United States: Could The Use Of Online Volunteers And Moderators Increase Your Company's Copyright Liability Exposure?

With over one billion websites on the Internet, and 211 million items of online content created every minute, it should come as no surprise that content curation is one of the hottest trends in the Internet industry. We are overwhelmed with online content, and we increasingly rely on others to separate the good from the bad so that we can make more efficient use of our time spent surfing the web.

Consistent with this trend, many websites that host user-generated content are now focused on filtering out content that is awful, duplicative, off-topic, or otherwise of little interest to site visitors. And these sites often find that humans—typically passionate volunteers from the sites' user communities—are better than algorithms at sorting the wheat from the chaff.

Of course, any website that deals with user-generated content needs to consider potential copyright liability arising from such content. We've discussed in past Socially Aware blog posts the critical importance of Section 512(c) of the Digital Millennium Copyright Act (the DMCA) to the success of YouTube, Facebook and other online platforms that host user-generated content. By providing online service providers with immunity from monetary damages in connection with the hosting of content at the direction of users, Section 512(c) has fueled the growth of the U.S. Internet industry.

Nevertheless, questions have persisted as to whether a website operator's use of employees or volunteers to review and filter user-generated content could deprive the operator of protection under the Section 512(c) safe harbor. A new Ninth Circuit decision, Mavrix Photographs, LLC v. LiveJournal, Inc., tackles this subject head on, concluding—to the alarm of many online service providers—that a company's use of volunteer moderators to curate content hosted on its website resulted in triable issues of fact as to whether the company qualifies for DMCA safe harbor protection to the extent that such content infringes third-party copyrights.

LiveJournal and the Oh No They Didn't! Community Journal

The defendant in the case, LiveJournal, operates a social media platform on which a user can, among other things, create a "community journal" focused on a particular topic or theme. As the name suggests, a community journal allows multiple users to submit content to the journal. The creator or administrator of a community journal decides whether to enable moderation, to have no moderation, or to employ a hybrid moderation model (e.g., whitelisting certain domains while requiring moderation for others).

The dispute involved a moderated community journal focused on celebrity gossip and pop culture, called "Oh No They Didn't!" (ONTD). Initially run entirely by volunteers, ONTD created rules to govern user submissions and posted comments; these rules included a requirement that users incorporate any referenced articles and photos in their submissions (rather than linking to such items), and a prohibition on the submission of old gossip and outdated photos. ONTD also adopted a "blacklist" of third-party sources from which users were prohibited from copying materials for inclusion in their submissions.

By 2010, ONTD was generating 52 million page views a month, making it the most popular journal on the LiveJournal platform. To maintain this success, ONTD relied on volunteer moderators (who review user-submitted items to ensure compliance with ONTD's rules) and maintainers (who review and delete posts, and have the authority to remove users and even moderators from the ONTD community).

That same year, for the first time, LiveJournal became directly involved in the operation of ONTD. In particular, it hired one of ONTD's volunteer moderators—Brendan Delzer—to serve as the journal's full-time "primary leader." In this new role, Delzer instructed ONTD moderators regarding their own review and selection of content, and monitored and evaluated moderators, removing underperformers; Delzer also continued to review and select user-submitted content for posting to ONTD. By making Delzer an employee, LiveJournal sought to "take over" ONTD, in order to further grow the journal and run ads against the journal's content.

The Parties' Dispute

The plaintiff, Mavrix, is a company that specializes in candid photographs of celebrities; it generates revenue by selling its photos to magazines. Between 2010 and 2014, 20 celebrity photographs owned by the plaintiff were allegedly posted to ONTD in seven separate posts, all without Mavrix's authorization. Some of these photos incorporated either a generic watermark or a Mavrix-specific watermark.

In 2014, in lieu of sending a DMCA takedown notice, Mavrix sued LiveJournal for copyright infringement in connection with the 20 photographs. Upon learning of the suit, LiveJournal removed the photographs from its site and terminated the LiveJournal account holders who had posted the photographs. LiveJournal ultimately moved for summary judgment on the basis that it was shielded from copyright liability under the Section 512(c) safe harbor.

