YouTube Happy with Veoh's Win, But Not Off the Hook in Viacom Litigation

A recent district court decision in which a San Jose judge ruled that YouTube competitor Veoh was not liable for copyright infringement based on infringing material posted by users is being batted about in the blogosphere and the news media in hopes of gleaning some insight into any affect it may have on the outcome of the pending Viacom v. YouTube litigation.

The ruling is clearly a win for Veoh and a good sign for YouTube, but not dispositive of the YouTube/Viacom litigation in any way. While the San Jose court's decision may be persuasive to the judge in the YouTube case, it is not binding precedent.

The Digital Millennium Copyright Act (DMCA) provides a safe harbor for service providers as long as they act as a "conduit," meaning they do not select or modify the content that is transferred. They also have to respond to take-down notices from copyright owners. While the Veoh court has clearly said that Veoh falls within the safe harbor, there are still other cases out there (such as the Aimster case) that say turning a blind eye to wrongdoing does not excuse you from liability. And more importantly, Viacom can still rely on the Supreme Court's holding in Grokster, which hinges on "intentionally inducing or encouraging direct infringement." If Viacom can convince a judge that YouTube's business model is based on encouraging users to upload infringing content in order to attract more users to the site, the fact that YouTube later responds appropriately to take-down notices may not absolve them of liability.

Bottom line, YouTube is very happy with the Veoh decision, but it doesn't necessarily affect the outcome of the Viacom/YouTube suit.

For articles regarding the Veoh decision, see:

• Washington Post
  
• AllHeadlineNews
  

Universities Catching on to Traffic Shaping for Peer to Peer Prevention

Last year I gave a presentation on the potential liability of universities and employers for copyright infringement stemming from peer to peer file sharing by students and employees. In my comments I advocated that universities and employers protect themselves by instituting policies of blocking such network traffic by closing ports known to be used for this type of activity. In the time since, many universities appear to have elected to slow the tide of peer to peer file sharing by using network traffic shaping instead (see, for example: link). While this practice is in the spirit of stopping illegal downloading by students, it is treading on dangerous ground in the face of a largely failing RIAA legal attack against students, which may soon realize it can turn its focus toward the universities' deeper pockets as contributory infringers.

I commented several months ago that I see at least one argument that could be used to show that universities forfeit DMCA safe harbor protection by engaging in traffic shaping. The traffic shaping practices that have become seemingly commonplace over the last several years give the universities undeniable knowledge of the type of activity occurring on their networks. Network administrators in charge of traffic shaping implementation must periodically review the efficacy of their policies and procedures. In doing so, they review the statistics related to the shaped traffic. Because the network using traffic shaping often segments particular activity - such as file sharing - for special handling, the network statistics now present to the administrator, and the university by respondeat superior, clear data regarding the improper activity occurring over its network.

17 USC § 512(a)(2) provides:

(a) Transitory Digital Network Communications.— A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider’s transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections, if—
***
(2) the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider

Universities using traffic shaping to slow file sharing without stopping it are now inserting human oversight into their technical processes. Content deemed to be infringing is "selected" for slower transmission. The practice of network traffic shaping may be bringing universities dangerously close to the line of contributory infringement for illegal downloading by students.

Network Traffic Shaping a Threat to DMCA Safe Harbor for Network Providers

My reading of the article from University of Georgia student newspaper RedAndBlack.com, cited in the entry below discussing "Ruckus", left me with the uneasy thought that universities and employers, in trying to subtly dissuade downloading on their networks are choosing methods that may strip them of the protections from secondary liability under the Digital Millennium Copyright Act (17 USC § 512) for copyright infringement by network users.

The above cited article quotes University of Georgia communications director Bert DeSimone as saying that his network is largely unaffected by peer-to-peer file sharing because "[t]he system rates activities like peer-to-peer file sharing and limits it in favor of other activities...More bandwidth is given to the research mission of the University."

The practice described by Mr. DeSimone is known as network traffic shaping. Traffic Shaping is a practice by which network administrators attempt to give priority to digital transmissions of one type of information over another. This method, while effective in assigning greater bandwidth to desired network traffic and less bandwidth to undesirable traffic, is arguably an abrogation of the DMCA online service provider safe harbor when read in light of the Supreme Court's holding in MGM v. Grokster 125 S.Ct. 2764, 2767 (2005).

In order to shape network traffic, the network is configured to read the identifiers of data packets traveling over that network and read basic information from those identifiers that specifies what type of data is being sent. Because this gives the network provider (in this case the University) knowledge of the transmission of potentially infringing material over the network, yet allows that traffic to proceed and funnels the traffic into what is essentially the "slow lane" of the network highway, the provider may be charged with participating in the selection of content and/or ceasing to act as a conduit delivering content through automatic processes.

Either of the conclusions above places the university-provider squarely into the shoes of Grokster and Streamcast, the liable defendants in the MGM case. The Supreme Court wrote that there was "no evidence that either company made an effort to filter copyrighted material from users’ downloads or otherwise impede the sharing of copyrighted files" on the Grokster and Streamcast systems and was persuaded by the fact that "[the defendants did not] attempt to develop filtering tools or other mechanisms to diminish the infringing activity using their [software]."

When combined with the Ninth Circuit's language in Napster that "[i]f a computer system operator learns of specific infringing material available on his system and fails to purge such material from the system, the operator knows of and contributes to direct infringement," the network provider who shapes traffic and knowingly allows downloading to continue may be secondarily liable for copyright infringement accomplished over the network.