Copyrights and Fair Use: Lenz v. Universal Music Group, et. al.<\/em><\/p>\n In this appeal<\/a> from the U.S. District Court for the Northern District of California, the U.S. Court of Appeals for Ninth Circuit\u2019s panel held that the Digital Millennium Copyright Act (\u201cDMCA\u201d) requires copyright holders to consider \u201cfair use\u201d before sending a takedown notification. If a copyright holder fails to do this, it introduces a triable issue regarding whether the alleged infringing use was not in accordance with the law. The copyright owner\u2019s determination whether the use is fair use or not is subjective. This subjective \u201cgood faith belief\u201d test required under the DMCA can be determined under two analysis methods: 1) the actual knowledge theory and 2) the willful blindness doctrine, both of which the 9th<\/sup> Circuit held could be used under the DMCA.<\/p>\n Actual knowledge theory says that the there must be some actual knowledge of the misrepresentation on the part of the copyright holder. Generally, in order to be held liable for any damages due to misrepresentation, the court will look to whether the person making the statement was negligent in making false statements. The distinction between this and fraud is that to be held liable for fraud, the speaker must have intended that there be reliance on the false statement made.<\/p>\n The \u201cwillful blindness doctrine\u201d means that the speaker materially misrepresented that it had a good faith belief that the offending activity was not a fair use. The plaintiff would have to show that the defendants subjectively believed that the use of the copyright protected work constituted fair use. The lower court in this case determined that Lenz could proceed under the actual knowledge theory, but not the blindness doctrine because \u201cbecause she did not show that the defendants subjectively believed there was a high probability that the video constituted fair use.\u201d<\/p>\n Background: On July 24, 2007, Stephanie Lenz filed a lawsuit under 17 U.S.C. \u00a7 512(f)\u2014part of the DMCA against Universal Music Corp. (\u201cUMG\u201d) and its subsidiaries. She claimed that UMG misrepresented in its takedown notification that her 29 second video containing Prince\u2019s song \u201cLet\u2019s Go Crazy\u201d and to which her children danced, was not lawful. The court determined that \u201cthe statute requires copyright holders to consider fair use before sending a takedown notification, and that failure to do so raises a triable issue as to whether the copyright holder formed a subjective good faith belief that the use was not authorized by law.<\/p>\n Lenz uploaded her video named \u201cLet\u2019s Go Crazy #1\u201d to YouTube in 2007. UMG monitors YouTube videos and one of its employees found Lenz\u2019s video. The employee checked to see if the video \u201cembodied a Prince composition\u201d and made \u201csignificant use of . . . the composition, specifically if the song was recognizable, was in a significant portion of the video or was the focus of the video.\u201d If the song is the focus of the video, UMG\u2019s procedure required that they notify YouTube to take it down. The procedures did not explicitly say that UMG considered application of the fair use doctrine. The notice included a good faith statement which: \u201cWe have a good faith belief that the above-described activity is not authorized by the copyright owner, its agent, or the law.\u201d<\/p>\n YouTube took down the video, and Lenz protested. YouTube brought the protest to UMG\u2019s attention and UMG responded that Lenz did not acknowledge that her statement was made under penalty of perjury and that there was no record that YouTube or Lenz had licenses to use the song. Lenz protested again, and YouTube reinstated the video. Lenz brought a lawsuit regarding UMG\u2019s alleged misrepresentation under 512(f), among other reasons, including tortuous interference. Only the misrepresentation claim was before the Ninth Circuit for this decision.<\/p>\n Under the Digital Millennium Copyright Act, service providers, such as YouTube, can avoid copyright infringement claims under certain conditions. Infringement liability can be avoided if the service provider disables or removes the alleged infringing content \u201cexpeditiously.\u201d DMCA sets forth the copyright holder\u2019s requirements to support removal: 1) identification of the copyrighted work, 2) identification of the allegedly infringing material, and, 3) a \u201cgood faith\u201d statement regarding the copyright holder\u2019s belief that the infringing use was not authorized by the copyright owner, an agent, or the law. If a copyright owner misuses the takedown notice requirements, the owner is subject to liability under 512(f) misrepresentation.