Mavrix opposed LiveJournal's motion and filed its own motion asserting that LiveJournal was disqualified from the Section 512(c) safe harbor because, as a result of the activities of ONTD's volunteer moderators acting as LiveJournal's agents:

  • The photographs had not been hosted on the LiveJournal site "at the direction of a user," as required under Section 512(c);
  • LiveJournal had actual or at least red flag knowledge of the photographs through the ONTD moderators; and
  • LiveJournal received a financial benefit directly attributable to the allegedly infringing activity, where it had the right to and ability to control such activity.

The district court granted LiveJournal's summary judgment motion, finding that ONTD moderators constituted independent third-party users, not agents of LiveJournal. Mavrix appealed, and the Ninth Circuit reversed.

Storage at Whose Direction?

As noted above, the Section 512(c) safe harbor is available only where content is stored by an online service provider "at the direction of the user." In reaching its decision, the Ninth Circuit focused on whether LiveJournal's use of moderators to pre-screen user-submitted content meant that the Mavrix photos were posted at LiveJournal's direction, rather than at the direction of the users who submitted such photos to ONTD.

After reviewing the sparse case law on the subject, the Ninth Circuit held that the common law of agency applies in determining whether the acts of the ONTD moderators are attributable to LiveJournal, and that genuine issues of material fact existed as to whether the moderators are LiveJournal's agents.

In reaching this conclusion, the Ninth Circuit examined the common law agency concepts of actual and apparent authority and the level of control of a principal over the agent, and found:

  • Regarding actual authority (which arises where the principal assents to the agent taking action on the principal's behalf), Mavrix had presented evidence that LiveJournal "gave its moderators explicit and varying levels of authority to screen posts" and provided "express directions about their screening functions." Unlike other online platforms where users may independently post content, "LiveJournal relies on moderators as an integral part of its screening and posting business model."
  • Regarding apparent authority (which arises when a third party reasonably believes that a person has authority to act with legal consequences on behalf of another), Mavrix had presented evidence that ONTD users may have reasonably believed that the journal's moderators had authority to act for LiveJournal.
  • Regarding the level of control, Mavrix presented evidence showing that "LiveJournal maintains significant control over ONTD and its moderators"; that Delzer—a LiveJournal employee—had engaged in "substantive supervision" of ONTD moderators, and had exercised the power to select and remove moderators; and that LiveJournal had "ratified" the ONTD-developed rules that moderators relied on in screening user submissions.

Based on its analysis of actual authority, apparent authority and control principles, the Ninth Circuit held, "From the evidence currently in the record, reasonable jurors could conclude that an agency relationship existed" between LiveJournal and ONTD's volunteer moderators.

The Ninth Circuit next turned to a related issue: If the fact finder were to determine that the ONTD moderators are agents of LiveJournal, the fact finder would then need to determine whether Mavrix's photos "were indeed posted at the direction of the users in light of the moderators' role in screening and posting" the photos. The court noted that posts are at the direction of the user if the online service provider (1) "played no role in posting them on its site" or (2) "carried out activities that were 'narrowly directed' towards enhancing the accessibility of the posts."

Regarding this second item, the Ninth Circuit observed that activities such as the automatic reformatting of posts or the manual screening of posts "for infringement or other harmful materials like pornography" can be "accessibility-enhancing," and thus do not necessarily deprive an online service provider of protection under Section 512(c). But, if ONTD's moderators are determined to be LiveJournal's agents, the fact finder would then need to decide "whether the moderators' acts were merely accessibility-enhancing activities or whether instead their extensive, manual, and substantive activities went beyond the automatic and limited manual activities we have approved as accessibility-enhancing." In this regard, the Ninth Circuit noted that the ONTD moderators manually review the substance of user-submitted items to ensure that they contain new and exciting gossip and that only one-third of all submitted items are ultimately approved for posting.

Lack of Knowledge

Having provided guidance to the lower court on the threshold requirement of whether the Mavrix photos were stored at the direction of users, the Ninth Circuit turned to another Section 512(c) safe harbor requirement disputed by the parties: Whether LiveJournal lacked actual and red flag knowledge of such users' infringing activities. If, on remand, the fact finder were to determine that the photos were stored by LiveJournal at the direction of users (rather than at LiveJournal's own direction via its agents), LiveJournal would then need to establish that it had neither actual nor red flag knowledge that the photos were infringing.

