Judicial Regulation of Digital Copyright Windfalls: Making Interpretive and Policy Sense of Viacom v. YouTube and UMG Recordings v. Shelter Capital Partners

Abstract

The Digital Millennium Copyright Act of 1998 (DMCA), passed at the dawning of the Internet Age, sought to foster “reasonable assurance” to copyright owners “that they will be protected against massive piracy” while insulating online service providers (OSPs) from copyright liability in the ordinary course of their operations so that they will make “the necessary investment in the expansion of the speed and capacity of the Internet.” Section 512's safe harbor provision plays a principal role in effectuating that balance. At the time that Congress crafted this regime, the World Wide Web operated on a simpler model in which webmasters actively controlled material made available on webpages. With the advent of Web 2.0 services, such as YouTube, in which users upload, edit, and collaborate in information dissemination, webmasters came to be replaced by automated systems and the potential liability of OSPs became more uncertain. On the one hand, Web 2.0 websites greatly expanded Internet functionality and the ability of amateur creators, fans, and the public at large to reach worldwide audiences quickly and easily. On the other hand, they greatly expanded the level of infringing activity. This article critically examines the Second and Ninth Circuits' recent, much anticipated decisions applying the Section 512 safe harbor to Web 2.0 services. It highlights the difficulties of interpreting copyright law in a rapidly evolving technological age. After working through the complex statutory conditions governing the operation of the safe harbor, it contends that the courts have interpreted the DMCA's "red flag" provisions in an overly narrow manner, possibly out of understandable concern for creating undue windfalls. Unfortunately, the courts' interpretation rewards cavalier business models that undermine the balance of copyright protection and responsible OSP activities. The article concludes that Congress can better effectuate the DMCA's dual goals by tightening the responsibilities of Web 2.0 OSPs while significantly recalibrating the statutory damage regime to avoid undue digital copyright windfalls.

Keywords: Copyright, DMCA, Safe Harbor, Online Service Providers