<\/p>\n Fair use analysis was codified in the Copyright Act in 1976, under 17 U.S.C. \u00a7 107<\/a>. Fair use considerations are:<\/p>\n (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.<\/p>\n Universal argued that fair use is a \u201cdefense\u201d to otherwise infringing activity, e.g., unless proven otherwise, any use of copyright protected works without permission is an infringement. This court stated that fair use is a right, and not an excuse for otherwise infringing content. However, the court quoted Bateman v. Mnemonics<\/em><\/a>, Inc.<\/em>, 79 F.3d 1532, 1542 n.22 (11th<\/sup> Cir. 1996) which said: \u201cRegardless of how fair use is viewed, it is clear that the burden of proving fair use is always on the putative infringer.\u201d<\/p>\n The court provided some guidance as to how a copyright holder could use computer programs to identify content which could be subject to a takedown notice and determine fair use: \u201cFor example, consideration of fair use may be sufficient if copyright holders utilize computer programs that automatically identify for takedown notifications content where: \u201c(1) the video track matches the video track of a copyrighted work submitted by a content owner; (2) the audio track matches the audio track of that same copyrighted work; and (3) nearly the entirety . . . is comprised of a single copyrighted work.\u201d Brief for The Org. for Transformative Works, Public Knowledge & Int\u2019l Documentary Ass\u2019n as Amici Curiae Supporting Appellee at 29\u201330 n.8 (citing the Electronic Frontier Foundation website (link unavailable)).\u201d [CMG link <\/em>here<\/em><\/a>.]<\/p>\n The court concluded, however, that copyright holders must consider fair use before submitting takedown notices under the DMCA and that the plaintiff, Lenz, could move forward at trial under the actual knowledge theory regarding plaintiff\u2019s misrepresentation allegation. In addition, the plaintiff could seek nominal damages for injuries due to the misrepresentation, if proved.<\/p>\n In my opinion, there are two things worth noting regarding this decision. First, Lenz had filed a tortuous interference claim which was dismissed. In her second amended complaint, only misrepresentation under \u00a7 512(f) was the only claim. The tortuous interference with her contract with YouTube claim suggested that the plaintiff\u2019s insistence in reposting the video had a purpose other than making available an innocent video about her children. Indeed, how many <\/em>children<\/em><\/a> [49,659,075 YouTube views as of October 22, 2015] have been launched to fame after videos were posted on YouTube and subsequently interviewed by <\/em>television personalities<\/em><\/a> [100,795,145 YouTube views as of October 22, 2015] or had the opportunity to meet the musicians or vocalists the children were imitating? Second, M. Smith, Circuit Judge, concurring in part, dissenting in part, and concurring in the judgment, had the better analytical approach to this case: \u201cIn sum, I would hold that parties must individually consider whether a work is a fair use before representing that the work is infringing in a takedown notice. If they do not, and the work is a non-infringing fair use, they are subject to liability for knowingly misrepresenting that the work is infringing.\u201d<\/em><\/p>\n If you have copyright protected work which you want to monitor online, <\/em>Gayton Law<\/em><\/a> can help you with developing policies and procedures for your businesses\u2019 infringement monitoring activities. <\/em><\/p>\n Terms of Use and Arbitration Clauses. Berkson,et. al. v.Gogo LLC and Gogo, Inc.<\/em><\/a> This consumer fraud case came before the U.S. District Court for the Eastern District of New York. The class action plaintiffs alleged that the defendants, Gogo LLC and Gogo, Inc., fraudulently charged Wi-Fi services on air flights, specifically, that the defendants \u201cimproperly increased their sales and profits by misleading customers into purchasing a service that charged a customer\u2019s credit card, on an automatically-renewing continuing monthly basis, without adequate notice or consent.