The actual knowledge inquiry looks at whether an online service provider has subjective knowledge of the specific infringing activity at issue. The district court had held that actual knowledge can only be conferred through a DMCA-compliant takedown notice received by a service provider from the copyright owner; because Mavrix had never sent such a notice, LiveJournal necessarily lacked actual knowledge of its users' infringing activities in connection with the Mavrix photos.

Sending shockwaves through the online service provider community, the Ninth Circuit rejected the district court's approach, holding that a fact finder may determine that LiveJournal—either directly or through its agents, the volunteer moderators—in fact possessed subjective (and thus actual) knowledge of the infringing posts, even in the absence of a takedown notice from Mavrix.

Further, even if LiveJournal can establish on remand that it lacked actual knowledge, it must also show that it did not have red flag knowledge of the infringing posts. Red flag knowledge exists where an online service provider is aware of facts that would have made the specific infringement at issue objectively obvious to a reasonable person. Such infringement must be "immediately apparent to a non-expert."

The Ninth Circuit noted that some of the posted Mavrix photos contained either a generic watermark or a Mavrix-specific watermark, and that, on remand, the fact finder will need to determine whether it would have been objectively obvious to a reasonable person that photos bearing such watermarks were infringing.

Lack of Financial Benefit and the Right and Ability to Control

The Ninth Circuit then turned to the final Section 512(c) safe harbor requirement at issue: Even if LiveJournal were to establish on remand that the Mavrix photos were stored at the direction of users, and even if it were able to establish that it lacked actual or red flag knowledge that the photos were infringing, it then must show that it did not financially benefit from infringing activities that it had the right and ability to control.

The Ninth Circuit stated that the right and ability to control component of this final requirement involves "something more" than the mere ability of the service provider to remove or block access to materials posted on its website. This "something more" exists where the service provider exerts "high levels of control" over the activities of users. The court observed that, on remand, the fact finder should take into account the following in assessing whether LiveJournal had a right and ability to control the infringing posts:

  • LiveJournal ratified ONTD rules that instruct users on the substance of their posts;
  • ONTD moderators screened the substantive content of user submissions;
  • Nearly two-thirds of posts submitted by ONTD users were rejected by ONTD moderators, including on substantive grounds;
  • ONTD prohibited users from submitting content taken from third-party content sources identified on a "blacklist" maintained by ONTD; and
  • LiveJournal implemented a mechanism to automatically block any submitted items originating from one of the sources on the ONTD blacklist.

The court concluded that "the fact finder must assess whether LiveJournal's extensive review process, infringement list, and blocker tool constituted high levels of control to show 'something more'."

Finally, the Ninth Circuit noted that LiveJournal would need to establish that it did not derive a financial benefit from infringement that it had the right and ability to control. A safe harbor-disqualifying financial benefit "need not be substantial or a large portion of the service provider's revenue," and could be based on a broad availability of infringing materials attracting advertisers to the service provider's site. On remand, the fact finder would need to consider the following:

  • LiveJournal's receipt of revenue from advertising based on the number of ONTD page views; and
  • Evidence presented by Mavrix (but contested by LiveJournal) showing that approximately 84% of posts on ONTD contain infringing material

In order for LiveJournal to prevail on its safe harbor defense, the fact finder would need to determine whether LiveJournal met its burden of establishing that it did not financially benefit from infringement or that, if it did so benefit, it lacked the right and ability to control such infringement.

Concluding Thoughts

The Ninth Circuit's Mavrix opinion may be the most significant DMCA safe harbor decision since the Second Circuit's landmark Viacom Int'l, Inc. v. YouTube, Inc. ruling in 2012. On numerous fronts—including what constitutes "at the direction of a user," what constitutes "actual knowledge," what constitutes "red flag knowledge," what constitutes a "right and ability to control" and what constitutes a "financial benefit"— the Mavrix decision appears to go against the tide of generally pro-service provider decisions on these issues over the past two decades.

Regardless of what the district court ultimately decides on remand, Mavrix is a wake-up call to website operators and other online service providers who rely on volunteers to screen, review or curate user-generated content. Such operators and service providers will want to carefully study the Ninth Circuit's decision to determine whether they should take steps to modify their current practices regarding user-generated content. And, although Mavrix focuses on volunteers, not employees, companies should keep in mind that employees engaged in screening, reviewing or curating user-generated content are even more likely than volunteers to qualify as company agents, and thus may raise some of the same DMCA safe harbor concerns discussed in the Mavrix decision.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.