contributory liability – Attorney Evan Brown

October 25, 2023 Copyright, DMCA

No knowledge of infringement, no secondary copyright liability for YouTube

This case underscores that platforms like YouTube, when promptly addressing DMCA takedown notices, are not necessarily held liable for user-uploaded content that infringes copyright.

Plaintiff sued defendant YouTube accusing it of secondary copyright infringement liability — that YouTube was contributorily and vicariously liable for infringement concerning three videos that nonparty TV-Novosti (operator of various RT channels, including RT Arabic) posted on YouTube. These videos contained content from documentary videos plaintiff had created and for which it owned the copyright.

Defendant moved to dismiss the complaint. The lower court granted the motion to dismiss. Plaintiff filed a motion for leave to file an amended complaint, which the court denied. That court had determined that the proposed amendments would be futile. Plaintiff sought review with the Second Circuit, arguing it had sufficiently alleged YouTube’s liability under theories of contributory and vicarious liability. On appeal, the court affirmed the denial of the motion to amend.

The court rejected plaintiff’s argument that YouTube was liable for infringement by failing to delete TV-Novosti’s entire YouTube account. Plaintiff’s argument apparently went something like this: “We made YouTube aware of the infringement by sending a DMCA takedown notice. Though YouTube took down the videos (which it did not catch in its copyright-detection technology) once it found out about them, by continuing to provide the platform for this infringer, YouTube took on liability for the infringement.”

The court held that it agreed with the lower court’s denial of the motion for leave to amend. “[B]ecause YouTube promptly and permanently removed the [allegedly infringing videos] from its platform once it received the plaintiff’s DMCA notices, the Amended Complaint does not permit an inference that YouTube acted in concert with TV-Novosti.”

Business Casual Holdings, LLC v. YouTube, LLC, 2023 WL 6842449 (2d Cir., October 17, 2023)

September 15, 2016 Copyright

Website operator faces copyright liability over use of allegedly infringing third party add-on

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The recent case of Live Face on Web, LLC v. Biblio Holdings LLC illustrates some important risks of which any purchaser of third-party technology services or deliverables should be aware. The defendant in this case faces potential copyright liability (and the expenses associated with defending such claims) arising from technology that a third party vendor provided for defendant to enhance defendants’ website.

Plaintiff’s software

Plaintiff developed software that allows website operators to display video of a personal “host” to welcome online visitors to the website. A website operator implements plaintiff’s software by embedding an HTML script tag in the code of its website. The added code links the website to a copy of plaintiff’s software stored on the same server as the customer’s website or on a different server. When a user points his or her browser to the web page, the embedded HTML script tag causes the distribution of plaintiff’s software, which in turn causes the personal host video to be displayed. The browser saves plaintiff’s software into cache or hard drive or both, and automatically loads the software into RAM.

Defendants’ alleged infringement

Defendants allegedly used an infringing version of plaintiff’s software to display a spokesperson video on its website. Specifically, defendants claim that they contracted with a third party vendor that processed video that defendants provided, then sent defendants HTML code which defendants implemented into their site. When a user visited defendants’ website, his or her browser would call on the allegedly infringing code, which was stored on the third party vendor’s server. This caused a copy of the allegedly infringing software to be stored on the visitor’s computer in cache, memory, or its hard drive.

The proceedings

Plaintiff filed suit for copyright infringement in the U.S. District Court for the Southern District of New York. Defendants moved to dismiss for failure to state a claim upon which relief may be granted. The court denied most of the motion to dismiss, leaving the majority of copyright-related claims remaining in the case. It granted the motion to dismiss on the question of contributory liability.

Direct copyright infringement

Defendants raised several arguments as to why they should not be liable for direct copyright infringement . Although the court rejected each of these arguments, it observed that defendants’ most promising argument was that any infringement was actually done by the third party vendor that provided the technology to defendants. In this part of its opinion, the court considered the holdings of Perfect 10 v. Amazon, 508 F.3d 1146 (9th Cir. 2007) and other cases that involved in-line linking. The court observed that the reasoning of these cases appeared to limit plaintiff’s ability to hold defendants liable for direct infringement of plaintiffs distribution right. Nonetheless, the record did not have enough information for the court to definitively make a determination at this early stage. Accordingly, the court decided to permit discovery on the relationship between the third-party technology vendor and he allegedly infringing software.

The court also rejected defendants’ other arguments against liability for direct infringement. It found unpersuasive defendants’ arguments that the software was never downloaded. On this point, the court found that the complaint had sufficiently alleged that the infringing software was automatically saved into the cache or hard drives and automatically loaded into computer memory or RAM of visitors to defendants’ website. The court also rejected defendants’ arguments that the DMCA Safe Harbors protected them from liability, that any copying was only de minimis, and that previous lawsuits against the third-party technology provider should relieve defendants from liability.

