. & SPORTS LAWYER 10 (2006).

Nicos L. Tsilas, Minimizing Potential Liability Associated With Linking and Framing on the
World Wide Web, 8 COMMLAW CONSPECTUS 85 (2000).

Jennifer M. Urban & Laura Quilter, Efficient Process or "Chilling Effects "? Takedown Notices
Under Section 512 of the Digital M\~illennium Copyright Act, 22 SANTA CLARA COMPUTER
& HIGH TECH. L.J. 621 (2006).

Tim Wu, The Copyright Paradox, 2005 SUP CT. REV. 229, 248 (2005).

Tim Wu, Copyright Communications Policy, 103 MICH. L. REV. 278 (2004).

Alfred C. Yen, Internet Service Provider Liability for Subscriber Copyright Infr~ingement,
Enterprise Liability, and the First Amendment, 88 GEO. L. J. 1833 (2000).

Emily Zarins, Notice Versus Knowledge Under the DM~CA 's Safe Harbors, 92 CAL. L. REV. 257
(2004).

News Articles

Matthew Bellioni, YouTube Can 't Filter Two Sets of Critics, HOLLYWOOD REPORTER, Oct. 26,
2007, available at
http ://www.hollywoodreporter. com/hr/content~di splay/business/news/e3 ia9a3 9f26ada8cfl
66417fl57b5a94eee (last visited Feb. 20, 2008).

Paul Boutin, Videos that Put YouTube on the Map, NPR.org, Oct. 19, 2006, available at
http://www.npr. org/templates/story/story .php? storyld=6289141 (last visited Feb. 9, 2008).









John Cloud, The Gurus of YouTube, TI1VE, Dec. 16, 2006 at 66.


Noam Cohen, A Comedian 's Riff on Bush Prompts an E-Spat, N.Y. TI1VES, May 8, 2006,
available at
http ://www.nytimes.com/2006/05/08/technology/0clethm x1189656000&en
=9489362d46bfc588&ei=5070 (last visited Feb. 9, 2008).

N'gai Croal, Time for Your M~a~sh-Up?, NEWSWEEK, Mar. 6, 2006, at 61-62.

Kevin J. Delaney, Free Viewing -- Threat for Big Media: Guerrilla Video Sites, WAL~L ST. J.,
p.A1, Apr. 17, 2007.

John C. Dvorak, M~issing the Point About You Tube, MARKETWATCH, Aug. 10, 2006.

Lee S. Ettleman, 2006 Top Ten Websites of the Year, TI1VE, available at
http://www.time.com/time/topten/2006/websies1.html (last visited Feb. 13, 2008).

Andy Greenberg, You Tube 's Filter Fails to Please, FORBES, Oct. 18, 2007, available at
http://www.forbes. com/2007/10/1 8/google-viacom-video-tech-cx_ag_1 018youtube.html
(last visited Jan 28, 2008).

Carl S. Kaplan, Copyright Decision Threatens Freedom to Link, N.Y. TI1VES, Dec. 10, 1999,
available at http://www.nytimnes. com/library/tech/99/1 2/cyber/cyberlaw/101law.html (last
visited Jan. 13, 2008).

Saul Hansell & Jeff Leeds, A Supreme Court .1hton~ Jan~ a for File .\laiing11. N.Y. TI1VES, Mar. 28,
200 5, avail able at http://www. nytimrnes. comn/2005/03/28/technol ogy/28grok~ster. html (last
visited Jan. 10, 2008).

Miguel Helft, Google Courts Small YouTube Deals, and Very Soon, a Larger One, N.Y. TI1VES,
Mar. 2, 2007.

Miguel Helft, Google Takes Step on Video Copyrights, N.Y. TI1VES, Oct. 16, 2007, available at
http://www. nytimes. com/2007/1 0/16G/busine ss/1 6vi deo. html?_r= 1&ref-busines s&pagewan
ted=all&oref=slogin (last visited Feb. 20, 2008).

Lawrence Lessig, Make Way for Copyright Chaos, N.Y. TI1VES, Mar. 18, 2007 (Op-Ed
Contribution) available at
http://www.nytimes.com/2007/03/1 8/opinion/1 81essig.html?ex=1 33 1870400&en=5a2a6ea
9bc52f3fc&ei=5 124&partner=permalink&exprod=permalink (last visited Feb. 18, 2008).

Merissa Marr & Kevin J. Delaney, Disney, M~icrosoft Lead Copyright Pact, WALL ST. J., Oct. 19,
2007, available at http://online.wsj .com/public/article/SBll19269788721 663302.html (last
visited Feb. 17, 2008).

Mark Memmott & Jill Lawrence, Yes We Can Has Topped 3. million Views, USA TODAY,
available at http:.//blogs.usatoday .com/onpolitics/2008/02/yes-we-can-has.htm (last visited
Feb. 9, 2008).










Rachel Rosmarin, Hunting Video Pirates, Forbes.com, Oct. 15, 2007, available at
http ://www.forbes.com/technology/2007/1 0/15S/youtube-google-videoid-tech-internet-
cx~rr_1015techyoutube.html (last visited Feb. 10, 2008).

Katharine Q. Seelye, New Presidential Debate Site? Clearly, YouTube, N.Y. TI1VES, June 13,
2007, available at http://www.nytimes. com/2007/06/13 /us/politics/13 cnd-
youtube.html?pagewanted=1&_r=1&ref=politics (last visited Feb. 5, 2008).

Richard Siklos, Push Comes to .\bove rfor Control of Web Video, N.Y. TI1VES, April 1, 2007.

William Triplett, Chasing Pirates, VARIETY, Aug. 21, 2007.

Tim Wu, Does YouTube Really Have Legal Problems?, SLATE, Oct. 26, 2006,
http://www. slate. com/id/2152264 (last visited Feb. 16, 2008).

Cases & Court Documents

A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001).

A&M v. Napster, 2000 WL 573136, at *7 (N.D. Cal. 2000).

Advanced Computer Servs. of Mich., Inc. v. MAI Systems Corp., 845 F. Supp. 356 (E.D. Va.
1994).

ALS Scan, Inc. v. RemarQ Communities, Inc., 239 F.3d 619 (4th Cir. 2001).

Arista Records, Inc., v. MP3Board, Inc., 2002 WL 1997918 (S.D.N.Y. Aug. 29, 2002).

Batesville Services, Inc. v. Funeral Depot, Inc., 2004 WL 2750253 (S.D. Ind. 2004).

Bernstein v. J.C. Penney, Inc., 1998 WL 906644 (C.D. Cal. 1998).

Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829 (11"i Cir. 1990).

Cal IV Entertainment, LLC v. Youtube, Inc., 3:2007cy00617 (M.D.Tenn. filed June 7, 2007).

Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994).

Central Point Software, Inc. v. Nugent, 903 F.Supp. 1057 (E.D.Tex. 1995).

CoStar Group, Inc. v. LoopNet, Inc., 164 F. Supp 2d 688 (D. Md. 2001).

CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir.2004).

Corbis Corp., v. Amazon.com, 351 F. Supp. 2d 1090 (W.D. Wash. 2004).

Dreamland Ball Room v. Shapiro, Bernstein, & Co., 36 F.2d 354 (7th Cir. 1929).

DVD Copy Control Assoc. v. McLaughlin, 2000 WL 48512 (Ca. Super. Ct. Jan. 21, 2000).










Eldred v. Ashcroft, 537 U.S. 186 (2003).

Ellinson v. Robertson, 357 F.3d 1072 (9th Cir. 2004).

Field v. Google Inc., 412 F. Supp 2d 1106 (D. Nev. 2006).

Feist Publications, Inc. v. Rural Telephone Service, Co., 499 U.S. 340 (1991).

Football Assoc. Premier League Ltd. and Bourne Co. v. YouTube, Inc, 07 Civ. 03582 (S.D.N.Y.,
filed May 4, 2007).

Fonovisa v. Cherry Auction, 76 F.3d 259 (9th Cir. 1996).

Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159 (2d Cir. 1971).

Google, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007).

Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 562 (1985).

Hendrickson v. Amazon.com, Inc., 298 F. Supp. 2d 914 (C.D. Cal. 2003).

Hotaling v. Church of Jesus Christ of Latter-Day Saints, 1 18 F.3d 199 (4th Cir. 1997).

In re Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003).

In re Aimster Copyright Litigation, 252 F. Supp. 2d 634 (N.D. Ill. 2002)

Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc., 75 F. Supp 2d 1290 (D. Utah 1999).

IO Group, Inc. v. Veoh Networks, Inc., 2006cy03926 (N.D. Cal., filed June 23, 2006).

Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir. 2003).

Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993).

Matthew Bender & Co., v. West Pub. Co., 158 F.3d 693 (2d Cir. 1998).

Maxtone-Graham v. Burtchaell, 803 F.2d 1253 (2d. Cir. 1986).

M.G.M., Inc. v. Grokster, Ltd., 380 F.3d. 1154 (9th Cir. 2004).

M.G.M., Inc. v. Grokster, Ltd., 259 F. Supp 2d 1029 (C.D. Cal. 2003).

Michaels v. Internet Entertainment Group, Inc., 5 F. Supp 2d 823 (C.D. Cal. 1998).

Monster Communications, Inc. v. Turner Broadcasting Sys. Inc., 935 F. Supp. 490 (S.D. N.Y.
1996).










New Jersey Turnpike Authority v. YouTube, Inc., 2:2007cy02414 (D.N.J. voluntarily dismissed
May 24, 2007).

N.Y. Times Co. v. Sullivan, 376 U.S. 254, 283 (1964).

N.Y. Times v. Tasini, 533 U.S. 483 (2001).

Parker v. Google, Inc., 422 F.Supp. 2d 492 (E.D. Pa. 2006).

Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007).

Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007).

Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F. Supp. 2d. 1146 (C.D. Cal. 2002).

Playboy Enterp. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993).

Playboy Enters. v. Webbworld, Inc., 991 F. Supp. 543 (N.D. Tex. 1997).

Quality King Distribs., Inc. v. L'Anza Research Int'l., Inc. 523 U.S. 135 (1998).

Recording Indus. Ass'n of Am. v. Diamond Multimedia Sys., Inc., 180 F.3d 1072 (9th Cir. 1999).

Religious Tech. Ctr. v. Netcom On-Line Communication Servs., Inc., 907 F.Supp 1361 (N.D.Cal
1995).

Roy Export Co. Estab. of Vaduz v. Columbia Broadcasting Sys., Inc. 672 F.2d 1095, 1 100 (2d
Cir. 1982)

Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304 (2d Cir. 1963).

Softel, Inc. v. Dragon Med. & Scientific Communications, Inc., 118 F.3d 955 (2d Cir. 1997).

Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984).

Stewart v. Abend, 495 U.S. 207 (1990).

Suntrust Bank v. Houghton Mifflin Co., 268 F.3d 1257 (11th Cir. 2001).

Ticketmaster L.L.C. v. RMG Technologies, Inc., 507 F. Supp 2d 1096 (C.D. Cal. 2007).

Ticketmaster Corp. v. Tickets.Com, Inc., 2000 WL 525390 (C.D. Cal. 2000).

Ticketmaster, Corp. v. Tickets.com, Inc., 2003 WL 21406289 (C.D. Cal. 2003).

Twentieth Century Fox Film Corp. v. Cablevision Systems Corp., 478 F.Supp 2d 607 (S.D.N.Y.
2007).

Twentieth Century Fox Film Corp. v. iCraveTV, 2000 WL 255989 (W.D. Pa. 2000).










Tur v. YouTube, Inc., CV 06-4436 (C.D. Cal., consolidated with Football Assoc. case in
S.D.N.Y).

Turner Broadcasting System, Inc., v. FCC, 512 U.S. 622 (1994).

UMG Recordings, Inc. v. Bolt, Inc. CV 06-06577 (C.D. Cal., filed Oct. 16, 2006).

UMG Recordings, Inc. v. Grouper Networks, Inc., CV 06-06561 (C.D. Cal., filed Oct. 16, 2006).

Universal City Studios, Inc. v. Sony Corp. of America, 480 F.Supp. 429 (D.C.Cal. 1979).

Universal City Studios, Inc. v. Sony Corp. of America, 659 F.2d 963 (9th Cir. 1981).

Universal City Studios, Inc. v. Reimerdes, 82 F. Supp 2d 211 (S.D.N.Y. 2000).

Universal City Studios v. Corley, 273 F.3d 429 (2d Cir. 2001).

Universal City Studios, Inc. v. Youtypc.com, Judgment Against Defendants Billy Duran and
Sam Martinez Pursuant to Entry of Default, No. 07-4181 (C.D. Cal. decided Dec. 3, 2007).

United States v. O'Brien, 391 U.S. 367 (1968)

Vault Corp. v. Quaid Software, Ltd., 847 F.2d 255 (5th Cir. 1988).

Veoh Networks, Inc. v. UMG Recordings, Inc., 07 1568 (S.D. Cal., filed Aug. 9, 2007).

Viacom Int'l, Inc. v. YouTube, Inc., No. 1:2007-CV-02103 (filed Mar. 13, 2007).

Viacom, Inc. v. YouTube, Inc., Complaint, 2007 WL 775611 (S.D.N.Y. filed Mar. 13, 2007)(No.
07-2103).

Viacom, Inc. v. YouTube, Inc., Answer, 2007 WL 1724620 (S.D.N.Y. Apr. 30, 2007) (No. 07-
2103).

Ward v. Rock Against Racism, 491 U.S. 781 (1989).

Warner Bros. Entertainment, Inc. v. Peekvid.com, No. 07-4185 (C.D. Cal. filed June 26, 2007).

Zeran v. America Online, Inc., 129 F.3d 327 (4th Cir. 1997).

Reports

Bri Holt, Heidi R. Lynn, & Michael Sowers,Vidmeter. com, Analysis of Copyrighted Videos on
YouTube, March, 2007, available at
http://www.vidmeter. com/i/vidmeter~copyright report.pdf (last visited Feb. 9, 2008).

Electronic Freedom Foundation, Fair Use Principles for User Generated Video Content,
http://www.eeff org/fil es/UGC Fair Use BestPracti ce s_0.pdf (last vi sited F eb. 1 6,
2008)(hereinafter Fair Use Principles).










H.R. Rep. 94-1476 (1976)(Conf. Rep.).


H.R. Rep. No. 105-551 (II) (1998).

H.R. Rep. 105-796 (1998) (Conf. Rep.).

Mary Madden, Online Video, Pew Internet & American Life Proj ect, July 25, 2007.

Lee Rainee, Increasing Use of Video .\lail ing; Sites, PEW INTERNET & AMERICAN LIFE PROJECT,
Jan 9, 2008, at 1 available at
http:.//www.pewinternet. org/pdfs/PewVideosharing~memoJanO8 .pdf (last visited Feb.
16, 2008).

U.S. Copyright Office, DMCA Section 104 Report, (Aug. 2001), available at
http://www.copyright.gov/reports/studies/dc/e-04-report-vol-1.pdf (last visited Jan.
11, 2008).

User Generated Principles, http ://www.ugcprinciples.com (last visited Feb. 17, 2008)(hereinafter
UGC Principles).

WIPO WCT Contracting Parties,
http://www.wipo.int/treaties/en/ShowResult sp?lang=en&treaty~id=1 6 (last visited Feb.
14, 2008).

Xu Cheng, Cameron Dale, & Jiangchuan Liu, Understanding the Characteristics oflnternet
.@a t ido .ai ngYou Tube as a Case Study at 3, Simon Fraser University Technical
Report (July 2007) available at http://arxiv.org/PS_cache/arxiv/pdf/0707/00.37v.pdf
(last visited Feb. 5, 2008).

Constitutions & Statutes

U.S. Const. Art. I, @ 8, cl. 8.
17 U.S.C. @ 101, et seq.
17 U.S.C. @ 102.
17 U.S.C. @ 106.
17 U.S.C. @ 112.
17 U.S.C. @ 117.
17 U.S.C. ( 501.
17 U.S.C. ( 504.
17 U.S.C. ( 512, et seq.
RESTATEMENT (SECOND) OF TORTS 8 A cmt. b (1965).









BIOGRAPHICAL SKETCH

Drew Shenkman was born in Jacksonville, Florida. He grew up in Jacksonville and

attended the University of Florida for his undergraduate degree, earning a Bachelor of Arts in

political science, cum laude. He was part of the j oint degree media law program, and in May

2008 received a Juris Doctor from the University of Florida Levin College of Law, and a Master

of Arts in Mass Communications from the University of Florida College of Journalism and

Communications. After graduation, he will join the Washington, D.C. office of Holland &

Knight as a litigation associate.





PAGE 1

1 COPYRIGHT IN THE YOUTUBE AGE: HOSTING AND LINKING OF ONLINE VIDEO By DREW SHENKMAN A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLOR IDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS IN MASS COMMUNICATION UNIVERSITY OF FLORIDA 2008

PAGE 2

2 2008 Drew Shenkman

PAGE 3

3 To my family.

PAGE 4

4 ACKNOWLEDGMENTS I thank m y chair and members of my supervisory committee for their feedback on this study as well as during my time in the classroom. I thank all of my mentors in the legal profession who have provided great examples of professionalism, diligence, and advocacy early in my legal career. I thank my parents, brothe r, and grandparents for their constant support and encouragement.

PAGE 5

5 TABLE OF CONTENTS page ACKNOWLEDGMENTS...............................................................................................................4 LIST OF FIGURES.........................................................................................................................7 ABSTRACT.....................................................................................................................................8 CHAP TER 1 INTRODUCTION..................................................................................................................10 YouTube and Online Video....................................................................................................12 Concern from the Copyright Industry..................................................................................... 15 Linking to Infringing Content................................................................................................. 16 Protecting the Interests of the End-User................................................................................. 18 Digital Copyright Law.......................................................................................................... ..19 A Possible Affirmative Defense............................................................................................. 27 Research Questions and Methodology................................................................................... 29 2 LITERATURE REVIEW.......................................................................................................33 Copyright Law and New Technology..................................................................................... 40 The Legislative Process...................................................................................................40 Copyright Incumbents..................................................................................................... 43 Changing Views: Regulatory Poli cy and Copyright Consum ers................................... 51 Technology and the Courts..................................................................................................... 55 Secondary Liabilitys Effect on Copyright Law............................................................. 56 Judiciarys Role in Se tting Copyright Policy .................................................................. 60 Conclusion..............................................................................................................................61 3 REVIEW OF CASE LAW..................................................................................................... 63 Direct Liability............................................................................................................... .........64 Reproduction Right 106(1)...........................................................................................65 Derivative Works 106(2).............................................................................................. 66 Distribution Right 106(3)............................................................................................. 67 Public Display and Performance Rights 106(4)-(5)..................................................... 68 Secondary Liability............................................................................................................ .....69 Vicarious Liability........................................................................................................... 71 Contributory Liability...................................................................................................... 72 Modern Secondary Liability and Technology.................................................................73 Sony v. Universal City Studios (1984) .....................................................................74 A&M v. Napster (9th Cir. 2001)................................................................................79 In re Aimster (7th Cir. 2003).....................................................................................84 MGM v. Grokster (2005) ..........................................................................................89 PostGrokster developm ents.................................................................................... 98

PAGE 6

6 Linking Law............................................................................................................................99 Linking to Infringing Content....................................................................................... 101 Linking and Thumbnail Images..................................................................................... 103 Linking to Illegal Material (DeCSS)............................................................................. 106 Indexing and Linking to Music..................................................................................... 108 DMCA Safe Harbor.............................................................................................................. 110 Transitory Communications 512(a)............................................................................ 112 System Caching 512(b)..............................................................................................113 User-Directed Storage of Material 512(c) .................................................................. 114 Information Location Tools 512(d)............................................................................ 118 Fair Use.................................................................................................................................119 4 CASE STUDY ANALYSIS.................................................................................................124 YouTube.com Case Study....................................................................................................126 Direct Liability.............................................................................................................. 128 Reproduction right.................................................................................................. 129 Distribution right.................................................................................................... 133 Public display and performance right..................................................................... 133 Derivative works right............................................................................................ 136 Secondary Liability....................................................................................................... 136 Vicarious liability................................................................................................... 138 Traditional contributory liability............................................................................ 145 Substantial noninfringing use................................................................................. 150 Inducement............................................................................................................. 160 DMCA Immunity.................................................................................................167 Linking Websites: SouthParkzone.com Case Study............................................................ 176 Jurisdictional Problems................................................................................................. 180 Direct Liability.............................................................................................................. 181 Secondary Liability....................................................................................................... 182 Vicarious liability................................................................................................... 183 Contributory liability and inducement................................................................... 185 Inducement............................................................................................................. 187 DMCA Immunity.................................................................................................189 5 FUTURE OF ONLINE VIDEO........................................................................................... 194 Innovation Leading to Creativ ity: Justice Breyers S ubstantial Noni nfringing Use Standard ....................................................................................................................... .....196 Safe-Harbor Burden Shifting: The F uture is in the Filter.................................................... 203 Filtering User-Generated Content While Preserving Fair Use............................................. 210 First Amendment Test for Linking Websites ....................................................................... 219 Conclusion............................................................................................................................225 LIST OF REFERENCES.............................................................................................................227 BIOGRAPHICAL SKETCH.......................................................................................................237

PAGE 7

7 LIST OF FIGURES Figure Page 4-1 SouthParkzone.com homepage........................................................................................ 192 4-2 SouthParkzone.com video player page............................................................................193

PAGE 8

8 Abstract of Thesis Presen ted to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Degree of Master of Arts in Mass Communication COPYRIGHT IN THE YOUTUBE AGE: HOSTING AND LINKING OF ONLINE VIDEO By Drew Shenkman May 2008 Chair: Justin Brown Major: Mass Communication Our study presents a legal analysis of copyright infringements impact on the dissemination of online video. The rapid increas e in online videos popular ity is due in large part to the unprecedented succe ss of YouTube.com, the Internet s leading hosting website for online video. YouTube, as well as other video hosting websites, offers Internet users the unprecedented ability to share thei r creative audio-visual works with the world. However, the technology also enables users to engage in infringing uses by sharing unauthorized copies of copyrighted television shows and motion pictures. In addition, linking websites have developed as popular tools for Internet users to find and access copyrighted videos stored on hosting websites. Both the infringing uses of YouTube and linking websites assistance in the facilitation of copyright infringement have cau sed great concern within the c ontent industry regarding their ability to continue to market and protect their creative work s online. At the same time, limitations on user-generated content caused by we bsites seeking to limit their liability raise concerns as to the limitations of free speech and fair use. Previous research reveals that copyright law has regularly struggled to adapt to technological innovation. This study examines the latest struggle as copyright law adjusts to online video hosting and sh aring technologies. A

PAGE 9

9 variety of copyright laws apply in this instance, including direct liability under the Copyright Act, the common law of seconda ry liability, and the safe ha rbor provided by the Digital Millennium Copyright Act. This study applies these areas of law to the case studies of YouTube and a popular linking website, SouthParkzone.com, a nd determines whether either may be liable under the applicable copyright la ws. Finally, this study identifi ed four possible solutions to problems identified through the legal analysis, including how to preserve First Amendment concerns within secondary liability, the future of automatic filtering and its impact on usergenerated content and fair use, and a new test for liability for linking websites consistent with First Amendment principles.

