In a highly anticipated decision, on September 14, 2015, the Ninth Circuit in Lenz v. Universal Music Corp. et al. ruled that copyright holders must consider fair use prior to sending a takedown notice under the DMCA or they may run the risk of being held liable for nominal damages under 17 U.S.C. § 512(f). Yet, what implications does this decision have for copyright holders, who are already struggling to enforce their rights as the Internet and technology rapidly progresses? Although the decision mandates that copyright holders partake in a fair use inquiry prior to issuing a takedown notice, which technically-speaking is an added step, many copyright holders, particularly those who have engaged the regular aid of a legal team, already take this step and thus, this ruling is not as onerous as it may seem at first glance.
Specifically, the case involves a twenty-nine second home video of Plaintiff Stephanie Lenz’s two children dancing to Prince’s “Let’s Go Crazy”. Plaintiff had initially posted the video to YouTube, but it was taken down after YouTube received a takedown notification from the legal department at Universal. Although Universal’s legal department monitored YouTube daily and assessed what videos should be taken down based on specified guidelines, the key inquiry is whether or not Universal considered fair use, which, now after the Ninth’s Circuit affirmed the denial of the parties’ cross-motions for summary judgment, is a question for the jury.
Importantly, the Ninth Circuit held that Universal, along with all other copyright holders, must consider fair use prior to issuing a takedown notification, as 17 U.S.C. § 512(c)(3)(A)(v) requires a takedown notification to include a “statement that the complaining party has a good faith belief that the use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law”, and the Court held that fair use is a use authorized by law through 17 U.S.C § 107. Yet, the Court explicitly noted that a copyright holder need only form a subjective good faith belief that the use is not fair and that the consideration of fair use need not be “searching or intensive”. A copyright holder only faces liability for nominal damages if it makes a knowing misrepresentation in its takedown notification that it has a good faith belief that the use is not fair or otherwise authorized by the law.
Further, the Court noted that the consideration of fair use through automated computer programs, coupled with the review of any remaining information by some sort of legal department like that employed by Universal, may be acceptable. Thus, although copyright holders are faced with an overabundance of content to sift through, automated computer systems may help to ease this burden. As the Court aptly notes, Section §512(c) of the DMCA already requires copyright owners to initially review potentially infringing content prior to sending a takedown notice and as such, the Court’s decision serves to clarify that the fair use inquiry must be part of that initial review.
UPDATE: On Tuesday, October 20, 2015, both parties filed petitions for rehearing. On the one hand, Plaintiff/Appellee Stephanie Lenz has petitioned the Ninth Circuit to address the question of “Whether Congress, in drafting the safe harbor provisions of the Digital Millennium Copyright Act (“DMCA”), intended to grant private parties the practical power to censor speech based on an unreasonable belief that a copyright has been infringed, as long as that belief is (like all beliefs) subjectively held” (emphasis added). Meanwhile, on the other hand, Universal has petitioned for rehearing to address whether or not Lenz in fact suffered an injury-in-fact sufficient to give rise to jurisdictional standing.