Order for Further Briefing in UMG v. Veoh

I have written previously about the UMG v. Veoh and Viacom v. YouTube cases.  Briefly, both cases involve claims by content owners that the operators of user-generated content (UGC) websites such as YouTube and Veoh are liable when their users post allegedly infringing content.  Both YouTube and Veoh convinced trial courts that they are not liable for such postings because they complied with the notice-and-takedown procedure of the Digital Millennium Copyright Act, 17 U.S.C. § 512(c).  The UGC sites claim that upon receipt of proper requests, they promptly took down any infringing content.

Both sets of content owners appealed.  In December 2011, the Ninth Circuit Court of Appeals affirmed the trial court's summary judgment in favor of Veoh.  In April 2012, the Second Circuit Court of Appeals affirmed the trial court's summary judgment in favor of YouTube in part, but remanded the case in part for further fact finding on some issues (and possible further summary judgment briefing).  I discussed both opinions here and here.  In the YouTube case, the Second Circuit agreed with the Ninth Circuit's decision on many issues, but not all of them.

After the December 2011 decision in the Veoh case, the plaintiffs asked the Ninth Circuit to rehear the case.  After reading the April YouTube decision, the Ninth Circuit decided to rethink its Veoh opinion.  In an order last week, the Ninth Circuit asked the parties in Veoh to file additional briefs on the following issues:

     On December 20, 2011, this Court issued its opinion in UMG Recordings v. Veoh Networks, 667 F.3d 1022 (9th Cir. 2011), affirming in part, remanding in part and upholding the District Court’s grant of summary judgment because the defendants were protected by the Digital Millennium Copyright Act (DMCA) safe harbor provisions. The Appellants have filed a petition for rehearing and rehearing en banc, and the Appellees have filed a response.

     The Appellants argue, inter alia, that (1) the panel decision has conflated the 17 U.S.C. § 512(c)(1)(A)(i) actual knowledge standard and the § 512(c)(1)(A)(ii) “red flag” knowledge standard, see PFR/EB 12-15; and (2) by importing a knowledge requirement into § 512(c)(1)(B) (the “right and ability to control” provision), the panel decision has rendered it duplicative of § 512(c)(1)(A), see PFR/EB 15-17.

     After briefing was completed on the pending petition, the Second Circuit issued its opinion in Viacom International v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012). The Second Circuit held, in relevant part, that (1) the § 512(c) safe harbor (including the “red flag” provision) requires knowledge or awareness of specific infringing activity, see id. at 30-35; and (2) the District Court erred by importing a specific knowledge requirement into the § 512(c)(1)(B) “right and ability to control” provision, see id. at 36-38.

     Within 21 days of the date of this order, each party shall file a supplemental brief, not exceeding 3800 words or 15 pages, addressing certain relevant issues pending before this Court in light of the Second Circuit’s opinion in Viacom. Specifically, the parties should address the following questions:

1. Actual and “red flag” knowledge

The Second Circuit held:

The difference between actual and red flag knowledge is . . . between a subjective and an objective standard. In other words, the actual knowledge provision turns on whether the provider actually or “subjectively” knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement “objectively” obvious to a reasonable person. The red flag provision, because it incorporates an objective standard, is not swallowed up by the actual knowledge provision under our construction of the § 512(c) safe harbor. Both provisions do independent work, and both apply only to specific instances of infringement.

Viacom at 31. Does the Second Circuit draw the correct distinction between actual and red flag knowledge? If so, does the distinction affect the disposition of this case?

2. “Right and ability to control”

     Does a service provider have to be aware of the specific infringing material to have the “right and ability to control” the infringing activity? Does importing such a knowledge requirement make it duplicative of § 512(c)(1)(A)? If there is no knowledge requirement, does a copyright holder need to show that a service provider possesses “something more than the ability to remove or block access to materials posted on a service provider’s website” in order to have the right and ability to control infringement? Id. at 38 (citations and internal quotation marks omitted). If so, what must the copyright holder show? Should this Court adopt the Second Circuit’s resolution of these questions? See id.

This briefing will likely result in an amended decision in the Veoh case.  That isn't necessarily bad news: there's a good chance that Veoh still wins depending on how the Ninth Circuit decides these issues.  And if the Ninth Circuit fully agrees with the Second Circuit, that lessens the possibility that the U.S. Supreme Court will decide to hear either case.