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10 CHAPTER 1 INTRODUCTION Before 2005, sharing original video content through a website on th e Internet required fairly sophisticated web-publishing knowledge or enough m oney to pay someone with such knowledge. Similarly, watching a favorite TV s how or movie at the time and place of their choosing online was difficult. Copyright owners were slow to adopt online video outlets and were afraid of losing increasing viewers to the Internet. Yet in early 2005, the world of online video drastically changed in a Silicon Valley garage: three former PayPal employees launched YouTube.com, and the rest is history. In fairness, YouTube was not the first video-sharing website onlineGoogle Video was born around the same time. But what quickly differentiated YouTube from its competitors was its superior ease of use. YouTube s popularity and use increased exponentially, where less than a year after its founding, YouTube served an estimated 100 million videos a day to its users.1 By July 2007, more than 57% of the online public watched or downloaded Internet video on YouTube or other online video platforms.2 However, YouTube proved popular not only for the sharing of original user-generated content. Users soon began to use its unrestricted upload structure to post favorite clips and full length copyrighted programming. Sh ortly thereafter, video linking websites began to aggregate links to popular videos on YouTube and a number of its fast-growing competitor hosting websites.3 By the time the copyright industry finally was turned on to the popularity of such online video-sharing websites and realized the amount of its own content was uploaded to the 1 John C. Dvorak, Missing the Point About YouTube MARKETWATCH, Aug. 10, 2006, http://www.marketwatch.com/news/story/stor y.aspx?guid=%7B29399E0D-DBFD-4DA3-BB531E09BAD7F66B%7D (last visited Feb. 16, 2008). 2 Mary Madden, Online Video PEW INTERNET & AMERICAN LIFE PROJECT, July 25, 2007, at 2, available at http://www.pewinternet.org/pdfs/PIP_Online_Video_2007.pdf (last visited Feb. 16, 2008). 3 See Kevin J. Delaney, Free Viewing -Threat for Big Media: Guerrilla Video Sites WALL ST. J., p.A1, Apr. 17, 2007.

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11 websites without permission, it was t oo late to reverse the trend. Much like the peer-to-peer file sharing of Napster in the late -1990s, online video-sharing, le gal or otherwise, found itself entrenched in the Internet landscape. However, the copyright industry feeling threat ened by new Internet te chnologies is nothing new. Napsters effect on the mu sic industry is just one example of the power of the Internet as a distribution platform for digita l content. Despite a significa nt rebound by the music industry, the Recording Industry Association of America (R IAA) recently estimated that the industry continues to lose an annual $300 million domestically due to online or hard-copy copyright infringement.4 Figures regarding the impact of vide o piracy are speculative. The visual entertainment industry, including broadcast televi sion, cable, and the motion picture industry are a multi-billion dollar a year industry. As a result of increasing online infringement, an array of lawsuits are being filed against the websites a nd networks that allegedly have a hand in the copyright infringement. In just one example of recent lawsuits file d against YouTube, Viacom sought $1 billion in damages.5 This study will identify, analyze, and respond to the legal problems associated with video hosting websites like YouTube and websites that link to them. A major focus will be a casestudy analysis of YouTube, as well as video linking websites through a case study of Southparkzone.com. Numerous legal quest ions surround the new technology, and the law appears to be approaching a crossroads. This research will ultimately aim to propose possible solutions to the stalemate at which the copyrig ht industry and new Inte rnet technologies finds themselves, either in the form of legal an swers or proposed legislative solutions. 4 William Triplett, Chasing Pirates, VARIETY, Aug. 21, 2007, http://www.variety.com/article/VR1 117970624.html?categoryid=1338&cs=1 5 Complaint, Viacom, Inc. v. YouTube, Inc., 2007 WL 775611at (S.D.N.Y. filed Mar. 13, 2007)(No. 07-2103).

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12 YouTube and Online Video In December 2005, three young computer programmers launched YouTube.com as an Internet website allowing user s to share and view videos.6 What started out as a small independent operation is now the top online video distribution website, currently ranking as the worlds second most popul ar website overall.7 On October 9, 2006, online giant Google announced a $1.65 billion stock acquisition of YouTube.8 By the end of 2006, YouTube had gained such popularity and influence that Time Magazine devoted its year-end Person of the Year cover to the website a nd named it the Invention of 2006. 9 YouTube was not the first website to allow easy distributi on of online videos to users, as there are many online video distribution competitors in the marketplace.10 However, no website currently comes close to matching YouTubes market power in bringing online video to users.11 YouTube became an overnight sensation mainly for two reasons: (1) its ease of use, and (2) attractive content, some of which includes popular clips of copyri ght-protected television shows and movies.12 One of YouTubes strengths is the ab ility of users to vi ew videos without downloading any software or registering first with the website.13 This makes the website very user-friendly and requires only the most basic web-knowledge to view or upload a video. Additionally, as the website developed, users were able to link directly to videos in their own 6 See About YouTube, www.youtube.com/t/about (last visited Feb. 16, 2008). 7 See Alexa.com worldwide site-rankings, http://www.alexa.com/site/ds/top_sites?ts_mode=global&lang=none (last visited Feb. 16, 2008). YouTube only currently ranks behind yahoo.com. Id 8 Google Press Release, Google To Acquire YouTube for $1.65 Billion in Stock Oct. 9, 2006. http://www.google.com/press/pr essrel/google_youtube.html (last visited Feb. 16, 2008). 9 John Cloud, The Gurus of YouTube TIME, Dec. 16, 2006 at 66. 10 NBC-Universal and News Corp. rece ntly agreed to create a competitor to YouTube. Richard Siklos, Push Comes to Shove for Control of Web Video, N.Y. TIMES, April 1, 2007. Other competitors, large and small exist. See e.g. Joost.com, Bolt.com, Dailymotion.com, Gofish.com Grouper.com, Livevideo.com, and MetaCafe.com. 11 See Cloud, supra note 9, at 66. 12 See id 13 Id.

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13 web pages, send links to others via email, and eventually embed the actual videos on any other website or blog, making it appear as though the vide o appeared and played within the foreign website.14 YouTube also allows a user to search its vast database of videos with simple keywords. In short, it became virtually impossible for a web user to not at some point in time come across a video hosted by YouTube by the time the website celebrated its first birthday. YouTube is an extremely lucrative website, as witnessed by the $1.6 billion price tag paid by Google. YouTube offers its user-generated serv ice to its users free of charge, in exchange for delivering advertising to them through the website.15 Currently, YouTube limits serving advertising to viewers via tradit ional banner advertisements on th e homepage, search pages, and sponsored videos.16 YouTube does not place any advertis ing on pages that contain video uploaded by users due to copyright concer ns that will be explored later. YouTube also utilizes alternative revenue sources, such as sponsored videos by content owners. For example, CBS agreed to a d eal that put videos from the 2007 NCAA Mens Basketball Tournament on the website with banne r advertisements from Pontiac posted during video play.17 In addition, undisclosed agreements have been made between content-providers such as the National Hockey League, the NBA, CBS, and many others in the entertainment industry.18 These agreements have not all been ma de public, and many are tentative deals in order to gauge the interest of the Internet community.19 Still other entertainment companies 14 See Sharing YouTube Videos, http://youtube.com/sharing (last visited Feb. 16, 2008). 15 YouTube Fact Sheet, http://www.youtube.com/t/fact_sheet (last visited Feb. 16, 2008). 16 Id. 17 Press Releases, CBS Sports, The NCAA and Pontiac Bring NCAA March Madness to Sponsored CBS Sports NCAA Tournament Channel on YouTube available at http://www.youtube.com/press_room_entry?entry=bJcHI4MeC6A (last visited Feb. 16, 2008). 18 See Miguel Helft, Google Courts Small YouTube Deals, and Very Soon, a Larger One N.Y. TIMES, Mar. 2, 2007, available at http://query.nytimes.com/gst/fullpage.html?res=950DE4D81631F931A35750C0A9619C8B63 19 See id.

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14 have forayed into their own online video websites, such as Joost.com,20 partly owned by Viacom, and Hulu.com, a joint ventur e of NBC-Universal and NewsCorp.21 The business of YouTube has little impor tance without briefl y understanding how the technology of the website works. YouTube identif ies itself as a personal video-sharing service that has developed into the Internets self-proclaimed premier video entertainment destination.22 There are no membership requirements to view, thus anyone can view a video uploaded on YouTube. However, for a user to post a video, they must first register for free with the website to become a member and agree to specific Terms of Use.23 Every member must agree to not upload any videos to which th ey do not possess the re quisite copyright in.24 There is currently no prescreening process by YouTube befo re the video goes live to the public, the user simply uploads a video.25 Thus, it is not difficult for YouTube members to upload original user-generated content or infringing content. Once a member, the user may then upload videos in the proper format, no longer than ten minutes in length, and consisting of no more than 100 mega-bytes of data.26 A member simply chooses whether th ey want the video to be public or private and then clicks upload.27 If the member chooses to make the video public, the video is available for viewing to anyone in the worl d in a matter of minutes after the upload is complete. 20 http://www.joost.com (last visited Feb. 16, 2008). 21 http://www.hulu.com (last visited Feb. 16, 2008). 22 YouTube Fact Sheet, supra note 15. 23 YouTube Terms of Use, http://www.youtube.com/t/terms (last visited Feb. 16, 2008). 24 See Id. 25 Cloud, supra note 9, at 66. 26 YouTube Help, How Do I Upload a Video? http://www.google.com/support/youtube/bin /answer.py?answer=57924&topic=10525 (last visited Feb. 16, 2008). 27Id.

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15 Next, the instant the upload takes place, a dig ital copy of the video in its entirety is made onto the YouTube computer servers.28 The copy is transcoded in YouTubes own compressed format and stored on YouTube central servers.29 YouTube then automatically creates a thumbnail of the video from a frame within the vide o in order to add it to its searchable library.30 In order to classify the video and aid in searches, the uploading member is asked by the website to tag the video by indicating keywords to he lp identify the subject matter of the video.31 The uploading member may be as detailed as they want to be in id entifying the video. Concern from the Copyright Industry As Viacom alleges in its complaint filed ag ainst YouTube, YouTubes meteoric rise in popularity may have been in part due to users attraction to the vast am ount of popular copyrightinfringing material hosted on its servers.32 YouTube, of course, assert s that it is solely intended as a sharing website for original user-generated content. As the public continues to adopt Internet video, copyright industr y leaders fear losing control ov er copyrighted content. For example, they fear that viewers looking for the highlights of a NFL football game or a funny clip from The Daily Show will no longer turn to the official webs ites or traditiona l television outlets of the NFL or Comedy Central, respectively, but instead to video-sharing websites like YouTube. Such a fear is not completely irrational. Traditional television content providers rely almost exclusively on advertising; and advertisers are attracted to only one thing: viewers eyeballs. Thus, the more viewers watch a show, the higher its ratings, and the more the 28 See Complaint, supra note 5. 29 Id. 30 Id. 31 Id. 32 Complaint, supra note 5.

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16 television outlet may charge for advertising time. The logic follows that as viewers exit to the Internet to view unauthorized, commercial-free ve rsions, ratings will decline and advertisers will demand lower rates or ultimately abandon the traditional television distribution outlets altogether. As a result, content-owners have an economic incentive, and as will be later explored, the legal right to protect their interest in the videos they own. Therefore, many attribute YouTubes extreme popularity to its early reliance on attracting viewers to its site through infringing videos, and see this trend as endangering the adver tising-supported business models of television.33 Linking to Infringing Content However, the controversy over online video doe s not begin and end sim ply with YouTube. Increasingly popular are linking websites, which simply offer vi sitors links to other hosting websites offering infringing content.34 For example, fans of the popular show South Park can go to the linking website Southparkz one.com and view every episode in the history of the series commercial-free and conveniently organized by season.35 Neither parent company Viacom, Comedy Central, nor South Park Studios receive royalties from the playing of the episodes nor have the ability to control the distribution of them. To understand the uniqueness of such websites, the process of the Internet must first be explained. Users typically explor e the Internet through what we know as websites, online hubs of information along the information superhighway. Typically, websites either have information directly on the home page which is visible to the viewer, or embedded on further pages throughout the website in the form of text, pi ctures, or logos known as hyperlinks (commonly 33 Id. 34 Delaney, supra note 3. 35 http://www.southparkzone.com (last visited Sept. 1, 2007).

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17 called links).36 When a user clicks on a link, the us ers web browser reads the embedded code and directs the browser to the new web address.37 It is common practice to link to other pages, pictures, and video within the websites control. Everything on a webpage is copied and stored on a server, which is what web browsers access to produce a copy for the end-user to view. Often, websites also link to other websites, poin ting users to interes ting articles, videos, and other information. This resu lts in the network effects that give the Internet its enormous power as a research and information tool.38 The process of embedding a link on a website does not insert what is being linked into the website nor are copies made of any content on their servers. It merely allows the user to jump to the new website at the click of a mouse. No copying is involved by merely direc ting the user to another website However, through a process called framing, content from another website can be made to appear as if it resides on the nonoriginal webpage.39 Similarly, there is no copying invol ved with framing, the media merely play from the original host se rver into the frame on the website. To the webpage viewer, the result is seamless and difficult to differentiate from original content. Through technologies from video-sharing websites, framing of video on a webs ite is quite easy. So too, of course, is the simple linking to video clips on an outside vide o-sharing website. Often times, the streaming videos linked to on the linking websites are housed on offshore servers outside of the direct 36 See Nicos L. Tsilas, Minimizing Potential Liability Associated With Linking and Framing on the World Wide Web 8 COMMLAW CONSPECTUS 85, 85-86 (2000). 37 Id. 38 See generally Michael L. Katz & Carl Shapiro, Systems Competition & Network Effects 8 J. ECON. PERSPECTIVES 93 (1994). The value of membership to one user is po sitively affected when another user joins and enlarges the network, such markets are said to exhibit network effects or network externalities. Id. at 94. 39 See Mark Sableman, Link Law Revisited: Internet Linking at Five Years 16 BERKELEY TECH. L.J. 1273, 12971301 (2001).

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18 jurisdiction of the United States, thereby creating jurisdictional problems.40 The legal issues surrounding linking will be further addressed in Chapter 4. Protecting the Interests of the End-User United States copyright law lim its the use of original works of authorship in a fixed tangible expression to the authors, or subse quent owners or licensees of the copyright.41 The policy behind copyright law is to provide and ma intain the financial incentive for authors of creative works. Article I, Section 8 of the U.S. Constitution provides for Congress to pass laws in order to, promote the progress of science a nd useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.42 Online videos are copyrightable as fixed original works of authorship under the Copyright Act as either motion pictures or audiovisual works.43 Thus, the resulting protection allows online video content-owners to control the reproducti on and distribution of their works. However, throughout the history of copyright law, a debate ha s raged over the reach of the law and limits that should be placed on it in a free society in order to promote the sharing of information and therefore the betterment of society as the Constitution suggests.44 Thus, a more basic normative debate regarding copyright law must first be a ddressed. While copyright is often framed as a regime to protect commercial authors, scholars such as Professor Lawrence Lessig argue that the original intent of the C onstitutional guarantee was to promote creativity in society though the sharing and participati on of the public in a non-commercial context.45 Lessig 40 Delaney, supra note 3. 41 17 U.S.C. 102. 42 U.S. CONST. Art. I, 43 17 U.S.C. 102(a)(6). 44 See generally, Michael D. Birnhack, NIMMER ON COPYRIGHT, 19E.01, (David Nimmer & Melville Nimmer eds., Matthew Bender, New York 2007)(discussing the history of the conflict and contemporary criticisms of copyright law and the First Amendment). 45 See LAWRENCE LESSIG, FREE CULTURE, 119-124 (Penguin Press, New York 2004).

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19 sees copyright as a mechanism for the spreadi ng of free culture for th e betterment of society.46 As a result, Lessig asserts that copyright should allow for the spr eading of our culture while at the same time protecting the co mmercial rights of authors.47 Lessigs key argument is that creativity builds on past works.48 This is easily seen though the increasing number of consumers as creators of the increasing amount of user-generated content on websites such as YouTube, which must be similarly protected.49 The problem, Lessig notes, is that digital technology radically ch anges the way the lines are drawn between commercial and non-commercial use, resulting in a top-down copyright regime controlled by incumbent industries.50 He states that unlik e traditional copyright law, where there were clear regulated uses (you could not publish anothers work, for example) and unregulated uses (e.g., reading a work, giving your copy away, even sleepi ng on it), the Internet creates an environment where every act is a copy.51 Thus, according to Lessig, in an Internet world, every use then becomes a regulated use controlling creativity.52 Digital Copyright Law Copyright law has long struggled to protect or iginal works during tim es of technological change.53 While the content of original creations rarely change, the form in which they are delivered to end-users changes greatly over time, often quite abruptly. For example, what is commonly referred to as the formal beginning of copyright law, the 1710 Statute of Anne was 46 Id. 47 Id. at 170-73. 48 LESSIG, FREE CULTURE, supra note 44, at 29. 49 See Lawrence Lessig, Talks Larry Lessig: How Creativity is Being Strangled by the Law, Mar. 2007 available at http://www.ted.com/talks/view/id/187 (last visited Dec. 11, 2007). 50 Id. 51 LESSIG, FREE CULTURE, supra note 44, at 170-73. 52 The subtitle of Lessigs 2004 book is Free Culture: How Big Media Uses T echnology and the Law to Lock Down Culture and Control Creativity LESSIG, FREE CULTURE, supra note 44. 53 See Jessica D. Litman, Copyright Legislation and Technological Change 68 OR. L. REV. 275, 277 (1989).

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20 largely a response to printing pre ss and the ease at which copies of written works could suddenly be made.54 Similarly, modern applications of copy right law in the United States includes numerous instances of technologica l changes affecting the writing a nd revisions of the law. The struggle continues between copyright law and advances in digital technology. First, it is important to understand the basics of digital t echnology that has worked to change the market so drastical ly. Digital technology turns a traditional analog product into a series of 1s and 0s wr itten into binary code.55 Since the code is simply a very long series of numbers, it can be replicated perfectly over and over again, w ithout any loss of information.56 Anything can be digitized: a song to CD or MP3,57 a video from VHS to DVD or MPEG,58 even a paper book to e-book.59 A number of factors have led to the revolution of digital technology. First, increased proces sor speeds, memory storage ability, and data compression technology such as the MP3 file format allows for audiovisual works to be digitized.60 Next, digitization allows for higher sampling rates, thus permitting more transparent reproductions than typical analog sampling.61 The flawless digital files are inexpensive to reproduce, and infinitely manipulable, 54 See G. PETER ALBERT, INTELLECTUAL PROPERTY LAW IN CYBERSPACE 208 (Cumul. Supp. BNA, Wash. D.C. 2006). 55 HARRY NEWTON & RAY HORAK, NEWTON'S TELECOM DICTIONARY, 20th Ed., digital video compression (CMP Books, San Francisco 2004) [electronic resource] available through the University of Florida Libraries Catalog. 56 See Peter S. Menell, Envisioning Copyright Laws Digital Future 46 N.Y.L. SCH. L. REV. 63, 98 (2003). 57 MP3 refers to the Moving Picture Experts Group 1 Layer 3 file, which allows for audio files to be compressed digitally to a 1:12 fraction of the original analog file, but without any loss of quality. See id. at 66. 58 VHS, or video home system, is the traditional analog tape; DVD, stands for digital video disk, and is the digital version of a VHS tape; and MPEG is the digital online video equivalent, and is the compressed and digitized format of video on the web. NEWTON & HORAK, supra note 54. 59 See Menell, supra note 55, at 109-12. 60 See id. at 110-12. 61 See id. Sampling is nothing more than the reality of the optical illusion of viewing any reproduced medium. Id. For example, traditional film movies consist of still cells passing through light fast enough to project a moving image which the eye cannot differentiate. Id. Digital projection fools the eye similarly, except that digital technology allows for more details to be inserted into ev ery cell, thus creating a more sharp and realistic image. Id.

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21 resulting in easily produced derivative works, and of course, easily pirated works as well.62 As digital files shrink in size, they retain powerful management and searchability attributes, while gaining in portability, as seen throug h the enormous popularity of the iPod.63 Finally, because of the rise of the Internet as an inexspensive di stribution medium, combined with the convergence of consumer digital technology, all the powers of digital technology combine to provide users with an unprecedented ability to share media files with others, legally or otherwise.64 The Internet achieved critical mass duri ng the mid-1990s, opening new avenues for improved digital techno logy to take root.65 The infinite network of th e Internet in turn allowed for the development of new methods of inform ation compression, which thereby increased the desire for cheap and larg er storage technologies.66 Add into the mix the late 1990s flood of affordable digital consumer electronic products such as the MP3 player and the digital video recorder, and the copyright world soon found itself swimming in a new digital sea.67 The initial reaction of the copyright industry to the Digita l Millennium Copyright Act of 1998 (DMCA) was to use digital techno logy to its advantage through encryption and copying controls.68 However, this tactic was soon circumvented by new pi racy technology, which the DMCA similarly forbids.69 62See id. at 114-15 (2003). 63 See id. at 115-16. 64 See id. at 116. 65 See id. at 66. 66 See id. 67 See id. 68 See id. at 66-68. For example, DVDs include a digital encryption code which prevents their copying known as the DVD Content Scrambling System. Id. 69 See id. at 66-68.

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22 Due to the relatively small size of music files, the music recording industry was the first to be affected in a substantial way by digital technology.70 The spread of peer-to-peer (P2P) file sharing networks enabled large-scale infringeme nt of digital audio works and created major problems for the recording industr y in decreased sales and decr eased demand for legal copies.71 While the Napster and Grokster Supreme Court decisions of the early 21st Century largely settled the legal issues surrounding online copyr ight infringement of music files,72 solving the problems for the video production industries of television and motion pictures is just beginning. As digital technology continues to improve, full-length tele vision programs can be copied digitally, and full-length motion pictures are not far behind. The legal standards for copyright infringement will be set forth in Chapter 3, and analyzed in the context of YouTube and linking websites in Chapter 4. However, a brief introduction to the concept of secondary infringement is necessary. There is a well-developed body of case law that en ables a plaintiff to sue for infringement based upon acts complicit by a third party that enables direct infringement.73 Secondary liability has two traditional categories: vicarious infringement and contributory infringement.74 The Supreme Court also recently instituted an addi tional mode of contribut ory liability known as inducement, by which distributing a device or service which promotes or induces the infringement of copyright can result in liability.75 70 See id. at 99-100. 71 See id. at 119-23. 72 See infra notes 86-106 and accompanying text. 73 See DAVID NIMMER & MELVILLE NIMMER, NIMMER ON COPYRIGHT 12.04(A)(Matthew Bender 2007)(hereinafter NIMMER ON COPYRIGHT). 74 Id. 75 See Metro-Goldwyn-Mayer Studios, Inc v. Grokster,Ltd., 545 U.S. 913 (2005).

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23 The distinctions between vicarious and contributory liability are often confused. In short, vicarious liability focuses on the relationship of the defendant to the third-party infringer, while contributory infringement looks to the relationship of the de fendant to the actual infringing act.76 YouTubes operation as an Internet platform for ho sting user-generated videos calls both areas of secondary liability into question. Video linking websites similarly could be subject to possible secondary liability. Vicarious liability pertains to a third-partys right, duty, or ability to control a third party direct infringer and the ability to pr ofit from the infringement of others.77 The Supreme Court noted that vicarious liability is impo sed in virtually all areas of the law.78 To be found liable for vicarious infringement, three basic elements must be met: (1) there must be an act of direct infringement by a third party (1 ) the defendant must hold the ri ght or ability to control the infringers conduct, and (2) defendant mu st receive a direct financial benefit79 from the exploitation of the work.80 Unlike vicarious infringements focus on the association between the defendant and their control over the direct infringer, contributory infringement looks to the connection between the defendant and the actual infringing act. C ontributory infringement may generally be found 76 William Sloan Coats, Mark R. Weinstein, Erik R. Zimmerman, Pre-and Post-Grokster Copyright Infringement Liability for Secondary and Tertiary Parties Practising Law Institute, 877 PLI/Pat 323 at n.7 (Sept. 2006). 77 See NIMMER ON COPYRIGHT, supra note 72, at 2.04(A)(2). See also Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005). 78 Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 435 (1984). 79 There is some disagreement among the Federal Circuit Courts as to how extensive the financial benefit must be. Cf. Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963)( stating that, an obvious and direct financial interest in the exploitation of copyrighted materials may result in the imposition of liability upon the beneficiary of that exploitation; finding chain store liable for the infringing acts of retained operator running its record departments ), with A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1023 (9th Cir. 2001) (finding Napster liable for vicarious infringement because the future of the business relied upon building a network of infringing users to advertise to), and Fonovisa v. Cherry Auction, 76 F.3d 259, 263 (9th Cir. 1996) (finding a direct financial benefit by swap-meet landlord when le ssees paid minimal rental fees and defendant received no commission or proceeds from the sales of bootleg music). 80 NIMMER ON COPYRIGHT, supra note 72, at 2.04(A)(2).

