Even though we are nearing two decades since the passage of the Digital Millennium Copyright Act (the “DMCA”), litigation over the interpretation of the DMCA continues to push the envelope of copyright law. In possibly one of the most important decisions interpreting the DMCA, the Ninth Circuit Court of Appeals in Lenz v. Universal Music Corp., Slip. No. 13-16106 (9th Cir. Sept. 14, 2015), held that copyright owners must consider fair use when issuing takedown notifications under Title II of the DMCA.[1] In this case, Universal (acting as the rights manager for the famed musician and notorious litigant Prince) issued a takedown notice concerning a 29-second home video posted by Stephanie Lenz of her two young children dancing. Playing in the background was Prince’s song “Let’s Go Crazy.” Complying with the requirements of the DMCA, Lenz sent a counter-notification to Universal, requiring YouTube to reinstate the video. YouTube subsequently reinstated the video, and Lenz brought suit against Universal for misrepresentation under the DMCA under 17 U.S.C. § 512(f). The parties filed cross motions for summary judgment, the District Court denied both motions, both parties appealed, and the District Court granted the parties permission to bring an interlocutory appeal to the Ninth Circuit. There were three primary issues in this case: 1) whether fair use must be considered by copyright owners when issuing takedown requests under the DMCA, 2) what standard should apply when bringing claims under § 512(f) for misrepresentation, and 3) what damages are appropriate to misrepresentation claims, and must the claimant show monetary harm.

Must copyright owners consider fair use when issuing takedown notices?

The Ninth Circuit Court held that parties issuing takedown notices must consider as an initial matter whether the potentially infringing material is a fair use of a copyright. The Court arrived at this conclusion by way of traditional canons of statutory interpretation as to the meaning of “is not authorized by the copyright owner, its agent, or the law.” 17 U.S.C. § 512(c)(3)(A). Universal argued that “authorized by” did not include the fair use doctrine, codified at 17 U.S.C. § 107, since fair use is an affirmative defense to infringement. The Ninth Circuit disagreed, holding that fair use of a copyrighted work is protected because the use is non-infringing, not because the user is entitled to an affirmative defense, regardless of the fact that it is procedurally raised as an affirmative defense. By this logic, the Court further held that the text of the DMCA, “authorized…by law,” necessarily includes fair use, and that therefore copyright owners must consider fair use when issuing takedown notices.

What standard applies to misrepresentation claims under Section 512(f)?

Second, the Court decided in favor of Universal as to the standard by which claims under § 512(f) for misrepresentation under the DMCA should be judged. After discussion of various theories of liability, the Court held that the copyright owner must have a “good faith” belief that the content is not fair use, and that a court looking at such belief must apply a subjective standard. The Court was cognizant of the torrent of infringing content that appears daily on the internet in making this determination and explained that the copyright holder’s consideration of fair use “need not be searching or intensive,” and that a good faith belief does not require “investigation of the allegedly infringing content.” By the Court’s logic, this lowered subjective standard will enable copyright owners to continue to combat infringing content. As to what might meet this good faith standard, the Court noted one of the most common current solutions – algorithmic processing and analysis. In dicta, the Court said that computer systems that flag or identify videos that may be infringing and then send flagged videos to humans to make a brief fair use assessment would likely meet a good faith standard. This is akin to what major platforms such as YouTube already engage in, so compliance with this holding may only require small modifications on the part of copyright owners. The Court went on to hold that a copyright owner who was “willfully blind” as to the fair use doctrine will have violated the DMCA. The Court adopted the willful blindness test set forth in Global-Tech Appliances, Inc. v. SEB S.A.[2], holding that a plaintiff must establish that the copyright owner 1) subjectively believed there was a high probability that the video constituted fair use and 2) took deliberate actions to avoid learning of this fair use. Lenz did not meet the first prong of this standard, since she did not proffer any evidence to suggest that Universal believed the video constituted fair use.

What damages are available under Section 512(f)?

Finally, the Court clarified what damages are available to successful plaintiffs under 512(f). Analogizing the DMCA to a statutorily-created intentional tort, the Court held that nominal damages will always be available to the prevailing party in these cases. The statute additionally specifies that “costs and attorneys’ fees” may also be recovered by prevailing alleged infringers.

Conclusion

This case raises interesting questions for copyright holders and users. Although the Court provided some explanation as to what might constitute sufficient analysis of content for fair use purposes, ambiguity remains. An owner cannot be “willfully blind” to the possibility of fair use, and must engage in some assessment. How a user can prove whether the owner was mindful of fair use and made a required assessment is not resolved in the decision. It is relevant that the type of content at issue in this case – music – is easily searched against a database for potential infringing matches, since audio files have distinctive patterns. Other content, such as video, may provide greater technical challenges. Both users and owners should also bear in mind the teaching of the Supreme Court in the Harper & Row v. Nation Enterprises case.[3] In Harper & Row, the memoirs of President Gerald Ford were purloined, and the decision focused on the use of a very brief excerpt of content (1200 words out of a 200,000 word book) in which President Ford described his reasons for pardoning Richard Nixon. The timing of the exploitation (pre-publication of the book) raised another issue that militated against a finding of fair use. Since even a snippet of a work can be an infringing use and not fair use, it behooves all parties – the owner and the user – to make reasoned assessment of the exploited copyrighted material. The more substantial a company, like Universal, the more important it will be to instruct employees charged with making DMCA notification decisions as to what is required to have the requisite “subjective good faith belief” regarding infringements before sending takedown notifications. The Lenz decision requires a reasoned process, and failure to consider fair use entirely will result in many copyright owners facing counter claims for damages and compensating users for their legal fees, a prospect few owners would relish. [1] One justice concurred in the judgment but dissented in part with the majority’s reasoning. [2] 131 S. Ct. 2060, 2070 (2011). [3] Harper & Row, Publishers, Inc. v. Nation Enters., 105 S. Ct. 2218 (1985)