Contributory infringement

On the question of contributory liability, the court granted defendants’ motion to dismiss. To bring a claim for contributory infringement, a plaintiff must allege both that its copyrighted work was directly infringed and that the defendant, with knowledge of the infringing activity, induced, caused, or materially contributed to the infringing conduct of another. The court found that plaintiffs had alleged only a bare legal conclusion that defendants knew or had reason to know they were using an infringing version of the software. Without strong enough allegations on the knowledge element of contributory infringement, this claim failed.

Vicarious infringement

Vicarious liability for copyright infringement may be imposed where a defendant profits directly from the infringement and has a right and ability to supervise the direct infringer, even if the defendant initially lacks knowledge of the infringement. The court denied the motion to dismiss on this point, as plaintiff plausibly alleged that defendants controlled the allegedly unlawful distribution of copies of plaintiff’s software to its website visitors. The court drew inferences in plaintiff’s favor, noting the allegation that defendants did modify their website to include code linking to the allegedly infringing software. Plaintiffs also successfully alleged that defendants profited from the use of the infringing software in that having the video host captured, held and prolonged the attention of the average online user, and did in fact generate revenues and profits for defendants. On this point, the court look to Arista Records v. MP3Board, 2002 WL 1997918 (S.D.N.Y. August 28,2002), which stands for the proposition that “infringement which increases a defendant’s user base or otherwise acts as a draw for customers constitutes a direct financial interest.”

Implications

In the course of negotiating technology development and service agreements, a customer should seek to get assurances from its vendor that any technology being provided will not infringe third party intellectual property rights. It is critically important to, were possible, have the vendor warrant and represent that the deliverables are non-infringing. It is equally important, still from the customer’s perspective, to have the vendor obligate itself to indemnify the customer in the event there are third party claims of intellectual property infringement. Although from this opinion we do not see all the facts, it appears this could be a situation where the defendant/customer is being taken to task and having to incur needless expense for the use of infringing software provided by its vendor. If that is the case, it is an unfortunate situation, one which a prudent customer of technology services would be well advised to seek to avoid.

Live Face on Web, LLC v. Biblio Holdings LLC, 2016 WL 4766344 (S.D.N.Y., September 13, 2016)

Photo courtesy of Flickr user J E Theriot under this Creative Commons license.

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

November 9, 2015 Copyright

Digital locker service not liable for copyright infringement based on user download of unlicensed ebook

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A boon for cloud service providers: Court decision protects locker service from infringement over user’s storage and downloading of unlicensed copy of ebook.

Plaintiff-author granted a license to defendant-digital locker service, authorizing users of defendant’s services to store and download sample copies of plaintiff’s ebook. Plaintiff later terminated the license. On two separate occasions, one of defendant’s customers — who had acquired a sample copy of the ebook during the license period — downloaded her sample copy from defendant’s locker storage service and onto her e-reader device. Plaintiff filed suit, claiming these post-license termination customer downloads amounted to direct and contributory infringement by the file locker service.

Both parties moved for summary judgment. The court granted defendant’s motion and denied plaintiff’s motion.

As to the question of direct infringement, the court relied heavily on Cartoon Network v. CSC Holdings, 536 F.3d 121 (2nd Cir. 2008) to hold that a lack of evidence of defendant’s “volitional conduct” in distributing and reproducing the downloaded copies precluded a claim for direct infringement. Quoting from Capitol Records v. ReDigi, 934 F.Supp.2d 640 (S.D.N.Y. 2013), the court found that defendant “did not have a ‘fundamental and deliberate role,” such that it was transformed ‘from a passive provider of a space in which infringing activities happened to occur to an active participant in the process of copyright infringement.’”

Plaintiff’s contributory infringement claim failed under the “substantial noninfringing uses” test (the “Sony-Betamax Rule”) set out in Sony v. Universal, 464 U.S. 417 (1984). The court held that defendant could not be held liable for contributory infringement because its digital locker systems was capable of substantial non-infringing uses, and indeed was used for commercially significant noninfringing uses.

Smith v. BarnesandNoble.com, No. 2015 WL 6681145 (S.D.N.Y. Nov. 2, 2015)

Evan Brown is a Chicago attorney helping clients in matters dealing with copyright, technology, the internet and new media. Call him at (630) 362-7237, send email to ebrown [at] internetcases dot com, or follow him on Twitter @internetcases

Photo courtesy of Flickr user Alex Thomson under this Creative Commons license.

