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IP/Entertainment Case Law Updates

Lenz v. Universal Music Corp., et al. (not for publication)

The district court denied Universal Music Corp.’s request for an interlocutory appeal relating to the court’s August 20, 2008, order in which the court held that a copyright owner, in order to proceed in good faith under the DMCA, must consider whether an individual’s use of a copyrighted work is a fair use before sending a take-down notice.

In this case, the plaintiff posted a video to that features her children dancing, with a Prince song playing in the background. Universal Music Corp. and its affiliates, as owners of the copyright to the song, sent YouTube a takedown notice which included the statement required by 17 U.S.C. § 512(c)(3)(A)(v) that “the complaining party has a good faith belief that use of the material complained of is not authorized by the copyright owner, its agent, or the law.” Plaintiff sent YouTube a counter-notice, claiming that her use of the song was a fair use, and demanded that the video be restored. YouTube restored the video about six weeks later.

Plaintiff also filed suit against Universal for misrepresentation under 17 U.S.C. §512(f), alleging that Universal lacked a good faith belief that the video actually infringed a copyright as required by Section 512(c) of the DMCA. Plaintiff argued that her use of the song constituted fair use and is thus “authorized” by law. Universal filed a motion to dismiss, arguing that copyright owners cannot be required to evaluate the question of fair use prior to sending a takedown notice because “fair use is merely an excused infringement of copyright rather than a use authorized by copyright owner or by law.”

On August 20, 2008, the court denied Universal’s motion, finding that the phrase “authorized by law” was unambiguous and that an activity authorized by law is one “permitted by law or not contrary by law.” The court went on to find that fair use is a lawful use of a copyright.

Universal filed a motion to certify the August 20 order for interlocutory appeal. A district court, in its discretion, may certify an issue for interlocutory appeal under 28 U.S.C. §1292(b) if (1) there is a “controlling question of law,” (2) on which there are substantial grounds for difference of opinion,” and (3) “an immediate appeal may materially advance the ultimate termination of the litigation.”

The court rejected Universal’s assertion that the issue presented in the order constitutes “a substantial ground for difference of opinion,” noting that the mere presence of a disputed issue that is a question of first impression, standing alone, is insufficient to demonstrate a substantial ground for difference of opinion (citing In re Conseco Life Ins. Cost of Ins. Litig., 2005 WL 5678841, at *2 (C.D.Cal. May 31, 2005)). The court stated that, in its August 20 order, it “did not hold that every takedown notice must be preceded by a full fair use investigation. Rather, it recognized, as it has previously, that in a given case fair use may be so obvious that a copyright owner could not reasonably believe that actionable infringement was taking place. In such a case, which is likely to be extremely rare, the policy objectives of the DMCA are served by requiring copyright owners at least to form a subjective good faith belief that the ‘particular use is not a fair use’ before sending the takedown notice.”

Regarding the timing of an interlocutory appeal, the court explained that an interlocutory appeal before discovery would deprive the appellate court of a factual record that would aid its consideration of the legal questions presented, noting that so far “Universal has not identified what if any steps it took to consider fair use when it sent the takedown notice for Lenz’s video.”