On April 5, the Second Circuit issued its highly anticipated opinion in Viacom v. YouTube, reversing the District Court’s grant of summary judgment and remanding for further proceedings.  Significantly, the opinion marks the first time that a court has drawn a meaningful, substantive distinction between actual and “red-flag” knowledge under the DMCA.  This sets it apart from earlier DMCA opinions, including that of the Ninth Circuit in UMG Recordings, Inc.  v. Shelter Capital (involving the Veoh videosharing service) and, notably, the lower court opinion in Viacom.  Practitioners and ISPs now have some judicial guidance as to how to construe their rights and responsibilities under the DMCA.

Ominously for YouTube, the Second Circuit held that a reasonable jury could find that, under DMCA Section 512(c), YouTube had actual knowledge or awareness of specific infringing activity on its website.  Moreover, the Second Circuit ruled that the District Court had incorrectly construed the DMCA’s control and benefit provisions in holding that the “right and ability to control” infringing activity required that the ISP have knowledge of specific, identifiable instances of infringement.  Finally, the court affirmed the District Court’s holding that three of YouTube’s software functions fell within the safe harbor for infringement occurring “by reason of user storage,” and remanded for further fact-finding with respect to a fourth software function.  Continue reading »