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Cyberlocker sites come under the radar of copyright holders

By Nick Solish

In the war of music pirates versus record labels, cyberlockers are heating up as the next battleground for copyright suits.  A cyberlocker is an online storage provider that allows users to upload and share files.  Other users can then access those uploaded files for free, simply by clicking a link to the site and a second link to download the file.

This recent battle started earlier this year when the Motion Picture Association of America (MPAA) sued Fort Lauderdale-based Hotfile.com.  Plaintiffs Disney Enterprises Inc., Twentieth Century Fox Film Corp., Universal City Studios Productions LLLP, Columbia Pictures Industries Inc., and Warner Brothers Entertainment Inc., all sued Hotfile Corp. and Hotfile’s owner, Anton Titov, in the Southern District of Florida alleging copyright infringement.

The suit alleges that “[d]efendants actively encourage their users to upload…infringing copies of the most popular entertainment content in the world.”  Further, plaintiffs argue that defendants openly pay users to upload, and disseminate links to, infringing content.  The complaint also claims that Hotfile uses a cash incentive program to encourage users to upload infringing content.

Since January 2011, cyberlocker sites have been drawing more traffic than BitTorrent sites, bringing to the attention of copyright holders.  Predictably, these sites often contain access to copyrighted files.  Hotfile itself has become one of the top 100 most trafficked sites on the Internet, making it a target for the MPAA.

Cyberlocker sites like Hotfile.com include disclaimers about compliance with the Digital Millennium Copyright Act as well as a process for filing take-down notices.  Cyberlocker services are not inherently illegal.  However, the plaintiffs allege that Hotfile’s use of a cash incentive program encourages people to upload infringing content to the site.

Hotfile may have initially been targeted because it had a track record of settling lawsuits against its service.  However, they recently changed tactics.  In April 2011, Hotfile filed a motion to dismiss the suit, which was followed by a ruling in July that dismissed the direct infringement claims against Hotfile.  The judge found thatplaintiffs had failed to plead the necessary facts proving that Hotfile engaged in the required volitional conduct for a direct infringement of copyright law.

However, University of Texas law professor Christopher Harrison speculates that the decision throwing out the direct infringement claim may not survive on appeal.  Harrison explains that Judge Adalberto Jordan’s reliance on Cartoon Network LP v. CSC Holdings Inc., 536 F.3d 121 (2d Cir. 2008) for the proposition that “a significant difference exists between making a request to a human employee, who then volitionally operates the copying system to make the copy, and issuing a command directly to a system, which automatically obeys commands and engages in no volitional conduct” may be misplaced.

Specifically, in Cartoon Network, defendant’s remote DVR system responded to commands from Cablevision subscribers and created a single, unique copy of a TV show for later viewing by that same subscriber.  In [Hotfile], not only are uploaded files available to anyone using the site, Hotfile’s servers automatically make five additional copies of uploaded files and five unique links for those files.  This seems to be a clear distinction. 

However, in a recent filing, Hotfile has shown that it may be willing to fight back.  Plaintiffs filed a motion to limit privilege logs that they are required to produce in the case.  Privilege logs describe documents or other items withheld from production in a civil suit under claims of attorney-client privilege, work product doctrine, or trade secrets.  The burden is on the withholding party to give the court and the opposing party enough information to test the privilege claim.

Hotfile opposed this motion, asking that the plaintiffs produce the standard, required privilege logs.  In their opposition motion, Hotfile’s lawyers stated in a footnote that “[b]eing able to determine which withheld documents are related to [p]laintiffs’ cooperative antipiracy efforts to remove material from Hotfile is also important for a counterclaim Hotfile intends to bring against at least one of the [p]laintiffs — Warner Bros. Entertainment, Inc..”  They allege that Warner has abused their anti-piracy tool by using it to remove content, which either was not infringing or for which Warner did not own the copyrights.

The MPAA complaint wasn’t the first major suit for Hotfile.  In January 2011, plaintiff Liberty Media filed suit against Hotfile and 1,000 John Does alleging that jointly and severally, with actual or constructive knowledge of or with willful blindness, reproduced and distributed certain Liberty-owned works through www.Hotfile.com.  Liberty demanded that the court freeze Hotfile’s assets held by PayPal and that the court seize Hotfile’s domain name in the meantime.

As of yet, Hotfile has not filed its counter-suit against Warner or any other copyright holders.  Should these cases be successful, they may ignite a storm of litigation against other cyberlockers that could virtually shut these services down or severely limit their inherently legal function.  The MPAA case against Hotfile will certainly be a strong indicator of what the future holds for other cyberlockers and whether they can survive legal scrutiny.

Nick Solish is a lawyer at Bryan Cave and recent graduate of the University of Texas. He can be contacted at nickolas.solish at bryancave.com.

YouTube and Fair Use: Through the Lenz of Prince

By Nick Solish

(First published in the Daily Journal on Tuesday, May 24th, 2011)

The creation of YouTube.com in 2005 engendered a great deal of tension between owners of copyrighted content and people who upload original videos to YouTube.com.  The Digital Millennium Copyright Act provides content owners with a mechanism by which they can challenge allegedly infringing content via a takedown notice.  However, videos protected by the fair use doctrine of the Copyright Act are frequently taken down alongside infringing works.  So the question remains, what constitutes fair use of copyrighted content when it comes to YouTube videos?