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24 where, one who, with knowledge of the infr inging activity, induces, causes or materially contributes to the infringi ng conduct of another .81 Thus the three basic elements of contributory infringement are (1) an act of direct infringement by a third party, (2) where the defendant has knowledge of the infringing activit y, and (3) the defendant induces, causes, or materially contributes to the infringement.82 Some have further divide d this up into two general ways to be a contributory infri nger, either by participating in the infringement, or providing the means by which to infringe.83 As the Supreme Court has noted, copyright law has developed in response to changes in technology, as far back as the invention of the pr inting press necessitating the rise of copyright protection.84 Two major Supreme Court cases dealt with emerging technology, Sony v. Universal City Studios in 1984,85 and the more recent Metro-Goldwyn-Mayer v. Grokster decision of 2005.86 In 1984, the Supreme Court decided the seminal case of Sony v. Universal City Studios (Sony), holding that the sale of video tape record ers failed to violate content providers copyrights.87 The Sony Betamax video tape recorder, an early version of the VCR, enabled users to record shows and movies from their televisions.88 The Supreme Court reversed the holding of the Ninth Circuit, finding Sony not liable for th e direct, vicarious, or c ontributory infringement of Betamax users in a five-to-four decision.89 It relied heavily upon the traditional reluctance of 81 Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971). 82 See Grokster, 545 U.S. at 930. 83 NIMMER ON COPYRIGHT, supra note 72, at 2.04(A)(3)(a-b). 84 Sony v. Universal City Studios, 464 U.S. 417, 430 (1984). 85 Id. 86 545 U.S. 913 (2005). 87 464 U.S. 417 (1984). 88 Id. at 420. 89 Id. at 421.

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25 the judiciary to do what it viewed would be imposing an unprecedented new form of liability upon innovators.90 The majority acknowledged that, it is not our job to apply laws that have not yet been written, leavin g room for Congress to take a fresh look at this new technology, just as it so often has examined other innovations in the past.91 This dicta in Sony is just one piece of evidence leading to the likely conclusion that onl ine copyright law needs a fresh look in order to protect the traditional copyright regime. In its contributory infringement analysis, the Court declined to clearly define the substantial non-infringing use stan dard borrowed from patent law.92 In defining what was a substantial non-infringing use, the Court said that it did not n eed to consider every possible potential use and determine whether it was infringing, but instead whether a significant number of them would be non-infringing.93 This term remains unclear even after subsequent filesharing decisions and has yet to be applied in the online video cont ext. This is a critical point that YouTube must address as to whether it is capable of substantial non-infringing uses. In 2005, the Supreme Court, addressed the issu e of contributory infringement of peer-topeer file sharing networks in MGM v. Grokster .94 Grokster and codefendant Streamcast, distributed free software enabling users to sh are digital files dire ctly among one another.95 Both companies made money by placing a dvertising within the software.96 Grokster and Streamcast both took advantage of the downfall of Napster by advertising and promoti ng the fact that their 90 See id. at 431-32. 91 Id. at 456. 92 Id. 93 Id. (emphasis added). 94 Grokster, 545 U.S. 913 (2005). 95 Id. at 923. 96 Id. at 926.

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26 respective software woul d be a good replacement.97 The Supreme Court decided the case on the new inducement theory of contributory liability, finding a determination of vicarious liability unnecessary.98 The Court first noted Sonys substantial noninfringing use doctrine, yet, the Court punted on the issue, holding only that the lower court s ruling on substantial noninfringing use was incorrect.99 Though the issue was addressed by two separate three-justice concurrences,100 it remains a lingering question postGrokster of what exactly constitutes a substantial noninfringing use. Next, the Court applied the inducement theory of contributory liability from patent law, holding that th e distribution of a device with the intent of promoting its use to infringe copyright, as shown by clear expression or other affirm ative steps taken to foster infringement, is liable for the resu lting acts of third party infringers.101 In discussing inducement, the Court noted that such things as Groksters promoting to users looking to fill the Napster void, its lack of filtering software to prevent infringement, and its dependence on advertising revenue dire ctly correlated to the use of the software.102 As a result, the Court found Grokster liable of inducement to in fringe and remanded the decision.103 Finally, in the present controversy over Y ouTube, numerous lawsuits have been filed against YouTube and other similar websites.104 Two lawsuits are most not able. First is the high97 Id. at 924. 98 Id. at 930. 99 Id. at 932-34. 100 Id. at 942 (Ginsburg, J., concurring); Id. at 949 (Breyer, J., concurring). 101 Grokster 545 U.S. at 936-37(majority opinion) 102 Id. at 939-940. 103 Id. at 941. 104 Veoh Networks, Inc. v. UMG Recordings, Inc., 07 1568 (S.D. Cal., filed Aug. 9, 20 07); Cal IV Entertainment, LLC v. Youtube, Inc., 3:2007cv00617 (M.D.Tenn. filed June 7, 2007); Football Assoc. Premier League Ltd. and Bourne Co. v. YouTube, Inc, 07 Civ. 03582 (S.D.N.Y., filed May 4, 2007, class action); Viacom Intl, Inc. v. YouTube, Inc., No. 1:2007 CV 02103 (filed Mar. 13, 2007); UMG Recordings, Inc. v. Bolt, Inc. CV 06-06577 (C.D. Cal., filed Oct. 16, 2006); UMG Recordings, Inc. v. Grouper Networks, Inc., CV 06-06561 (C.D. Cal., filed Oct. 16,

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27 profile suit filed agains t YouTube by Viacom, parent company of numerous cable TV networks such as Comedy Central and MTV.105 In its complaint, Viacom alleged that YouTube knowingly engaged in activities re sulting in the massive infringe ment of copyrighted material, and thus should be found liable for both contributory and vicarious infringement.106 Recently associated with the Viacom suit is a class-action suit started by a complaint by a European soccer league against YouTube.107 These and other similar lawsuits in the courts may ultimately decide the issue of secondary infringement concer ning the new online video technologies. A Possible Affirmative Defense Typical copyright lawsuits are private rights of action filed by the copyright owners. However, just as copying is different in the digital world, so too are the methods for fighting against infringem ent. The Digital Millennium Copyright Ac t (DMCA), passed in 1998 with much fanfare, was seen as a great leap forward for the protection of copy right owners in digital media, allowing for the implementation of digita l rights management technologies to strengthen copyright holders righ ts in the digital age.108 The DMCA provides an affirmative defense for direct or secondary infringement by online service providers with a safe-harbor from liability 2006); IO Group, Inc. v. Veoh Networks, Inc., 2006cv03926 (N.D. Cal., filed June 23, 2006). See also Tur v. YouTube, Inc., CV 06-4436 (C.D. Cal., consolidated with Football Assoc. cas e in S.D.N.Y); New Jersey Turnpike Authority v. YouTube, Inc., 2:2007cv02414 (D.N.J., complaint voluntarily dismissed May 24, 2007)(N.J. Turnpike Authoritys security camera footage of a car accident at a toll booth turned up on YouTube and other file sharing websites). 105 Viacom Intl, Inc. v. YouTube, Inc., No. 1:2007 CV 02103 (filed Mar. 13, 2007). 106 Id 107 The Football Assoc. Premier League Ltd. and Bourne Co. v. YouTube, Inc, 07 Civ. 03582 (S.D.N.Y., filed May 4, 2007, class action). 108 Digital Rights Management techonology allows copyright owners to program into digital copies of their copyrighted works specific limitations on the copys usage. For example, a digital music file may have a restriction placed on it limiting the number of computers it can be played on. See generally 17 U.S.C. 201, 1202, providing for criminal penalties for those tampering with, removing, or circumventing digital rights management technolgies from copies.

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28 for infringing acts of its users if certain procedures of notice and takedown are observed. 109 The safe-harbor was implemented in order to protect in ternet service providers from liability, treating it more as a common carrier than a content provider responsibl e for its users action on its networks.110 The safe harbor requires those operating as s ervice providers to follow strict notice and takedown procedures outlined in the law.111 Very simply, upon knowledge or awareness of infringing activity, a website is required to prom ptly remove or disable access to the alleged material. 112 The knowledge or awareness typically come s from content owners notification of infringement, however, not all users accused of infringement are necessarily guilty of infringement due to fair use or by mistake of the accusing party. As a result, it requires the copyright owners to vigorously protect its produ cts, limiting liability for secondary infringers such as YouTube until they are put on actual no tice by the copyright owner, while placing the entire burden on the alleged infringer to prove be yond a doubt that they are authorized to use the video.113 109 Online Copyright Infringement Liability Limitation Ac t, Title II of the DMCA, 17 U.S.C. 2 (1998). 110 See Ellinson v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004)(DMCA created to provide greater certainty to service providers concerning their legal exposure for infringe ments that may occur in the course of their activities.). See also Tim Wu, Does YouTube Really Have Legal Problems? SLATE, Oct. 26, 2006, http://www.slate.com/id/2152264 (last visited Feb. 16, 2008). 111 17 U.S.C. 512(c). 112 17 U.S.C. 512(c)(1)(A)(iii). 113 See e.g. Jennifer M. Urban & Laura Quilter, Efficient Process or Chilling Effects? Takedown Notices Under Section 512 of the Digital Millennium Copyright Act, 22 SANTA CLARA COMPUTER & HIGH TECH. L.J. 621, 637-38 (2006); Emily Zarins, Notice Versus Knowledge Under the DMCAs Safe Harbors 92 CAL. L. REV. 257, 291-95 (2004); Colin Folawn, Neighborhood Watch: The Negation of Rights Caused by the Notice Requirement in Copyright Enforcement Under the DMCA, 26 SEATTLE U. L. REV. 979 (2003); Alfred C. Yen, Internet Service Provider Liability for Subscriber Copyright Infringement, Enterprise Liability, and the First Amendment, 88 GEO. L.J. 1833, 1888 (2000). See also Lawrence Lessig, Make Way for Copyright Chaos, N.Y. TIMES, Mar. 18, 2007 (Op-Ed Contribution) available at http://www.nytimes.com/2007/03/18/opinion/18lessig.html?ex=1331870400&en=5a2a6ea9bc52f3fc&ei=5124&part ner=permalink&exprod=permalink (last visited Feb. 18, 2008).

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29 While numerous courts have grappled with the issue of the Section 512 safe-harbor, no definitive rule has emerged concerning online video hosting websites.114 Whether YouTube falls under the safe-harbor will in larg e part determine its liability under the Copyright Act for the infringing actions of its users. The question similarly applies to linking websites. The impact of the burden shift on the copyright regime, how it a ffects content providers and their ability to protect their product, and its impact on fair use, are all important issues that will be further explored in Chapters III, IV, and V. Research Questions and Methodology The prim ary purpose of this research is to ex plore copyright infringe ment of online video distribution via YouTube and linking websites. As a secondary purpose, this study will also address the larger theoretical impact that YouT ube and video liking site s are having upon digital copyright law. Specifically, this study addresses the following set of research questions: 1) Are video-sharing website like YouTube liable under direct infringement? 2) Are video-sharing websites like YouTube, as well as video linking websites, liable as a secondary infringer? 3) Are video-sharing websites like YouTube, as well as video linking websites, immune from liability under (c) of the DMCA as an online service provider? 4) What remedies are available to help solve the problem of copyri ght infringement of online video? 114See e.g. Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1117 (9th Cir. 2007); Parker v. Google, Inc., 422 F.Supp. 2d 492 (E.D. Pa. 2006); Ellison v. Robertson, 353 F.3d 1072, 1079 (9th Cir. 2004); Corbis Corp., v. Amazon.com, 351 F. Supp. 2d 1090 (W.D. Wash. 2004); In Re Aimster 334 F.3d 643, 655 (7th Cir. 2003); Hendrickson v. Amazon.com, Inc., 298 F. Supp. 2d 914, 915 (C.D. Cal. 2003) ; Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F. Supp. 2d. 1146, 1171 (C.D. Cal. 2002); ALS Scan, Inc. v. RemarQ Communities, Inc., 239 F.3d 619, 625 (4th Cir. 2001); A&M Records v. Napster 239 F.3d 1004, 1025 (9th Cir. 2001).

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30 The first question examines direct infringe ment by applying each of the exclusive rights that exist under copyright law. To answer the second question, this study will review what constitutes a substantial noninfringing use in de termining traditional se condary liability of vicarious and contributory infringement under Sony and review the applicability of inducement under Grokster. To analyze the third question, th e study will explore whether YouTube immunity is different from the sort of immun ity granted to regular websites. What does the legislative history of the DMCA suggest as to the limitation of liability for websites such as YouTube? Will these types of site s continue to enjoy protection mo re copyright owners seek to protect their copyrighted work s on the Internet? If the immunity stands, what are the implications for users and fair use? The analys is will look to the Secti on 512 immunity standard and analyze the repercussions of th e burden shift to alleged infringers. The same questions are then posed as they apply within the video linking website Southparkzone.com. Finally, the fourth question will be explored through suggested changes to and interpretations of the law. The scope of the research is limited to YouT ube and linking websites, with applicable case law and other materials generally limited to the last twenty years and concerning emerging technology. As an emerging technology, and with the law surrounding it in flux, this research is original in application to online video and linki ng websites. Very limited literature currently exists on YouTube, and that which was publishe d within the research period was limited in amount and different in scope. All research was conducted though legal methods analyzing case law, statutes, and legislative history. Chapter 2 will follow with a le gal literature review of academic journals and law review articles on the topic. Chapter 3 will then overview the prior case history pertaining to copyright infringement and emerging technologies, from Sony through Grokster, to the pending

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31 YouTube litigations. Chapter 4 will then provi de the analysis of the legal questions and problems outlined below through a case study of YouTube and the linking website Soutparkzone.com. Finally, Chapter 5 will c onclude the study by proposing practical legal solutions to the problems created by online video infringement and remaining questions in the law. In carrying out the legal literat ure in Chapter 2, law review ar ticles were searched through Westlaw and Lexis-Nexis Communicatio ns law review databases as we ll as all of the law review databases. Academic journals were searched by utilizing the University of Florida Librarys Research Gateway which links to databases su ch as Academic Search Premier, InfoTrac, EbscoHost, GaleGroup, and Proquest. Search te rms included DMCA w/p safe harbor fair use Grokster Sony v. Universal and substantial noninfringing use. Many of the cases had already been identifie d, however, these cases are expanded and new cases uncovered in Chapter 3 upon completing s ound legal research methods via Westlaw and Lexis Nexis. New cases were searched though the All-Fed database since copyright is a federal question, and utilized search st rings such as copyright w/p on line w/p infringement copyright w/p internet w/p infringement DMCA w/p saf e harbor. The research is time-limited to December 2007. New cases were identified thro ugh keycite on Westlaw by viewing previously found cases, as well as through Andrews Liti gation Reporter on Westlaw for current and recently decided copyright law cases. In additi on, a number of copyright law websites and blogs provide industry-based updates to stay abreast on current ongoing ca ses. Dockets were searched in ongoing cases to discover the most current legal strategies being pursued by counsel in the YouTube litigations through the free website http://www.dockets.Jus tia.com. Parallel cases having to do with online servic e provider immunity under other laws with similar safe-harbors

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32 were similarly searched for using online servi ce provider and other similar language from the DMCA. Legislative history for DMCA was t horoughly searched via Westlaws keycite system and search terms to House and Senate reports, through the Library of Congress Thomas website, and Senate and House committee websites.

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33 CHAPTER 2 LITERATURE REVIEW In order to further explore the issue of we bsites such as YouTube and linking websites facilitating online copyright infringem ent, it is important to review th e scholarly literature concerning the broader issues of online copyright. Little scholarly litera ture exists on the new technology of YouTube.com and similar online video-shar ing websites. There are a number of brief commentaries on the lawsuits file d by Viacom and others against YouTube.1 However, nothing in the literature as of yet handles the full analysis of the growing online video infringement problem. Further exploration is ne eded, as the problem continues to grow: a 2007 study estimated that the market for online vide o will grow from 13 million households in 2005 to 131 million households by 2010.2 As such, the remainder of this literature re view, after a brief review of linking and safeharbor research, will focus on general policy re garding copyright and new technology in light of online video to set a theoretical framework for the remainder of this study. It will then focus on the effect of changing dissemination technologies on copyright law, the legislative process, and the problem of online infringement facilitators. Next it will turn to the judiciarys effect on copyright law and specifically on common law base d secondary liability. Finally, it will review the copyright law and economics literature a nd examine a number of new ways to look at copyright law from unique perspectives other than the courts and Congress. 1 See e.g. Michael Driscoll, Comment: Will YouTube Sail Into the DMCAs Safe Harbor or Sink for Internet Piracy? 6 J. MARSHALL REV. INTELL. PROP. L. 550 (2007); Christopher D. Newkirk & Thomas A. Forker, Does YouTubes Bright Past Mean a Cloudy Future? 19 No. 1 INTELL. PROP. & TECH. L. J. 1 (2007); Christina Scelsi, You Tube 24-FALL ENT. & SPORTS LAWYER 10 (2006); Tim Wu, Does YouTube Really Have Legal Problems? How the Bell Lobby Helped Midwife YouTube, SLATE, Oct. 26, 2006, http://www.slate.com/id/2152264/fr/rss (visited Nov. 5, 2007). 2 Michael A. Einhorn, Digitization and Its Discontents: How Markets are Transforming Copyright, 54 J. COPYRIGHT SOCY U.S.A. 231, 235 (2007).

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34 As introduced in Chapter 1, linking websites are becoming more prevalent on the Internet to distribute infringing videos to users, without hosting copies of infringing materials on their own web servers. For example, SouthParkzone .com is an hub of links to unauthorized fulllength copies of the hit television show South Park.3 The links direct the users to copies stored on video-sharing websites, such as YouTube.c om or veoh.com, and nothing is located on the southparkzone.com servers but the links to the in fringing copies. While there are methods to rid the host websites of illegal copies, fresh links are often searched for or uploaded to replace dead links within a matter of hours of removal. This is a very new problem in the copyright law world due to the ease at which illega l copies may be accessed and th e difficulty at which infringing copies may be removed. Similar legal issues were prevalent during the early development of th e Internet during the 1990s, and the topic was covered on a limited basis in the literature.4 Other linking literature concentrates on cases pertaining to anti-circumvention copyright laws where websites linked to codes and instructions for unlocking di gital rights management technologies.5 The more recent problem of linking websites devoted solely to infringing videos has been covered on an even 3 See e.g. South Park Zone, http://www.southparkzone.com (last visited Nov. 20, 2007)(offering links to unauthorized streaming copies of Comedy Centrals South Park); Peekvid, http://www.peekvid.com (last visited Nov. 20, 2007)( Peekvids disclaimer of liability on its home page: Peekvid does not contain any content on its site, but is merely an index of available links on the Internet.). 4 See e.g. Mark Sableman, Link Law Revisited: Internet Linking Law at Five Years 16 BERKELEY TECH. L.J. 1273 (2001); Nicos L. Tsilas, Minimizing Potential Liability Associated With Linking and Framing on the World Wide Web 8 COMMLAW CONSPECTUS 85, 85-86 (2000); David L. Hayes, Advanced Copyright Issues on the Internet, 7 TEX. INTELL. PROP. L.J. 1, 84-87 (1998); Edward A. Cavozos & Coe F. Miles, Copyright on the WWW: Linking and Liability 4 RICH. J. L. & TECH. 3 (1997). 5 See Michael Dockins, Comment, Internet Links: The Good, the Bad, the Tortious, and a Two-Part Test 36 U. TOLEDO L. REV. 367, 386 (2005).

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35 more limited basis.6 This is clearly an area in the literatur e that is in need of further development and will be a major focus of the remainder of this study. One of the most relied-upon defenses to onl ine copyright infringement by video hosting websites is the Online Copyright Infringement Liability Limitation Act, otherwise known as section 512 of the Digital Mill ennium Copyright Act (DMCA).7 Section 512 grants certain online service providers immunity from secondary copyright infringement as a conduit of the infringing activity.8 Three years prior to the enactment of the DMCA, copyright scholar Jane Ginsburg noted that service providers were best-situated to prevent infringement.9 Section 512(c) may apply to video-shari ng websites such as YouTube, th at are open to the public for uploading without prior approval of content. The lack of content approval is integral to the notice-takedown process. First, the online serv ice provider must receive notice--a request from the apparent content-owner that an infringing vi deo is on their servers. Upon notice, the online service provider must then expeditiously remove the alle ged infringing video, notify the complainant of the removal, and notify the origin al uploader that the c ontent has been removed and their right to serve a counte r-notice to the complainant. The specifics of (c) will be addressed further in Chapters III and IV. 6 See Louise Longdin, Note & Comment, Hyperlinking and Copyright Infringement 13 NEW ZEALAND BUS. L. Q. 33 (2007)(comparing briefly American legal copyright problems with linking to English, Australian, and Canadian problems). 7 17 U.S.C. 2 (2000). 8 This is distinct from what are commonly known as Internet Service Providers, or ISPs. 9 See Jane C. Ginsburg, Putting Cars on the Information Superhighway: Authors, Exploiters, and Copyright in Cyberspace 90 COLUM. L. REV. 1466, 1492-93 (1995).

