Will Universal's Campaign Against User-Generated Content Lead Us Back To Sony?

Universal Music has begun to go after user-generated content sites in a big way. In October, Universal sued video-sharing sites Bolt and Grouper, alleging that each is liable for the posting of copyrighted material by users. Recently, Universal filed suit against a much bigger (and richer) opponent, MySpace, on the same theory. (A copy of the complaint will be available here shortly.)

Most of the discussion about these suits has centered around whether the Digital Millenium Copyright Act ("DMCA") will protect the defendants from liability. It provides a "safe harbor" for online service providers ("OSP's") who lack actual notice of copyright violations so long as they take down infringing material upon actual notice of it from the copyright owner. See 17 U.S.C. 512(c).

But there is trouble lurking. An OSP that has the ability to control infringing conduct can't take advantage of the safe harbor if it profits directly from the infringement. See 17 U.S.C. 512(c)(1)(B). Enter contextual advertising. It keys ads to the content the user seeks and sees. If MySpace earns revenue from contextual ads that show up alongside a pirated U2 video precisely because I searched for U2, it would seem MySpace is profiting directly from the infringing material.

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This issue is not lost on Universal. Its complaint alleges specifically that "MySpace displays targeted advertisements, from which it derives significant revenue, in association with infringing content."

If the safe harbor is not available to MySpace, that does not mean that MySpace will lose. But it does mean the focus of the case will change.

More than twenty years ago, the U.S. Supreme Court held that Sony cannot be held liable for copyright infringement committed by users of its VCR's because those VCR's are are capable of substantial non-infrigning use. It is yet unclear how that rule applies in the digital realm. The Ninth Circuit held that the file-sharing service Grokster was immune from similar liability under the Sony rule, but the Supreme Court reversed that decision and found Grokster liable because it set out to facilitate infringement by intention and design, and its product was used overwhelmingly for piracy.

Some believe the Grokster decision spells the end of the Sony rule. (See William Patry's view on that issue here.) The case against MySpace could help tell us if that is so. MySpace exists to facilitate self-expression, not piracy. While some users choose to express themselves illegally by posting infringing material, the content on MySpace is overwhelmingly non-infringing. MySpace would seem to be exactly the sort of technology that the Sony rule would protect. We may soon see how it fares both under the DMCA and the Sony rule.

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