YouTube is a web property that enables users to upload videos, and to watch videos uploaded by others. The videos that users can upload are restricted by size (no larger than 100MB), length (no longer than 10 minutes) and format (avi, mpg, etc.). These are technical restrictions that enable YouTube to implement an automated process to efficiently process the tremendous number of videos that are uploaded each day. Using the YouTube webpage as a file uploading interface, users can upload whatever quirky video they have on their hard drive, and a short time later view the video streamed in a small embedded Flash player from the YouTube website. Humans like to do this, and YouTube has become immensely popular.
Viacom is a media conglomerate, owning such media properties as Comedy Central, Black Entertainment Network, Country Music Television, Logo, MTV, Nikelodean, Spike, Noggin, and VH1. Headed by the mercurial Sumner Redstone, Viacom is worth in excess of $28B. Of all of it media assets, SpongeBob SquarePants is probably the most emblematic of the Viacom empire. Consequently, henceforth all references to Viacom's registered copyrighted audiovisual works shall be anthropomorphized as "SpongeBob".
In November 2006, YouTube was purchased by Google Inc. for an impressive $1.65B. In order to reduce friction incurred by users uploading registered copyrighted audiovisual works not their own, YouTube struck numerous partnership deals with content providers such as CBS, BBC, Universal Music Group, Sony Music Group, Warner Music Group, NBA, and The Sundance Channel, amongst others.
By early 2007, Viacom had noticed that lots of fans of SpongeBob had been uploading clips and episodes to YouTube. As the fans of SpongeBob were a numerous and evasive bunch, Viacom thought it might be prudent to also engage in negotiations to license SpongeBob to YouTube. Such a license would bring revenue to Viacom, while obviating the unpleasant task of tracking down and prosecuting its base of loyal customers. However, the negotiations broke down, and on March 13 (coincidentally, the same date Germany invaded Austria in 1938), Viacom filed a $1B lawsuit against YouTube for copyright infringement.
Viacom's complaint alleges six counts of copyright infringement, consisting of three types of direct infringement, and three types of indirect infringement.
A performance is considered "public" when the work is performed in a "place open to the public or at a place where a substantial number of persons outside of a normal circle of a family and its social acquaintances are gathered." A performance is also considered to be public if it is transmitted to multiple locations at multiple times, which would be the case with audiovisual works streamed from a website.
Viacom claims that YouTube itself publicly performs the SpongeBob videos on the YouTube site and other websites.
However, the court in Field v Google had no problem finding that users clicking on the Cached link did not constitute direct copyright infringement because there was no volitional act on the part of Google at that point in the process. This is the same situation; users clicking on hyperlinks cause the SpongeBob videos to be streamed to their browsers. Consequently, there can be no direct infringement of public performance.
As the court noted in ALS Scan v. Remarq, As to direct infringement, liability is ruled out for passive, automatic acts engaged in through a technological process initiated by another."
Viacom claims that YouTube causes SpongeBob to be publicly displayed by showing individual images of infringing video clips in response to searches for videos on YouTube. It appears that YouTube takes a frame from videos that are uploaded to the website, and transforms that still image into a thumbnail image that is used as a hyperlink. As a result, a user searching for a video will be able to peruse a series of images and more easily locate the video that satisfies his search.
Unlike the Public Performance claim above, or the Reproduction claim below, YouTube doesnt have a Field v Google automatic out on this one because the creation of the thumbnail is not at the users request or direction. YouTube extracts the image from the video file, transforms it, and copies it into its database, from whence it transmits it to the user in response to a search performed by the user. Even though the process of creating and posting the thumbnail is automated, the actual creation and transmission of the thumbnail was done by YouTube, and not at the direction of the user.
Since it looks like there may be a direct infringement on this count, YouTube must rely on a defense such a Fair Use, which is easily found here under the reasoning articulated in Kelly v. Arriba Soft. In Kelly, a visual search engine searched the web for images, transformed the images into thumbnails, and copied them into its database, from whence it transmitted them to users in response to a searches performed by users. The key in Kelly was that the creation of the thumbnails were sufficiently transformative, in both appearance (reduced resolution) and use (means of identification and hyperlink, as opposed to contemplative objects). Likewise, YouTube is transforming the appearance (motion video to reduced resolution still image) and use (means of identification and hyperlink, as opposed to a slice of a moving image).
A possible fly in this ointment is the ruling in a Perfect 10 case against Google which cuts against the fair use finding if the thumbnail compete with an existing market for such images. In Perfect 10, the porn site Perfect 10 was licensing thumbnails of its images of naked women to cell phone companies. Consequently, when Google Image Search, a visual search engine similar to Arriba Soft, transformed the images into thumbnails, the court didnt consider that transformation to be that transformative.
However, it is unlikely that YouTube will have any Perfect 10 problems. First, it is highly unlikely that Viacom can show a secondary market for screen captures of random slices of SpongeBob. Second, in weighing the Relative Amount prong of the First Use test, Google was using 100% of the image, whereas YouTube is only using 1/10000 of the audiovisual work.
