Part 3: Companies Are Not Complying With the Safe Harbor Provision of the DMCA

Protection From Additional Liabilities
Once a company is found ineligible for DMCA safe harbor, it is vulnerable to be found liable for copyright infringement claims. Copyright holders may pursue secondary liabilities such as vicarious, contributory or induced infringement.

Secondary liabilities are sought when the user who posted the infringing materials is not available or cannot be found. To find a company vicariously liable, the copyright holder must prove 1) the defendant directly benefited financially from the infringing activity, 2) the defendant had the right and ability to supervise or control the infringing activity and 3) the defendant failed to exercise that right and ability.[i] To find a company contributorily liable, the copyright holder must prove 1) the defendant knew or had reason to know of the infringing activity and 2) the defendant intentionally induced or materially contributed to the user’s infringing behavior.[ii] In Joint Stock Co. “Channel One Russia Worldwide” v. Russian TV Co., the Southern District of New York found that plaintiff Joint Stock Co. satisfied the requirement that the defendant knew or had reason to know of infringing activity when it alleged Russian TV Co. provided unlicensed content at far lower prices to subscribers than it provided authorized content.[iii] Finally, a defendant may be liable for inducement of copyright infringement if it “distributes a device with the object of promoting its use to infringe copyright” and has taken affirmative steps to foster infringement.[iv] Courts evaluate four elements, called the Grokster III test, to determine whether inducement of copyright infringement applies: 1) distribution of a device or product (such as an internet platform), 2) acts of infringement, 3) object promoting use to infringe copyright and 4) causation.[v]

Individual liability is sought when copyright holders want to hold owners or employees of OSPs liable for the infringement. The Eleventh Circuit defines a liable individual as “a corporate officer who directs, controls, ratifies, [or] participates in … the infringing activity.”[vi] In Babbit Elecs., Inc. v. Dynascan Corp the Eleventh Circuit held the corporate officers jointly and personally liable for their participation in the corporation’s counterfeiting activities. Holding liable owners or employees who permit infringement or directly infringe on the copyright themselves effectively removes the corporate veil that usually protects individuals from personal affiliation with their legal entities.

An OSP that is found liable for copyright infringement in any manner will be penalized. Continue Reading

Part 2: Companies Are Not Complying With the Safe Harbor Provision of the DMCA

Compliance With Notice and Takedown Provisions of the DMCA
In 17 U.S.C. § 512, subsections (c) and (d), special notice and takedown provisions are outlined for OSPs that host copyrighted materials on their platform or contain links to copyrighted material on their platforms, respectively. If these particular OSPs comply with the notice and takedown provisions, then copyright holders’ claims will likely fail. The provisions include 1) not benefiting financially from the alleged infringement, 2) not having actual or red flag knowledge of infringements, 3) quickly removing known infringements, and 4) writing, adopting, posting on its website and reasonably implementing a repeat infringer policy.[i] Particularly, copyright holders find the most room for litigation on the second and fourth issues.

To receive safe harbor, a defendant must be unaware of any facts or circumstances that make it apparent that a user is using its system to infringe on copyrights. This means a defendant will need to show it lacked both actual and red flag knowledge of the infringement. Having actual knowledge turns on whether the provider subjectively knows of specific infringements, while having red flag knowledge “turns on whether the provider was subjectively aware of facts that would [make] specific infringement[s] ‘objectively’ obvious to a reasonable person.”[ii] Liability under this factor is limited in that OSPs are not required to monitor or affirmatively seek out infringing activity. Nor are they required to act on a general knowledge that rampant infringement takes place on their platform. Having a general knowledge of these activities will not disqualify an OSP from protection, whereas a specific knowledge with no remedial response will.

