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In Diebold, the U.S. District Court for the Northern District of California held that a party knowingly materially misrepresents that content or activity is infringing where it “actually knew, should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith, that it was making [a] misrepresentation.”
Subsequently, in Rossi, the Ninth Circuit Court of Appeals held that a “copyright owner cannot be liable [under § 512(f)] simply because an unknowing mistake is made, even if the copyright owner acted unreasonably in making the mistake . . . . Rather, there must be a demonstration of some actual knowledge of misrepresentation on the part of the copyright owner.”
The Ninth Circuit's holding entirely undermines Diebold's interpretation of § 512(f), and therefore courts should treat Diebold as bad law on this point.
The facts underlying the Diebold court's interpretation of § 512(f) are disturbing and may have played a large role in the court's interpretation of the statute.
In the aftermath of the 2000 presidential election, which concluded with the U.S. Supreme Court determining George W. Bush was the winner,
the nation learned that vote-counting can prove to be very problematic. The nightmare created by hanging chads led many to conclude that electronic voting machines were the answer.
Diebold, Inc. manufactures such electronic voting machines.
In 2003, a hacker acquired an archive of over 13,000 internal Diebold e-mails and posted it online.
Many other Internet users subsequently reposted these e-mails. The e-mails demonstrated that Diebold employees knew that the company's voting machines were flawed and that they took steps to cover up these flaws.
Two students at Swarthmore College were among those who posted the archive. They did so on multiple websites, including their own site for an organization they founded called the Swarthmore Coalition for the Digital Commons, using Internet access provided to them by Swarthmore College.
IndyMedia, an online newspaper, provided a link to one of the archive postings in an article criticizing Diebold.
Diebold sent takedown notices to Swarthmore regarding the students' activities
and to another ISP, Online Policy Group, regarding IndyMedia's article.
After Online Policy Group refused to remove the article and informed Diebold that it believed the article to be noninfringing, Diebold sent a takedown notice to Hurricane Electric, which was an “upstream” ISP
for Online Policy Group.
Swarthmore had the students remove the archive and all links to the archive from Swarthmore-hosted websites.
Hurricane Electric indicated that it might terminate Online Policy Group's service (which would have resulted in the removal of more than 1,000 websites from the Internet),
but agreed to await the outcome of the litigation before doing so.
Thus, the IndyMedia article was not taken down.
EFF and CIS filed suit against Diebold on behalf of Online Policy Group and two Swarthmore students, Nelson Pavlovsky and Luke Smith. The suit asked the court to enjoin Diebold from bringing a copyright lawsuit against the plaintiffs, declare the activities of the plaintiffs to be lawful, and award the plaintiffs damages under § 512(f) as well as under the doctrine of “copyright misuse” and state laws against tortious interference with contracts.
EFF and CIS did not send counternotices to Swarthmore or Hurricane prior to filing the lawsuit. Instead, EFF and CIS only sent Swarthmore a counternotice after the college publicly stated that it would comply with the statute upon receiving such a notice.
Subsequently, Diebold determined that the archive of e-mails had proliferated beyond control.
It informed the court that it would not file suit against the Swarthmore students and that Swarthmore could replace the material.
It also informed the court that it would not issue any more takedown notices related to the e-mail archive.
Based on Diebold's assurances, the court declared the plaintiffs' motion for a preliminary injunction moot, but it withheld judgment on the declaratory relief and damages issues.
Thereafter, both parties filed motions for summary judgment on the remaining issues, including the damages the plaintiffs sought under § 512(f).
EFF and CIS maintained on behalf of the plaintiffs that the knowing material misrepresentation standard is equivalent to a “likelihood of success” standard, whereby a copyright owner would run afoul of § 512(f) for sending takedown notices in relation to claims for which there is no objective likelihood of success on the merits.
Under this standard, EFF and CIS argued that “[r]epresenting as infringing that which is in fact a non-infringing fair use is a misrepresentation subject to damages.”
EFF and CIS also pointed out that Diebold continued to send notices after being made aware of the plaintiffs' fair use arguments.
Diebold countered that:
[It] could not, as a matter of law, have 'knowingly' made misrepresentations of infringement given the [unclear] precedent . . . on the issues of fair use and linking liability. It would be one thing for a plaintiff to attempt to prove that a copyright owner knowingly misrepresented certain factual matters such as whether it owned the published materials or had consented to publication. It is far different for a plaintiff to attempt to prove that the copyright owner knowingly misrepresented the law especially in an area where the legal outcome turns on balancing numerous factors.
In place of the standard suggested by EFF and CIS, Diebold argued that the knowing material misrepresentation standard requires a takedown or putback notice to be “frivolous” for liability to attach.
Diebold took this standard from Rule 11 of the Federal Rules of Civil Procedure, which governs representations made by attorneys or pro se litigants to courts.
The court rejected both parties' interpretations of § 512(f). It reasoned that a likelihood of success standard “would impermissibly chill the rights of copyright owners,” and that Congress would have explicitly adopted a Rule 11 standard if that was its intent.
Without citing any legislative history, the court “conclude[d] that the statutory language is sufficiently clear on its face and does not require importation of standards from other legal contexts.”
The court then held:
A party is liable if it “knowingly” and “materially” misrepresents that copyright infringement has occurred. “Knowingly” means that a party actually knew, should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith, that it was making misrepresentations. “Material” means that the misrepresentation affected the ISP's response to a DMCA letter.
Applying this standard, the court granted summary judgment for the plaintiffs on the issue of Diebold's liability under § 512(f). The court stated that portions of the e-mail archive were “clearly subject to the fair use exception” and that “[n]o reasonable copyright holder could have believed that the portions of the e-mail archive discussing possible technical problems with Diebold's voting machines were protected by copyright.”
