In Lenz v. Universal Music Corp. et al, the Ninth Circuit held that the Digital Millennium Copyright Act (the “DMCA”) requires copyright holders to consider fair use before sending a takedown notice and that the 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. The Ninth Circuit also held that an individual who is the subject of a takedown notice that does not consider fair use may recover nominal damages under the DMCA.
In February 2007, Plaintiff Stephanie Lenz (“Lenz”) uploaded to YouTube, a 29-second home video of her two young children dancing to the song Let’s Go Crazy by Prince. The video was entitled “Let’s Go Crazy # 1.” At the time the video was posted, defendants Universal Music Corp., Universal Music Publishing, Inc., and Universal Music Publishing Group (collectively, “Universal”) were responsible for enforcing Prince’s copyrights. In order to accomplish that objective with respect to YouTube, Universal’s legal department assigned an assistant to monitor YouTube on a daily basis. Universal’s general guidelines were that it would send YouTube a takedown notice if a composition was the “focus” of a video clip. Consideration of the fair use doctrine was not a part of the guidelines.
After reviewing Lenz’s video, based on the fact that Let’s Go Crazy played loudly throughout the entire video, the title of the clip and Lenz asking one of her children whether he liked the song, Universal concluded that the Prince song was “very much the focus of the video” and sent a takedown notice to YouTube. The notice included a good faith belief statement as required by 17 U.S.C. § 512(c)(3)(A)(v): “[Universal] has a good faith belief that the above-described activity is not authorized by the copyright owner, its agent, or the law.”
After receiving the takedown notice, YouTube removed the video and sent Lenz an email notifying her of the removal. In July 2007, Lenz sued Universal for misrepresentation under 17 U.S.C. § 512(f), which provides that if a person abuses the DMCA, said person can be liable for damages. Lenz alleged that Universal should have considered whether her use of Let’s Go Crazy was protected by fair use before sending a takedown notice in order to have a “good faith belief” that the use was infringing. Both parties moved for summary judgment on Lenz’s § 512(f) claim. The district court denied both motions and certified its summary judgment order for interlocutory appeal.
On appeal, the Ninth Circuit held that 17 U.S.C. § 512(c)(3)(A)(v) requires copyright holders to consider whether potentially infringing material is fair use before sending a takedown notice. Section 512(c)(3)(A)(v) requires a takedown notice to include a “statement that the complaining party has a good faith belief that the use of the material in the manner complained of is not authorized by the copyright owner, its agent or the law.” The Court held that the Copyright Act unambiguously contemplates fair use as a use authorized by the law. In 1976, Congress codified the application of a four step test for determining the fair use of copyrighted works in 17 U.S.C. § 107. Because 17 U.S.C. § 107 both empowers and formally approves the use of copyrighted material if the use constitutes fair use, fair use is “authorized by the law” within the meaning of § 512(c).
The Court rejected Universal’s argument that fair use was not “authorized by the law” because it is an affirmative defense that excuses otherwise infringing conduct. There are two different types of affirmative defenses: an affirmative defense that is labeled as such due to the procedural posture of the case, and an affirmative defense that excuses impermissible conduct. The Court held that fair use fell into the former category because 17 U.S.C. § 107 explicitly authorizes fair use. Thus fair use is distinct from other affirmative defenses where a use infringes a copyright, but there is no liability due to a valid excuse, such as copyright misuse or laches.
The next issue before the Court was whether there was a genuine issue of material fact as to whether Universal had knowingly misrepresented that it had formed a good faith belief that the video did not constitute fair use. The Ninth Circuit reversed the district court and held that Lenz could proceed under an actual knowledge theory, but not under a willful blindness theory. The Ninth Circuit had previously held that a copyright owner sending a DMCA takedown notice only needs to form a subjective good faith belief that a use is not authorized. Thus, Lenz’s argument that Universal should have known that the video qualified for fair use as a matter of law – an objective standard – was untenable. Under controlling Ninth Circuit authority, Universal would be subject to liability only if it knowingly misrepresented in the takedown notice that it had formed a good faith belief that the video was not authorized by law (i.e. did not constitute fair use). Lenz presented evidence that Universal did not form any subjective belief about the video’s fair use because it failed to consider fair use at all and knew that it failed to do so. Universal argued that its procedures, while not formally labeled consideration of fair use, was tantamount to such consideration. The Court remanded for further proceedings since a jury would need to determine whether Universal’s actions were sufficient to form a subjective good faith belief about the video’s fair use or lack thereof.
The Court also noted that, although the willful blindness doctrine could be used to determine whether a copyright holder “knowingly misrepresented that it held a good faith belief” that offending activity was not fair use, the record did not support that Universal was willfully blind. To demonstrate willful blindness in the Ninth Circuit, a plaintiff must establish: (1) that the defendant subjectively believed that there was a high probability that a fact exists; and (2) that the defendant took deliberate actions to avoid learning of that fact. Thus, Lenz needed to demonstrate a genuine issue as to whether Universal subjectively believed that there was a high probability that the video constituted fair use and took deliberate actions to avoid learning of the fair use. However, Lenz failed to provide any evidence that Universal was aware of a high probability that the video constituted fair use.
Finally, the Court held that a plaintiff may seek recovery of nominal damages for an injury incurred as a result of an improper takedown notice under Section 512(f). The Court rejected Universal’s argument that Lenz needed to demonstrate “actual monetary loss” because § 512(f) explicitly allows for the recovery of “any damages,” not just monetary losses.
Judge Smith concurred in part, dissented in part, and concurred in the judgment. He fully agreed that §512(c)(3)(A)(v) requires copyright holders to consider whether potentially infringing material is a fair use before sending a takedown notice. However, Judge Smith did not view § 512(f) as directly prohibiting a party from falsely implying that it had considered fair use. Instead Judge Smith read § 512(f) to prohibit a party from misrepresenting that a work is infringing, not from misrepresenting that they have considered fair use. Thus, in Judge Smith’s view, the relevant representation to be analyzed was Universal’s assertion that the video was infringing. It was undisputed that Universal did not consider fair use before sending the takedown notice. Thus, Judge Smith disagreed with the majority that there was a material factual dispute about whether Universal had a subjective good faith about the video’s fair use or lack thereof. Universal’s policy simply did not permit it to form an opinion about how the fair use factors applied to the video.
Judge Smith also expressly doubted that the “willful blindness” standard was applicable to § 512(f). The “willful blindness” standard first arose in the criminal context. In Judge Smith’s view, § 512(f) creates a statutory misrepresentation action, and it is likely Congress intended the action to mirror analogous common law torts like fraud, deceit, and misrepresentation. Therefore, common law tort principles should be used to construe “knowingly,” rather than a doctrine that developed from the criminal law.
The Ninth Circuit’s decision is important for any person or company that monitors online copyright infringements. Companies with written DMCA takedown policies should review their policies to ensure that fair use is taken into consideration. The Ninth Circuit also analyzes the DMCA different than other circuits in certain respects. That must be considered by copyright owners and users in choosing a forum to resolve their disputes.