Prof. Randal C. Picker, The University of Chicago Law School
June 24, 2010

Yesterday, a federal district court in New York granted YouTube’s motion for summary judgment in its long-running litigation with Viacom. Viacom and – separately – the English Premier League sued YouTube and Google alleging that they were liable for infringing works that users posted on YouTube.  Google is understandably trumpeting its victory though it of course is subject to appeal to the Second Circuit.

The issue in the case focuses on the scope of the Digital Millennium Copyright Act’s safe harbor for online service providers set forth in Section 512 of the copyright statute.  Section 512 is pretty chunky but most of the court’s analysis focuses on Section 512(c).  That subsection insulates service providers from liability “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 can meet a three-part standard set forth in that subsection.

One part of that standard turns on the knowledge of the service provider of the underlying infringing activity and most of the court’s opinion focuses on how to assess that knowledge.  The district court ultimately rejects the notion of generalized knowledge of infringement and instead focuses on “knowledge of specific and identifiable infringements of particular individual items.”  We could have a lively discussion about the right way to structure knowledge of user infringement and whether the district court reads the statute correctly but I want to direct my attention elsewhere.

Quoting the statute, the legislative history and then the ensuing discussion of knowledge occupies slightly more than the first 22 pages of the 30-page opinion. I want to direct my attention to, as the court puts it “other points” and in particular to the question of exactly what protection emerges from the “storage” language in 512(c).

Consider a hypothetical.  An online service provider offers backup storage for its customers.  Customers copy files to a centralized server to protect against a local hard drive failure.  Some customers upload files that infringe the rights of copyright holders, as might occur, for example, if a customer scanned an entire book so that it could have an electronic copy of the book.  Assume such scanning to be infringing though I do understand that some contend that such full-scale digitization might be fair use under some circumstances.

The service provider notices that through its customers uploads it has amassed a very nice collection of digitized books.  It decides to go into the print-on-demand business: Customers check to see if a copy of the book is stored centrally and if so the service provider print outs a copy on demand and overnights it to the customer.  Are these printed books protected by the storage safe harbor in Section 512(c)?

I assume that the answer to that is no.  The fact that part of your business may be protected by Section 512(c) doesn’t insulate any other aspect of your business from potential charges of copyright infringement.  Indeed, I assume that the YouTube district court agrees with me on this as it is crystal clear in stating that to the extent that YouTube’s activities go beyond the scope of storage and “allied functions” then normal principles of copyright infringement apply and YouTube is outside the safe harbor of Section 512(c).

The district court’s analysis focuses on the definition of service provider and 512(k)(1) and takes a breadth of that definition to indicate that more than storage must be protected in the safe harbor: “Surely the provision of such services, access, and operation of facilities are within the safe harbor when they flow from the material’s placement on the provider’s system or network: it is inconceivable that they are left exposed to be claimed as unprotected infringements.”

It is certainly true that more than storage is protected.  Indeed, 512 actually provides four well-defined safe harbors: for transitory digital network communications in 512(a); for temporary storage or system caching in 512(b); for permanent storage under the control of users in 512(c); and for information location tools under 512(d).  The definition of service provider needs to encompass each of those four situations but that tells us little about what, if any, allied functions beyond those set forth in 512(a)-(d) are protected.

Change my hypothetical slightly.  Switch from books to video and have the service provider offer a video-on-demand business rather than a print-on-demand business.  Should we think that the analysis changes?  We have now reached the nub of the case that the Second Circuit will have to decide, namely whether a website that enables public performance of works uploaded by users is engaging in simple storage or is taking a step beyond that as occurs, I believe, in my print-on-demand hypothetical.

Originally posted here on the Faculty Blog of The University of Chicago
Law School.