In Disney Enterprises, the court found that Hotfile had actual or red flag knowledge of the infringement. Thus, Hotfile was forced to assume vicarious copyright infringement liability. Likewise, in Columbia Pictures Industries, Inc. v. Fung, the court found that Fung had red flag knowledge of infringement. The court held that Columbia Pictures proved Fung’s inducement liability. Continue Reading

Part 1: Companies Are Not Complying With the Safe Harbor Provision of the DMCA

The most recent changes to U.S. copyright rules driven by the Digital Millennium Copyright Act (DMCA) became effective on Dec. 1, 2016. However, a considerable time after the effective date, many companies have yet to fully comply with the rules outlined in 37 C.F.R. § 201.38 and 17 U.S.C. § 512. Companies should review the new and existing rules to ensure that they are in compliance.

Users of online service provider (OSP) platforms often post copyrighted materials to their accounts. There are rules that OSPs must follow in order to be shielded from liability when users post copyrighted material to the OSPs’ platforms. If OSPs comply with the rules, they can escape liability by relying on the safe harbor provision in the DMCA. While additional requirements for hosting OSPs (e.g., Facebook or YouTube) and linking OSPs (e.g., Google Search) include notice and takedown and designating a copyright agent, all OSPs need to comply with the following requirements: 1) have a policy for terminating repeat infringers, 2) inform subscribers and account holders of the policy and 3) reasonably implement the policy.

Three rules associated with these requirements are recurring issues not being addressed by OSPs:

  1. OSPs must provide the Copyright Office with their full legal name, physical street address and any alternate names affiliated with the platform.
  2. OSPs must register a designated agent to receive copyright infringement notices. The rules require that the agent’s full name, address, phone number and email be publicly accessible on the OSP’s website and that the identical information be provided to the Copyright Office for display in its DMCA directory.
  3. OSPs must write, post and implement a repeat infringer policy to govern the takedown process for users who recurrently post copyrighted materials.

As simple as these requirements are, many OSPs are not in compliance. Courts have found alternate OSP names inadequate. Moreover, contact information for designated agents is not identical on the OSP’s and Copyright Office’s websites. In some cases, the agent’s contact information provided by the OSP lacks any portion of the four requirements. In other cases, it is difficult to find the contact information for the designated agent at all on the OSP website. Some OSPs have simply not appointed an agent to the Copyright Office. Courts have found OSPs ineligible for safe harbor because of these discrepancies. Continue Reading

Supreme Court Clarifies Meaning of ‘Full Costs’ in Section 505 of Copyright Act

In Rimini Street, Inc. v. Oracle USA, Inc.,[1] a unanimous Supreme Court recently held that 17 U.S.C. § 505’s award of “full costs” is limited to the specific categories of costs defined in 28 U.S.C. §§ 1821 and 1920, which exclude expert witness fees, e-discovery expenses and jury consultant fees. “A statute awarding ‘costs’ will not be construed as authorizing an award of litigation expenses beyond the six categories listed in §§ 1821 and 1920, absent an explicit statutory instruction to that effect.”[2] This decision effectively limits the costs recoverable by a successful litigant as a matter of course in copyright litigation and in “exceptional” trademark and patent cases.[3]

Oracle originally sued Rimini Street in the District of Nevada, alleging that Rimini’s software support services for Oracle customers wrongly copied Oracle’s software without licensing it. The jury agreed and awarded Oracle $35.6 million in damages for copyright infringement and $14.4 million for Oracle’s state law claims.[4] The district court also ordered Rimini Street to pay roughly $28.5 million in attorney’s fees and $4.95 million in taxable costs.[5] Rimini Street was further ordered to pay approximately $12.8 million for nontaxable litigation expenses such as expert witnesses, additional e-discovery fees, contract attorney services and jury consulting.[6]  Continue Reading

The Scope of CDA and DMCA Protection for Online Services Continues to Evolve

Section 230 of the Communications Decency Act (CDA, codified 47 U.S.C. § 230) and the Safe Harbor provisions of the Digital Millennium Copyright Act (DMCA, codified 17 U.S.C. § 512) provide certain protections for operators of online services from some, but not all, third-party claims arising out of user content posted on those services. These protections are essential for the survival of services that host user content. However, there are many limitations to the scope of protection and conditions on what is required to be eligible for those protections. The law in this area continues to evolve, so we have summarized recent notable cases and legislation that publishers should consider in operating their user content programs.