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36 The safe-harbor has been examined in detail by numerous authors.10 The literature has been divided into three camps:11 (1) early commentary that r ecognized as the solution to all the Internets problems,12 (2) suggestions that it actually provides a disincentive to online service providers to monitor for infringeme nt despite their best position to do so,13 and (3) commentators that thought the onus put on users to prove they ha d the right to share the work after removal acted as a chill on Internet expression.14 Additionally, Professor David Nimmer thoroughly examined the legislative history and intent in his book Copyright : Sacred Text, Technology, and the DMCA .15 The early praise of the DMCA safe harbor largely due to optimism for the effectiveness of the new statute based on the history of its development.16 The safe harbor began as a recommendation of the Intellectua l Property Working Group of the Information Infrastructure Task Force, formed in 1993 to address digital technologies and the Internet.17 In 1995, the 10 See Cassandra Imfeld & Victoria Smith Ekstrand, The Music Industry and the Le gislative Development of the Digital Millennium Copyright Acts Online Service Provider Provision 10 COMM. L. & POLY 29 (2005); Emily Zarins, Notice Versus Knowledge Under the DMCAs Safe Harbors 92 CAL. L. REV. 257 (2004); Mitchell P. Goldstein, Service Provider Liability for Acts Committed by User s: What You Dont Know Can Hurt You 18 J. MARSHALL J. COMPUTER & INFO. L. 591 (2000); Alfred C. Yen, Internet Service Provider Liability for Subscriber Copyright Infringement, Enterprise Liability, and the First Amendment 88 GEO. L. J. 1833 (2000). 11 Jennifer M. Urban & Laura Quilter, Efficient Process or Chilling Effects? Takedown Notices Under Section 512 of the Digital Millennium Copyright Act 22 SANTA CLARA COMPUTER & HIGH TECH. L.J. 621, 637-38 (2006). 12 See Urban & Quilter, supra note 11, at 1270; Michelle A. Ravn, Navigating Terra Incognita: Why the Digital Millennium Copyright Act Was Needed to Chart the Course of Online Service Provider Liability for Copyright Infringement 60 OHIO ST. L.J. 755, 785-86 (1999); Steven E. Halpern, New Protections for Internet Service Providers: An Analysis of The Online Copyright Infringement Liability Limitation Act 23 SETON HALL LEGIS. J. 359, 406-07 (1999). 13 See Urban & Quilter, supra note 11, at 687-88; Colin Folawn, Neighborhood Watch: The Negation of Rights Caused by the Notice Requirement Under the DMCA 26 SEATTLE U. L. REV. 979 (2003). 14 See Emily Zarins, Notice Versus Knowledge Under the DMCAs Safe Harbors, 92 CAL. L. REV. 257 (2004); Alfred C. Yen, Internet Service Provider Liability for Subscriber Copyright Infringement, Enterprise Liability, and the First Amendment, 88 GEO. L. J. 1833 (2000). 15 See generally DAVID NIMMER, COPYRIGHT : SACRED TEXT, TECHNOLOGY, AND THE DMCA (Kluwer Law International, The Hague 2003). See also, David Nimmer Appreciating Legislative History the Sweet and Sour Spots of the DMCAs Commentary 23 CARDOZO L. REV. 909, 951 (2002). 16 Supra note 12. 17 Halpern, supra note 12, at 382-83.

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37 Intellectual Property Working Group issued a White Paper recommending that a passive conduit exception to liability should be extended to online service providers.18 Shortly thereafter, Congress initiated a bipartisan legislative initiative to implement the recommendations, but ultimately failed due to a standstill over the reach of the limitation of liability.19 However, the safe harbor was revive d during Congress implementation of two World Intellectual Property Organi zation treaties, which had orig inally included safe harbor provisions in earlier drafts.20 As a result, the Digital Mille nnium Copyright Act was finally agreed upon by both houses of Congress and signed into law on October 28, 1998.21 Due to the long history of industry particip ation in the process of devel oping the safe harbor, it is understandable that there were few early critics. However, others greeted the safe harbor with more skepticism, finding that it created a perverse incentive for service providers to avoi d monitoring their system s despite being in the best position to do so.22 When a service provider is al erted to possibly infringing material, it has no reason to distrust the accusation, as furthe r inquiry may result in knowledge of infringing material.23 Such knowledge risks losing immunity and in troduces the provider to great potential financial liability, the same uncer tain liability the safe harbor attempts to avoid in the first place.24 18 Ravn supra note 12, at 744. See Information Infrastructure Task Force, Intellectual Property and the National Information Infrastructure: The Report of the Working Group on Intellectual Property Rights at 100 (1995) available at http://www.uspto.gov/go/com/doc/ipnii/lawcopy.pdf (last visited Mar. 3, 2008). 19 Halpern, supra note 12, at 383. 20 Id. 21 Id. See also Digital Millennium Copyright Act, Pub. L. No. 105-304, 201-203, 112 Stat. 2860, 2877-2886 (Oct. 28, 1998). 22 See supra note 13. 23 Urban & Quilter, supra note 11, at 687. 24 Id.

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38 After observing the operation of the safe ha rbor over its early years, a number of commentators pointed a major failing.25 They noted that the DMCAs notice and takedown procedure shifted the traditional burden of copyr ight owners proving infringement to alleged infringers being forced to disprove infringement.26 Professor Alfred Yen pointed out this problem, noting the First Amendment concerns th at arise when allegedly infringing works are taken-down preemptively without a chance for th e alleged infringer to respond prior to the takedown.27 Although alleged infringers are equipped with the ability to serve a counter-notice and eventually have their material put-back, that process then puts the alleged infringer at risk to be sued by the copyright owner.28 In addition, there are few sa feguards to protect users from over-zealous claims of infringement by copyright owners other than bad-faith claims directly forbidden by the DMCA itself.29 As a result, Yen noted, the notice-takedown process under the DMCA results in a chilling effect on speech by over-zealous takedown notices or through the perceived risk of litigation by alleged infringers serving counter-notice.30 Pertinent to this study is the effectiveness of the notice and takedown regime on the online video-sharing and protection of copyrighted work s. Jennifer Urban and Laura Quilter conducted an empirical analysis of the e ffect of section 512 of the Dig ital Millennium Copyright Acts (DMCA) notice and takedown regime in 2006.31 Urban and Quilter found that a limited 25 See supra note 14. 26 Urban & Quilter, supra note 11, at 638; Yen, supra note 14, at 1887-88. 27 Yen, supra note 14, at 1888. 28 Id. 29 Id. 30 Id. 31 Urban & Quilter ,supra note 11.

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39 achievement of the overall goals of section 512, t he inexpensive takedown of clearly infringing hosted content or links to infringing websites.32 In the study, Urban and Quilter examined a data set compiled by online copyright watchdog group Chilling Effects, consisting of nearly 900 takedown notices sent to alleged individual online infringers of all forms of copyright.33 Of that number, 734 notices were reported by Google, Inc., the entire number of notices received by the Internet search giant since it began record-keeping in 2002.34 Of the claims, only 31% applied to the (c) safe-harbor relating to online service providers,35 many of which were substantially and procedurally flawed.36 In all, they found an ove rall abuse of the notice and ta kedown process and a negative impact on the publics consumption of copyrighted works and a degradation of the Internet as a platform for sharing information.37 One of the most important findings was that Urban and Quilter determined that the immediate removal of alleged infringing cont ent, without any response from the alleged infringer, constituted a lack of fairness and due process.38 As a result, they suggest amending from requiring expeditious takedown to a set time period which would not instantly strip an alleged infringer of his ability to share conten t that may in the end be rightfully his to share.39 This would in effect build[] some due proce ss back into the system and restore the notice32 Id. at 687. 33 Id. at 641. 34 Id. 35 Id. at 667. 36 Id. at 682. 37 Id. at 687-88. 38 See id. at 688-89. 39 See id.

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40 takedown regime to its proper bala nce, rather than a one-sided attack tool of the copyright owners.40 Copyright Law and New Technology As noted in Chapter 1, copyright law has st ruggled to adapt to changes in technology.41 As a result, a major question throughout the scholarly literature is the classic chicken-egg question of how technological advances aff ect copyright law: whether th e technology changes the law, or the law changes technology (or at least adapts to it). It is important to further examine this question in order to frame the issue the Intern ets constantly advanc ing digital technology, specifically for the purposes of this study regard ing the infringement of online video. In 1989, Professor Jessica Litman noted that while one gr oup of scholars maintained that copyright law had always accommodated changes in technology largely with great success, another group insisted that current technologica l changes were incongruent to th e original notion of copyright law of protecting author s incentive to create.42 This trend largely cont inues in the more recent literature on the topic. Litman herself contends that technology has a net positive effect of granting greater control to the end-users.43 The Legislative Process Som e commentators contend that it is the legislative process that is deficient in adapting copyright law to changing technology. Litmans seminal 1989 analysis, Copyright Legislation and Technological Change examines the effect technological change has on the legislative process of developing new copyright law.44 Litman argues that th e legislative process is 40 Id. at 689. 41 Jessica D. Litman, Copyright Legislation and Technological Change 68 OR. L. REV. 275, 276 (1989). 42 Id. 43 See JESSICA D. LITMAN, DIGITAL COPYRIGHT 14 (Prometheus Books, Amherst, N.Y. 2001). 44 Litman, Copyright Legislation and Technological Change, supra note 41, at 277.

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41 responsible for the deficiency of copy right law in accord with new technology.45 Much of the copyright law through history was written by the i ndustry concerned with dr afting fact-specific statutes that are easily surpa ssed when new technology takes over.46 Litman contends that the obsession of current stakeholders to entrench themselves in current technology through complicated statutes that quickly become outdate d is the greatest barrier to lasting copyright laws.47 In other words, Litman argues that copy right legislation is essentially about the incumbent copyright industry increasing its control over the sale of its products.48 However, the sought-after control was typically more of an inside job than one might imagine. Dating back to 1909, Congress has largel y allowed the interested parties in copyright legislation gathered together to write the laws.49 One obvious problem with such a process is clearly defining who has the right to sit at the table when it comes time to renegotiate.50 Since the negotiations are largely self-i nitiated, it is left to the industries to determine the proper players. This results in a favoritism towards in cumbents and away from new technologies. Such a complication in this legisl ative strategy can be easily a pplied to current copyright controversies. For example, if perhaps Google was afforded a seat at the table, but not some of its smaller software rivals, Googles technologic al approach will clearly be favored in the revision. 45 Id. 46 Id. 47 See id. at 359-60. 48 See LITMAN, DIGITAL COPYRIGHT, supra note 43, at 81. 49 Litman, supra note 41, at 278. Litman identified that the 1909 Copyright Act followed this exact model, however fringe industries such as the piano roll and phonograph were not invited to participate. Id. at 285. 50 See id. at 280.

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42 But what is the result on copyright legislation in the wake of this process? Professor Tim Wu notes two main streams of copyright legislation that emerged in the Internet age.51 First, are new specific rules for passive dissemination technologies in the form of safe-harbors.52 In the past, new dissemination technologie s relied on compulsory licenses to gain access to copyrighted works, the lifeblood of any disseminator.53 However, with the safe-harbors, disseminators are no longer concerned with gaining legal access to copyr ighted works, since the safe-harbor places that burden on the users of the websites and sharing programs, and immunizes disseminators from consequences of unknown user infringement.54 Wu argues that this essentially allows copyright distribution facilitato rs to free-ride off the works of others without major legal repercussion so long as they adhere to the safe harbors dictates.55 The second type of copyright legislation sought is specific laws aimed at limiting infringing users.56 For example, Congress passed new laws aimed at strengthening digital rights management technologies by making it ille gal to circumvent security measures.57 It also singled out certain technologies for a tax to be paid to the copyright owners knowing that a certain amount of infringement would occur utilizing the technology.58 The digital rights management abilities and targeted taxes work to not only stre ngthen the hand of the copyright incumbents, but equally work to weaken the hand of their challengers.59 51 See Tim Wu, Copyright Communications Policy 103 MICH. L. REV. 278, 344 (2004). 52 Id. 53 Id. 54 See id. 55 Id. 56 Id. at 344-45. 57 Id. 58 Id. See infra at notes 99-101. 59 See Jane C. Ginsburg, Copyright and Control Over New Technologies of Dissemination 101 COLUM. L. REV. 1613, 1619-20 (2001). For example, the 1992 Audio Home Recording Act (AHRA) was a law aimed specifically at a new digital audio tape technology (which never caught on commercially). Id. The AHRA imposed a tax on the sale of qualifying devices to be distributed to content creators. Id. In exchange for the tax, the AHRA allowed the

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43 Copyright Incumbents Once the laws are written and enacted, it is co mmon for the winners to reap the rewards of their carved-out areas of the law to utilized their technology, while the losers struggle to adapt their products to the new laws, often resulting in a stifling of technology. The conflict between incumbent and challengers is a common cycle throughout the hist ory of copyright law.60 The conflict is unavoidable because new technologies will constantly evolve to displace the old either through a technological advantage or lower costs.61 In response, incumbents will use all means available, including fine tailored le gislation, to destroy the incoming competition.62 As Professor Alina Ng notes, copyright in cumbents attempt to use information, the currency in which copyright deals, to solidify their dominance.63 Ng suggests that unless fences are erected, common resources, such as informa tion, will be depleted in precisely the same manner that common pastures are overgrazed.64 Such fences regarding online video are essential, for once a work is disseminated to th e public, digital technology readily allows it to be exploited by anyone with the requ isite knowledge to do so, legally or otherwise. If no fences are erected, then free riding may result-where one unjustly benefits fr om the work of another at the expense of the author.65 device to make first-generation copies, but prevented user s from making additional copies to distribute off the device. Id. 60 Wu, Copyright Communications Policy supra note 51, at 292-97. 61 Id. at 293. 62 See id. at 292. 63 See Alina Ng, Copyrights Empire: Why the Law Matters, 11 MARQ. INTELL. PROP. L. REV. 337, 346 (2007). For the seminal analysis of copyright law and economic theory, see William M. Landes & Richard A. Posner, An Economic Analysis of Copyright Law 18 J. LEGAL STUD. 325 (1989). See also Paul A. Samuelson, The Pure Theory of Public Expenditure 36 REV. OF ECON. & STATISTICS 387 (1954)(defining in economic terms what constitutes a public good). 64 See Ng, supra note 63. 65 See id. But s ee Mark A. Lemley, Property, Intellectual Property, and Free Riding 83 TEX. L. REV. 1031 (2005)(critiquing the notion that free riding in intellectual property should be eliminated).

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44 The incumbent typically retains a more power ful position than the challenger: incurring great litigation costs on the chal lenger, denying the challenger access to copyrighted materials or taxing them for access, and seeking regulatory and legislative restrictions on the challenger.66 However, even with all the advantages, the copyright policy making process is typically unpredictable concerning new technologies.67 Despite constant improvement, major shifts in technology, such as from analog to digital on the Internet, are generational changes.68 Similarly, major changes to the copyright law are similarly uncommon.69 Thus, the actions of multiple government actors can be unpredicta ble and yield unexpected results.70 Professor Kevin M. Lemleys 2005 article, The Innovative Medium De fense: A Doctrine to Promote the Multiple Goals of Copyright in the Wake of Advancing Digital Technologies attempts to find the proper balance in orde r to prevent the stifling of new technology by incumbent copyright owners and disseminators.71 Lemley contends that if the framers of the Constitution intended to promote the useful arts and sciences (as developed in patent and copyright law), then so too did they inte nd to protect innovative mediums which would communicate such creative works.72 Lemley adds that because copyright owners do not typically directly benefit fina ncially from innovation, they have no incentive to cooperate and 66 Id. at 294-95. 67 Id. at 295. 68 See id. 69 See id. 70 Id. 71 Kevin A Lemley, The Innovative Medium Defense: A Doctrine to Promote the Multiple Goals of Copyright in the Wake of Advancing Digital Technologies 110 PENN. ST. L. REV. 111, 112-13 (2005). 72 Id. at 134.

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45 work with innovators.73 The basic business desire to do what has worked in the past and avoid taking chances on new mediums works to stifle innovation.74 Most importantly, Lemley argues that the stifling of new technology is due to the overprotection of copyright granted to creators, creating a technological veto.75 In support, Lemley cites Matthew Fagins three reasons why copyright law threatens innovation of new mediums: (1) a de facto cont rol over the channels of distribution, (2) e xpanding liability that inhibits fair use, and (3) owners rete ntion of complete distributional control.76 Such a technological veto allows incumbents to deliver their works through traditional models of their choosing, regardless of whether they are the most efficient to them or the consumer. Additionally, this prevents consumers from being able to adopt new technologies that they desire because incumbents will attempt to prevent thei r content from following consumers to disfavored new locations. In addition, Lemley notes basic economic th eory encourages innovation only to a limited extent within the preexisting business model.77 For example, the music industrys move from records, to 8-tracks, to cassett e tapes, to CDs only increased the sound quality, changing nothing substantial about the indi vidual listening experience.78 To the contrary, where outside innovators are allowed to introduce new technology to incu mbent industries, consumers receive more 73 Id. at 135 (2005). See also Mark A. Lemley & R. Anthony Reese, Reducing Digital Copyright Infringement Without Restricting Innovation, 56 STAN. L. REV. 1345, 1350 (2004). 74 Kevin A. Lemley, supra note 71, at135. 75 Id. at 136-37 (citing Matthew Fagin, ET AL., Beyond Napster: Using Antitrust Law to Advance and Enhance Online Music Distribution 8 B.U. J. SCI. & TECH. 451, 499 (2002)). 76 Matthew Fagin, ET AL., Beyond Napster: Using Antitrust Law to Advance and Enhance Online Music Distribution 8 B.U. J. SCI. & TECH. 451, 499-500 (2002). 77 Kevin A Lemley, supra note 71, at 138. Economist Joseph Schumpeters static market model of competition posits that where an industry is committed to a propertization of its commodity, it tends to protect the delivery of the good within the current business model. Id. at 138-39. 78 Id.

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46 freedom in choosing how to consume the cont ent, and innovation is encouraged and robust.79 For example, out-sourcing Google to develop a new software by which a television station can broadcast its newscast online is more likely to result in an innovative delivery system, and actually will drive to create more competition within the creative indus try in the long-term.80 However, incumbent firms have little incentive to allow outside firms for two reasons. First, the value of the copyrighted work d ecreases when the creators control over the dissemination is decreased.81 Second, although long-term benefits will result to the incumbent firm, short-term losses will result in the invest ment in what is often an unproven and somewhat risky method of distribution.82 For example, the rise of the iTunes Music Store as the premier legal online distributor of music files can be attributed to its charging relatively high prices for music, and giving substantial profits to the traditional recording industry.83 Thus, they buy-off the incumbent industry and block out potential innovators.84 In striking a balance between incumbent firms and innovators, Lemley argues for a limitation of secondary liability and the introduc tion of an innovative medium defense similar to that of fair use.85 Secondary liability poses a threat to innovation because it can limit the investment in technologies for fear of being dragged into a lawsuit.86 Lemley also argues that secondary liability often results in the shutting down of innovativ e technologies, resulting in a loss of use of that and similar technologi es to the public for their non-infringing uses.87 Thus, 79 Id. at 139. 80 See id. 81 See id. 82 Id. 83 Tim Wu, The Copyright Paradox 2005 SUP CT. REV. 229, 248 (2005). 84 Id. 85 Kevin A Lemley supra note 71, at 140-162. 86 Id. at 141. 87 Id. at 142.

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47 Lemley supports the imposition of an innovative medium defense by which new technologies can be protected while at the same time protecting individual copyright owners.88 The innovative medium defense would apply similarly to the fair use factor test, utilizing the following factors: (1) whether the technology ad vances consumer aut onomy, (2) whether the technology allows more than nominal noninfring ing uses, (3) whether the medium allows unlimited reproduction and distribution, (4) whether it fosters positive active consumerism, and (5) whether the medium will allow an ad equate return for copyright owners.89 This approach favors the innovator and assumes incumbent copyright firms are willing to take short-term losses to accommodate the introduction of new technology. While resistance by incumbents is often short-sighted, it is hard to expect self-interested companies to s acrifice profits for the good of society by not attempting to stifle competitive innovation. Professor Jane Ginsburg studied the problem from a different approach in her 2001 article Copyright and Control Over Ne w Technologies of Dissemination not just examining the attempted control of new technology, but al so the exploitation of it by incumbents.90 Ginsburg found that where copyright incumbents sought to exploit new technology, they often did so successfully and quite profitably.91 For example, Ginsburg poin ts to the music industrys adaptation to the radio licensing model by form ing the ASCAP collective licensing society to license the right to pl ay songs over the radio.92 On the other hand, wh ere incumbent copyright holders sought to legally bl ock new technologies, new technologies have regularly won out.93 88 Id. at 157-62. 89 Id. 90 Ginsburg, supra note 59, at 1619-20. 91 Id. at 1619. 92 Id. at 1620-21. 93Id. at 1619.

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48 However, as the article was written prio r to the anti-technology decisions of Napster, Aimster, and Grokster this dichotomy has been somewhat lessened. As for the Digital Millenni um Copyright Act (DMCA), Gi nsburg asserts that Congress attempted to devise a dual regi me in order to grant access cont rol to owners while not wholly shutting down new technologies.94 However, as Ginsburg notes, the limitation of controlling access to a work, rather than mere copies of it, restricts the latter fair uses of the work.95 Quite correctly, Ginsburgs criticism of controlling a ccess to works ultimately strikes at one of the Constitutional intents of copyright to promote the progress of the arts.96 By limiting access to works, the law ultimately impinges upon the cr eativity of new works and makes for a less creative society. Part of copyright laws challenge in adapting to changes in technology can be attributed to the traditional methods of distribution and consum ption, and the resistance of content owners to shift to new methods. Professor Joseph Liu exam ines the challenge of ownership of digital copies in Owning Digital Copies: Copyright Law and the Incidents of Copy Ownership .97 Traditionally, copyright scholar s followed Howard Demsetzs prominent notion of property rights as applied to copyright: as a property right granted in th e possession of physical copies.98 One of the basic tenets of property law is the free alienability of physical property.99 A hard copy is limited in the manner in which it can be transferred, thus restric ting the ability of an 94 See id. at 1631-34. 95 Id. at 1635-36. 96 See U.S. CONST., art. I, cl. 8. 97 Joseph P. Liu, Owning Digital Copies: Copyright Law and the Incidents of Copy Ownership 42 WM. & MARY L. REV. 1245, 1247 (2001). 98 See Howard Demsetz, Toward of Theory of Property Rights 57-2 AM. ECON. REV. 347. 359 (1967). 99 See Liu, Owning Digital Copies supra note 97, at 1248-49 (2001). The first-sale doctrine embodies this notion in copyright law. Id. The first sale doctrine, 17 U. S.C. is the con cept of exhaustionthat once an item is placed into the stream of commerce, the original creators right to reap any further financial benefit from later sales is prohibited. See Quality King Distribs., Inc. v. LAnza Research Intl., Inc. 523 U.S. 135, 152 (1998).

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49 owner to make enough pirate copies to harm the producer.100 For example, one can give another a book, transferring ownership righ ts in the book, but one cannot easily copy the entire book and distribute copies of it without more technology, such as a copy machine.101 However, as Liu notes, a digital copys charact eristics are markedly different from hard copies, erasing the physical baseline whic h the property right of copyright assumes.102 Above all, digitization allows unprecedented access to works, legal or otherwise.103 Liu posits that in order for copyright law to be rele vant in the digital environment, its physical legal characteristics of alienability must be ap plicable to digital copies.104 Still, to apply this concept to digital copies, the limitations on ownership must be clear either through licen se or technological limitations.105 Ultimately, the distribution of individual digital copies results in a pay-per-use regime, in which use-limitations are built into the price of the work and are agreed upon at time of purchase. In a pay-per-use system, data is encrypted and a user purch ases the right to unlock the data in a limited manner.106 In 2001, F. Gregory Lastowka examin ed the shiftng distribution in Free Access and the Future of Copyright .107 Lastowka articulated three main meth ods of traditional distribution: (1) the purchase of copies, (2) the purchase of access to content, or (3) free content.108 However, he contends that digital technology upsets the traditional models, bl urring the long-established lines 100 Liu, Owning Digital Copies, supra note 97, at 1249-51. 101 See id. at 1248-49. 102 Id. at 1250. 103 Id. at 1309-10. 104 See id. at 1336-40. 105 See id. at 1338-39. 106 See Tom W. Bell, Fair Use vs. Fared Use: The Impact of Automated Rights Management on Copyrights Fair Use Doctrine 76 N.C. L. REV. 557, 555-56 (1998). 107 F. Gregory Lastowka, Free Access and the Future of Copyright 27 RUTGERS COMP. & TECH. L. J. 293 (2001). 108 Id. at 294. The purchase of copies is self-explanatory e.g. the purchase of a com puter program on CD-ROM or a physical copy of a book. Id. The purchase of access includes viewing a movie in a theater or renting it for a set period of time from a video rental store. Id. at 294. The free distribution model includes broadcast television, though it also assumes a bargain of viewing a limited number of advertisements during the programming. Id.

