Q&A: Attorney Paul Smith of Jenner & Block Deciphers YouTube Appeal Decision

by Jeremy Zweig, Viacom

On April 5, the U.S. Court of Appeals in New York handed down its decision in Viacom’s copyright infringement case against Google and YouTube.  The Appeals Court ruling was a significant victory for Viacom and rejected key elements of the lower court’s decision, clarified several questions of law and sent the case back to be heard in the lower court.

On the day of the ruling, Viacom released the following statement:

“We are pleased with the decision by the U.S. Court of Appeals. The Court delivered a definitive, common sense message – intentionally ignoring theft is not protected by the law.”

Viacom filed suit in 2007 to end YouTube’s practice of disregarding copyright law and profiting from infringing content on its site.  During the course of the case, YouTube modified its practices and now blocks much of the infringing content from being posted.  As a result, YouTube’ s relationships with the producers of  professional content have improved significantly.  In fact, Viacom’s Paramount Pictures recently announced a distribution deal with YouTube, as have several other film studios.

Paul Smith, the attorney from Jenner & Block who represented Viacom in the appeal, spoke to us about the case and what the ruling means for Viacom, YouTube and the Internet.

What is this case about?

Internet sites like YouTube have quite a bit of latitude to create web properties legally, and most developers follow the law.  However, shortly after YouTube’s launch in 2005, it became obvious to its leadership team that clips of popular television shows and movies were what its users most wanted to watch.  But rather than engaging and compensating those who created and distributed these popular properties, YouTube’s managers made the deliberate decision to unlawfully build their business on the backs of others.

This is an individual case with a very specific set of facts.  This suit doesn’t at all impact internet sites that are following the law, complying with the Digital Millennium Copyright Act (DMCA) and doing the right thing.

Paul Smith of Jenner & Block

How much of YouTube’s content was infringing?

YouTube’s internal surveys in March of 2006 “estimated that 75-80% of all YouTube streams contained copyrighted material,” a fact that the Appeals Court found compelling and stated in its ruling:“[t]hese approximations suggest that defendants were conscious that significant quantities of material on the YouTube website were infringing.”  In addition to these surveys, evidence also showed that YouTube was aware of specific infringing clips of Viacom content.  For example, one of YouTube’s founders prepared a report in March of 2006 indicating his awareness of specific clips that he believed to be ‘blatantly illegal.’  These included clips of Family Guy, South Park, MTV Cribs, The Daily Show with Jon Stewart, Reno 911, and Chappelle’s Show.  Five of these six shows were owned by Viacom.  YouTube clearly knew this, but looked the other way.  Under the law, this is called “willful blindness.”

What is “willful blindness,” exactly? 

It is a deliberate effort to avoid knowledge of something illegal.  In this case, it describes the way YouTube’s leadership took inappropriate steps to shield itself from knowing of the vast amount of infringements on the site.  If a party is “willfully blind,” a court may find it liable for all of the unlawful behavior it should have been preventing, which puts all of the infringing behavior into play – not just the specific clips cited in Viacom’s suit.

Why did the Appeals Court have a problem with the lower court’s ruling?

The Appeals Court disagreed with much of the lower court’s reasoning and ordered the lower court to take a fresh look at the facts based on a proper understanding of the relevant legal principles in this case.  For example, the Appeals Court faulted the lower court for failing to properly examine the extensive evidence of YouTube’s awareness of infringement.  The Appeals Court also found that the lower court applied the wrong legal standard to determine whether YouTube had the ability to control infringement and whether YouTube received a financial benefit from that conduct.

Most press articles report that Viacom won the appeal, but YouTube claims differently.  Why does YouTube disagree?

The Appeals Court agreed with the lower court that under the DMCA, online service providers must have “specific knowledge” of infringing conduct before having to take action.  But that’s only one element of the analysis.  More significantly, the Appeals Court wrote  that the lower court did not properly consider several other factors, including whether YouTube ignored clear evidence of infringement and had sufficient control over the infringement to be held responsible.  The lower court will now have to assess those and other factors.

What happens next?

The case will now go back to the lower court for further factual development and legal argument, guided by the principles explained in the Appeals Court decision.

If Viacom wins, what could happen to YouTube?

Viacom’s lawsuit doesn’t impact YouTube as it operates today.  The suit is based on YouTube’s practices until 2008, at which point YouTube began to take responsibility for infringement on its site.  If Viacom wins, it can be compensated for damages prior to the start of YouTube’s content filtering program and can be given legal assurances that YouTube will continue to act responsibly.

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