CDA Updates

 Section 230 of the CDA protects providers of interactive computer services from liability from suits that may arise when other internet users post material to a provider’s platform, except for infringement of intellectual property rights (which in some circuits has been held to include publicity rights), or violation of federal criminal law or certain other narrow carve-outs. 47 U.S.C. § 230(c)(1).

  • Can’t Avoid CDA Immunity Through Indirect Action:

The anticipated case Hassell v. Bird holds true to this. In this case, the California Supreme Court concluded that ordering a third-party platform owner to assist in removing defamatory content (posted to Yelp) would undermine the purpose of the CDA. 5 Cal. 5th 522 (2018). The California Supreme Court reversed the Court of Appeal’s reasoning that by not suing Yelp directly, plaintiff could effectively sidestep the CDA, and held that plaintiff’s litigation strategies could not overcome CDA immunity for a platform provider. The California Supreme Court further reasoned that a platform simply failing to remove reviews from a website, after an order was obtained against the user, did not constitute “aiding and abetting” under California law, and CDA immunity continued to apply. The Supreme Court of the United States declined to take up an appeal in this case. Continue Reading

Application Rejected: Supreme Court Requires Registration to Commence Copyright Infringement Suit

In Fourth Estate Public Benefit Corp. v., the Supreme Court settled the long unresolved question of whether registration or simply the application for registration is required to commence a suit for copyright infringement. In a unanimous decision authored by Justice Ginsburg, the high court ruled that a copyright owner cannot pursue infringement claims in court until the Copyright Office has registered the work at issue.

The decision resolves a long-standing circuit split over the meaning of the Copyright Act’s “registration” requirement. Some courts, notably in the Fifth and Ninth Circuits, permitted copyright owners to sue for infringement as soon as the application for registration (along with the appropriate fee and deposit copy of the work) was filed with the Copyright Office. Other courts, however, like those in the Tenth and Eleventh Circuits, relied on the plain language of the Copyright Act to hold that the Copyright Office must determine that copyright protection is warranted before registration occurs under the Copyright Act. Continue Reading

Copyright Office Eliminates Three-Month Filing Requirement for Newspapers

A close up of the word copyright from a dictionaryCo-authored by: Savannah Merceus

On Feb. 13, 2019, the U.S. Copyright Office amended its rule governing group registration of newspapers by eliminating the requirement that claims be submitted within three months after publication of the earliest issue in the group.[1] In its new amendment, the Office noted that several newspaper publishers reported issues with complying with the three-month deadline and found a “legitimate need to make this change effective immediately.”[2]

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Important Copyright Protections for Software to be Addressed in Pending Federal Circuit Appeal

In December 2014, Cisco Systems, Inc. sued rival ethernet switch provider Arista Networks, Inc., for more than $300 million because it allegedly infringed Cisco’s copyrights in operating system software that manages Cisco switches. Curiously, Cisco did not claim that Arista infringed the copyright in the software’s source code, which many understand to be the subject of computer program copyright. Rather, Cisco claimed that Arista infringed portions of the user interface of the software –specifically by copying more than 500 multiword command expressions.