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50 differentiating segments of the copyright distribution market.109 The displacement of the traditional models is due largely to digiti zation technology, increased storage and memory capacity, and the prevalence of ne twork effects via the Internet.110 Lastowka argues that the confluence of these events has led to the end of the single-copy concept and is leading ultimately to the end of the middleman in copyright.111 The middleman long held an essential role in the copyright dist ribution chain by making money producing and distributing copi es of the work to the public.112 However, digital technology allows anyone to become a producer and allows the bypass ing of traditional distribution outlets in favor of direct-to-consumer distribution.113 In addition, the Internets popularity is based largely on th e free access to information.114 The consequence of such changes could mean the end of the middleman and ultimately copyright law itself.115 As Lastowka observes, two common ar guments of those predicting the end of copyright are that (1) copyright law is not respected normatively, an d (2) since information naturally wants to be free, sharing information is a more advanced and superior model to crass commercialism.116 However, the copyright middlemen wield extreme power and continue an essential role in the digital environment by constructing secure onlin e systems to distribute works on a pay-per-use basis.117 109 See id. at 296. 110Id. 111 See id. at 298-306. 112 Id. at 304. 113 Id. 114 Id. at 312. 115 Id. at 305. 116Id. 117 See id.

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51 Changing Views: Regulatory Policy and Copyright Consumers While the incentive-laden tem porary monopoly con tinues to drive authors to be creative, two related, alternative models have emerged to explain co pyright policy: (1) Tim Wus copyright as communications policy118 and (2) Joseph Lius regulatory copyright model.119 Tim Wus Copyrights Communications Policy120 examines the conflict from the competition side, while Liu then segues to the legislative and regu latory tactics by which th e industries battle in Regulatory Copyright.121 While each approach is different, to gether they help to explain the new direction that copyright law is headed in during the Internet age. While both agree the authorincentive is the basis for copyright law, th ey also agree that it has been displaced.122 The common thread through both is that copyright in cumbents use various rent-seeking and anticompetitive behaviors to retain their st ranglehold over the dissemination industry.123 As explained previously, incumbent copyright firms furiously battle to inhibit new competitors from taking over in a number of diff erent ways. Wus copyright as communications policy explains the tension between the two abusive behaviors of both incumbents and challengers.124 While new entrants attempt to free-ride off incumbents, incumbents attempt to lock them out of entering the market.125 Wu notes that classic communications policy stated that as long as new technologies could afford to pay for the right to disseminate copyrighted works in the form of compulsory licenses, they could use the works.126 For example, this model 118 Wu, Copyrights Communications Policy, supra note 51. 119 Joseph P. Liu, Regulatory Copyright 83 N.C. L. REV. 87 (2004). 120 Wu, Copyrights Communications Policy, supra note 51. 121 Liu, Regulatory Copyright supra note 119. 122 Id. 123 See Liu, Regulatory Copyright supra note 119, at 135 (2004);Wu, Copyrights Communications Policy supra note 51, at 278-79. 124 Wu, Copyrights Communications Policy, supra note 51, at 287. 125 Id. 126 Id. at 324-35.

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52 was used with music on the radio, and broadcast television on cable.127 What resulted, argues Wu, is a copyright regime in which incumbents look to the law-making process for protection in the form of specific technologybased laws and safe-harbors.128 Professor Joseph Liu picks up the argument from there, describing the increasingly regulatory model of copyright law.129 Liu characterizes regulatory copyright by four factors: (1) increasingly complex statutes, (2) increasingl y industry and technology specific statutes, (3) more intervention in the markets, and (4 ) greater policy-making power of Congress.130 The first factor, increasingly complex statut es, discards the trad itional broad-based a pproach in copyright law left to case-by-case interpretation by the courts.131 In its place are deta iled statutes designed to elicit precise results without much wiggle room for interpretation by the courts.132 Second and similarly, the specific statut es are much more industry and t echnology specific, fine-tailoring them to obtain specific results.133 Such specificity may be in the form of specific compulsory licenses to certain devices, narrow exemptions and exceptions, or even limiting the use of certain technologies altogether.134 Third, as a result of the complex and specific laws, regulatory copyright intervenes in the structure of copyright markets more than traditional copyright law.135 For example, compulsory licenses may be tailored for certa in sectors of the copyright in dustry, while others may apply a 127 See id. 128 Id. at 342. 129 See Liu, Regulatory Copyright supra note 119, at 103-04. 130 See id. at 103-05. 131 Id. at 103. 132 Id. 133 Id. 134 Id. 135 Id. at 104.

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53 tax to reallocate profits to incumbents.136 Quite often, such interven tions have negative effects on fair use for consumers.137 Lastly, the regulatory regime grants increased power to Congress in lieu of the courts.138 Due to increased lobbying efforts and Congress willingness to amend the copyright statute at the dire ction of the industry, more power is placed in the legislative process of fine-tailoring outcomes for problems rath er than in court interp retation of broad-based copyright laws.139 Liu proposes a number of causes for the shift to the regulatory regime of copyright law. Most importantly, he suggests that it is a dire ct result of the rent-seeking by the incumbent copyright industry.140 Incumbents are the most organized and well-positioned to effect copyright policy in Congress.141 Emerging technologies and consumer s may both have their own agendas, however, they are ill-equipped to fight the more powerful incumbent rent-seeking.142 Further, the increased value of the copyright markets drives the desire to re nt-seek from Congress to retain the dominant position. Another possible cause fo r the increased regulatory copyright policy is that Congress itself is res ponsible. Through political compromi ses designed to cure market failures, Congress may encourage the private d eal-making that often results in complex and detailed statutes.143 136 Id. 137 See generally Glynn S. Lunney, Fair Use and Market Failure 82 B.U. L. REV. 975 (2002); Tom W. Bell, Fair Use vs. Fared Use: The Impact of Automated Rights Management on Copyrights Fair Use Doctrine 76 N.C. L. REV. 557 (1999). 138 Id. at 104-05. 139 See id. 140 Id. at 131. 141 Id. 142 See Id. 143 See id. at 129-131.

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54 However, increased regulatory copyright is not necessarily always positive, Liu notes.144 On the whole, more complex statutes are more di fficult to interpret for industries that were not involved in writing them.145 In addition, the broader goals of copyright law are less transparent and diminishes the role of the c ourts in applying general concepts.146 As for Congress, interest group pressure poses a constant problem of whethe r or not it is making copyright policy for the right reasons rather th an political paybacks.147 Congress also may be criticized for drafting extremely complex copyright laws yet not really having the requi site detailed knowledge to do so.148 As a result, the statutes are not only comple x, but can create further problems due to a lack of foresight and industry knowledge by Congress.149 Generally, Wu and Liu caution ag ainst the further spread of copyright as a communications policy and the regulatory copyright re gime that results. Liu adds to the literature of alternative views of copyright policy by looking at the often overlooked end-user in Copyright Laws Theory of the Consumer .150 With the increasing use of c opyright dissemination technologies by consumers to not only upload infringing videos, but also their own original works, this theory is worth discussion. Liu argues that consumers are often left out of the copyright discussion, despite the fact that the original copyright au thor-incentive regime was intended to encourage them to share their creations for the betterment of society.151 Traditional copyright law assumes passive consumers, readily reading, listening, and viewing whatever the market brings to them, when the market brings it to them, in whatever 144 See id. at 134-37. 145 Id. at 134-35. 146 Id. at 135 147 Id. at 136. 148 Id. at 136-37. 149 See id. 150 Joseph P. Liu, Copyright Laws Theory of the Consumer 44 B.C. L. REV. 397 (2003). 151 See id. at 397-98.

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55 form or medium brought to them.152 Thus, traditional copyright policy merely aims to provide a functioning market of creative works through the author-incentive.153 Liu suggests that this view persists into digital copyright law, such as the use of consumers in the Digital Millennium Copyright Act and the increasi ng popularity of the pay pe r use model such as iTunes.154 Conversely, Liu argues that digital technology allows the consumer to assume an active role with greater autonomy in selecting the manner in which to consume copyrighted works.155 While Sony recognized consumer autonomy by legalizing time-shifting abilities of VCRs in 1982, traditional analog mediums typi cally left consumers boxed into time slots and specific methods of consumption.156 No other medium in history has granted consumers more autonomy than the Internet; however, the Internet brings a unique proble m. Traditional copyright law limits sharing copyrighted works with others, but allows a certain amount to be shared in a social manner, for example, lending a friend a DVD or CD.157 Yet, the Internet allows sharing with complete strangers anywhere in the world at little to no cost to the sharing consumer.158 Technology and the Courts Other than Congress, th e body Constitutionally empowered to the make copyright law, no other governmental body comes close to the power over copyright law policy than the United States Federal Courts. Since the grant of copyrights is based in the U.S. Constitution, all copyright disputes have original subject matter jurisdiction in th e Federal Court system. As Tim 152 See id. at 402-03. 153 Id. 154 Id. at 403-04. 155 Id. at 406-07. 156 See id. at 408-09. 157 Id. at 412-14. 158 See id. at 413.

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56 Wu stated, in copyright law, the cour ts act as a technological gatekeeper.159 This section will first focus on the effect of the courts on the shapi ng of the law of secondary liability in copyright. Then, it will address the overall pol icy towards copyright law the c ourts have taken recently. Secondary Liabilitys Effect on Copyright Law A m ajor area concerning online infringement of video is secondary liability. Secondary liability allows copyright owners to seek remuneration for acts of infringement from the deep pockets of facilitators, rather than the low-rate of return of suing indi vidual direct infringers.160 To briefly review, secondary liability consists of both contributory and vicarious infringement, where a facilitator makes it pos sible anothers infringing act.161 Vicarious liability assumes the facilitators right and ability to control supervise the infringer and receives a direct financial benefit from the infringing act.162 Contributory liability requires a facilitator to have knowledge of the infringing activity and materially contribu tes, causes, or induces another to do the act.163 Articles simply too numerous to list have b een written in dissecting the major Supreme Court cases of Sony and Grokster regarding their secondary liabil ity policies, and the subject will be analyzed further in chapters III and IV.164 Notably, Professor R. Anthony Reese examined the postGrokster effect on the on the subject of substant ial noninfringing us es, noting that the 159 Wu, Copyrights Communications Policy, 103 MICH. L. REV. 278, 348 (2004). 160 See Mark A. Lemley & R. Anthony Reese, Reducing Digital Copyright Infringement Without Restricting Innovation, 56 STAN. L. REV. 1345, 1349 (2004). 161 See DAVID NIMMER & MELVILLE NIMMER, NIMMER ON COPYRIGHT, 12.04(A)(2) (Matthew Bender, New York 2007). See also MGM v. Grokster, 545 U.S. 913, 930 (2005). 162 Id. 163 Id. 164 See e.g. R. Anthony Reese, The Temporal Dynamics of Capable of Substantial Noninfringing Uses 13 MICH. TELECOM. & TECH. L. REV. 197 (2006); Center for Democracy & Technology, Interpreting Grokster: Limits on the Scope of Secondary Liability for Copyright Infringement 2006 STAN. TECH. L. REV. 3 (2006); Tiffany A. Parcher, Comment, The Fact and Fiction of Grokster and Sony: Using Factual Comparisons to Uncover the Legal Rule 54 UCLA L. REV. 509 (2006); Tim Wu, The Copyright Paradox 2005 SUP. CT. REV. 229 (2005); Richard M. Myrick, Note, Peer-to-Peer and Substantial Noninfringing Use: Giving the Term Substantial Some Meaning 12 J. INTELL. PROP. L. 539 (2005).

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57 application of the doctrine to th e same dual-use device may change over time as the uses of the device change.165 As will later be explored in Chapters III through V, the Grokster Courts failure to apply and further artic late the substantial noninfringing use doctrine left its continuing power uncertain.166 Reese compared the Courts concurri ng opinions on the issue and concluded that together they called for a prediction of future uses, yet courts are not always the best-situated to make accurate predictions.167 As a result Reese suggested th at copyright owner plaintiffs should have a limited opportunity to return to to court at a later date should circumstances change and current information can prove a device no longer capable of substantial noninfringing uses.168 However, also pertinent to th is study is scholarship concer ning the effect technological change has on secondary liability. A common criticism is that the legal system is ill-equipped to deal with new technology and secondary liability.169 In the ambiguous common-law developed world of secondary liability in copyright law, disparate judgments concerning similar technologies are common throughout history.170 Further, what seems as the settled law of contributory and vicarious liability is in fact an amalgam of unrelated precedents responding to new technologies over the years, from pi ano rolls and dance halls to the VCR.171 As a result, Professor Craig Grossman argues that innovation proves a poor stimulus for judicial reasoning, 165 R. Anthony Reese, The Temporal Dynamics of Capable of Substantial Noninfringing Uses 13 MICH. TELECOM. & TECH. L. REV. 197, 224 (2006). 166 See id. 167 Id. at 222-23. 168 Id. at 223. 169 See Craig A. Grossman, From Sony to Grokster, the Failure of the Copyright Doctrines of Contributory Infringement and Vicarious Liability to Resolve the War Between Content and Destructive Technologies 53 BUFF. L. REV. 141, 221-22 (2005). 170 Id. 171 Id.

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58 for innovation moves too quickly for the inheren tly conservative process of refining precedent through judicial practice.172 Additionally, Professors Mark Lemley and An thony Reese point out two major effects of digital technology on secondary liability.173 First, it negatively impact s innovation of dual-use technologies, which allow for both infringing and non-infringing uses.174 For example, something as simple as a trumpet may be put to both infringing and non-in fringing uses, but that does not mean that it is not a universally accepted legal device.175 Courts may be quick to look at dual-use devices as a zero-sum game, shutting down services prematurely, or allowing them to ravage copyright industries wholesale.176 For instance, if a new technology has $100 of lawful use, but $1000 worth of harm to society or authors, it is questionable whether that product should be on the market.177 There are a number of additional weaknesse s of secondary liability regarding new technology. First, new technology is especially vu lnerable to total shutdown, because its true capabilities may yet to be fully developed, so a court may be quick to pull the trigger.178 Second, courts are unable to address the specific il legal conduct of the actua l infringers through secondary liability.179 The actual end-user infringers suffe r no repercussion whatsoever. Third, courts have recently loosened the direct financ ial benefit under vicarious liability, resulting in 172 Id. at 263. 173 See Lemley & Reese, supra note 160, at 1354-72. 174 Id. at 1355. 175 Id. 176 Id. at 1380. 177 See Wu, Copyrights Communications Policy supra note 51, at 348-50. See also Randal C. Picker, Copyright as Entry Policy: The Case of Digital Distribution, 47 ANTITRUST BULL. 423 (2002). 178 Lemley & Reese, supra note 160, at 1389. 179 Id. at 1379.

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59 more facilitators being found liable, though also resulting in less innovation.180 Each of these problems accumulated may have drastic negative impacts on innovation. Lemley and Reese recommend three alternatives to suing facilitators based on secondary liability.181 First, one solution is to change the in centive of individual infringers to commit piracy, by making them accountable thr ough enforcement and increased fines.182 Second, eliminate the need for enforcement through auto matic collections in the form of taxes on facilitating devices.183 Third, if individual enforcement is still necessary, then create a cheaper more nimble alternative dis pute resolution system to keep them out of the courts.184 Some scholars note that seconda ry liability is beginning to take on a more attenuated degree, resulting in a new tertiary liability.185 Lemley and Reese first used the term in 2004 to describe courts increasing us e of liability to go after the helpers of the helpers.186 Different from secondary liability, the tertiary infringe r has no contact whatsoever with the primary infringer.187 Instead, the tertiary infr inger is typically a small-scale innovator or start-up, or large-scale venture capitalist, that provides the infringing technology to the facilitator.188 Thus, it is argued, that shutting down the source of the infringing tec hnology is most efficient rather than shutting down entire dual-use facilitators.189 However, it could also result in a chilling of 180 Id. at 1367-69. 181 See id at 1351. 182 Id. 183 Id. at 1351-52. See also WILLIAM FISHER, PROMISES TO KEEP: TECHNOLOGY LAW AND THE FUTURE OF ENTERTAINMENT, chp. 6 (Stanford Univ. Press, Stan ford, Cal. 2004); Neil W. Netanel Impose a Noncommercial Use Levy to Allow Free Peer-to-Peer File Sharing, 17 HARV. J. L. & TECH. 2 (2003). 184 Lemley & Reese, supra note 160, at 1351-52. 185 See id. at 1347 (2004); Benjamin Glatstein, Comment, Tertiary Copyright Liability 71 U. CHI. L. REV. 1605 (2004). 186 Lemley & Reese, supra note 160, at 1347. 187 Benjamin Glatstein, Comment, Tertiary Copyright Liability 71 U. CHI. L. REV. 1605, 1610 (2004). 188 Id. at 1617-19. 189 Id. at 1617-18.

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60 outside investment and as a result again stifle innovation.190 Tertiary liability has yet to be widely recognized as a viable legal doctrine and remains a largely theoretical approach.191 Judiciarys Role in Setting Copyright Policy In response to the Suprem e Courts recent 2005 Grokster copyright decision, Professor Tim Wu addressed the issue of the Court s changing role in copyright policy in The Copyright Paradox .192 Since the landmark 1982 decision, Sony v. Universal City Studios courts consistently apply the Sony system of weighi ng the costs and benefits to society of new technology.193 While the legal test determining this is still unclear twenty-five years later, Wu describes two major ways courts decide cases, either the bad actor or welfarist models, borrowed from antitrust law.194 In the bad actor model, courts look to punish alleged violators of the law, in this case copyright infringers.195 Under the welfarist model, the courts overlooks bad behavior, instead favoring outcomes which bene fit society as a whole, a very utilitarian notion.196 Wu characterizes the Grokster decision as a classic tension between the two models, with the Supreme Court ultimately taking the bad ac tor approach by punishing the developers and promoters of contributor y-infringing software.197 He notes that sin ce peer-to-peer had a reputation of piracy, it allowed the Supreme Court to make the politically easy choice of labeling 190 Id. at 1621-22. 191 See William S. Coats ET AL., Preand Post-Grokster Copyright Infringement Liability for Secondary and Tertiary Parties, 35-JUL COLO. LAW. 71, 72 (2006). 192 Tim Wu, The Copyright Paradox 2005 SUP. CT. REV. 229 (2005). 193 Id. at 233. 194 Id. at 230. 195 Id. 196 Id. This approach relies on Adam Smiths philosophy of allowing some bad behavior in society is tolerable as long as the results largely benefit society as a whole. Id. 197 Id.

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61 Grokster as the bad actor.198 While the Court split evenly on the question of how to further interpret the dictates of the Sony test of weighing societal costs and benefits, it unanimously shut down Grokster by applying the inducement test borrowe d from patent law to the bad intent of the software.199 However, Wu cautions against such outright punishment of the bad guys for two main reasons.200 First, the bad actor approach ignores possible positive consequences to society of infringing devices.201 Second, by shutting down alleged infring ers, the courts effectively create barriers to entry and ultimately set market entry policy in the copyright technology industry.202 It is always dangerous whenever a non-expert actor, such as the courts often are regarding copyright economics, to set market policies.203 Wu argues that the bad actor test is simply too black and white for copyright po licy, either blessing or cursing the market entry of a given technological device.204 He concludes that the courts are si mply ill-positioned to deal with the market-based problems in copyright law, and s hould cede substantial power back to Congress to determine the proper equilibrium.205 Conclusion In conclusion, the copyright literature is vast, and very little literatur e exists on the topic of copyright infringem ent of online video. This ch apter has supplemented the absence by focusing on the impact of new dissemination technologies on c opyright law, the effect it has on legislative decisions, and the courts. The remaining chapters will attempt to build on this scholarship by 198 Id. at 239-41. 199 Id. at 241. 200 Id. at 230-32. 201 Id. at 231. 202 Id. at 231-32. 203 See id. at 231. 204 Id. at 249. 205 Id. at 251.

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62 applying the law to a case study analys is of YouTube and the linking website SouthParkzone.com in Chapter 4, and proposing so lutions to the greater problems identified in Chapter 5.

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63 CHAPTER 3 REVIEW OF CASE LAW Copyright law at its m ost simple form is the unauthorized copying of the original work of another. An authors copyright may also be infringed by violating one of five statutory exclusive rights under Section 106 of the Copyright Act.1 Section 106 provides for the exclusive rights to reproduce,2 prepare derivative works,3 distribute to the public,4 perform,5 and publicly display their copyrighted works.6 Courts have stated simply that the word copying in a legal context means the violation of any of the exclusive rights.7 Naturally, for any work to be eligible for copyright protection, it must be an original work of author ship, made with a modicum of creativity attributed to the author.8 However, in the context of the Internet, the most impacting fo rm of copyright infringement to authors because of scope is not typically direct infringement, but secondary infringement. The Internet brings a new scale to the problem of copyright infringement. The problem is not as much as the creation of actual copies, but inst ead the means by which the copies are made and shared. As a result, it only takes one original copy, but also requires a mechanism to make and distribute copies. For example, in the past, to copy and distribute hard copies of a movie illegally on DVD, a person would have to have the means and knowledge of how to copy and 1 17 U.S.C. 106 (2002). 2 106(1). 3 106(2). 4 106(3)(to distribute copiesof the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending). 5 106(4)(in the case of motion pictures and other audiovisual works, to perform the copyrighted work publicly). 6 106(5)(in the case of the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly). 7 A&M v. Napster, 238 F.3d 1004, 1013 (9th Cir. 2001)(citing S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1085 n.3 (9th Cir. 1989). 8 See Feist Publications, Inc. v. Rural Telephone Service, Co ., 499 U.S. 340, 361 (1991)(stating the requirement of originality was that the work was independently created and that it possesses at least some minimal degree of creativity.)

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64 distribute hard copies to individuals. This of ten occurred in black markets and flea markets, reaching only the number of people for which there were hard copies available. However, with the Internet, one only needs to limited knowledge to distribute or display c opies on the Internet. On the Internet, copies are non-exclusive, mean ing that there are an unlimited amount of copies available to anyone that has access to the Internet and the lim ited knowledge of how to download the copy. As a result, the mechanis ms, programs, and linking and sharing websites that make the copying and distribution easy for th e Internet user often find themselves in litigation for assisting and enabli ng the copyright infringement of their users. This is known as secondary liability. This chapter will further examine copyright jurisprudence of sec ondary liability, prior linking law, and possible defenses. First, this section will explain direct liability, as direct infringement must first be proven in order to ha ve secondary liability. Next, it will cover the law regarding secondary liabilityboth vicarious and contributory infringement. It will then set forth the history of linking law on the Internet Then, it will address the Digital Millennium Copyright Acts safe harbor of Section 512. Fina lly, it will cover the stat utory defense of fair use as it applies to online video. Direct Liability Secondary liability cannot exist in the absen ce of direct infringement by a third party.9 Thus, in order to address secondary liability in copyright law, what constitutes direct infringement must be further expl ored. Direct infringement is th e violation of one of the five exclusive rights under .10 Section 501(a) of the Copyright Act sets forth the requirements 9 Napster 239 F.3d at 1013 n.2; Religious Tech. Ctr. v. Netcom On-Line Communication Servs., Inc., 907 F.Supp 1361, 1371 (N.D.Cal 1995). 10 See 17 U.S.C. 106 (2002); 17 U.S.C. 501 (2002).

