Ever find yourself in a situation where a hot court decision drops but you have precious little time for a proper analysis? That was exactly the case this week, when your steadfast FMC’ers found ourselves with an appeals ruling in Viacom’s high-profile case against YouTube. The decision just dropped yesterday, but dammit, we like to be first in analysis! (OK, maybe second; Public Knowledge is pretty quick on the draw.)

The following is the gist of the case and the April 5, 2012 decision by the 2nd Circuit Court of appeals.

Background

In its suit against YouTube, Viacom sought to diminish or even eliminate YouTube’s protection against liability for its users’ actions. It may seem absurd that the bulk of what was being argued centered around videos posted in the site’s pre-Google infancy, but such is the nature of copyright litigation and technology. Today, many of the companies that once viewed YouTube with fear and loathing are now using it as a key platform. But the law is a slow-moving thing.

By and large, this decision is good news for YouTube and the internet in general. Although the court did not broadly repudiate every one of Viacom’s arguments, it did largely uphold YouTube’s qualification for the so-called ‘safe harbors” in the Digital Millenium Copyright Act (DMCA). These safe harbors are what let user-generated services and social networks exist, by giving their operators a shield against liability for material posted by their users (provided the site or service fulfills a few legally-mandated requirements).

The upshot of Thursday’s decision is that YouTube will keep on showcasing those delightful cat videos. There are, however, a few nagging issues that promise to drag the case out further: the Circuit court “remanded” (which is to say sent back to the lower courts) a handful of matters for further factual determination. Good news for the lawyers, at least.

This verdict is important because had it gone in another direction, there would undoubtedly have been a chilling effect on innovation and expression. At the heart of the matter was section 512 of the DMCA — the part of the statute that outlines what steps a site or service must take to qualify for safe harbors. In the absence of such protections, we might not have a Facebook, a Twitter, an Etsy, an eBay and so forth. It’s safe to say that musicians and other small businesses use these sites and services in every aspect of their lives and careers. And it’s not just about today’s platforms, but those still on the horizon. Leaving room for continued innovation is crucial to tomorrow’s creative expression and business models. Even though there are still lingering questions regarding YouTube’s liability from its first year or so as a platform, the Circuit Court’s ruling should be seen as a strong affirmation of the safe harbor provisions of the DMCA.

What the Court Said

The court soundly trashed Viacom’s assertion that YouTube was ineligible for a safe harbor based on the idea that it had “generalized knowledge” of infringing material on its platform. Much like the lower court, the Circuit upheld the interpretation that “specific knowledge” is needed to lose safe harbor protections. (But even still, if the site or service “expeditiously” removes the material, they would potentially qualify.) The court’s reaffirmation of the knowledge requirement, absent the directive to actively monitor, is fundamental to every user-generated operation in existence.

Here’s a trickier concept that the court tackled: the “right and ability to control” content. Essentially, this means that the site or service has the technical ability to remove infringing material. Taken to the extreme, this could be construed as a “duty to monitor” a network for infringement. But that seems a bit silly, as sites are already bound to observe a “notice-and-takedown” protocol, whereby the rightsholder informs the site or service of specific instances of infringement and said site or service removes or disables acess to that material. The court found no extra burden to place on the service, since the “right and ability to control” is inherent in a site’s ability to comply with notice and takedown. Another brush-off of a persistent Viacom argument.

Sometimes copyright owners attempt to assert their exclusive right to create or allow “derivatives” of their works in a way that goes beyond common sense. Take, for example, Viacom’s idea that safe harbors are only for storage space, and that any act of formatting (for efficiency or display) would take a service out of its safe harbor. In YouTube’s case, this means simply converting video codecs and what-have-you. The court found this argument not in the least bit compelling.

What remains unresolved

We don’t have the space to describe certain legal presumptions in great detail. So we’ll just quickly mention that the court found that  “willful blindness” — which has underpinnings outside of the DMCA — could apply to section 512, provided that it was pegged to “specific instances of infringement.” So, even though it seems like the court introduced a potential new trigger for liability, it set a fairly high bar (and we presume that notice-and-takedown is already in effect). Importantly, this should not be read as an obligation to monitor, as the court said the doctrine applies only to specific instances of infringement.

Ultimately, the ruling is more of a victory for the safe harbor provisions of the Digital Millennium Copyright Act than it is a clear-cut win for YouTube. In remanding certain fact-finding back to the lower court, the Circuit chastised the previous ruling as premature, and even suggested that a jury could reasonably find that early YouTube employees had sufficient knowledge of actual incidents of infringement to disqualify them for the safe harbor. We’ll have to see how all that plays out. But for now, the internet — and all of the innovations made possible by this crucial part of the law — can breathe easy.