DMCA Abuse and the Meaning of “Good Faith”

by Leo Lichtman

The DMCA notice and takedown process is instrumental to creators. At the same time, the safe harbors it provides are critical for fostering a diverse marketplace of online services. With the ease of online infringement, the DMCA helps navigate the murky waters of online intermediary liability by ensuring qualifying online service providers are protected from liability, while at the same time ensuring copyright owners can still protect their rights through meaningful and efficient procedures for taking down potentially infringing content. While the DMCA largely results in valid takedowns by creators asserting their legal rights, there are occasionally bad actors that give all creators a bad name by abusing the DMCA for inappropriate purposes.

Recognizing this concern, Congress placed certain safeguards in the DMCA’s overall scheme, including requiring certain elements to be contained in all notifications under § 512(c)(3), introducing a cause of action against any person who “knowingly materially misrepresents” that material or activity is infringing under § 512(f), and providing counter-notification procedures for replacing removed material under § 512(g). A recent case out of the Northern District of California presents a perfect example of a situation where a bad actor may have abused the DMCA and was found liable, showing that this system works as it is supposed to. Though the case ultimately came to the right outcome, the magistrate judge used the wrong standard to get there.

The recent default judgment in Automattic Inc. v. Steiner stems from a § 512(f) action brought by Oliver Hotham and Automattic. The facts are as follows: Hotham published an article on his WordPress blog (operated by Automattic) that criticized Straight Pride UK, a “heterosexual pride” organization, and included parts of a Press Release sent to Hotham by Defendant Nick Steiner, the “Press Officer” for the organization. After the article was published, Steiner sent Hotham and Automattic takedown notices asserting a “good faith belief” that the material was not authorized by the copyright holder, pursuant to 17 U.S.C. § 512(c)(3)(A)(v). This led to another article by Hotham, and after Steiner sent two more takedown notices that were incomplete, Automattic and Hotham brought this action, claiming Steiner allegedly misrepresented that the material was infringing, knowing that the representations were false. Steiner never answered or otherwise appeared in the action, and after the Clerk entered default against Steiner, the magistrate judge for the Northern District of California recommended default judgment in favor of plaintiffs, which was ordered by the district judge on March 2, 2015.

Taking the factual allegations of the complaint as true, the judge found the complaint to sufficiently allege that Steiner knowingly misrepresented that Hotham violated his copyright. This was based on a finding that “Defendant could not have reasonably believed that the Press Release he sent to Hotham was protected under copyright.” This seems like the correct outcome. However, the reasoning to get to this outcome was based on outdated precedent from Online Policy Group. v. Diebold, Inc., which defined “knowingly” to mean that a party “actually knew, should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith, that it was making representations.” Applying this standard, the court in Diebold found the copyright holder liable, for “[n]o reasonable copyright holder could have believed that the portions of the [allegedly infringing material] were protected by copyright.”

Diebold was almost immediately rejected by Rossi v. Motion Picture Association of America when the Ninth Circuit concluded that good faith was a subjective standard. In doing so, the Ninth Circuit stated, “[a] copyright owner cannot be liable simply because an unknowing mistake is made, even if the copyright owner acted unreasonably in making the mistake. Rather, there must be a demonstration of some actual knowledge of misrepresentation on the part of the copyright owner.” (Emphasis added). In Rossi, the plaintiff Rossi’s website contained various links suggesting that one could download MPAA member studios’ copyrighted motion pictures. The MPAA sent takedown notices to Rossi and Rossi’s Internet Service Provider, stating that Rossi’s site infringed. Rossi brought an action, contending the MPAA did not have sufficient information to form a “good faith belief” under § 512(c)(3)(A)(v) because it did not “conduct a reasonable investigation into the allegedly offending website.” Adopting the subjective standard for good faith, the court held that the MPAA acted in compliance with the DMCA. Given the explicit nature of the statements on Rossi’s website, no other investigation was needed by the MPAA to form a good faith basis. In other words, without actual knowledge that the links did not actually lead to infringing material, there was no basis for liability under § 512(f).

This reasoning was extended to affirmative defenses. In Lenz v. Universal Music Corp., the Northern District of California held that in light of Rossi, summary judgment was not appropriate because “[defendant’s] mere failure to consider fair use would be insufficient to give rise to liability under § 512(f).” There, plaintiff Lenz filed a § 512(f) action after Universal removed a twenty-nine second video on YouTube that featured Lenz’s young son “dancing” to the Universal-owned recording “Let’s Go Crazy.” Lenz, who had previously reinstated the video under § 512(g) on fair use grounds, claimed Universal made a knowing misrepresentation that the material was infringing because it did not adequately assess whether the use was fair before sending the takedown notice. Even though Lenz presented evidence that Universal did not consider explicitly whether her video made fair use of the song prior to sending the notice, the court declined to grant Lenz summary judgment. While the court noted that “at a minimum . . . a copyright owner must make at least an initial assessment as to whether the fair use doctrine applies” in order to make a good faith representation that the use is not authorized, it agreed that requiring a copyright holder to actually engage in a full fair use analysis prior to sending a takedown notice would be inconsistent with the purpose of the statute. Again, without actual knowledge that the video made fair use of the recording, there was no basis for liability under § 512(f). Notably, in assessing whether Universal willfully blinded itself as to whether the video might constitute fair use, the court also rejected Lenz’s argument that the video was “self-evident” fair use, for this would necessarily rest upon an objective measure rather than the subjective standard required by Rossi.

In Automattic, it is very likely that Automattic and Hotham’s complaint already sufficiently alleged that Steiner did have actual knowledge of the misrepresentation. The allegations show that Steiner stated a good faith belief that use of the materials were not authorized in that manner, even though the material was specifically sent to Hotham with the intent that Hotham report on it. Taking these factual allegations as true, the court could have easily recommended default judgment under the Rossi standard, by finding that the Plaintiffs demonstrated Steiner had actual, subjective, knowledge of his misrepresentation. The circumstances show that Hotham was in fact given permission to use the “Press Statement” in his article (why else would a “Press Officer” send a “Press Statement” to a journalist seeking out a story?), yet Steiner still stated in good faith that use of the “Press Statement” was not authorized.

Therefore, while the court applied the wrong standard—which is ultimately not a big deal as a magistrate judge’s default judgment recommendation carries little precedential weight—the outcome does seems correct, and it is worth highlighting cases such as this where bad actors abuse copyright law even under the right standards. Too often, critics of copyright highlight what they see as “trolling” behavior designed to chill speech, when in reality, it is simply a copyright owner trying to assert his or her legal rights. But the fact of the matter is that copyright infringement is rampant on the Internet. In order for copyright owners to meaningfully protect their rights, Congress intended for § 512 to “balance the need for rapid response to potential infringement with the end-users legitimate interests in not having material removed without recourse.” (Emphasis added).

It is already a massive undertaking for copyright owners to monitor their works online, so facing potential liability for not launching a full investigation into every piece of allegedly infringing material online—including trying to predict any affirmative defenses an alleged infringer might raise—would completely undercut the Congressional aim of the DMCA notice and takedown process. The Rossi court understood this when it affirmatively established a subjective “good faith” requirement under the DMCA, stating, “[m]easuring compliance with a lesser ‘objective reasonableness’ standard would be inconsistent with Congress’s apparent intent that the statute protect potential violators from subjectively improper actions by copyright owners.” The Rossi standard thus fulfills Congress’s intent to provide an effective mechanism for online infringement while providing recourse against alleged bad actors as in this case.

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