January 31, 2014 Copyright

No copyright liability against founder of competing company for overseeing development of infringing website

After defendant left plaintiff’s employment to co-found a competing company, plaintiff sued defendant personally for copyright infringement based on the new company’s website’s resemblance to plaintiff’s website. The infringement theory was interesting – plaintiff alleged that defendant did not commit the infringement himself, but that he was secondarily liable for playing a significant role in the direct infringement by the new company’s employees.

Defendant moved to dismiss the copyright infringement claim. The court granted the motion.

There are two types of secondary copyright infringement liability: contributory liability and vicarious liability. A defendant is a contributory infringer if it (1) has knowledge of a third party’s infringing activity, and (2) induces, causes, or materially contributes to the infringing conduct. See Perfect 10, Inc. v. Visa Int’l Service Ass’n, 494 F.3d 788, 795 (9th Cir.2007) (quoting Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir.2004)). In the context of copyright law, vicarious liability extends beyond an employer/employee relationship to cases in which a defendant has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities. A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir.2011) (quoting Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 262 (9th Cir.1996)).

In this case, the court held that plaintiff had not alleged enough detail to state a claim of secondary liability against defendant. Instead, the complaint simply recited the elements of contributory and vicarious liability. Specifically, plaintiffs failed to allege:

That defendant was uniquely in possession of the original material on plaintiff’s website, but rather plaintiffs alleged that the material was publically available on the website for anyone to read and copy.
How defendant, as a non-employee (but founder) of the new company, was personally responsible for the content of the new company’s website. (Interestingly, the court held it was not sufficient to allege that defendant was a founder of the new company. Although plaintiffs alleged some factual details about what was actually copied from plaintiff’s website, they alleged no factual details as to defendant’s personal involvement in the infringement.)
Facts that suggested that defendant induced the new company to infringe plaintiff’s website.
Facts that suggested that defendant had the right to control and supervise the new company’s employees who were involved in the alleged infringement.

Plaintiff’s attempts to impose secondary liability were (if they had worked) a clever method for accomplishing the same objective as piercing the corporate veil. Granular control by the individual founder could be equated with the “alter ego” aspect of the veil-piercing analysis. The absence of such specific control by the individual defendant, however, left the possibility of liability only with the company.

BioD, LLC v. Amnio Technology, LLC, 2014 WL 268644 (D.Ariz. January 24, 2014)

Court rules against Ripoff Report in copyright case

Xcentric Ventures, LLC v. Mediolex Ltd., 2012 WL 5269403 (D.Ariz. October 24, 2012)

Plaintiff Xcentric Ventures provides the infamous Ripoff Report, a website where consumers can go to ~~defame~~ complain about businesses they have dealt with. Defendant ComplaintsBoard.com is a similar kind of website.

Ripoff Report’s Terms of Service provide that users grant Ripoff Report an exclusive license in the content they post to the site. Based on this right, Xcentric sued various defendants associated with ComplaintsBoard for “encourag[ing] and permit[ing] consumers to post content that has been exclusively licensed to Xcentric.”

Defendants moved to dismiss the copyright infringement claim, asserting they were protected by the safe harbor provision of the Digital Millennium Copyright Act (“DMCA”). The court granted the motion to dismiss, but not because of the DMCA.

DMCA Analysis

The safe harbor provision of the DMCA states that a “service provider shall not be liable for monetary relief” if all of the following requirements are met:

(1) it does not have actual knowledge that the material on its network is infringing;

(2) it is not aware of facts or circumstances that would make the infringing activity apparent;and

(3) upon obtaining knowledge or awareness of such infringing activity, it acts expeditiously to remove or disable access to the copyrighted material.

In this case, Xcentric alleged that defendants actively “encouraged and permitted” copyright infringement by ComplaintsBoard users. The court held that this allegation, if taken as true, could be sufficient to preclude defendants from taking advantage of the DMCA’s safe harbor provisions.

But the court went on to hold that Xcentric had failed to state a copyright claim on which relief may be granted.

Secondary Liability Insufficiently Pled

Xcentric did not allege that defendants directly infringed copyright. Instead, it alleged that by encouraging and permitting users to copy and republish material, ComplaintsBoard was engaged in secondary infringement — either vicarious or contributory infringement.

To state a claim for contributory copyright infringement, Xcentric had to plead that ComplaintsBoard had knowledge of the infringing activity and induced, caused, or materially contributed to the infringing conduct of its users. The court found that Xcentric had not alleged any facts that would lead to a reasonable inference that defendants knew of their users’ republishing Xcentric’s copyrighted content or that defendants had induced, caused, or materially contributed to such republication.

To successfully plead vicarious infringement, Xcentric had to show that defendants had the right and ability to supervise the infringing activity and also had a direct financial interest in those activities. The court found that Xcentric had not put forward enought facts to show that defendants had the right and ability to supervise the infringing activity.