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65 for an infringement complaint.11 A plaintiffs prima facie copyri ght infringement claim must (1) show ownership of the allegedly infringing materi al, and (2) demonstrate a violation of one of the exclusive rights, absent fair use.12 Violation of the excl usive right in terms of digital technology and the Internet have taken a few unique forms and thus necessitate a closer look. Each of the exclusive right s (with the exception of the public performance right, which is largely irrelevant to this study) will now be further explored in the context of digital technology and the Internet. Reproduction Right 106(1) The right of reproduction in a physical worl d sim ply prohibits the making of tangible copies of an original protected work. An author of a book retains the right to authorize copies of his book, a film producer to authorize copies of hi s movie on film reels, and a television station to allow copies on videotape. It is also gene rally accepted that the reproduction right extends to copies made in media other than the original form absent personal fair use, which will be further explored later.13 For example, a music producer retain s the right to make copies of a sound recording in both CD form as well as digitized M p3 files for sale on the Internet. In a physical world, making a hard copy of a work typically involves secondary equipment such as a tape recorder, VCR, or photocopy machine. In the di gital world, however, a digitized file can be copied with the simple click of a mouse with free software. Thus, a special problem presents itself with th e Internet regarding ephemeral copies of the contents of a page that are kept in rand om access memory (RAM), known as cache, when a 11 501(a). 12 Id. See also Napster 239 F.3d at 1013. 13 See id See also Sony v. Universal City Studios, 464 U.S. 417, 443 (1984)(personal time-shifting of television programming with VCR fair use).

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66 browser views a webpage.14 The cache enables the browser to more efficiently reproduce the webpage, and is not generally considered a violation of the reproduction right by the end-user.15 Typically, cache files by end-user s are viewed as fair use because the copies are temporary in nature and only as required to enhance the web-browsing experience.16 However, search engines and other websites providing links to copyrighted material where co pies of the pages are held in cache have been found to be an unauthorized reproduction.17 In addition, the U.S. Copyright Offices 2001 report on the Digital Millennium Copyright Act clarif ies that copies stored in cache could be sufficiently characterized as repr oductions so long as the reproduction persists long enough to be copied, pe rceived, or communicated18a relatively simple standard. Derivative Works 106(2) The concept of derivative works stems from the heart of the intent of the Constitutions copyright clause to promote a creative society.19 However, absent fair use, the right to authorize and license derivative works resides with the orig inal author. A derivati ve work is defined by of the Copyright Act generally as a creative work built upon a previous work.20 For example, a screen play and subsequent movi e based upon a fictional nove l are both derivate works of the original novel. It also includes different versions of the original work through editing and alteration. On the Inte rnet, the derivative right is ofte n implicated due to the ease at 14 See Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1156 at n.3 (9th Cir. 2007). 15 Id. 16 See Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1169-70 (9th Cir. 2007). 17 See Ticketmaster L.L.C. v. RMG Technologies, Inc., 507 F. Supp 2d 1096, 1005-06 (C.D. Cal. 2007). See also Twentieth Century Fox Film Corp. v. Cablevision Systems Corp., 478 F.Supp 2d 607, 621 (S.D.N.Y. 2007). 18 See U.S. Copyright Office, DMCA Section 104 Report, at 107-117 (Aug. 2001), available at http://www.copyright.gov/r eports/studies/dmca/sec-104-report-vol-1.pdf (last visited Jan. 11, 2008). 19 See U.S. CONST. Art. I, Sec. 8. 20 17 U.S.C. 101 (2005) (A deriva tive work is a work based upon one or more preexisting works, such as a translation, musical arrangement, dram atization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, c ondensation, or any other form in which a work may be recast, transformed, or adapted.).

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67 which copies can be made, altered, and edite d. This includes popular mashups, in which copyrighted videos are re-edited and combined with other copyrighted material to form entirely new videos rarely resembling the originals.21 In light of the increas e in user-generated content on video-sharing websites such as YouTube, the right to authorize derivative works, absent fair use, is often implicated in alleged infringements. Distribution Right 106(3) The Copyright Act specifically grants copyright owners the exclusive right to distribute copies of their works to the public by sale or ot her transfer of ownership rental, lease, or lending.22 The pertinent question to this study is whether the distributi on right extends to streaming of online video. The standard of di stribution, according to th e statute, is to the public.23 Additionally, the Supreme Court has held that electronic copies should be treated similarly as hard copies re garding the dist ribution right.24 Yet, it is questionable whether the mere placement, or making available, of a streaming video on the Internet available to the public is a distribution because, by the strict language of the stat ute, it is not a sale or other transfer of ownership rental, lease, or lending.25 The argument is that a transmission is legally distinct from a sale or transfer of ownership. However, few courts have applied the making available standard to the distribution right. In 1994, the Fourth Circuit deemed a librarys ma king of infringing books av ailable to the public to check out a distribution of the works.26 As for the Internet, a number of courts have held 21 See Ngai Croal, Time for Your Mash-Up? NEWSWEEK, Mar. 6, 2006, at 61-62. 22 17 U.S.C. 106(3) (2002). 23 Id. 24 N.Y. Times v. Tasini, 533 U.S. 483, 498 (2001). 25 See id. See also R. Anthony Reese, The Public Display Right: The Copyright Acts Neglected Solution to the Controversy Over RAM Copies, 2001 U. OF ILL. L. REV. 83, 122-38 (2001). 26 Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199, 203 (4th Cir. 1997).

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68 that the posting of infringing images for download on Bulletin Board Systems (BBS) and websites held on centralized serv ers constituted a distribution.27 However, the Ninth Circuit recently backed away from such a definition of distribution where the Google search engine merely directed users to images held on other websites servers, finding no liability for Google.28 Public Display and Performance Rights 106(4)-(5) Finally, the public perform ance and display ri ghts are often implicated by the Internet regarding online video, treated in the statute as either motion pictures or audiovisual works.29 The (4) performance right, as defined by states that a motion pi cture or audiovisual work is performed when its images are shown in any sequence.30 Similarly, the (5) public display right is implicated where a copy of a work is shown or where motion picture or audiovisual work shows indi vidual images non-sequentially.31 Regarding infringement of video, these distinctions appear to be without much difference. However, a single still image displayed online from a video, such as a thumbnail, could constitute a public display given the nonsequential nature of the image.32 Yet, the semantics of which right applies is less important than determining whether either applies at all. The key in defining what constitutes a publ ic display or performance, and whether Internet content qualifies, lies in the definition of public. The answer is found what is known as the transmit clause of stating that to transmit or otherwise communicate a 27 See Playboy Enters. v. Webbworld, Inc., 991 F. Supp. 543, 550-53 (N.D. Tex. 1997)(storing infringing photos on servers with the ability for users to download and print the ph otos was a distribution); Central Point Software, Inc. v. Nugent, 903 F.Supp. 1057, 1058 (E.D.Tex.1995)(making available for download of copyrighted computer software on BBS was distribution); Playboy Enterp. v. Frena, 839 F. Supp. 1552, 1556 (M.D. Fla. 1993)(holding that user postings of Playboys copyright images to BBS with the ability to later be downloaded constituted a distribution). 28 See Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1162-63 (9th Cir. 2007). 29 See 17 U.S.C. 101 (2005). 30 Id. (perform). 31 Id. (display). 32 See Michaels v. Internet Entertainment Group, Inc., 5 F. Supp 2d 823, 830-31 (C.D. Cal. 1998)(finding that still images captured from a celebrity sex-tape and posted on Internet a violation of the videos public display right).

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69 performance or display of the work to the public, by means of any device or process, whether the members of the public receive it in the same place or separate places and at the same time or different times.33 The transmit clause incorporates the Internet into the public display and performance rights by adopting the ba sic tenet of online video, that the end-user can view it in an on-demand fashion, at the time and place of their own choosing. For example, in a precursor case to the current online video controversy, a U.S. District Court found that a Canadian company that converted live U.S. copyrighted telecas ts into streaming video for its users violated the public performance rights of the copyright holders.34 Setting aside the international jurisdictional issues, the webs ite iCraveTV.com streamed c opyrighted works such as NFL football and NBA basketball games, and publicly performed them because Internet users could access them through the website.35 Secondary Liability Liability for copyright infringem ent can onl y be found in the Copyright Act for direct infringement by an individual.36 However, there is a well-deve loped body of law that enables a plaintiff to sue for infringement based upon acts complicit by a third party that enables direct infringement.37 Commonly known as secondary liability, it has two major cate gories: vicarious infringement and contributory infringement. Th e Supreme Court has recognized such liability in the field of copyright, acknowle dging that, the absence of such express language in the 33 17 U.S.C. 101 (2005)(publicly). 34 Twentieth Century Fox Film Corp. v. iCraveTV, 2000 WL 255989 at *3 (W.D. Pa. 2000). 35 Id. 36 See 17 U.S.C. 501(a) (2002). See also Sony v. Universal City Studios, 464 U.S. 417, 434 (1984). 37 See DAVID NIMMER & MELVILLE NIMMER, NIMMER ON COPYRIGHT, 2.04[A] (Matthew Bender, New York 2007).

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70 copyright statute does not preclude the imposition of liability for copyright infringers on certain parties who have not themselves engaged in the infringing activity.38 The origins of secondary liab ility in copyright law stem from the common law agency doctrine of respondeat superior as well as a parallel provision in the Patent Act which expressly allow for secondary liability.39 Respondeat superior is derived from the tradition of the masterservant relationship, holding a master res ponsible for the actions of his servant.40 Such liability was similarly extended to the workplace, making a corporation culpable for the actions of its employee in matters related to th e business, and has since been extended to many other types of relationships where a right to supervise or control exists.41 The Supreme Court cited the si milarities in the Patent Ac t that makes liable anyone who actively induces infringement of a patent42 as well as imposing liability on a specific contributory infringers.43 The Court relied upon the Patent Act due to the common Constitutional origins of copyright s and patents when extending secondary liability to copyright law.44 While the Court recognized th e substantial differences between patent and copyright law, it argued that both are grounded upon the basis that protecting the creative monopoly may require courts to look beyond mere duplication, instead to the devices which make actual duplication possible.45 38 Sony v. Universal City Studios, 464 U.S. 417, 435 (1984). 39 See NIMMER ON COPYRIGHT, supra note 37, at 2.04(A)(1); Sony, 464 U.S. at 434-35. 40 See NIMMER ON COPYRIGHT, supra note 37, at 2.04(A)(1). 41 See id. 42 See 35 U.S.C. 271(b) (2003). 43 See 35 U.S.C. 271(c). 44 See NIMMER ON COPYRIGHT, supra note 37, at 12.04(A). Patent law expr essly provides for secondary liability as anyone who actively induces in fringement of a patent, 35 U.S.C. 71(b), and certain contributory infringers, 35 U.S.C. (c). Sony v. Universal City Studios, 464 U.S. 417, 435 (1984). 45 Sony 464 U.S. at 442.

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71 The distinctions between vicarious and contributory liability are often confused. In short, vicarious liability focuses on the relationship of the defendant to the third-party infringer, while contributory infringement looks to the relationship of the de fendant to the actual infringing act.46 The Supreme Court stated that one infringes contributorily by inte ntionally inducing or encouraging direct infringement and infringes vicariously by profiting from direct infringement while declining to exer cise a right to stop or limit it.47 Vicarious Liability Vicarious liability pe rtains to a third-partys right, duty, or ability to control a third party direct infringer.48 The Supreme Court noted that vicarious liability is imposed in virtually all areas of the law.49 To be found liable for vicarious infringement, three basic elements must be met: (1) there must be an act of direct in fringement by a third party, (2) the defendant must possess the right and ability to c ontrol the infringers conduct, a nd (3) defendant must receive a financial benefit from the exploitation of the work.50 A classic example of vicarious infringement can be found in the dance hall cases in which the owners of entertainment venues we re found liable for the infringing acts of the orchestras or bands performing within their venues.51 Liability was found whether or not the bandleaders were true employees of the club or merely independe nt contractors, and regardless of whether the owner had knowledge of the infringing act.52 By inviting patrons to the club and charging for admission, the dance hall owner in vited potential liabili ty under vicarious 46 See MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005). 47 Id. 48 See NIMMER ON COPYRIGHT, supra note 37, at 2.04(A)(2). 49 Sony 464 U.S. at 435. 50 NIMMER ON COPYRIGHT, supra note 37, at 2.04(A)(2). 51 See e.g. Dreamland Ball Room v. Shapiro, Bernstein, & Co., 36 F.2d 354 (7th Cir. 1929). See also Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307-08 (2d Cir. 1963). 52 See supra.

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72 infringement for the infringing acts over those employed in some fashion by the club.53 As the Sony Court pointed out, this line of cases can be contrasted with the landlord-tenant li ne of cases, where a landlord leases space to an infringing te nant, but without knowledge or participation in the infringement.54 There has been some disagreement among the Federal Circuit Courts over what constitutes a financial benefit. The S econd Circuit has generally followe d a more strictly drawn nexus between the infringing activity and the financial benefit.55 It required an obvious and direct financial interest in the exploi tation of copyrighted materials.56 Meanwhile, the Ninth Circuit has engaged in a broadening of the financial bene fit requirement to the extent that so long as there is some financial remuneration where there is some right to control the infringing activity, the requirement will be met.57 Contributory Liability Unlike vicarious infringements focus on the association between the defendant and their control over the direct infringer, contributory infringement looks to the connection between the defendant and the actual infringing act. C ontributory infringement may generally be found where, one who, with knowledge of the infrin ging activity, induces, ca uses or materially 53 See supra. 54 See Sony v. Universal City Studios, Inc., 464 U.S. 417, 438 at n.18 (1984)(citing Deutsch v. Arnold 98 F.2d 686 (2nd Cir. 1938). 55 See Softel, Inc. v. Dragon Med. & Scientific Communications, Inc., 118 F.3d 955, 971 (2d Cir. 1997); Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307-08 (2d Cir. 1963). 56 Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963)( stating that, an obvious and direct financial interest in the exploitation of copyrighted materials may result in the imposition of liability upon the beneficiary of that exploitation; finding chain store liable for the infringing acts of retained operator running its record departments). 57 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1023 (9th Cir. 2001) (finding Napster liable for vicarious infringement because the future of the business relied upon building a network of infringing users to advertise to); Fonovisa v. Cherry Auction, 76 F.3d 259, 263 (9th Cir. 1996) (finding a direct financial benefit by swap-meet landlord when lessees paid minimal rent al fees and defendant received no commi ssion or proceeds from the sales of bootleg music).

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73 contributes to the infringi ng conduct of another .58 Thus the three basic elements of contributory infringement are (1) an act of direct infringement by a third party, (2) where the defendant has knowledge of the infringing activit y, and (3) the defendant induces, causes, or materially contributes to the infringement.59 Some have further divide d this up into two general ways to contributorily infringe, either by partic ipating in the infringe ment, or providing the means by which to infringe.60 Modern Secondary Liability and Technology From the development of the VCR in the earl y 1980s to the online file-sharing craze of the late-1990s, contributory in fringement and vicarious infringeme nt, are at the heart of modern new-technology copyright infringement cases. As will be explored further below, as new technologies develop, conflicting questions aris e between copyright protection for contentowners, and questions of fair use by individuals using the ne w technology. The increasingly easy ability to copy was the common characteristic of all the devices in question in the new age of secondary liability. As the Supreme Court has noted, copyright law has developed in response to changes in technology, as far back as the inve ntion of the printing pres s necessitating the rise of copyright protection.61 There are two major Supreme C ourt cases dealing with emerging technology, Sony v. Universal City Studios62 in 1984, and the more recent Metro-GoldwynMayer v. Grokster63 decision of 2005. Additionally two lowe r court cases helped to shape the law. In 2001 the U.S. Court of A ppeals for the Ninth Circuit decided A&M v. Napster 64 and in 58 Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971). 59 MGM v. Grokster 545 U.S. 913, 930 (2005). 60 NIMMER ON COPYRIGHT, supra note 37, at 2.04(A)(3)(a-b). 61 Sony v. Universal City Studios, 464 U.S. 417, 430 (1984). 62 Id. 63 545 U.S. 913 (2005). 64 A&M v. Napster, 239 F.3d 1004 (9th Cir. 2001).

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74 2003 Judge Richard Posner of the U.S. Court of Appeals for the Seventh Circuit handed down In re Aimster Copyright Litigation .65 Sony v. Universal City Studios (1984) In 1984, the Supreme Court decided the seminal case of Sony v. Universal City Studios (Sony), determining whether the sale of video tape recorders violated te levision show owners rights under the Copyright Act.66 The Sony Betamax video tape recorder67 enabled users to record television shows and m ovies from their televisions.68 A survey conducted by Sony for trial showed that the primary us e of the Betamax was for time-sh ifting, consisting of recording a show and watching it once at a later time.69 Some shows authorized time-shifting while others did not.70 A number of content-owners elected to sue Sony, instead of the direct infringers, on the theory that some Betamax users utilized the device to record copyrighted works from broadcast television not only fo r time-shifting, but also to bu ild libraries of copyrighted programming.71 The U.S. District Court for California dete rmined that non-commercial home recording, including authorized and unauthorized time-sh ifting, was a fair use and thus non-infringing.72 The District Court also indepe ndently found no contributory infr ingement by Sony, stating that it had no direct involvement in the direct infringement by its users.73 The court reasoned that while the Betamax was capable of a number of infringing uses, finding Sony liable for them 65 In re Aimster Copyright Litigation, 334 F.3d. 643 (7th Cir. 2003). 66 Sony v. Universal City Studios, 464 U.S. 417 (1984). 67 The Sony Betamax was a competitor in the emerging hom e-video recording market, co mparable to todays VCR. 68 Sony, 464 U.S. at 420. 69 Id. at 421. 70 Id. 71 Id. At the time, broadcasts were either approved for home recording or were prohibited, and an individual had to look up in TV listings whether or not the work was eligible for home recording. Id. at 445. 72 Universal City Studios, Inc. v. Sony Corp. of America, 480 F.Supp. 429 (D.C.Cal. 1979). 73 Id. at 436.

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75 would set a precedent that would unduly obstr uct commerce and expand potential liability beyond the judiciarys control.74 The court borrowed the staple-article of commerce theory from patent law,75 asserting contributory infringement c ould not be found where there existed a substantial non-infringing use.76 However, the U.S. Court of Appeals for the Ninth Circuit disagreed and reversed, finding that time-shifting was not a fair use because it not a productive use.77 The Ninth Circuit also rejected the staple-article of commerce argument, stating that primary purpose of videotape recorders was to reproduce television programming.78 The court reasoned that since most television programming is copyrighted material, if the primary purpose of the Betamax was to record such material, then vi deotape recorders cannot be f ound to have a substantial noninfringing use.79 The Supreme Court reversed the holding of th e Ninth Circuit, finding Sony not liable for the direct infringement of Betamax users in a five-to-four decision.80 Justice John Paul Stevens, writing for the majority, relied h eavily upon the traditional reluctan ce of the judiciary to do what he viewed would be imposing an unprecedented new form of liability upon innovators.81 Justice Stevens preferred to leave such decisions to C ongress, the body with Cons titutional authority to properly address the issue, when technological innovati ons alters the market for copyrighted 74 Id. at 461. 75 See 35 U.S.C. 271(c) (2003). 76 Universal City Studios, Inc. v. Sony Corp. of America, 480 F.Supp. 429, 436 (D.C.Cal. 1979). 77 Universal City Studios, Inc. v. Sony Corp. of America, 659 F.2d 963, 971-72 (9th Cir. 1981)(. when copyrighted material is reproduced for its intrinsic use, th e mass copying of the sort involved in this case precludes an application of fair use.). 78 Id. at 975. 79 Id. 80 Sony v. Universal City Studios, 464 U.S. 417, 421 (1984). 81 See Sony 464 U.S. at 431-32.

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76 materials.82 The majority acknowledged th at, it is not our job to a pply laws that have not yet been written, leaving room for Congress to take a fresh look at this new technology, just as it so often has examined other innovations in the past.83 The Court first addressed the issue of whet her Sony could be found to be a vicarious infringer.84 While the argument could be made that Sony benefited financia lly through the sale of the Betamax, the Court said nothing as to ho w Sony possessed any control over the customer a necessary element to vicarious liability.85 The Court determined that the only way Sony could be found liable on such theory would be if it sold the Beta max with constructive knowledge of the fact that customers ma y use the device to violate copyrights.86 In other words, the only true way for Sony to not be labeled a vicarious infringer under such a standard would be if Sony stopped selling the Betamax altogether, an alternative neither the Court nor Sony wanted. Additionally, finding liability based upon mere constructive know ledge of an infringing act would have forced the Court to go beyond precedentsomething it was unwilling to do at the time.87 While the majority recognized vicarious infri ngement as a potential form of liability in copyright law, though not for Sony, the opinion th en focused on the question of whether Sony was a contributory infringer.88 The Court adopted the view of the District Court and the staplearticle of commerce argument borrowed from patent law.89 The Court recognized that to protect the copyright monopoly, courts are so metimes required to look beyond the direct 82 Id. 83 Id. at 456. 84 See id. at 439. 85 See id. 86 Id. 87 Id. 88 See id. at 440-44. 89 See id

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77 infringing duplication to the products that make such copying possible.90 As paralleled in the staple-article of commerce doctrine, the sale of copying equipment does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes.91 In other words, the Court had to determine whether the Betamax was capable of a substantial non-infringing use.92 The Court next turned to the task of defi ning what was a substantial non-infringing use.93 In terms of infringement, the Court said th at it did not need to consider every possible potential use and determine whether it was infringing, but instead whether a significant number of them would be non-infringing.94 The majority did not offer a bright line number of what significant meant, however they gave deference to the fact-finding of the di strict court in terms of how much the Betamax was used for non-infringing use.95 The District Court found that the defendants collectively held less than ten percen t of copyrights in the television market, thus leaving a significant portion of copyright holders subject to th e outcome of the litigation, many of which allowed viewers to copy their programs for later viewing.96 In addition the Court agreed with the district court that authori zed time-shifting expands the audience, allowing a viewer to see a show that he otherwise might not have had the opportunity to see at the time it was aired.97 The majority also echoed the district courts finding that non-authorized time90 Id at 442. 91 Id. 92 Id. 93 Id. 94 Id. (emphasis added). 95 See id. at 443-45. 96 Id. at 443. 97 Id.

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78 shifting also fits under th e fair use exception and thus could also be found to be a substantial non-infringing use.98 However, the dissent, authored by Justice Harry Blackmun and joined by Justices Marshall, Powell, and Rehnquist, took issue with the majoritys ch aracterization of contributory infringement as a novel theory of liability.99 The minority first disagreed on the finding of fair use, stating that it would have required unauthorized time-shifting to be a productive use as the Ninth Circuit had required.100 The minority reasoned that extending fair use as far as unauthorized time-shifting would erode the basis of copyright law and eviscerate the incentive to create.101 Justice Blackmun thus would have found Sony liable for contributory infringement because to him the intended use of the Beta max was to copy programs off-air, and Sony was induced and materially contribu ted to the direct infringement of users by virtue of their advertising and the sole in tended use of the device.102 Further, the dissent disagreed with the application of the staple-article of commerce doctrine to copyrights.103 However, recognizing the majority s application of substantial noninfringing use, Justice Black mun concluded that, if a significant portion of the products use is non-infringing the manufacturers and sellers cannot be held contributorily liable for the products infringing uses.104 However, Justice Blackmun insisted that if virtually all of the products use is infringing, then contributory liability may be imposed.105 He disagreed with the 98See id. at 447-56. 99 Id. at 457 (Blackmun, J., dissenting). 100 Id. at 479. Justice Blackmuns dissent recognized that there should remain room for non-productive uses that have a minimal impact on the potential market for the copyrighted work. Id. at 482. 101 Id. at 481. 102 Id at 490. 103 Id. at 491. I do not agree that this technical judge-made doctrine of patent law, based in part on considerations irrelevant to the field of copyright should be imported wholesale into copyright law. Id. 104 Id. (emphasis in original). 105 Id.

