On September 14, 2015, the Ninth Circuit Court of Appeals held that copyright holders must consider whether media on content-hosting websites like YouTube constitutes "fair use" of the copyrighted material prior to sending takedown notices pursuant to the Digital Millennium Copyright Act ("DMCA"). Lenz v. Universal Music was a case of first impression nationally. Lenz is significant to copyright holders as it creates additional steps and considerations to the process of sending online takedown notifications and significant to users who wish to challenge takedowns. It gives users wider latitude to bring suits by expanding the scope of damages available.

The Basis for Lenz' Claims: The facts of Lenz are straightforward. Lenz uploaded to YouTube a fanciful video of her children dancing to Prince's Let's Go Crazy in their home. An assistant with Universal Music, the copyright holder, discovered the video during a search for infringing material. He determined that the video should be flagged for takedown pursuant to a list of specified criteria, although consideration of fair use was not one of the factors. Universal sent YouTube a takedown notice that complied with the DMCA. After disputing the takedown to no avail, Lenz filed suit pursuant to the DMCA alleging that Universal misrepresented in its takedown that it had a good faith belief that her video was infringing.

DMCA Requirements: Compliance with the DMCA's procedures is crucial to avoid liability. The DMCA permits service providers like YouTube to insulate themselves from liability for hosting infringing material by "expeditiously" removing copyrighted content after receiving a takedown notice. Section 512(c)(3)(A) requires this notice to include an accompanying statement that the copyright holder believes, in good faith, that the allegedly infringing material is not authorized by the holder or by law. Section 512(g) provides that after this notice is given to the service provider and the content is taken down, the posting user can send a counter-notification to the service provider, which can re-post the content within a short window of time unless the copyright holder gives notice that it filed a lawsuit to restrain the infringing content.

Lenz centered on the good faith statement in the takedown notice, specifically whether the DMCA requires copyright holders to consider whether the allegedly infringing material constitutes a "fair use" prior to sending takedown notices. For context, the Copyright Act § 107 excludes certain fair uses from being infringing, like uses for the purpose of criticism, comment, teaching, news reporting, or more, stating that the use is "not an infringement of copyright." Consequently, if a person uses copyrighted material in a manner that constitutes a fair use, that person cannot be liable for copyright infringement. But the language of the good faith provision does not mention fair use—it requires a statement that the holder believes in good faith that the use is not authorized.

Universal Failed to Consider Fair Use: The Ninth Circuit concluded that fair use is necessarily an authorized use. Though Universal claimed that fair use was merely a defense, and as such was not authorized, the court flatly rejected this view. Instead, the court concluded that the language of the Copyright Act unambiguously authorizes fair uses. Because fair uses are authorized, copyright holders must consider the use before sending a DMCA takedown notice.

Having determined that courts must consider fair use to even qualify for the "good faith" status of the takedown notice, the court shifted gears in determining what level of examination was sufficient to be considered good faith. It held that the copyright holder's actual, subjective knowledge governs the good-faith inquiry, and not the objective knowledge that the copyright holder should have known. To be liable under the DMCA, a copyright holder must make a knowing misrepresentation that it had a good faith belief that the media was not authorized, which, after Lenz, includes an examination of fair use.

The Level of the Required Fair Use Investigation is Unclear; But Willful Blindness is Not Allowed: Interestingly, the court noted that consideration of fair use "need not be searching or intensive," and even that "formation of a subjective good faith belief does not require investigation of the allegedly infringing content." There are some cases, it noted, where computer algorithms can detect obviously infringing content. However, the court did cite case law noting that the DMCA requires at least an initial investigation, and did warn that copyright holders will be liable if they merely "pay lip service" to the consideration of fair use by claiming they held a good faith belief in the face of contrary evidence.

The court also held that the "willful blindness" doctrine could be used to determine whether a copyright holder knowingly and materially misrepresented that it held a good faith belief that the content did not constitute fair use. In the context of the DMCA, this requires a party to show that 1) the copyright holder held a subjective belief that there was a high probability that the content constituted fair use; and 2) took deliberate actions to avoid learning of this use. However, Lenz had failed to provide sufficient evidence that there was a high probability that Universal was aware of the fair use.

Lessons From the Case: Following Lenz, it is clear that copyright holders must consider fair use prior to sending takedown notices. However, the court did not enunciate a precise standard by which they can attain the requisite good faith belief. Rather, the court merely held that holders cannot be willfully blind to fair use or claim that they considered fair use when the evidence points to the contrary. This ruling means that copyright holders must employ a greater degree of diligence in considering whether to send DMCA takedown notices or risk claims under the DMCA.

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