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Today, the Second Circuit Court of Appeals in New York shot down the majority of those theories. Meanwhile, the case has been sent back to the district court level for more factfinding on exactly how much YouTube employees may have known about the presence of specific infringing files on their service.
As a quick refresher, section 512(c) of the DMCA says that online service providers who store users' material don't have to pay damages for copyright infringements committed by those users—but only if they do certain things and meet certain conditions. For instance, they have to take down infringing material when they get a properly-formed takedown notice. They also can't take advantage of the safe harbor if: (1) they have "actual knowledge that the material is infringing;" (2) if they're aware of any "red flags" indicating that there's infringement; or (3) if they receive a financial benefit directly from the infringing activity while they have a right and ability to control it.
Actual and "Red Flag" Knowledge
Viacom argued that YouTube knew that infringing material was scattered throughout its system, and that this gave them red flag, if not actual, knowledge that there was infringement. According to Viacom, if they didn’t' take all of this infringing material down, they would be kicked out of the safe harbor and on the hook for billions of dollars.
The court rejected this argument, saying that both actual and red flag knowledge meant knowledge of specific instances of infringement—particular files that were infringing, for instance. Just knowing that somewhere amongst the countless hours of video that some (or even a substantial portion of) files were infringing wasn't enough to fail these prongs of the test.
Of course, there were some specific files that YouTube employees might have had actual knowledge of. Some rather incriminating emails came to light during the course of the decision below, with early founders discussing infringing videos on the sites and what to do about them. What actually happened with those videos, though, isn't clear in many cases (did they eventually get taken down?), and it looks like a lot of the videos discussed in the emails don't actually belong to the plaintiffs in this case. In order to figure these questions out, the appeals court is sending the case back down to the district court so that the parties can straighten out the facts.
"Control and Benefit"
Viacom also argued that YouTube failed to make the safe harbor because it had the "right and ability to control" infringing activity on its site. Viacom's take on this was that, since YouTube can kick subscribers off if it wants, and can decide whether or not it accepts files for upload, it has that "right and ability."
This amounts to a backdoor requirement for filtering, something that the law explicitly rejects. The district court rejected it, too, saying that, just like actual knowledge and red flag standards, the "right and ability to control" inly applied to specific instances of infringing activity. In other words, until YouTube knew that a particular file was infringing, it didn't have the "right and ability" to control it. Thus, unless YouTube knew it was infringing and put it up anyway, it still gets the safe harbor.
But this is where the appeals court disagrees with the district court. The Second Circuit held that the district court was wrong to say that "right and ability to control" only applied to specific knowledge of specific infringing files. Instead, it generally means the power to control infringement on its site.
However, the appeals court didn't buy Viacom's argument either. Just because YouTube can decide what to host and who it lets upload videos doesn't automatically mean it has a "right and ability to control." The court points out that pretty much every online service has those abilities, and to interpret the DMCA the way Viacom wants would render it inconsistent—if not useless.
So what does "right and ability to control" mean? The Second Circuit cites a case where the service provider was giving its users detailed instructions on the content they were uploading, specifically monitoring content and giving feedback on layout, appearance, and content. Meanwhile, the service provider ignored the fact that a lot of that content was infringing. Basically, YouTube would have to "exert substantial influence on the activities of users."
This doesn't seem to be the case with YouTube, but the Second Circuit isn't taking any chances by guessing. Rather than try to make that decision based upon the brief examination in the opinion at the district court, the Second Circuit is sending the case back down for the district court to see exactly how much YouTube influences what its users upload. My guess is that the district court won't find that to be all that much.
SOPA and "Willful Blindness"
Another issue for remand is the question of "willful blindness." Traditionally, the law treats someone who is "willfully blind" to a wrongdoing—deliberately turning a blind eye—as actually knowing that the wrongdoing is taking place. Viacom argued that, by failing to monitor their servers with a filtering program, YouTube was remaining "willfully blind" to infringement.
The district court rejected this argument out of hand, noting that the DMCA explicitly says that monitoring or actively hunting for infringement isn't required. The Second Circuit agreed with that, but also said that the district court went too far in saying that the DMCA prevents application of willful blindness generally.
Instead, willful blindness can apply—just not in the overbroad way that Viacom claimed. Willful blindness, the court says, can be used to demonstrate knowledge or awareness of specific instances of infringement. What this means isn't specifically clear, but if past cases are any indication, it would seem to mean that, for instance, deliberately failing to check your inbox for DMCA notices, or completely ignoring a takedown because it wasn't exactly form-perfect might not be acceptable. What's clear, though, is that being "willfully blind" doesn't mean "failing to install Audible Magic." To make sure that YouTube wasn't being willfully blind in a more specific way—ignoring notices or similar behavior—the court remands that fact-finding question back down to the district court.
It's worth mentioning here that "willful blindness" was a big part of the original SOPA bill. Content companies wanted to build legal liability for "deliberate actions to avoid confirming a high probability" that the site was being used for infringement.
Notice that this formulation is different from what the Second Circuit is saying. The court is focusing upon whether or not YouTube turned a blind eye to a specific instance of infringement—not whether or not it ignored the fact that somewhere, people were infringing on their site. In other words, contrary to SOPA supporters' arguments at the time, SOPA wasn't just codifying the doctrine of willful blindness, it was expanding it massively—applying on a site-level scale something that was intended to be applied to specific infringing files.
In a world that had a SOPA, this case could very well have come out completely differently. That's why it's not just important for us to keep fighting in the courts, but in Congress as well, to keep the creeping expansion of copyright liability at bay.