Old Media Versus New Media: Moving Toward a Whole New Balance?

Last week, five leading commercial copyright owners (CBS (CBS), Disney (DIS), Fox Entertainment (NWS), NBC Universal (GE) and Viacom (VIA)) collaborated with four leading User-generated content sites (Dailymotion, Soapbox on MSN Video (MSFT), MySpace and Veoh.com) to establish a new set of User Generated Content Principles. The Principles are available here.

The Principles strike a completely new balance—one much more favorable to content owners--than the one set forth in the current controlling US legislation, the Digital Millennium Copyright Act, or the controlling European legislation, the Directive on Electronic Commerce.

The question is: Will this start a trend toward requiring user-generated sites to filter and monitor content for infringements? Or will this be seen as a self-interested statement by a small group of large companies, which is not generally reflective of the industry, and does not even include many of the major players, such as Google (GOOG), Yahoo! (YHOO), Facebook or AOL (TWX).

Digital Millennium Copyright Act Standard: Notice-and-Takedown

The DMCA was aimed at balancing the needs of content owners with those of internet service providers, which host content uploaded by users. The DMCA was supposed to provide immunity from claims of monetary damages to service providers who engage in “passive”, “automatic” actions initiated by users. The DMCA provides that internet service providers do not need to monitor their sites for infringing material. Rather, it established a notice-and-takedown procedure: in the event a copyright owner complains about an alleged infringement, the site enjoys a “safe harbor” from monetary damages if it takes down the infringing material and complies with the other requirements of the statute, as described below. The European Union’s Directive on Electronic Commerce, passed in 2000, provides comparable protection for website owners which take down infringing content.

Prerequisites for Sailing into the Safe Harbor

In order to benefit from the safe harbor, a site must:

(a) adopt a copyright policy requiring termination of repeat copyright infringers in appropriate circumstances,

(b) implement that policy in a reasonable manner, and

(c) inform its subscribers of that policy.

Sites such as YouTube are not entitled to the safe harbor, however, if they are “aware of facts or circumstances from which infringing activity is apparent” or if they “receive a financial benefit directly attributable to the infringing activity”.

Court Decisions Interpreting the DMCA

Cases interpreting the DMCA have been very protective of websites. For example, in the case of Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001), the owner of the film documentary “Manson” sued eBay for offering for sale copies of his movie. The court held that eBay was entitled to the safe harbor protection. Similarly, in CoStar Group v. LoopNet, a Fourth Circuit case from 2004, the court held that a website was not liable for infringing photos of real estate posted to its site from users. In Corbis v. Amazon, where a zShop had posted infringing photographs, the court said that the copyright holder had to show that the website was “clearly a pirate site”—a very high hurdle indeed.

The DMCA’s legislative history says that a site will not be able to benefit from the safe harbor if it turns a “blind eye to red flags” that infringing activity is taking place. Once again, a very high standard.

Winds May Be Changing

Within the past several months, there have suddenly been several developments which could portend to change the balance, and provide greater protection for content owners at the expense of websites hosting user-generated content. Among them:

• March, 2007: Reflecting a sentiment that some companies may have built their businesses on infringement, a Microsoft lawyer attacked Google in a speech: “Companies that create no content of their own, and make money solely on the backs of other people’s content, are raking in billions through advertising revenue and IPOs”
• April, 2007: Google CEO Eric Schmidt announced that YouTube will launch filtering software—which just this month, Google did release
• May, 2007: MySpace and Dailymotion say that they will filter content
• May, 2007: The Ninth Circuit held that Google could be contributorily liable for copyright infringement if infringing images were available through its search engine, and it failed to take “simple measures” to prevent their availability
• June, 2007: AT&T (T) says that it will filter infringing content
• June and July: Four cases in France, Belgium and Germany held that video websites or ISPs were required to block or filter infringing content, in various contexts.
• July, 2007: Music upload site Imeem agrees to settle lawsuit brought by Warner Brothers two months earlier for copyright infringing material.

UGC Principles

Now comes the UGC Principles. While the Principles are not legally binding, they do set out meaningful obligations on website companies to proactively block infringing content, even before receiving DMCA notices:

• The UGC Services must conspicuously post notices discouraging users from uploading infringing content.
• During the upload process, UGC Services must prominently inform users that they may not upload infringing content, and that by uploading content, they agree that they are complying with the terms of use. The terms of use must prohibit infringing uploads.
• The UGC Services should use “effective content identification technology with the goal of eliminating all infringing user-uploaded audio and video content” for which content owners have provided so-called “Reference Material.” Reference Material is the content which would permit a site to match the uploaded infringing content with the original content.
• The standard is high. The UGC Services must implement the technology which is “highly effective, in relation to other technologies commercially available at the time of implementation”, to achieve the goal of eliminating infringing content.