Viacom claims that YouTube is making and otherwise authorizing copies of SpongeBob into its video database. The main argument that Viacom seems to make here is that, even though the files are uploaded by users, by inserting itself into the process by converting the uploaded file from its native format into Flash, YouTube is now copying the uploaded files.
If this is more like the facts in Arriba Soft, then Google will need a Fair Use argument; but if it is more like Field, then there is no direct infringement, so we dont need to go there. In Arriba Soft, there was a transformation, which seems like what is going on here with YouTube high-rez picture to low-rez thumbnail andavi to flv. However, in traditional copyright analysis, the pictures transformed in Arriba Soft would probably qualify as derivative works, whereas the straight transcoding of the video files probably would not. Consequently, this is much more in line with Field, and because there is no volitional act on the part of Google at that point in the process, there is no direct infringement.
As to direct infringement, liability is ruled out for passive, automatic acts engaged in through a technological process initiated by another." In providing access to newsgroups, RemarQ does not monitor, regulate, or censor the content of articles posted in the newsgroup by subscribing members.
Here, Viacom gets to try out the new theory of secondary indirect copyright infringement created in Grokster. In this case, Viacom alleges an underlying direct infringement by users who are uploading SpongeBob to YouTubes website, where SpongeBob is then publicly performed and publicly displayed. YouTube, it is alleged, induces Users to do this.
It is claimed that 1) YouTube is aware SpongeBob is copyrighted and available Nick.com, and 2) that YouTube is aware that users use YouTube to reproduce, perform and display SpongeBob. Viacom claim that the fact that YouTube knows these two things means that it intends, encourages, and induces Users to infringe SpongeBob.
In order to prevail on the Inducement Test, Viacom is going to have to show that YouTube is more like Grokster than Sony. Sony knew that VCRs would be used for infringing purposes, and did nothing technologically to prevent its devices from accomplishing that infringing purpose. Likewise with Grokster. However, the point the court hammered home time and again was that Grokster, with 90%+ infringing works flowing through its system and representations that it was the new Napster, had no viable purpose other than to facilitate copyright infringement.
If we get anything out of Grokster, maybe its a 90% litmus test for secondary liability. In any case, YouTube is clearly not in that category, either in terms of amount of infringing material in its system, or representations made to the world.
In order to prevail on a claim for Contributory Infringement, Viacom would need to show two elements:
In Fonovisa, Cherry Auction was found liable for contributory infringement because evidence of knowledge was established and material contribution was found in the tight, intertwined financial and operational interactions between the auction operator and the pirates.
In Ellison, AOL claimed DMCA safe harbor against a claim for contributory infringement, but because the implementation of its Notice and Take-Down procedures was defective, it lost the safe harbor, and for the very same reason failed the contributory infringement test because the defective implementation imputed the Knowledge prong of the test.
While YouTube does not have an Ellison problem, as evidenced by the the number of Take-Down Notices issued by Viacom and which have promptly been addressed by Google, the questiof financial gain derived from the entwinement of Google and its users will have to be addressed.
Viacom claims that: 1) users are directly infringing by uploading SpongeBob to YouTubes website, where SpongeBob is then publicly performed and publicly displayed; 2) YouTube has the right and ability to supervise Users and prevent them from infringing SpongeBob; 3. YouTube enforces copyright restrictions for partners, but withholds them for others; 4) YouTube greatly benefits from widespread infringement of SpongeBob since SpongeBob is a draw, attracting users to YouTube. The more users on YouTube, the more advertising revenue YouTube generates.
In the dance hall cases followed by the court in Fonovisa, operators were found liable for vicarious infringement for the direct infringement of users when the operators:
On the control issue, Viacom will point out that YouTube does have the ability to filter SpongeBob, and feature that is has offered to its partners, but withhold from non-partners conglomerates.
On the financial benefit derived from the draw of SpongeBob, this is much more speculative than the "dance hall" cases, in which without the infringing songs, there would be no paying customers. The facts don't map quite as well against Fonovisa, but as we shall see below, it doesn't really matter after all.
While the above discussion on three theories of indirect copyright infringement may be pedantically interesting, it is also moot since YouTube is eligible for immunity against claims of infringement by virtue of acts committed by users by the Safe Harbors provided by the DMCA. This is in fact what the crux of this case is all about who has the burden of monitoring YouTube for SpongeBob uploaded by users, YouTube or Viacom?
Viacoms lawyer confirmed this in a statement made at the Progress & Freedom Foundation: [T]he real bone of contention between Viacom and YouTube in the many months of negotiation and discussion that led up to this suit that the parties just werent able to resolve is, where is the responsibility going to lie for policing and monitoring to prevent infringement?
The DMCA is clear that as long as YouTube is eligible by virtue of implementing compliant Notice and Take-Down procedures, the burden rests squarely on the shoulder of Viacom.