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Lenz v. Universal Music Corporation, et al.

Court grants plaintiff’s motion for summary judgment with regard to defendants’ six affirmative defenses, in an action for misrepresentation brought under Section 512(f) of the DMCA based on defendants’ takedown notice submitted to YouTube.

Plaintiff Stephanie Lenz posted a video of her young son dancing to a Prince song on YouTube. Defendant copyright owners filed a takedown notice with YouTube, pursuant to Section 512(c) of the Digital Millennium Copyright Act (DMCA), and YouTube removed plaintiff’s video from the site. Plaintiff filed suit against defendants for misrepresentation under Section 512(f) of the DMCA, asserting that her use of the Prince song was a fair use and therefore was not an unauthorized use.

Section 512(f) provides:

“Any person who knowingly materially misrepresents under this section (1) that material or activity is infringing, or (2) that material or activity was removed or disabled by mistake or misidentification, shall be liable for any damages, including costs and attorneys' fees, incurred by the alleged infringer, by any copyright owner or copyright owner's authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.”

In August 2008, the district court denied defendants’ motion to dismiss for failure to state a claim. In this decision, the court granted plaintiff’s motion for partial summary judgment with regard to defendants’ six affirmative defenses: failure to state a claim, bad faith, unclean hands, no damages, estoppel, and waiver.

First, the court held that Lenz had alleged sufficient facts to state a claim under Section 512(f), as explained in the court’s August 2008 order, and granted summary judgment to Lenz on defendants’ affirmative defense of failure to state a claim.

Next, the court addressed defendants’ defenses of bad faith and unclean hands. The court treated the defenses together because “the legal standards for these two equitable defenses are for practical purposes the same” and because defendants treated them together in their briefings. The court quoted the U.S. Supreme Court’s description of the doctrine of unclean hands: “[W]henever a party who, as actor, seeks to set the judicial machinery in motion and obtain some remedy, has violated conscience, or good faith, or other equitable principle, in his prior conduct, then the doors of the court will be shut against him in limine; the court will refuse to interfere on his behalf, to acknowledge his right, or to award him any remedy.” (Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 245 (1933)).

Defendants offered several arguments to support their claim that Lenz acted in bad faith and with unclean hands: that she “implicitly” admitted to infringing the Prince song by claiming her use was a fair use; her claim that she posted the video on YouTube for viewing by her friends and family even though her video had received over 800,000 hits once she filed her lawsuit; including language in her counter-notification to YouTube lamenting the fact that Universal was able to discover the video; and being motivated by a “hostility to the rights of copyright owners.”

The court held that “Universal has not identified evidence from which a reasonable jury could find that any of the [sic] Lenz’s alleged misrepresentations during this litigation were made in bad faith, or constituted the kind of ‘unconscionable acts’ for which the unclean hands defense is designed.”

Turning to defendants’ defense that Lenz did not suffer any damages, the court noted that what types of damages are recoverable under Section 512(f) is an issue of first impression. Lenz asserted that the phrase “any damages” as used in 512(f) is not limited to monetary damages, while defendants asserted that damages must be more than marginal economic damages and that such damages must be proximately caused by the misrepresentation. The court held that “a plain language reading of the statute supports certain aspects of both parties’ arguments”: the phrase “any damages” as used in the statute is not limited to substantial monetary damages, but a plaintiff’s damages must be proximately caused by the misrepresentation to the service provider and the service provider’s reliance on that misrepresentation.

The court also held that attorney’s fees and costs that are incurred for work in responding to the takedown notice and prior to the institution of a lawsuit under Section 512(f) are recoverable under 512(f), but recovery of any other costs and fees is governed by Section 505 of the Copyright Act.

According to the court, in order to survive Lenz’s summary judgment motion on the affirmative defense of no damages, defendants must show that there are genuine issues of material fact as to all categories of recoverable damages. Defendants challenged Lenz’s claim that her pre-suit activities, which included “time spent reviewing counternotice procedures, seeking the assistance of counsel, and responding to the takedown notice,” involved actual expense or economic loss. However, as the court noted, defendants did not claim that Lenz did not take these actions or incur any damages in doing so. The court concluded that “actual expenses or economic losses of some minimum value are not necessary under the statute. Accordingly, because there is no genuine issue of material fact as to whether Lenz incurred some damages as defined under the statute, Lenz’s motion will be granted as to Universal’s affirmative defense of no damages.”

Finally, the court granted summary judgment to Lenz with regard to the defenses of estoppel and waiver. According to the court, in order to survive summary judgment on their affirmative defense of estoppel, defendants must demonstrate, among other things, that there are triable issues of material fact as to whether defendants detrimentally relied on any misrepresentation by Lenz. “Universal makes no attempt in its opposition papers to show that it relied in any way on any misrepresentations made by Lenz. Instead, Universal argues only that there are triable issues ‘on whether Plaintiff prosecuted this lawsuit knowing her allegations to be false.’” Regarding waiver, the court concluded that “Universal’s affirmative defense of waiver similarly is without support or elaboration in Universal’s answer or opposition brief. Universal merely quotes Lenz as expressing her lack of interest in having YouTube host the video at issue and argues that Lenz ‘is simply pursuing this case as part of her and EFF’s [Electronic Frontier Foundation] publicity blitz.’ Universal provides no support, legal or otherwise, for the conclusion that Lenz’s opinion should be interpreted as a waiver of her § 512 claim.”