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79 majoritys method of calculating substantial non-infringing uses.106 Where the majority looks at the amount of television programming that is copyrighted, Justice Black mun would instead look at the amount of Betamax usage that is infringing.107 A&M v. Napster (9th Cir. 2001) The first major decision by a federal cour t concerning online c opying technology in the Internet era came in 2001 from the U.S. Cour t of Appeals for the Ninth Circuit in the groundbreaking case A&M Records v. Napster .108 Napster was a peer-to-peer file sharing website with accompanying software which enabled networked users to share music files in MP3 format.109 Napster enabled its users to make MP3 copies of music files on their computer hard drive by copying the files from other users networked computers.110 Napster allowed users to share their own MP3 music file s with other users as well.111 Though all files were housed on the users computers and not Napsters servers, Na pster made all the sharing possible by uploading the names of all shared files into its common directory.112 To download a song, users simply searched Napsters centralized directory which di rected them automatically to another users computer from which to download the song.113 Napster was free and easy to use, and as a resu lt direct copyright infringement was rampant by its users, violating the mu sic copyright owners distri bution and reproduction rights.114 A legion of recording industry companies filed suit against Napster and were awarded a temporary 106 Id. at 492. 107 Id. As a result of the divergent views on how to calcula te substantial non-infringing use in this case, Justice Blackmun would have recommended the case for remand to the District Court for reconsideration. Id. at 493. 108 A&M Records v. Napster, 239 F.3d 1004 (9th Cir. 2001). 109 Id. at 1011. 110 Id. 111 Id. 112 Id at 1012. 113 Id. 114 Id. at 1014.

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80 injunction by the district court.115 Napster offered the defense of fair use for the direct infringement of its users.116 Napster asserted that space-sh ifting (downloading a song that you already own in another physical form)117 and sampling (downloading a song to see if you like it in order to determine whether to buy it later) shou ld have been recognized as fair uses by the district court.118 However, the Ninth Circuit affirmed the district courts ruling that Napster was not a fair use and sustained the temporary injunction based on contributory and vicarious infringement.119 First, the court addressed Napsters fair use argument. Regardi ng sampling as a fair use, the court held that the more music that was downl oaded for sampling purposes, the less likely users are actually to purchase the CD.120 Moreover, the court found that sampling would have adverse effects upon the developing lega l digital download market.121 As for space-shifting, the court rejected Napsters insistence that space-shifting by its users was no di fferent than that of Betamax users many years prior.122 The court distinguished Sony by stating that most Betamax users did not utilize the device to distribute infringing recordings whereas all Napster users who participated in file-sharing in fringed by distribution as well.123 115 Id. at 1011. The recording industry heavyweights suing Na pster were A&M Records, Geffen Records, Interscope Records, Sony Music Entertainment, MC A Records, Atlantic Recording, Motown Record Co., and Capitol Records. Id. at 1004. 116 See id. at 1014-15. 117 Space shifting occurs when a Napster user downloads MP3 music files in order to listen to music he already owns on an audio CD. Id. at 1019. 118 Id. at 1018-19. 119 See id at 1019. 120 Id. at 1018. 121 Id. Itunes music store, for example. 122 Id. at 1019. 123 Id. The court also referenced to Recording Indus. Assn of Am. v. Diamond Multimedia Sys., Inc., 180 F.3d 1072 (9th Cir. 1999), in which the Ninth Circuit stated that the Rio, a portable MP3 player, only made copies in order to make owned CDs portable, thus properly space-shifting them. Id.

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81 Next, the court shifted focus to the el ements of contributory infringement.124 A secondary infringer must have knowledge or have reason to know of the direct infringement to be liable under contributory infringement.125 The Ninth Circuit approved th e district courts finding that Napster had both actual and constructive know ledge of its users unlawful exchanging of copyrighted music.126 The district court found that Napster had actual knowledge because Napsters founder Sean Parker authored a docum ent stating that Napste r needed to remain ignorant of users real identities since they are exchanging pirated music, and the Recording Industry Association of America informed Naps ter of more than 12,000 infringing files shared on its network.127 It found that Napster had constructiv e knowledge due to Napster executives recording industry experience, thei r general knowledge of intellec tual property rights, their own downloading of copyrighted songs on Napster, and their promotion of the site with screen shots including infringing files.128 The Ninth Circuit followed the rule from Sony that knowledge with a substantial noninfringing use could exculpate the defendant of contributory liability.129 However, the court departed from the district court in defining what constituted a substantial non-infringing use.130 The Ninth Circuit stated that the lower cour t placed too much emphasis on the current and 124 See Napster 239 F.3d at 1020. 125 Id. (citing Cable/Home Communication Corp. v. Network Prods., Inc ., 902 F.2d 829, 845-46, n.29 (11th Cir. 1990) and Religious Tech. Ctr. v. Netcom On-Line Communication Servs., Inc., 907 F.Supp. 1361. 1373-74 (N.D.Cal. 1995)). 126 Id. 127 Id. at 1020, n.5. But see PAUL GOLDSTEIN, GOLDSTEIN ON COPYRIGHT .1.2, p.6:12-1 (2d ed. Aspen Pub., New York 2003)(disagreeing with the Ninth Circuits findin g that actual knowledge alone is sufficient to find contributory infringement.). 128 Id. 129 Id. at 1020 (citing the rule from Sony that if liability is to be imposed, it must rest on the fact the they have sold equipment with constructive knowledge of the fact that their customers may use that equipment to make unauthorized copies of copyrighted material, unless the device was capable of substantial non-infringing uses. Sony v. Universal City Studios 464 U.S. 417, 439 (1984).) 130 See Napster, 239 F.3d at 1020-21.

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82 ongoing infringing uses, rather than looking to the future non-infringing uses.131 The court also added that knowledge can be imputed where a com puter system operator such as Napster learns of specific infringing mate rial on the system and fails to purge such material from the system.132 The court analogized the rule subs tantial non-infringing use rule from Sony saying that absent specific information identifying infringing activity, a computer system operator cannot be held contributorily liable solely because the structure of the system allows users to exchange copyrighted material.133 The court stated furthe r that finding contributory infringement merely because of an infringing use would violate Sony and surely stifle innovation.134 Though the Ninth Circuit ga ve great deference to Sony in applying the case to Napster, in the end the court found Napster liable of contributory infringement based upon its actual knowledge that specific infringing material was available using its sy stem, that it had the capability to block users access to such infringing material, and that it failed to remove the material.135 In a way, the Napster court added the duty to mitiga te against infringement to contributory infringement where one has knowledge of such infringement, regardless of the prevalence of the infringement. The court also failed to define how far in the future a court should look in finding substantial non-infringing uses. After finding Napster contributorily liable, the Ninth Circuit then determined whether Napster was liable under the vicarious infringe ment standard. The court did not apply Sonys staple-article of commerce doctrine to vicarious infringement because Sonys discussion of 131 Id. at 1021. 132 Id. 133 Id. 134 Id. 135 Id. at 1022.

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83 vicarious liability was limited as the issue of vica rious liability was not before the Court at the time.136 Thus, the court judged vicarious infringement by the right and ability to supervise the infringing activity and also [having] a dire ct financial interest in such activities.137 First, the court agreed with the district c ourts finding that Napster derived a financial benefit from the infringing acts of its users.138 The court found that the infringing material acted as a draw for customers to the system.139 In addition, the court found that Napsters future revenue is based on increasing the size of its network, and the network size increases as the quality and quantity of music increases.140 Therefore, Napster was f ound to directly benefit from the infringing acts of its users.141 Second, the court determined whether Napster possessed the right and ability to supervise the conduct of its users, agreeing in part with the finding of the district court finding ability to supervise.142 The district court found th at through a Terms of Use agr eement with its users, it possessed the right to control and terminate accounts, and possessed the technological capabilities to police the acts of users through its search function.143 The Ninth Circuit agreed in principle with this finding, but recognized that Na pster users were capable of tricking the search system by merely misspelling names of songs becau se the system only read song titles, not the actual content of the MP3.144 With that said, the court stil l found that Napster possessed the ability to supervise and thus c ould be found vicariously liable. 136 See id. at 1022-23. 137 Id. (citing Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971)). 138 Id. at 1023. 139 Id. (citing Fonovisa Inc., v. Cherry Auction, Inc., 76 F.3d 259, 263-64 (9th Cir. 1996)). 140 Id. 141 Id. 142 See id. at 1023. 143 See id. at 1023-24. 144 Id.

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84 Finally, the Ninth Circuits c oncluded its analysis by cons idering whether Napster found immunity from all liability under the safe-h arbor provision of Sec tion 512 of the Digital Millennium Copyright Act145 as an Internet Service Provider.146 The court rejected the district courts conclusion that the safe-harbor ha d no application to s econdary infringers.147 The court posed three questions regarding the application of to Napster: (1) whether Napster was an Internet service provider as defined by the act, (2) whether copyright owners must give a provider like Napster official notice in order for there to be knowledge or awareness of infringement taking place on its system, and (3) whether Napster complies with the sections directive for Internet service providers to establish a deta iled copyright compliance policy.148 However, the court stated that these issues would be developed more thoroughly at trial on remand.149 In re Aimster (7th Cir. 2003) Around the same time Napster was decided, many of the same recording industry plaintiffs filed numerous suits against the Aimster In ternet service and its creator John Deep.150 Aimster was developed in large part to replace the void in file sharing systems due to the shutdown of Napster. The Northern District of Illinois was selected by Multidistrict Litigation Panel to hear the consolidated complaints of Plaintiffs.151 The district court issued a temporary injunction 145 17 U.S.C. 512. 146 See Napster, 239 F.3d at 1025. 147 See id. 148 Id. 149 Id. 150 See In re Aimster Copyright Litigation, 334 F.3d 643, 645-46 (7th Cir. 2003). 151 Id. at 645

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85 against Aimster finding a high pr obability of it being a contributory and vicarious infringer, and the U.S. Court of Appeals for the Seventh Circuit heard the appeal.152 Aimster was similar to Napster in that it offered free software to download which allowed users to share music files over its servers.153 Also like Napster, Aims ter did not host any files on its servers, only collecting and organizing th e information about the files from the users.154 The Aimster software piggybacked on AOLs instant me ssaging software, thus requiring users to be signed into AOL instant messenger to share files.155 Aimster users searched through the centralized listing of files, but were only able to swap files with those users designated as his buddy.156 However, if a user did no t designate any buddies then al l users of Aimster became buddies and thus the whole system was open to them for music file sharing.157 Aimster differed from Napster in that it offered Club Aimster, a service that users could join for a fee allowing them to more easily download th e top-40 popular music files on Aimster.158 Judge Richard Posner, writing for the Seventh Circuit, likened Aims ter to a stock exchange, not directly making copies of the infringing works, but offering the facility for matching offers of exchange.159 The court first drew upon Sonys substantial non-infringing use doctrine and applied it to Aimster. Judge Posner stated th at in order to define whether Ai mster was capable of substantial non-infringing use, the court need not explore all potential uses and whether they are infringing, 152 Id. 153 Id. at 646. 154 Id. 155 Id. 156 Id. 157 Id. 158 Id. 159 Id. at 647.

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86 but instead whether a significant numb er of them would be non-infringing.160 Furthermore, Posner noted that, as in Sony one potential use of a systemt he Betamaxs use of private, noncommercial time-shiftingcould be commercially significant enough to sa tisfy the standard.161 The court added that the cost and benefit balancing introduced by the Sony Court is necessary only where substantial non-infringing uses real or potential, are demonstrated.162 But when it is, some estimate of the respective magnitude s of these uses is necessary .163 Most importantly, the Seventh Circuit found that Aimster took affirmative steps that were missing from both Napster and Sony in the form of specifically inviting and instructing infringing uses.164 Aimster tutorials only gave examples of how to share files of copyrighted music.165 Additionally, Club Aimster charged us ers $4.95 a month for the ability to easily download the most popular music, which tu rned out to always be copyrighted.166 While Aimster was capable of sharing files th at would amount to non-infringing uses, the main source of income was through Club Aimster subscriptions.167 Upon establishing that there was ample eviden ce to prove that Aimster was being used rampantly for infringing uses, the court shifte d the burden to Aimster to prove substantial noninfringing uses.168 Judge Posner then carefully analy zed a number of potential non-infringing uses of Aimster.169 First, he noted that not all popular music was copyrighted, finding that a small number of start-up bands wanted users to swap and share thei r music to create a 160 Id. at 648. 161 Id. 162 See. id. at 650. 163 Id. at 649. 164 See id. at 651-53. 165 Id. at 651. 166 Id. at 651-52. 167 Id. at 652. 168 Id. 169 Id.

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87 following.170 Second, he argued that file-sharing c ould increase the value of a recording by turning it into currency in a music-sharing market, since users who only downloaded were essentially free-riders and hurt the system.171 Third, Aimsters buddy system might encourage the exchange of non-copyrighted ideas and information.172 Fourth, Aimsters encryption technology may encourage forms of expression th at users would be embarrassed to share publicly, such as uncopyrighted off-color jokes, photos, and the like.173 Finally, a user who owns a CD but cannot access it fo r some reason can download a copy in order to space-shift their music.174 Although Judge Posner courteously offered potential non-infringing uses of Aimster, the court noted that not a single piece of evidence was offered showing that Aimster was used for any such uses.175 It is not enough that the uses are potentially non-infringing, but that they are probable and in use.176 Shifting to the other elements of contributo ry infringement, the c ourt agreed with the recording industrys contention that a service providers ability to prevent its users from infringing is a factor to be considered in determining liability.177 However, the court notes that it is not a controlling factor, because doing so would have required a perverse result in AOL being forced to shut down its productive and generally non-infringing instant messaging service.178 As for the knowledge requirement, the court disagreed with the analysis of the Ninth Circuit in 170 Id. 171 Id. 172 Id. 173 Id. 174 Id. at 652-53 However, this reason garnered criticism from other courts and not addressed by the Napster Court. See id. 175 Id. at 653. 176 See id. 177 Id. at 648. 178 Id. at 648-49.

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88 Napster which held that actual knowledge alone is sufficient to prove contributory infringement.179 Aimster offered a peculiar defense to constr uctive knowledge, asserti ng that it had no way of knowing what files were bei ng swapped on its system because of the data encryption feature of the service.180 However, the court flatly rejected this excuse, stating that willful blindness is knowledge.181 The court analogized other areas of the law such as criminal culpability, where a defendant taking steps to make sure he does not acquire full knowledge is still held to have criminal intent.182 The court also addressed the issue of vicarious infringement and was less confident that Aimster could be found liable under such a theory, but still felt it was possible to prove.183 The court reasoned that since Sony intermingled vicarious and contributory liability, the question was largely academic.184 Aimster, like Sony, could have mitigated against the infringement in the form of encryptio n and monitoring the use of its system.185 However, Aimsters ostrich-like refusal to discover the ex tent to which its system was being used to infringe added to its potential liability.186 Finally, like the Ninth Circuit in Napster the Seventh Circuit attempted to consider whether the safe-harbor of Section 512 of the Digita l Millennium Copyright Act187 applied to Aimster.188 The court found that Aimster fit the broad definition of an Internet service 179 Id. at 649. 180 Id. at 650. 181 Id. 182 Id. 183 Id. at 654. 184 Id. at 655. 185 Id. at 654. 186 Id. at 655. 187 17 U.S.C. 512 (1999). 188 See Aimster, 334 F.3d at 655.

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89 provider, but was unable to apply it further189 because the statue requires Aimster to discourage repeat infringers. In contrast, the court found that Aimster actually invited and demonstrated infringement to its users.190 Like Napster, the decision in Aimster added to the body of case la w and helped interpret Sony in the digital Internet age. Aimster and Na pster shared similar fact ual qualities, and as a result found similar results in the courts. Th e Ninth and Seventh Circ uits similarly applied Sony to the facts, but what differences there were the Supreme Court was poised in 2005 to settle them regarding another Napster copycat, Grokster. MGM v. Grokster (2005) By the tim e the Supreme Court put the finishing legal touches on the nearly five-year battle over peer-to-peer file sharing in 2005, the damage to the recording industry had already been done by online piracy. At the time of oral argu ments before the Court, the recording industry reported its first increase in sales in five years, though at a miniscule two percent.191 However, the Courts ruling effectively ended the legal que stions surrounding peer-to-peer network sharing of copyrighted material, and ente red an entirely new doctrine of contributory liability into the copyright common law. Before the Court were Grokster and Streamcast (referred together as Grokster) for distributing free peer-to-peer file sharing programs.192 The software was the typical peer-to-peer variety, enabling users to share fi les or any kind directly with one another without the aid of centralized servers.193 Like Napster and Aimster, the software was primarily utilized in the 189 Id. 190 Id. 191 Saul Hansell & Jeff Leeds, A Supreme Court Showdown for File Sharing N.Y. TIMES, Mar. 28, 2005, available at http://www.nytimes.com/2005/03/28/technology/28grokster.html (last visited Jan. 10, 2008). 192 MGM Studios, Inc. v. Grokster, Ltd, 545 U.S. 913, 919-20 (2005). 193 Id. at 920.

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90 unauthorized sharing of copyrig hted music and video files.194 Although the Groksters software did not allow for it to know when copies are unlawfully shared, the softwares search tool revealed the vast amount of copyri ghted files available for download.195 Moreover, Grokster was aware of the infringing acts of its users.196 Often, it had communications from users seeking technical support with questions of how to play copyrighted movies they downloaded.197 Yet, neither defendant attempted to employ filtering technology or block known infringers from the software.198 However, Groksters actions were not merely passive, but it also took steps to actively encourage infringement through its software.199 Both Grokster and Streamcast developed promotional materials to market its service as the best Napster alternative.200 For example, Streamcast developed kit for poten tial advertisers containing arti cles about its potential to capture former Napster users.201 Meanwhile, Grokster inserted codes into its website so that when a user searched for Napster they woul d be directed to Groks ternotwithstanding the softwares inconspicuous similar name to Napster.202 Grokster and Streamcast also sold advertising space shown on the software.203 As a result of Groksters actions, a larg e conglomerate of music and motion picture industry companies filed suit seeking damages and an injuncti on in the U.S. District Court for 194 Id. 195 Id. at 922. An MGM commissioned study concluded that nearly 90% of the files available for download were copyrighted works. Id. This was compared to the nearly 87% of copyrighted works available on the filesharing network in Napster Id. at n.5. 196 Id. at 923. 197 Id. 198 Id. at 927. 199 Id. at 923-24. 200 Id. at 925. 201 Id. at 924. 202 Id. at 925. 203 Id. at 926.

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91 the Central District of California.204 The District Court found dire ct infringement by Groksters users, yet granted summary judgment to Groks ter on the issue of secondary liability for distributing the software because it lacked actual know ledge of specific acts of infringement.205 The U.S. Court of Appeals for the Ninth Circuit affirmed the ruling, applying the Sony rule that the software was capable of substantial non-infrin ging uses due to the lack of actual knowledge and decentralized nature of the sharing network.206 In addition, the Nint h Circuit held that Grokster did not materially contribute to its users infringement because they had no involvement beyond providing the software used.207 In unanimous opinion by Justice David Souter the Supreme Court re versed and remanded applying not the rule of Sony but instead instituting a new form of liability based upon inducement.208 It first acknowledged the secondary liability case law that when a widely shared service or product is used to commit infringement it may be impossible to enforce rights in the protected work effectively against all direct infr ingers, and thus a finding of secondary liability against the distributors of the copying de vices is the only pr actical alternative.209 The Court identified the theories of contributory infr ingementintentionally i nducing or encouraging direct infringementand vicarious infringementprofiting from dir ect infringement with a right to stop or limit it.210 However, it chose to determine liabi lity solely upon contributory liability based upon the inducement theory, setting as ide MGMs vicarious liability argument.211 204 M.G.M., Inc. v. Grokster, Ltd., 259 F. Supp 2d 1029,1033 (C.D. Cal. 2003) affd by 380 F.3d. 1154, 1162 (9th Cir. 2004). 205 Id. 206 M.G.M., Inc. v. Grokster, Ltd., 380 F.3d. 1154, 1162 (9th Cir. 2004) rvsd by 545 U.S. 913, 919-20 (2005). 207 Id. at 1163-64. 208 MGM Studios, Inc. v. Grokster, Ltd, 545 U.S. 913, 941 (2005). 209 Id. at 919-20. 210 Id. at 930. 211 Id. at 931 n.9.

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92 Curiously, in a decision about an innovativ e technology facilitati ng infringement, the Grokster Court chose to introduce the ne w law of inducement rather th an the previous standard of Sony v.Universal City Studios .212 The Court outright rejected the Ninth Circuits application of Sonys staple-article of commerce to Grokster.213 It disfavored the Circuits application of the rule that simply because Grokster was capab le of commercially si gnificant non-infringing uses, it could not be held contributorily liable for its users infringing acts.214 The Court found it erroneous that such a simple finding could immunize Grokster, despite significant evidence showing specific knowledge of infringement.215 However, much to the disappointment of the parties and numerous amici the Court then largely punted th e question, refusing to elaborate further on the principl e and state of the Sony doctrine.216 The Court left further explanation of the Sony rule for a day when that may be required.217 Then, the Court began its justif ication of a new theory of infringement by inducement. Despite the punting of Sonys staple-article of commerce doc trine, the Courts opinion next focused on elaborating further on why a device capa ble of substantial noninfringing uses could remain secondarily liable where evidence of intent, such as inducement, exists.218 [N]othing in Sony requires courts to ignore evid ence of intent and the case was never meant to foreclose rules of fault-based liability. .219 The Court announced that where evidence goes beyond a products characteristics or the knowledge that it may be put to infringing uses, and shows 212 Grokster 545 U.S. at 931-34. 213 Id. 214 Id. at 933-34. 215 Id. at 934. 216 Id. at 934. The parties and many of the amici in this case thing the key to resolving [the case] is the Sony rule, and, in particular, what it means for a product to be capable of commercially significant noninfringing uses. [citation omitted]. Id. at 933. 217 Id. at 934. 218 See id. at 934-35. 219 Id.

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93 statements or actions direct ed to promoting infringement Sonys staple-article rule will not preclude liability.220 In a footnote, the Court justified its decision by comparing it to the Patent Act, which statutorily fails to exempt staple-a rticle devices that induce patent infringement.221 It is these statements and actions by Grokster and Streamcast that the Court relied upon in determining the case based upon its new inducement standard.222 In adopting the inducement rule from patent la w, the Court held that a distributor of a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liabl e for the infringing acts of its users.223 The inducement rule premises lia bility on purposeful, culpable expression and conduct .224 It noted that the primary avenue of inducement was advertising, but could also be in the form of promotional materials, or ev en statements of the company showing an unlawful purpose.225 The Court limited its holding by exempting those with mere knowledge of infringing potential or actual infringing uses and ordinary acts incident to product distribution such as offering t echnical support or product updates.226 The Court held that to prove inducement, a court should examine a defendants own statements of unlawful purpose and whether th rough them a defendant is disqualified from claiming immunity.227 In applying the facts, the Court found numerous instances of inducement by advertisement and promotional material. For example, it cited a Grokster newsletter 220 Id at 935 (emphasis added). 221 Id. at 935 n.10. 222 See id. at 937-40. 223 Id. at 936-37. 224 Id. 225 Id. at 935-36. 226 Id. at 937. 227 Id. at 938.