The fair use doctrine, as codified in Section 107 of the Copyright Code, limits a copyright holder’s exclusive right to reproduce, or authorize others to reproduce, a work.  It explicitly includes such works as criticism, comments, news reporting, teaching, scholarship and research as fair use. Works which do not fall within these categories are analyzed using four fair use factors: the purpose and character of the use, including whether it is for profit; the nature of the copyrighted work; the amount and substantiality of the portion used of the copyrighted work in relation to the whole; and the effect of the use on the potential market for, or value of, the copyrighted work.

YouTube.com is one of the largest fair use battlegrounds.  According to YouTomb.MIT.edu, a research website by Massachusetts Institute of Technology that monitors videos taken down from YouTube.com, at least 10,000 videos have been removed for alleged copyright infringement.  YouTube.com and its parent company Google have implemented tools to deal with takedown notices alleging infringement.  The “content ID” tool allows copyright holders to automate which videos are sent DMCA takedown notices.  YouTube’s blog explains that copyright holders may be notified automatically if an uploaded video uses any copyrighted material.  Users may dispute takedown notices using content ID; disputed takedown claims lead to reinstatement of the offending videos and shift the burden of proving copyright infringement to the copyright holder.

However, content ID alone may be insufficient to allow copyright owners to determine whether an allegedly offending video is protected by fair use.  For instance, content ID still cannot determine the context of the work, which is crucial to a determination of fair use.  This type of automated response system has led to the removal of videos that would qualify for protection under fair use.

An example is the 2007 case of Stephanie Lenz, where Universal Music Corp. (UMC) filed a takedown notice with YouTube.com over a video of Lenz’s son dancing to Prince’s song “Let’s Go Crazy.”  Lenz filed a counter-notice with YouTube.com claiming that her video was a fair use of Prince’s song, due to the poor audio quality and the short duration of the song.  Six weeks after receiving Lenz’s counter notification, YouTube.com put her video back on its site. However, unsatisfied with UMC’s failure to consider fair use before sending the takedown notice, Lenz filed a complaint against UMC for misrepresentation under the DMCA and sought declaratory relief stating that her use of the song qualified as fair use.

In Lenz v. Universal Music Corp., 572 F. Supp. 2d 1150 (N.D. Cal. 2008), UMC argued that copyright holders cannot be required to evaluate fair use before sending a takedown notice because fair use is merely an excused infringement of copyright, rather than a use authorized by law or by the copyright holder.  UMC contended that the DMCA does not specifically mention fair use, and therefore copyright owners need not consider it before sending takedown notices.  Lenz countered that fair use was authorized by law as evidenced by its codification in the Copyright Act of 1972.  The court determined that the phrase “authorized by law” was unambiguous and included any activity permitted by law, which included fair use.

Lenz also alleged UMC sent the takedown notices in bad faith.  The DMCA takedown notice must include “a statement that the complaining party has a good faith belief that use of the material…is not authorized by the copyright owner, its agent, or the law.”  17 U.S.C. Section 512(c)(3)(v). The court acknowledged that the unnecessary removal of non-infringing content caused significant injury to the public and that the counter-notification remedy was insufficient.  From the evidence, the court found that UMC was a sophisticated party and failed to consider fair use before sending the takedown notice; rather, the takedown notice was sent to Lenz as part of a campaign by Prince to retake control of his art online.

The court granted partial summary judgment for Lenz based on UMC’s failure to include a statement in the takedown notice “that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.”  In other words, copyright owners must consider fair use before sending DMCA takedown notices.

However, the court never directly applied the fair use factors to Lenz’s video, focusing instead on the issue of whether UMC must consider fair use before sending a takedown notice.  Applying the Section 107 fair use test to Lenz’s video, the purpose of the work was to share a video of her son dancing, not to detract from legitimate Prince music videos.  The video was not uploaded for profit.  The nature of the work is a home movie, not a concert bootleg or reproduction of official video footage.  The amount of Prince’s song used was very little, totaling less than 20 seconds, in relation to the entire four-minute plus song.  Finally, the effect of Lenz’s video is unlikely to affect the market for Prince’s copyright works.  Thus, the video largely qualifies as fair use.

While Lenz had a strong argument that her video was fair use, other famous YouTube.com parodies may not.  For instance, a popular series of parodies take footage from the German movie “Downfall” depicting Adolf Hitler ranting about the imminent collapse of the Third Reich, and add subtitles depicting Hitler complaining about everything from his inability to get Billy Elliott tickets to not being able to find Waldo. The copyright owner, Constantin Films, began sending takedown notices for these parodies in mid-2010.  Though these parodies use original footage from the movie, their creators argue that the addition of comedic subtitles makes these videos fair use under the Copyright Act.  While these films are not for profit, they do use several minutes of original footage, albeit with added subtitles.  Although these videos would evidently be protected by fair use, it is unclear whether Constantin Films has considered this possibility before sending takedown notices.

One video testing and explaining the limits of fair use is “A Fair(y) Use Tale,” created by Bucknell University Professor Eric Faden using thousands of snippets of Disney films pasted together.  Scenes from Aladdin, Beauty and the Beast, and several other Disney movies are chopped into one-word snippets to create a narrative explaining the meaning of fair use.  As Buzz Lightyear and Aladdin lament, “unfortunately, copyright keeps getting longer,” with fair use being one of the few defenses to total control by copyright holders.

Ultimately, content ID is a powerful tool for copyright owners to police their content online.  However, given the requirement that copyright owners must now consider whether a video is fair use before sending out takedown notices, it is unclear whether automated systems such as content ID will ever become sophisticated enough to meet the strict requirements of copyright law.

Categories: Uncategorized
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