On the surface, the 2d and 9th Circuits appear to be in harmony regarding the standards in measuring the availability of the DMCA safe harbor to on-line service providers. Each agrees that failing to take down infringing content, despite awareness of facts that would cause a reasonable person to conclude that a specific act of infringement is occurring, can deprive the service provider of the safe harbor. However, they don't entirely agree.
The Digital Millennium Copyright Act (DMCA) insulates on-line service providers from copyright infringement claims if they: 1. Have a robust take-down policy, 2. Do not tolerate infringement of which they have actual or constructive knowledge, and 3. Do not receive a financial benefit directly attributable to infringing activity that they have the right and ability to control. This "safe harbor" from liability is the focus of two recent cases involving YouTube and isoHunt.com, a BitTorrent site. The business of YouTube is to enable the uploading and streaming of video content provided by users. BitTorrent sites, in turn, help users identify files available for copying on third-party computers using peer-to-peer technology (think "Grokster" on steroids, but constructed to better distance the website from the infringing activity). The ever-thorny problem is that a tremendous number of the videos and files that are available on or through these websites infringe the rights of copyright holders. Both YouTube and isoHunt derive their revenue largely from advertisers, not from subscription fees. YouTube's servers actually contain the infringing material; isoHunt merely directs users to peer-to-peer networks where it can be found. YouTube's internal studies estimate that 75% – 80% of all YouTube streams contain copyrighted material. IsoHunt has no such internal documents. Yet YouTube has so far escaped liability based upon the DMCA safe harbor, while isoHunt has not. What accounts for this different result? These cases involve an active dialogue between two courts of appeals that cite each other in their opinions: the Second Circuit, which took up the YouTube appeal; and the Ninth Circuit, which heard the isoHunt appeal. The two courts agreed on two key aspects of the DMCA safe harbor: The question of constructive knowledge of infringement (which they call "Red Flag Knowledge") requires actual knowledge of facts and circumstances that would lead a reasonable person to conclude that infringing activity was taking place; and the element of control referred to in the third qualification for safe-harbor protection listed above must involve something more than the ability to locate infringing material and terminate users' access to it.
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