A Legal Blog by Aaron | Sanders, PLLC

YouTube Decision Muddies the Water for DMCA Safe-Harbor Law–for Now

Part 1 of 2: Second Circuit on DMCA Safe Harbor: It’s Complicated

Well, if you were hoping that the DMCA safe-harbor law would clear up with the Second Circuit’s long-awaited opinion in Viacom v. YouTube–that we’d get to the point where folks would know the contours of the safe harbor without having to consult with a lawyer–then last Thursday was, indeed, as Prof. Goldman put it, a “bummer.” There were things to criticize in last December’s Ninth-Circuit decision in Shelter Capital v. UMG (better known as the “Veoh case”), and certainly rights-holders were unhappy with it, but at least you knew where things stood. The basic lesson from Veoh was: comply with the DMCA notice-and-takedown regime, watch out for notices of infringement by non-rights holders, and things’ll probably be OK.

But YouTube muddies the waters–at least, for a while. That’s not really meant as a criticism. Simplicity and “bright line rules” are nice because it saves business folks and consumers money (fewer legal fees) and worry. But an appellate court’s job is, in this case, to interpret a statute. Sometimes the best interpretation is also a complex or “fuzzy” one. True, lawyers are the main beneficiaries, but appellate courts don’t care…

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UMG Swings for the Copyright Fences … And Misses Everything

Ninth Circuit: It’s OK to Let the Public Access User-Uploaded Content

I think by now you’ve read a few headlines about Ninth Circuit’s decision in UMG Recordings v. Shelter Capital, which is better known as the “Veoh case,” just before Christmas. Mostly, the headlines say something like: Veoh Dodges Universal Music’s Copyright Claims, or Universal Loses DMCA Lawsuit Against Veoh.

But when you read the opinion, you should be struck by two things that have nothing to do with Veoh. First, Universal Music wasn’t just trying to get some compensation from a specific video site–it was trying to put video sites out of business. There’s no other way to explain the strategic choices Universal Music made. Second, as a result, in part, of Universal Music’s choices, the Ninth Circuit has just made Viacom’s life a lot harder for its case against YouTube.

Understanding Universal’s Peculiar Legal Strategy

If you’ve been reading my blogs on the DMCA defense (mostly in connection with the Nashville lawsuit against Grooveshark), you know that, even after 12 years, there are several very basic unanswered questions about DMCA safe-harbor protection. Off the top of my head, the most significant are:

What does it mean to have actual knowledge of infringement,…

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Help Us Spotify; You’re Our Only Hope! (Part 14 of our Online Music Services Series)

The Planets Align for the Music Industry. Will it Be Enough?

In our last post, we examined the overlapping music-licensing regimes to explain, in part, why it took Spotify two years to get licensed in the U.S. We also looked at the music industry’s unhappy history with the internet, which also helped explain Spotify’s licensing struggles.  We now look at what Spotify means to the music industry’s future. A lot might be riding on Spotify.

For all the technology firms looking to make money from music, consider how few of them even get as far as Spotify in being able to present the music industry a comprehensive internet-based scheme. A couple spring to mind: Rhapsody in 2001, and Apple in 2003.* This means that, when Spotify came calling, the industry actually had little practical experience on which to base a very perilous decision: how much to charge for music. Since the royalty rate is by far the biggest cost incurred by online music service providers–Rhapsody is said to pay 60% of its revenues in royalties, Pandora 50%–the royalty rate demanded by the music industry pretty much dictates the price of the product. Set it too high, and the service will founder…

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Spotify: A New Hope (Part 13 of our Online Music Services Series)

Or, the Attractions (and Distractions) of Licensing

Spotify has been available in the United States for a few months now. Until the recent kerfuffle involving its Facebook integration, the reviews have been positive. If you review the features list with which we started this Online Music Services Series, you’ll see that Spotify comes as closer to giving consumers what they want than any other service. In fact, it’s not even that close:

Portability: check: with Spotify Premium, you can listen to longs off-line and you gain access to Spotify’s mobile apps.
On-demand: check: you can listen to any song you want to in either your or Spotify’s catalog;
Music discovery: half-check: Spotify has a feature that allows others to share music with you, which should help you discover music you like, but nothing quite as robust as Pandora’s Music Genome.
Extensive catalog: check: Spotify’s catalog has about 15 million songs.
Low cost: half-check: Spotify Free has all of the features above except portability; for that, you need to shell out $9.99 a month, and you lose all access should your subscription expire.*

* If I were starting this series over again, I might have added “ownership” to this list. It’s important to me personally,…

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In Grooveshark’s Defense: Red Flags and Financial Benefit (Part 7 in our Online Music Services Series)

Why Grooveshark Might Not Swim into the DMCA Safe Harbor

In our last blog post, we examined two of the four main requirements for Grooveshark’s DMCA safe-harbor defense.  Those requirements were (1) having and implementing a repeat-infringer policy, and (2) compliance with the notice-and-takedown procedure.  We gave Grooveshark a pass on those two requirements.  We now look at the two remaining requirements:  (3) lack of actual knowledge or “awareness” and (4) lack of direct financial benefit.  We think these two requirements will be much trickier for Grooveshark.

Knowledge and “Awareness”

To qualify for DMCA safe-harbor protection, you (as the website operator) must (1) not have actual knowledge of the infringement,* (2) not be “aware of facts or circumstances” that make the infringement apparent, and (3) “expeditiously” stop the infringement, once you are obtain such knowledge or “awareness.”

*  Want to hear something weird?  If someone sends you a defective DMCA takedown notice, but it includes enough information to put you on notice that infringing activity is going on, you are not deemed to have actual knowledge or even “awareness” of the infringement.  Although this is illogical, there’s a good reason for it.  Otherwise, there’d be no reason for copyright owners to…

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