In short, these Principles require sites to block infringing content on its way up, and these UGC Sites have agreed to also search their sites for existing infringing content. In return, if the UGC Services adhere to these Principles in good faith, the Copyright Owners are not supposed to sue, even if there is infringing content which might remain on the site.

Impact of the UGC Principles?

These principles require UGC Services to actively filter content. This is an expensive proposition to license acoustical filtering software. These Principles are not law and do not change the law. And many important players did not sign on—neither leading UGC Services, such as YouTube, Yahoo!, FaceBook, AOL or Imeem, or any of the four major record labels. And several of the UGC Services, such as Dailymotion and MySpace, had already agreed to filter, so one could argue that there is nothing new here. Further, it has been dismissed by some, such as digital rights advocacy organization Public Knowledge, as "a small group of generally large companies” which has put together "a wish list for content companies to impose their will on others."

As of this writing, it is impossible to predict the impact of these Principles. But the question will become whether filtering becomes such an industry standard, that courts will start expecting sites to filter—and sites that do not do so will find that they can no longer rely on the DMCA’s “notice-and-takedown” standard

Comments

[GRiddick:]

Enter your comment hereHi David,

This is an excellent article. You bring this debate, which I personally see as one of the most significant in determining the future of the Internet over the next five years or so, to light in a well balanced fashion. These issues are VERY complex.

I know. My small electronic graphic arts content (clipart illustrations, design templates, digital logos, cartoons, and animations) development company (Imageline, Inc.) here in Virginia has fought these piracy issues ever since the DMCA was first enacted back in 1998. We know the law VERY well. We also know what its intended purpose was then ... and still is now ... a purpose that has been twisted around routinely by the high-priced copyright defense teams retained and employed by the Google's and AOL's of the world.

It was not at all surprising to me the see Google, YouTube, AOL, Yahoo, and Time Warner absent from the list of "signees" who put forward the new "UGC Principles" earlier this month.

Here's the problem. Without these companies involved, the implementation of two or more "standards" will simply create mass confusion in the marketplace. Pirates thrive on mass confusion. It provides fuel for their ongoing crimes. It places enforcement in the hands of a select few federal judges, and the slick talking (and often unscrupulous) attorneys, who actually hear and/or present these complex cases.

In my view, five (5) things need to happen here to make all of this effective:

1. Small companies need to be represented in these crucial industry discussions. We produce over 80% of all the new copyrighted works in this country and yet no small business that I am aware of was even asked to comment on the new UGC Principles before they were announced.

2. This cannot simply be another weapon in the hands of Microsoft in its ongoing war against Google for online advertising and search supremacy. Did you notice the Microsoft copyright statement at the bottom of the "UGC Principles" web page?

3. All major Internet service providers (Google, Yahoo, AOL, CNET, and others) MUST be forced to adopt any new principles that have half a chance of being effective. There's such a close parallel to the people who signed these new guidelines and those who have signed up to support Hulu (a new YouTube competitor), that one cannot help but be cautious, and curious, when taking a closer look at everyone's true objectives.

4. Foreign Internet companies, especially those that play on our own financial systems, such as NASDAQ (i.e. Baidu, ReDiff, and others) must be forced to comply as well. What good does all this do if it simply drives Internet consumers to international web sites, search engines, and portals?

5. The interests of all copyright industries, not just television and movies, must be adequately addressed for any new "standards" to be effective. What about music, books, graphic arts, journalism, cartoon strips, poems, photography, animations, and the many, many other groups that depend on adequate copyright protection for survival?

There is NO WAY Congress meant to provide loopholes that encourage willful infringement in the DMCA, or in the copyright laws of this country. By allowing "online service providers" to benefit economically from the support of piracy web sites, as Google does with literally thousands of web sites around the world every single day, a liberal interpretation of the DMCA "safe harbor" and "fair use" provisions in our copyright laws, actually increases copyright infringement in this country ... let alone encourages the destructive impact on U.S. owned copyrights we see now overseas.

I hope these new "UGC Principles" will be the catalyst that brings ALL interested parties to the table. Something needs to be done and it needs to be done fast. If we lose this war to the pirates, our economy will suffer the consequences for many, many years (if not decades) to come.

Thanks for helping to get this important public debate underway. Let's hope some of the "big players" can learn to listen.

George P. Riddick, III
Chairman/CEO
Imageline, Inc.
[e-mail]...

2007 Oct 29 02:12 PM