\u201d According to the complaint filed for this case, between 2008 and 2012, the defendants fraudulently advertised that purchasers were only buying single one month subscription to the Wi-Fi service, but the defendants were making recurring charges on the plaintiffs\u2019 credit cards. The defendants said that the plaintiffs agreed to the recurring charges and they also agreed to a mandatory arbitration clause. The named plaintiffs, representing a nationwide class, claimed that the defendants committed \u201ccommon law breach of the implied covenant of good faith and fair dealing, common law unjust enrichment, and violation of various consumer protection statutes.\u201d On April 8, 2015, the court made decisions on defendants\u2019 procedural motions, specifically, motions to (1) transfer venue; (2) compel arbitration; and (3) dismiss for lack of standing.<\/p>\n The motions to transfer venue and compel arbitration was based on Gogo\u2019s terms of use. Plaintiffs\u2019 claim that Gogo\u2019s terms and conditions were hidden, and, therefore, unenforceable. Gogo is a dominant player in the in-flight Wi-Fi market, where more than 80% of North American flights use Gogo\u2019s services. Gogo\u2019s website advertised a daily rate of $10 and a monthly rate of about $40. Plaintiffs used Gogo\u2019s services during air plane flights. The plaintiffs\u2019 claimed that there was nothing to indicate that if they registered for the monthly service that they would be billed on a recurring basis. The service was only canceled once the subscribers noticed the fee and contacted Gogo.<\/p>\n The court determined that because the terms and conditions were hidden and users were not given sufficient notice to inquire about the terms (which included language regarding the recurring fee and the arbitration clause) the court denied the defendants\u2019 motions to transfer venue and compel arbitration. The defendant\u2019s motion regarding standing stated that the plaintiffs had not shown the particularized and concrete injuries required to meet the requirements to bring a lawsuit. The court found that just because one plaintiff was reimbursed by a credit card company for the charges when Gogo refused to do so and that another was reimbursed when that plaintiff informed Gogo of the class action lawsuit. The standing motion was also denied.<\/p>\n Although this case was before a New York federal district court, the issues it addresses are nationwide. More and more transactions are being conducted online. This case is instructive with regard to providing transparency about your business\u2019s online contract terms and conditions. Contact <\/em>Gayton Law<\/em><\/a> to ensure that your online agreements are in compliance with your jurisdiction\u2019s click-wrap, sign-in-wrap and browse-wrap laws. <\/em><\/p>\n The FTC\u2019s Supreme Court Victory: A Rare Win for Both Libertarians and Regulators.<\/em> Guest post by Theodore A. Gebhard, J.D., Ph.D.<\/p>\n The Federal Trade Commission\u2019s (FTC) recent Supreme Court victory in the North Carolina State Board of Dental Examiners (NCSB or Board) case brought together in common cause both economic libertarians and federal antitrust regulators \u2014 groups often at odds with each other respecting important philosophical and policy principles. The FTC\u2019s win, however, gave both groups much reason to celebrate.<\/p>\n See the rest of the post <\/em>here<\/a><\/em>.<\/em><\/p>\n Even in a Knowledge-Driven Economy \u2013 Things are Still Kings by Cynthia M. Gayton, Esq. posted on Vienna Woods Law & Economics blog<\/a>.<\/p>\n From September 30 \u2013 October 1 of this year, I attended a conference entitled \u201cThe IP Platform: Supporting Inspiration and Innovation<\/a>\u201d that was sponsored by George Mason University School of Law\u2019s Center for the Protection of Intellectual Property.\u00a0 The extensive and impressive speaker\u2019s list included a keynote speech by David Kappos<\/a>, law professors from around the country, and innovators of all stripes.<\/p>\n See the rest of the post <\/em>here<\/em><\/a>.<\/p>\n Cynthia Gayton co-created a 3-part workshop, the third of which was held on Saturday, October 24, entitled \u201cTheseus\u2019 Paradox\u201d at The George Washington University\u2019s Alexandria campus. This workshop focused on strategies to manage innovation.<\/p>\n Learn more about the <\/em>program <\/em>here<\/em><\/a>.<\/em><\/p>\n Caroline Norbury was a featured guest speaker at the second National Creative Economy Summit. Cynthia Gayton had the distinct honor and privilege of interviewing her at DC\u2019s own WLVS Studios on October 6, 2015. Watch the interview <\/em>here<\/em><\/a>.<\/em><\/p>\n The \u201cGuide to Creating and Protecting Fictional Characters\u201d Second Edition by Cynthia Gayton was released in May 2014 and is now available for the Kindle<\/a>.<\/p>\nContracts<\/h2>\n
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