Copyright may extend to these “command line interfaces” by virtue of a feature of copyright law that has gained more attention in recent years. Known as the “non-literal elements” of a computer program, copyright protection can extend to not only the “literal elements” of a program’s source code or object code, but to the nontextual expression of the code such as user interfaces and the sequence, structure and organization of the program. To help the software industry grapple with this nuanced and abstract concept, BakerHostetler has created the Beyond Source Code web resource. Beyond Source Code digests the cases addressing protection of non-literal elements of computer programs. It organizes the decisions by whether they extended or rejected such protection, and includes a section identifying cases based on the type of non-literal element at issue. Continue Reading

2017 – The Year in Which Copyright Went Beyond Source Code

2017 was a big year for raising the profile of copyright in protecting computer programs. Two cases in particular helped bring attention to a myth that was addressed and dispelled some time ago but persists in some circles nonetheless. Many lawyers hold on to the notion that copyright protection for software is weak because such protection inheres in the source code of computer programs. Because most companies that generate code take extensive (and often successful) measures to keep source code out of the hands of third parties, the utility of copyright protection for code is often viewed as limited. However, copyright also extends to the “non-literal elements” of computer programs, such as their sequence, structure and organization, as well as to things such as screen displays and certain user interfaces. In other words, copyright infringement can occur when copying certain outputs of the code without there ever having been access to the underlying code itself.

Two jury verdicts, one in late 2016 and one in early 2017, helped emphasize just how valuable copyrights can be in the protection of software. On December 14, 2016, Cisco Systems Inc. lost a case to Arista Networks Inc. for alleged copying of the command line interfaces of Cisco software used to manage ethernet switches. Although Cisco did not prevail, the case, Cisco v. Arista, Case No. 5:14-cv-5344-BLF (N.D. Cal. NC), is noteworthy in that Cisco claimed more than $300 million in damages and proceeded to a jury verdict in a software copyright case that did not involve copying of code. The verdict is on appeal, with multiple amici filing supporting briefs. By contrast, on February 1, 2017, in the case of Zenimax v. Oculus, Case No. 3:16-mc-00098 (N.D. Tex.), virtual reality video game publisher ZeniMax Media Inc. obtained a $500 million verdict against Facebook subsidiary Oculus VR Inc., $50 million of which has been attributed to the copying of software architecture.

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Spanski Enterprises, Inc. v. Telewizja Polska, S.A.: How Far Is Too Far When It Comes to the Extraterritorial Reach of US Copyright Law?

As a general matter, acts of copyright infringement that occur outside the jurisdiction of the United States are not actionable under U.S. copyright law. “The Copyright Act, it has been observed time and again, does not apply extraterritorially.” Kirstaeng v. John Wiley & Sons, Inc., 133 S.Ct. 1351, 1376 (2013) (Ginsburg, J. dissenting). The general prohibition against the extraterritorial application of U.S. copyright law has been interpreted to mean that (1) purely extraterritorial conduct is not actionable in U.S. courts, but (2) extraterritorial conduct that crosses international borders and results in infringing conduct within the United States remains actionable under U.S. copyright laws. M. Nimmer & D. Nimmer, Copyright § 17.02 p. 17-28 (2015).

In Spanski Enterprises, Inc. v. Telewizja Polska, S.A., (Case No. 17-7051), the Court of Appeals for the District of Columbia will have to determine whether U.S. copyright law extends to situations in which the entirety of the defendant’s conduct occurred outside the territorial limits of the U.S., and the only allegedly infringing conduct occurring in the U.S. resulted from activities undertaken by plaintiff’s own lawyers.

The Spanski Enterprises case grows out of a dispute between the creator of Polish language television programming and its exclusive U.S. licensee. The defendant is Poland’s government-owned national television network that produces and is the copyright owner of much of the programming televised over its network in Poland. The plaintiff is the exclusive U.S. distributor for various television programs produced by the defendant. In addition to televising these programs in Poland, the defendant operates a video-on-demand (VOD) website in Poland that allows viewers to stream the defendant’s programs to their computers. The parties’ distribution agreement included a provision in which the defendant agreed to impose a United States “geo-bloc” on its VOD streaming service to prevent U.S. consumers from streaming the programming appearing on the defendant’s website. In violation of this provision, the defendant used versions of its programming that did not contain any geo-blocs, thus potentially allowing viewers in the U.S. to stream the programming to their computers in the U.S. Continue Reading