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94 containing articles touting the softwares usefulness for accessing copyrighted music.228 It also cited the several of Streamcasts own statements aimed at recruiting former Napster users to its site.229 Through such statements, the Court concluded that summary judgment for Grokster was erroneous because Grokster demonstrated unlawful intent for three reasons.230 First, each company sought to fill the Napster-void, as evidence showed both Grokster and Streamcast sought to serve former Napster users.231 Second, Groksters lack of an attempt to develop filtering tools to redu ce infringement added to the evidence of unlawful objective.232 However, in a footnote, the Court noted that the failure to filter alone, would be insufficient to find liability where a device is otherwise capable of substantia l non-infringing uses.233 Third, Groksters imputed unlawful objective was enha nced by the evidence that Grokster sold advertising, and the more users meant more advertising revenue.234 Since Groksters advertising revenue turned on high-volume use, which was shown to be highly infringing, it was added as another factor.235 As a result, the Court reversed the decision of th e Ninth Circuit and remanded the summary judgment decision to the District Court.236 Though the opinion of the Court was unanim ous, two concurring opinions differed on whether Grokster supported the Sony substantial non-infringing use standard (both agreed it would likely be liable under the ne wly announced inducement standard).237 Both concurrences agreed to the continuing validity of the Sony doctrine, but disagreed on the application of it in 228 Id. 229 Id. 230 Id. at 938-40. 231 Id. at 939. 232 Id. 233 Id. at n.12. 234 Id. at 939-40. 235 Id. However, like the previous no duty to fi lter, this factor alone is insufficient. Id. a 236 Id. at 941. 237 Cf. id. at 942-49 (Ginsburg, J., concurring) with id. at 949-66 (Breyer, J., concurring).

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95 this case.238 Justice Ruth Bader Ginsburg, joined by Chief Justice Rehnquist and Justice Kennedy, argued that based upon the record evid ence, summary judgment for contributory liability based upon Sony was unwarranted.239 Meanwhile, Justice Stephen Breyer, joined by Justices OConner and Stevens, argued that the Grokster has a nu mber of substantial noninfringing uses and thus summary judgment on that issue in favor of MGM was proper.240 Justice Ginsburg argued that be cause the record evidence show ed that Grokster had, for some time, been overwhelmingly used to infring e and that this infringement was the overwhelming source of revenue ., such ev idence was insufficient to prove a reasonable prospect that substantial or co mmercially significant noninfringi ng uses were likely to develop over time.241 Ginsburg criticized Brey ers characterization of Sony that limiting liability for dual-use technologies is correct, unless the product in question will be used almost exclusively to infringe copyrights .242 Instead, she argued that Sony requires, no clear, near-exclusivity test,243 but instead that of substantial or commercially signifi cant noninfringing uses [] likely to develop over time.244 Ginsburg disputed the District C ourts justification of substantial noninfringing resting largely upon a motley collection245 of anecdotal evidence of authorized uses.246 238 See id. 239 Id. at 942 (Ginsburg, J., concurring). 240 Id. at 949 (Breyer, J., concurring). 241 Id. at 948 (Ginsburg, J., concurring). 242 Id at 944 at n.1 (Ginsburg, J., concurring)(criticizing Grokster 545 U.S. at 957 (Breyer, J., concurring))(emphasis in original). 243 Id at 944 at n.1, (Ginsburg, J., concurring). 244 Id. at 948. 245 Id. at 947 n.3. 246 Id. at 945-47.

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96 In contrast, Justice Breyer argued the reco rd evidence was sufficient to prove Grokster capable of substantial noni nfringing use and thus immunize it from liability under Sony .247 In doing so, he demonstrated that the estimated amount of noninfri nging uses in the record, roughly 10% of all files shared via Grokster, was nearly identical in amount to the 9% of authorized timeshifting uses of the VCR in Sony .248 Breyer argued that while 10% appeared insignificant at the time, the standard was capable of substantial noni nfringing uses.249 He noted that while 10% would be insufficient over the long-term, the rea sonable prospect of expanded legitimate uses over time could prove to be exculpatory.250 To justify his reasoning, Breyer listed numerous potential noninfringing uses for peer-to-peer filesharing, includi ng: research, public domain works, historical and educational materials, digital photos, shareware and freeware, secure licensed media, news broadcasts, and user-created audio and video.251 Breyer rationalized his conclusion by invoking the balance Sony sought to provide between protection copyrighted works and th e rights of others to engage in substantially unrelated areas of commerce such as software development.252 Breyer toyed with idea of modifying Sony as he read Sony in a less-strict manner than Ginsburg, st ating that the true question should be whether the proper balance be tween copyright and new technology interests is found.253 In determining whether Sony should be modified, (or as he as serts Ginsburg argued, to interpret it more strictly) three questions ha d to be answered: (1) whether Sony works to protect new technology, (2) if so, would modification or stri ct interpretation signifi cantly weaken that 247 Id. at 952 (Breyer, J., concurring). 248 Id. 249 Id. at 953 (emphasis in original). 250 Id. at 953. 251 Id at 954. 252 Id. at 950. However, it could be argued that developing software that relies primarily upon the infringement of copyrighted works is hardly a substantially unrelate d area of commerce from the copyright industry. 253 Grokster 545 U.S. at 956 (Breyer, J., concurring).

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97 protection, and (3) if so, would new or necessary copyright-related benefits outweigh any such weakening?254 In answering his first ques tion, Breyer asserted the Sony rule works to protect innovators from liability for copyright infringement as they develop valuable new technologies for the market.255 The rule, he said, allows innovators to develop technology with confidence, while having a deterrent effect keeping them from de veloping technology with the dominant purpose to infringe.256 It is also forward-looki ng, allowing for future noninfringi ng uses, and thus intends to keep the judiciary from having to make judgmen t calls on conflicting evid ence where it lacks the technical expertise to do so.257 Breyer answered his second question stating that changing the interpretation of Sony would lead to legal uncertainty surrounding innovation, which would result in a chilling effect on technological innovation.258 Finally, the answer to his third question revealed that a more intrusive Sony test provided greater revenue secu rity for copyright owners, but at the expense of chilling technology.259 In concluding that Sony need not be revised nor interpreted more strictly, Breyer added that such a change would be disrupt ive to all industries involved by changing the rules of the game.260 He encouraged copyright owners to seek alternative tools availa ble to them to fight piracy, including the inducement theory.261 In addition, as the reco rding industry has done increasingly, he noted copyright holders may always go after i ndividual infringers directly.262 254 Id. at 956-57. 255 Id. at 957. 256 Id. 257 Id. at 958 258 Id at 959-60. 259 Id. at 960-61. 260 Id. at 960. 261 Id. at 962-63. 262 Id. at 963.

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98 Furthermore, copyright holders may develop tech nological mechanisms to prevent infringement, as well as continue to de velop technology to make legal copying and downloading cheaper and more efficient.263 Finally, as the Sony Court articulated, Congress always has to power to reassess the status of its laws, and are much bette r situated than the Courts are at dealing with balancing copyright with technological changes.264 PostGrokster develop ments While the general holding of Grokster was clearthat a distributor of a device who actively induces infringement is liable for the infringements of its usersthe continuing status of the Sony doctrine and what exactly constituted a substantial noninfringing use remained in limbo. Upon remand, the Central District of California found Streamcast liable under the inducement doctrine as set forth by the Suprem e Court (finding the S upreme Courts opinion unfavorable, Grokster settled its case and was dropped from the suit).265 A few courts have begun to deal with some of the unanswered questions raised by the Grokster Court. For example, a copyright owner of pictures of nude women sued Google in part for displaying the images in its search windows on the secondary liability theories of inducement and Sonys substantial noninfri nging use standard.266 The Ninth Circuit adopted and applied both the Grokster inducement standard, as well as Justice Ginsburgs stricter Sony test.267 However, it rejected plaintiffs Sony argument because plaintiffs cl aimed infringement was not based upon the design of Googles search engine.268 In resolving the inducement issue, the court looked for actions that intenti onally encouraged direct infrin gement, including knowing actions 263 Id. at 963-64. 264 Id. at 965. 265 MGM Studios, Inc. v. Grokster, Ltd. 454 F. Supp 2d 966, 998 (C.D. Cal. 2006). 266 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1169-74 (9th Cir. 2007). 267 Id. at 1169. 268 Id.

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99 that are substantially certain to result in direct infringement.269 The court applied the Grokster inducement test to Ninth Circuit precedents, crea ting a new rule that resulted in contributory liability for a computer system operator such as Google where there is (1 ) actual knowledge that specific infringing material is avai lable using the system, and (2) failure to take simple measures to prevent further damage to copyrighted works.270 However, the court remanded the matter for further factual development. The remaining questions surrounding the wake of Grokster and the continuing effect of Sony will be addressed further in Chapter 4. Ques tions also remain over the breadth at which vicarious liability will be imposed in the future due to Groksters minimal application of the doctrine.271 In addition, the following lines of cases addressed next in Section III regarding linking and in Section IV regardi ng the application of the DMCA safe harbor will continue to have a substantial impact while courts attemp t to sort out the current status of secondary copyright law. Linking Law As introduced in Chapter 1, linking is the central function of the Internet, allowing users to navigate through websites and jum p to informa tion from one webpage to another. Thus, the general principle is that linking alone does not c onstitute copyright infringement in order to not hinder the basic method of navigation on the Internet.272 In terms of copyright infringement, 269 Id. at 1170. 270 Id. at 1171 (citing A&M v. Napster 239 F.3d 1004, 1022 (9th Cir. 2001) and Religious Tech. Center v. Netcom On-Line Communicaiton Servs., Inc. 907 F.Supp 1361, 1375 (N.D. Cal 1995)). The court was mindful of Groksters reminder that failure to take preventative measures alone was insufficient to impose liability. Id at 1169. 271 See MGM Studios v. Grokster 545 U.S. 913, 931(2005). 272 See Batesville Services, Inc. v. Funeral Depot, Inc., 2004 WL 2750253, *11 (S.D. Ind. 2004)([H]yperlinks are essential to the operation of the Internet for a host of legitimate purposes.); Ticketmaster Corp. v. Tickets.Com, Inc., 54 U.S.P.Q.2d 1344, 1346 (C.D. Cal. 2000)( hyperlinking does not itself involve a violation of the Copyright Act since no copying is involved.); Bernstein v. J.C. Penney, Inc., 1998 WL 906644, *1(C.D. Cal. 1998)(linking is capable of substantial noninfringing uses. .).

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100 linking defendants have traditionally been search engines such as Google, acting as directories for all of the information contained on the web. However, of primary concern of this study are not search engines, but instead websites devoted to providing users w ith links to infringing copies of copyrighted media su ch as television shows and movi es. For example, the website Southparkzone.com provides users with links to every single episode of the Comedy Central television show South Park.273 While these websites often attemp t to skirt liability in the United States through housing their we bsites on offshore servers, the following case law further articulates the current state of linking law. The most important principle to linking law is that it is based in traditional secondary liability. Thus, all the previous ly mentioned precedents regarding contributory and vicarious liability, from Sony to Grokster similarly apply. There are diffe rent forms of linking that are possible: direct linking, deep lin king, and in-line linking or framing. Direct linking is the simple providing of a URL link which directs a user to th e front of a new webpage. For example, a link directing a user to YouTube.com. Deep linking is similar to direct linking, except that it directs a user to a specific address within a website, not merely the website in general. Finally, in-line linking, also known as framing, places a websites content within a frame on a website, surrounded by content chosen by the linker, which of ten includes advertising. This "creates the appearance that the in-lined graphic is a seamless part" of the linkers webpage.274 Sometimes this is authorized. For example, YouTube.com enables users to embed video clips YouTube into their web pages. While the videos appear to be part of the new website, they in fact reside on YouTubes servers and are simply linked to the website. Many blogs often incorporate videos 273 SouthParkzone.com, http://www.southparkzone.com (last visited Jan. 11, 2008). 274 Kelly v. Arriba Soft Corp., 336 F.3d 811, 816 (9th Cir. 2003).

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101 into their daily postings as well. However, ju st because the framing ma y be authorized by the hosting website, it does not mean that the c ontent shared is obvi ously noninfringing. Linking to Infringing Content One of the earlier linking cases involved a website linking to a copyrighted Morm on Church religious manual, in Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc.275 The arm of the Church of Jesus Chri st of Latter-day Saints that ow ned the copyright ordered Utah Lighthouse Ministry (ULM) to take down a copy of the manual from its website.276 ULM took the infringing copy down, but replaced it with thr ee links to other websites that hosted copies of the manual.277 Intellectual Reserve sued ULM seeking an injunction to limit the linking to other copies of the work.278 The U.S. District Court for the Dist rict of Utah granted the injunction and ordered the links removed from the website.279 Since the allegation of secondary infringeme nt requires proving direct infringement by another, the court assumed that at trial Intellec tual Reserve could prove the three linked copies directly infringed their copyright.280 ULM did not control the li nked websites, thus, the court found that it could not be held liable fo r the other websites direct infringement.281 However, the court next asked whether ULM coul d be contributorily liable for th e actions of those who browse any of the three infringing websites via the links from ULMs webpage.282 The court assumed the probability that some users were directed to the infri nging websites through the links 275 Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc ., 75 F. Supp 2d 1290 (D. Utah 1999). See also Carl S. Kaplan, Copyright Decision Threatens Freedom to Link, N.Y. TIMES, Dec. 10, 1999, available at http://www.nytimes.com/library/tech/ 99/12/cyber/cyberlaw/10law.html (last visited Jan. 13, 2008). 276 Intellectual Reserve, 75 F. Supp 2d at 1292. 277 Id. 278 Id. at 1291. 279 Id. at 1295. 280 Id. at 1293. 281 Id 282 Id. at 1293-94.

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102 provided by ULM.283 It held that ULMs posting of th e links on its webpage next to a line stating Church Handbook of Instruc tions is back online! actively encouraged and induced the infringement of Intellectual Reserves copyright and thus found the probability of contributory infringement.284 As a result, the court issued a tem porary injunction, the links were taken down, and ULM eventually settled with Intellectual Reserve.285 Two similar cases to Intellectual Reserve in the U.S. District Cour t for the Central District of California yielded more favorable outcomes for linkers. In Ticketmaster v. Tickets.com Ticketmaster alleged that Ticket s.com gathered information about ticket prices from its website and provided users with deep links to pages to buy tickets on Ticketma sters website, bypassing much of Ticketmasters a dvertising in the process.286 The court held that such linking was not infringement, likening the process to using a library catalog to lo cate a book, simply in a faster and more efficient manner.287 In a brief opinion, the court sim ilarly held in favor of free linking in Bernstein v. J.C. Penney, Inc. where J.C. Penneys website pr omoting Elizabeth Arden linked to a website operated by third party Internet Movie Database containing alleged infringing images of Arden spokeswoman Elizabeth Taylor.288 The court upheld the principle that multiple linking without substantial participation in the infringement would not constitute contributory infringement.289 283 Id. at 1294. This assumption would normally have been required to be proven at trial, however, the case settled before trial. See Utah Lighthouse Ministry, Final Settlement http://www.utlm.org/newsletters/no96.htm#Final%20Settlement (last visited Jan. 15, 2008). 284 Intellectual Reserve 75 F. Supp 2d at 1294-95. 285 See Utah Lighthouse Ministry, Final Settlement, http://www.utlm.org/newsletters/no96.htm#Final%20Settlement (last visited Jan. 15, 2008). 286 Ticketmaster, Corp. v. Tickets.com, Inc., 2000 WL 525390, *2 (C.D. Cal. 2000). 287Id. The controversy reemerged in 2003, and the court similarly found in favor of Tickets.com. See Ticketmaster, Corp. v. Tickets.com, Inc., 2003 WL 21406289 (C.D. Cal. 2003). 288 Bernstein v. J.C. Penney, Inc., 50 USPQ2d 1063 (C.D. Cal. 1998). 289 Id.

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103 More recently, the U.S. District Court for the Southern District of Indiana found copyright infringement for linking content placed on a third partys website by the defendant.290 In Batesville Services, Inc. v. Funeral Depot, Inc. funeral casket dealer Funeral Depot sold Batesville caskets and placed photographs of Batesville caskets on its website.291 Batesville ordered Funeral Depot to take the images down as it was not an authorized Batesville dealer.292 Funeral Depot complied by taking down the imag es and simply placing them on other websites within its control and linking to them.293 Funeral Depot also made a deal with an authorized third party dealer, Veterans Society, to place the images on its website and link to it.294 At issue were the images placed on the Vete rans Society webpage under the direction and control of Funeral Depot.295 The court distinguished the facts from similar cases which allowed for linking, saying that it was not an instance where Funeral Depot merely found some useful material elsewhere on the Inte rnet and encouraged its shoppe rs to link to those sites.296 The court denied Funeral Depots motion to dismiss due to the high probability that a jury could find contributory infringement for its involvemen t in displaying the images on the linked web pages.297 Linking and Thumbnail Images A line of cases addresses the sp ecific issue of linking sm all images of copyrighted works known as thumbnails. These cases contain the most recent and thorough analysis of Internet linking and thus necessitate a clos er evaluation. Both cases come from the Ninth Circuit, and 290 Batesville Services, Inc. v. Funeral Depot, Inc., 2004 WL 2750253 at *12 (S.D. Ind. Nov. 10, 2004). 291 Id. at *1. 292 Id. at *1-*2. 293 Id. 294 Id at *2. 295 Id. at *12. 296 Id. 297 Id.

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104 add to prove the general rule that all links are not bad. In 2003, the Ninth Circuit decided Kelly v. Arriba Soft finding that the use of thumbnails by a search engine was not copyright infringement but instead fell within the confin es of fair use (furth er explained below).298 In 2007, the Ninth circuit held that similar use of th umbnails on Googles image search engine were not infringing in Perfect 10 v. Amazon.com .299 In Kelly Arriba operated a search engine that enabled users to perform searches of images.300 The search engine was fed by a web crawle r that automatically searched for images and indexed them.301 The crawler copied the full size images to Arribas server and made a thumbnail of each image.302 Arriba displayed search results in the form of small thumbnails of full-size images located on other websites.303 Kelly, a professional photographer and copyright owner of 35 images featured on Arribas site, ob jected to the thumbnail image display by Arriba and alleged copyright infringement.304 The trial court found the search engine thumbnails to be a fair use, due to their transformative nature a nd failure to harm the market for the images.305 The Ninth Circuit affirmed this portion of the trial co urts decision, saying that and generally cleared the way for linking by search engines. On similar facts, the Ninth Circuit revisited the issue in 2007 when Perfect 10, publisher of photos of nude models, sued Google, alleging infringement by Googles thumbnail indexing image search engine.306 Similar to Kelly Google stored small, low-resolution thumbnails of 298 Kelly v. Arriba Soft Corp., 336 F.3d 811, 816 (9th Cir. 2003). 299 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007). 300 Kelly 336 F.3d at 815-17. 301 Id. 302 Id. at 815. 303 Id. 304 Id. 305 Id. at 816-17. 306 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1156-57 (9th Cir. 2007).

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105 Perfect 10s images on its servers.307 However, unlike Kelly when a user clicked on a thumbnail, Google merely sent HTML instructions to the users browser to access the third partys website, download the full image, and ma kes it appear at botto m of Googles search page.308 In doing so, Google did not download any images to its servers, it merely sent instructions to the users browser of how to do so.309 The court characterized this as both in-line linking and framing.310 The process of Google directing the users browser to seek and download the image from the third partys website was in-line linking.311 Then the court stated that the placing of the content within a frame at the bottom of Googles search page constituted framing.312 The District Court temporaril y enjoined Google from crea ting thumbnails of Perfect 10 images, finding direct infri ngement, but let stand Googles framing of full-size versions.313 It also found no secondary liability by Google.314 The Ninth Circuit agreed with the District Courts finding that Google was not secondarily liable.315 In determining the issue of direct infringement for displaying thumbnails, the Ninth Circ uit first applied the server test, to decide whether actual copies were made on Google servers.316 The server tests simply asks whether or not copies are made on the alleged infringers server, and if so, then prima facie copying is found.317 The court found that Googles thumbnails did not pass the server test, and were thus 307 Id. at 1155-56. 308 Id. 309 Id. 310 Id. 311 Id. (citing Kelly v. Arriba Soft Corp ., 336 F.3d 811, 816 (9th Cir. 2003). 312 Id. (citing Perfect 10 v. Google, Inc ., 416 F. Supp 2d 828 (C.D. Cal. 2006). 313 Id. at *1. 314 Id. at *15. 315 Id. at *15. 316 Id at *6. 317 Id.

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106 infringing.318 However, it found the thumbnails to be a fair use due to their transformative nature, lower quality, and usefulness to the public as an Internet index.319 As for the full-size images made at the direction of code sent by Go ogle to the users browser, the court found they were noninfringing under the server test.320 Linking to Illegal Material (DeCSS) Another portion of the case law dealing with Internet linking to copyr ighted m aterial has nothing to do with actual copyrighted material at all. Part of the Digital Millennium Copyright Act (DMCA), known as anti-circumvention, make s it illegal to circumvent technological mechanisms that control acce ss to a copyrighted work.321 It also prohibits the trafficking of programs and methods which make the circumvention possible.322 Courts have dealt with the specific problem of providing li nks to copies of a computer program used to unlock the encryption of DVDs.323 The prime example comes from the Second Circuit in 2001 in Universal City Studios v. Corley.324 Whether linking itself could be seen as a form of anticircumvention will be addressed in Chapter 5. DVDs are typically encrypted with an anti-circumvention device calle d Content Scramble System, or CSS.325 Decryption software, appropriately ca lled DeCSS, was developed to remove CSS from DVDs in order to make di gital copies of the DVDs contents.326 In 1999, the 318 Id. at *6. 319 Id. at *15. 320 Id. at *8-*9. 321 17 U.S.C. 1201(a). 322 17 U.S.C. 1201(b). 323 See Universal City Studios, Inc. v. Reimerdes 82 F. Supp 2d 211, 325 (S.D.N.Y. 2000) affd by Universal City Studios v. Corley, 273 F.3d 429 (2d Cir. 2001); but see DVD Copy Control Assoc. v. McLaughlin 2000 WL 48512 (Ca. Super. Ct. Jan. 21, 2000)(websites were not prevented from linking to other sites that contain DeCSS, linking is the lifeblood of the Internet) 324 Universal City Studios, Inc. v. Corley 273 F.3d 429 (2d Cir. 2001). 325 Corley 273 F.3d at 436-37. 326 Id at 437-38.

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107 publisher of Hacker Quarterly Eric Corley, placed an article about DeCSS on his website and included links to other website s where the program could be downloaded at the end of the article.327 Members of the motion picture industry sued Corley and others for failing to remove DeCSS links or files.328 The U.S. District Court for the Southern District of New York was particularly interested in th e hyperlinking to DeCSS copies, and found in favor of the motion picture industry plaintiffs, i ssuing an injunction from linki ng to copies of the program.329 The Second Circuit affirmed the ruling, focusing heavily on the First Amendment implications of prohibiting hyperlinking,330 as few courts have addr essed linking issues from a First Amendment perspective. The court adopted near ly all of the reasoning of the district court, recognizing that linking involved both a speech and non-speech elem ent: [i]t conveys information, the Internet address of the linked we b page, and has the functional capacity to bring the content of the linked web page to the users computer screen.331 The court also noted that limitation of linking to DeCSS was a content neutra l regulation of speech b ecause it is justified without regard to the speech component of the hyperlink.332 In other words, regardless of what the link says, the physical performance of the lin ktaking a user to ille gal contentwould be enough to justify the prohibition.333 The court then applied contentneutral jurispruden ce to the linking prohibition, finding that it served a substantial government al interest unrelated to the suppression of free expression.334 327 Id. at 439. 328 Id. at 440 n.8. 329 Universal City Studios, Inc. v. Reimerdes, 111 F. Supp 2d 294, 341 (S.D.N.Y. 2000). 330 Corley 273 F.3d at 455-58. 331 Id. at 456. 332 Id. 333 See id. 334 Id. (citing to United States v. O'Brien 391 U.S. 367 (1968)(When speech