The Ninth Circuit has affirmed the district court’s decision that Veoh’s user-generated video service was protected from UMG’s copyright infringement claims by the DMCA safe harbor provisions. In a comprehensive and mostly well-reasoned 49-page opinion, the court methodically rejected each of UMG’s arguments as to why the safe harbor should not apply. This is the latest in a string of decisions in which various courts have properly held that the DMCA safe harbor really does mean what it says. General knowledge that some infringing content has been posted by users is insufficient to deprive a service provider of the safe harbor; knowledge of the specific infringing content alleged in the complaint is necessary.
Along the way, there are some very interesting issues discussed in the opinion. Notably, the court held that copyright owners cannot rely upon anything other than valid DMCA take-down notices to prove specific knowledge of infringing material. In other words, a letter from the copyright owner is insufficient to establish notice if the letter does not contain all of the information required by the DMCA notice-and-takedown provision.
Also, the decision addresses the issue of when attorneys’ fees may be awarded pursuant to Rule 68 (the offer of judgment provision), as opposed to Section 505. This has been a fairly thorny problem in copyright law, and this decision does nothing to help the problem, as the reasoning is internally inconsistent. To sum up, Rule 68 provides that if a defendant makes an offer to accept judgment against it in a certain amount (or with certain stipulated equitable relief to the plaintiff) and the plaintiff refuses to accept the offer but then later obtains a lesser judgment at trial, the plaintiff must pay the defendant’s costs incurred after the date the offer was rejected. The wrinkle is that costs can include attorneys’ fees, but only for causes of action where attorneys’ fee awards are treated as recoverable costs by statute. One would think that would make attorneys’ fees recoverable pursuant to Rule 68 in copyright cases, because Section 505 does treat attorneys’ fees as recoverable costs. Unfortunately, many courts have mucked this up by saying that fees are not recoverable under RUle 68 because on the prevailing party can obtain attorneys’ fees in copyright cases and Rule 68 only applies to defendants who have lost. But this makes no sense. I seriously doubt that any of the causes of action where Rule 68 has been applied have statutory provisions allowing losing defendant to recover their attorneys’ fees. Indeed, the whole point of Rule 68 is to allow a losing defendant to recover its costs and if those costs (and fees) were already available to a losing defendant (as opposed to generally available to a prevailing party) pursuant to the substantive statute, there would be no need for Rule 68 at all. To be fair, this inconsistency is pretty well established in various prior decisions.
In any event, this decision is a must read for those of us who litigate or advise clients in the on-line content world, whether copyright owner or service provider. Here is a copy of the decision: