Hollywood v. the Internet
California Lawyer

Hollywood v. the Internet

April 2012

illustration by Hal Mayforth

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The battle over copyright protection on the Web is writ large in California. The state's highest-profile industries - Hollywood entertainment and Internet technology - are the key combatants in a multi-round legal and economic wrestling match between producers of content and those who host it online over how to interpret the "safe harbor" provisions of the Digital Millennium Copyright Act (DMCA). (17 U.S.C. § 512(c).)

A recent Ninth Circuit ruling in UMG Recordings, Inc. v. Shelter Capital Partners, LLC (2011 WL 6357788) appears to solidify safe harbor protections for social media sites, enabling them to host copyrighted material posted by their users without being held immediately liable for copyright infringement. But with another major appeal pending (Viacom Int'l, Inc. v. YouTube, Inc., No. 10-3270 (2nd Cir.)) and the Stop Online Piracy Act (H.R. 3261) temporarily shelved by Congress, the question of who should police online copyright infringements remains heavily contested.

At stake, legal onlookers say, is the future of both copyright law and Internet innovation - not to mention a whole lot of money. The music and entertainment industries have for years been trying to hold user-driven social media sites like Veoh (the prevailing defendant in the UMG case) and YouTube responsible for policing material that their users post. But in UMG, a three-judge Ninth Circuit panel affirmed in December what it called a "careful and comprehensive" 2009 decision by a federal district court in Los Angeles County that found Veoh well within the safe harbor protections of the DMCA, which Congress enacted in 1998.

In his 49-page opinion, Ninth Circuit Judge Raymond C. Fisher assailed UMG's "novel theory" that safe harbor provisions should apply only to Web hosting services providing space on their servers for storing copyrighted materials - and not to those that also operate websites displaying or distributing such material. "UMG's theory fails to account for the reality that web hosts, like Veoh, also store user-submitted materials in order to make those materials accessible to other Internet users."

In an amicus brief, the Recording Industry Association of America, NBC Universal, and other trade groups had objected to the district court's decision, arguing that it disrupts the DMCA's "careful balance" of protections both for core Internet activities critical to its proper functioning, and for copyright owners vulnerable to "the virtually unlimited infringement of their rights that the Internet uniquely makes possible."

But Corynne McSherry, intellectual property director for the Electronic Frontier Foundation, says the UMG decision "helped affirm a stable legal environment. ... It's important for [Web] users to know that their content is going to be available ... and that it's a safe environment in which to innovate." She contends, "If we create a world in which we hold people responsible for every little infringement, it stifles creativity."

Looking beyond the UMG case, F. Jay Dougherty, a professor at Loyola Law School of Los Angeles who has worked as an attorney for movie studios, demurs, saying the courts "seem to be rejecting the arguments of copyright owners vigorously." He anticipates that the Second Circuit will follow suit with its eventual Viacom v. YouTube ruling, leaving the two major U.S. copyright circuits with "a very broad interpretation of copyright harbors, very supportive of the Web business. ... They are interpreting safe harbor in as broad a way as you can."

Copyright battles in particular are shaped by economics, says Joseph C. Gratz, an attorney with San Franciscobased Durie Tangri who has represented Internet giants such as Google, Twitter, and Yelp. "If everybody agrees we don't want infringing material, who's going to pay the costs? Internet companies say Hollywood should pay for it, Hollywood is trying to get the Internet to pay."

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