Ninth Circuit Aligns with Second Circuit on DMCA Safe Harbor Reasoning

Practical Law Legal Update 8-525-2404 (Approx. 4 pages)

Ninth Circuit Aligns with Second Circuit on DMCA Safe Harbor Reasoning

by PLC Intellectual Property & Technology

Published on 18 Mar 2013 • USA (National/Federal)

In UMG Recordings, Inc. v. Shelter Capital Partners, Inc., the Ninth Circuit Court of Appeals withdrew its December 20, 2011 opinion and filed a superseding opinion, which is largely the same but clarifies the reasoning supporting its decision that the Section 512(c) safe harbor provision of the Digital Millennium Copyright Act (DMCA) applied to Veoh Networks insulating it from copyright liability based on its users' activity.

On March 14, 2013, the US Court of Appeals for the Ninth Circuit withdrew its December 20, 2011 opinion and published a superseding opinion in UMG Recordings, Inc. v. Shelter Capital Partners Inc. The new opinion reaches the same result as the earlier one, affirming the district court's summary judgment ruling that Section 512(c) of the Digital Millennium Copyright Act (DMCA) (the system storage safe harbor) insulated Veoh Networks from copyright infringement liability based on its users' acts. The Ninth Circuit issued its earlier opinion before the US Court of Appeals for the Second Circuit's April 5, 2012 decision in Viacom International, Inc. v. YouTube, Inc., which also addressed the scope and requirements of the system storage safe harbor.

In its superseding decision, the Ninth Circuit clarified both its reasoning and its alignment with the Second Circuit's interpretation of the DMCA provisions in Viacom. Key points on which the Ninth Circuit aligned its opinion with Viacom include:

Actual and red flag knowledge. The Ninth Circuit adopted the Second Circuit's distinction between actual knowledge under Section 512(c)(1)(A)(i) and red flag awareness under Section 512(c)(1)(A)(ii), that is, that:
- actual knowledge turns on whether the service provider subjectively knew of a specific infringement; and
- red flag awareness turns on whether the provider was aware of facts that would have made the specific infringement objectively obvious to a reasonable person.
The right and ability to control infringing activity. Noting its agreement with the Second Circuit's discussion of the proper standard in Viacom, the Ninth Circuit held that to have the right and ability to control, a service provider must exert substantial influence on the activities of users, meaning a high level of control over user activity, or purposeful conduct.
The Ninth Circuit's new opinion also notably omitted any discussion of whether the right and ability to control has a knowledge component. The earlier opinion held that to have the right and ability to control infringing activity a service provider must have knowledge of specific infringements, a position the Second Circuit expressly rejected in Viacom.

While still finding that Veoh qualified for DMCA safe harbor protection, the Ninth Circuit's decision clarifies its agreement with the Second Circuit on the substantive legal issues raised in both Shelter Capital and Viacom. The opinion suggests that the Ninth Circuit views the differing outcomes of the two cases as reflecting differing facts or interpretations of facts, rather than any meaningful circuit split on the law.

For more information on the Ninth Circuit's December 20, 2011 decision in UMG Recordings, Inc. v. Shelter Capital Partners, and background on this case, see Legal Update, Ninth Circuit Upholds DMCA Safe Harbor for Online Video-Sharing Site Veoh.

For more information on the Second Circuit's decision in Viacom International, Inc. v. YouTube, Inc., see Legal Update, Second Circuit Reinstates Viacom v. YouTube, Addressing Contours of DMCA Safe Harbor.

Update: On June 27, 2013, the Ninth Circuit denied an en banc rehearing of this case.

Ninth Circuit Aligns with Second Circuit on DMCA Safe Harbor Reasoning | Practical Law