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Lenz v. Universal Music Corporation

District court denies parties’ motions for cross summary judgment on plaintiff's claim of misrepresentation under the DMCA, which claim is based on defendant's takedown notice for plaintiff's YouTube video of her toddler dancing to the Prince song Let's Go Crazy, finding that defendant's failure to include a fair use analysis in its takedown review did not constitute subjective willful blindness, and that plaintiff was not precluded as a matter of law from recovering damages in connection with getting her video restored.

In this protracted litigation, plaintiff Stephanie Lenz brought suit in 2007 against defendant Universal Music Corp., asserting a claim for misrepresentation under the Digital Millennium Copyright Act (DMCA), 17 U.S.C. § 512, based on allegations that she suffered damages from YouTube’s removal of her viral video as a result of Universal’s takedown notice. On cross-motions for summary judgment, the court denied both plaintiff’s and defendant’s motions.

Plaintiff posted a 30-second video on YouTube titled “Let’s Go Crazy #1,” featuring her toddler performing an impromptu dance to the song Let’s Go Crazy by the artist formerly known as Prince. After identifying the video as containing the copyrighted composition through its review procedures, defendant Universal, which administers the copyright to the original composition, sent a takedown notice to YouTube in the form and to the address required by YouTube’s Terms of Use. YouTube removed the video and notified Lenz. Lenz sent YouTube a counter-notice, demanding that the video be restored, and YouTube acquiesced. The video was down for approximately six weeks. Lenz brought suit against Universal alleging a violation of 17 U.S.C. § 512(f), which creates a cause of action against any person who knowingly misrepresents that online material or activity is infringing, asserting that she incurred damages as a result of YouTube’s removal of her video.

At the outset, the district court considered whether the DMCA applied to the case. Universal argued that it did not intend its takedown notice to constitute a “notification of claimed infringement” under § 512 and that the notice complied with the provisions of the DMCA and was sent to the email address YouTube designated for receipt of DMCA takedown notices only because YouTube’s Terms of Use so required. The notice also contained language so stating and disclaiming that it was a notice under the DMCA. Universal also argued that YouTube is ineligible for the protection of the DMCA’s safe harbor provision because YouTube’s activities in uploading, hosting, and transmitting videos do not constitute “storage at the direction of the user” as specified in § 512(c)(1). Questioning why Universal had complied with YouTube’s Terms of Use or why Universal could not have addressed its concerns directly with YouTube (as the Terms of Use specifically allowed), the court concluded that, based on current case law, including the Second Circuit’s decision in Viacom Int’l, Inc. v. YouTube, Inc. and the Ninth Circuit’s decision in UMG Recordings, Inc. v. Shelter Capital Partners LLC, and in light of the evidence in the record, YouTube qualifies for protection under the DMCA safe harbor, and that Universal’s takedown notice constitutes a “notification of claimed infringement” under the DMCA.

A notification of claimed infringement sent to a service provider under § 512(c) must include “[a] statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.” Lenz asserted that Universal’s statement in its takedown notice that the company had a “good faith” belief that Lenz’s video “is not authorized by the copyright owner, its agent, or the law” could not have been in good faith, given that Universal’s procedures for reviewing YouTube videos did not include an analysis of whether the video constituted fair use, and was therefore an actionable misrepresentation under § 512(f). The court disagreed, finding that while Universal had an obligation to properly consider whether the video constituted fair use of the copyrighted song before it sent the takedown notice and that Lenz had put forth sufficient evidence that the company had failed to do so, Universal’s mere failure to consider fair use is insufficient to give rise to liability under § 512(f). According to the court, under the Ninth Circuit’s decision in Rossi v. Motion Picture Assoc. of America, Inc., Lenz must demonstrate that Universal had some actual knowledge that its takedown notice contained a material misrepresentation.

Universal argued that although the employee responsible for the video review procedure was not instructed to and did not consider fair use per se, his consideration of a number of factors that would be relevant to a fair use determination (the existence of a transformative noncommercial purpose; the nature of the copyrighted work; the amount and substantiality of the use of the copyrighted work; and the effect on the market for the copyrighted work) was sufficient to avoid liability. The court disagreed, finding that while requiring a copyright holder to engage in a full-blown fair use analysis prior to sending a DMCA takedown notice would be inconsistent with the remedial purposes of the statute, it is insufficient for a copyright holder to consider facts that might be relevant to a fair use analysis without making any effort to evaluate the significance of those facts – including their legal significance – in the context of the doctrine. “[A]t a minimum a copyright owner must make at least an initial assessment as to whether the fair use doctrine applies to the use in question in order to make a good faith representation that the use is not ‘authorized by law.’”

Notwithstanding Universal’s admitted failure to consider fair use before sending takedown notices, the court concluded its actions were not sufficient to establish liability under § 512(f) under the subjective good faith standard required by the Ninth Circuit’s holding in Rossi v. Motion Picture Assoc. of America, Inc. “In light of Rossi, it appears that Universal’s mere failure to consider fair use would be insufficient to give rise to liability under § 512(f). Lenz thus must demonstrate that Universal had some actual knowledge that its Takedown Notice contained a material misrepresentation.” The court rejected Lenz’s argument that Universal’s takedown procedures for evaluating copyright infringement were so deficient that Universal willfully blinded itself as to whether any video might constitute fair use.

In order to establish Universal’s willful blindness, Lenz must establish: (1) Universal must subjectively believe a high probability exists that any given video might make fair use of a copyrighted composition, and (2) that Universal took deliberate actions to avoid learning of that fact. The court noted that, based on the evidence that Universal assigned the task of reviewing YouTube postings for infringing uses of Prince’s songs to a single person without giving that employee any information or training about fair use, a trier of fact could conclude that Universal took deliberate actions to avoid learning whether any particular use of one of Prince’s works was protected by the fair use doctrine. Lenz did not present evidence, however, suggesting that Universal subjectively believed either that a high probability that any given video might make fair use of a Prince composition or that Lenz’s video in particular made fair use of Prince’s song Let’s Go Crazy, and was therefore not entitled to summary judgment. The court also found that Universal was not entitled to summary judgment under the subjective knowledge standard because it had not affirmatively shown that it lacked a subjective belief that a high probability existed that any given video might make fair use of a Prince composition.

The court also rejected Universal’s argument that the company was entitled to summary judgment because Lenz could not demonstrate that she suffered any damages recoverable under § 512(f). Lenz asserted three categories of damages: loss of YouTube’s hosting services and chilling of her free speech; lost time and resources; and attorneys’ fees and costs. The court found Lenz could not maintain a damages claim under the DMCA for either loss of YouTube’s services (which are free) or the chilling of her free speech. Noting that no reported cases definitively indicated Lenz could recover for the time (about 10 hours) and resources (electricity to power her computer, Internet and telephone bills) that she expended in attempting to have her video reinstated under the DMCA’s counter-notice procedures, the court reiterated its previous determination that requiring a plaintiff who demonstrates an actionable misrepresentation to also demonstrate “not only that she suffered damages but also that those damages were economic and substantial would vitiate the deterrent effect of the statute.” Similarly, the court found it unclear that Lenz could not recover attorneys’ fees (which were provided to her pro bono) as damages.