In other words, the court found Diebold's infringement argument-namely that the students should not have posted the e-mail archive as a whole when they could have selectively posted and commented on only those portions relevant to the voting errors issue
-unreasonable and believed that Diebold should have known it to be so.
In addition, the court highlighted the fact that Diebold did admit that some of the e-mails in the archive were “subject to the fair use doctrine.”
This was enough for liability to attach, especially given that the court believed that “Diebold sought to use the DMCA's safe harbor provisions . . . as a sword to suppress publication of embarrassing content rather than as a shield to protect its intellectual property.”
Given that the Diebold opinion was issued on September 30, 2004, and that the appellate arguments and briefing in Rossi were complete by May of 2004, the Diebold decision played no role in the arguments presented by the Rossi parties to the district and appellate courts. Although the Ninth Circuit did not issue its opinion in Rossi until one month after the Diebold opinion was issued, the appellate court made no mention of the district court's application of § 512(f) to Diebold. Thus, it is not surprising that there is no explicit statement in the Rossi opinion indicating that the appellate court believed Diebold to be wrongly decided. Nevertheless, a review of the facts at issue in Rossi-as well as the Rossi opinion itself-reveals that, post-Rossi, Diebold is bad law.
Michael Rossi, a self-described “veteran who suffers from a diagnosed bipolar disorder, making him particularly sensitive to stressful triggers,” operated a website called InternetMovies.com.
Mr. Rossi “conceived [the site] as an 'online magazine', to promote information about movies and who was putting movies out on the [I]nternet, and providing a graphical directory for people to easily see a compilation of all movies and information available on the [I]nternet.”
In early 2001, InternetMovies.com had about 100 members.
In March of 2001, an employee of Warner Bros. became aware of InternetMovies.com and informed the anti-piracy division of the Motion Picture Association of America (“MPAA”) that the site appeared to be engaged in infringing activity.
An employee of the MPAA visited the website and discovered that the site contained statements such as: “Join to download full length movies online now!”
The site also contained images advertising the availability of films such as Cast Away and Hannibal.
Based on the claims made on the InternetMovies.com site, the MPAA sent takedown notices to FlexNet, Rossi's ISP, as well as to Rossi himself.
The MPAA did not attempt to download movies from Rossi's site prior to sending the takedown notices.
FlexNet notified Rossi that it would terminate his service. Although Rossi never sent a counternotice to FlexNet that complied with the statutory requirements, he did send FlexNet a letter claiming that InternetMovies.com was not infringing copyrights.
Rossi's website was taken down and Rossi obtained a new service provider.
Rossi maintained that the site was down for “approximately 1 second to 72 hours.”
After the site went back up, Rossi's membership increased from 100 to approximately 40,000.
By June of 2001, Rossi was earning $10,469 per month from the site.
Rossi advertised that the MPAA had requested the removal of his site from the Internet,
and his marketing apparently paid off. Despite his increased income, Rossi filed suit against the MPAA alleging tortious interference with contractual relations and economic advantage as well as libel, defamation, and intentional infliction of emotional distress.
Rossi did not seek damages under § 512(f).
As a defense to Rossi's claims, the MPAA argued that it was merely following the notice-and-takedown process established by the DMCA.
The MPAA asked the U.S. District Court for the District of Hawaii to grant summary judgment in its favor “because [it] complied with the DMCA which authorized [it] to send FlexNet a notice requesting that it shut down [the plaintiff's] website.”
Rossi argued that the MPAA was required to conduct an investigation into whether InternetMovies.com actually made movies available for download before sending takedown notices, and that the MPAA's failure to do so exposed it to liability.
The district court, in a brief opinion, rejected Rossi's argument because Rossi “[did] not cite, and the Court [could] not find, any provision in the DMCA which requires a copyright holder to conduct an investigation to establish actual infringement prior to sending a notice to an ISP.”
The court reasoned that InternetMovies.com's claims that it made movies available for download and the fact that Rossi admitted that some of his customers believed that movies were available for download on the site demonstrated that the evidence was “more than a sufficient basis to form the required good faith belief.”
On appeal, Mr. Rossi's claims drew attention due to the likelihood that the Ninth Circuit, an influential copyright court, would interpret whether the § 512(c) good faith belief standard imposes affirmative obligations on copyright owners to engage in investigative activities prior to sending takedown notices.
In addition to the briefs submitted by the parties, amici curiae briefs were submitted by trade associations representing ISPs and copyright owners.
Rossi maintained that the good faith belief standard does require investigation: “Plaintiff asserts that in order to have the reasonable, justified, good faith belief necessary for the claimed defenses, surely some sort of investigation greater than the bare minimum would be necessary before accusing someone of violating the law, particularly a law that impacts First Amendment rights.”
He analogized the DMCA's good faith belief standard to Lanham (Trademark) Act standards requiring counsel to conduct trademark searches prior to applying for registrations.
He also argued, like the defendant in Diebold, that the good faith belief standard is equivalent to a Rule 11 standard, which requires plaintiffs to conduct a “reasonable inquiry.”
Amici supporting Rossi argued for an even more rigorous standard suggesting the DMCA “requires a good faith belief of infringing use by an individual acting on behalf of the copyright owner or its agent, who has conducted a sufficient review and has sufficient knowledge to form an objectively reasonable good faith belief that use of the material in question is infringing.”
The MPAA countered that neither of the standards requested by Rossi or the ISP amici were supported by the plain statutory language, rules of statutory construction, or the legislative history of the DMCA.
The MPAA maintained that the good faith belief standard was a subjective one that looks to whether the copyright owner subjectively believes that material or conduct is infringing.
In order to convince the court that Congress did not intend to include a requirement of objective reasonableness, the MPAA compared the good faith belief requirement of § 512(c) with the knowing material misrepresentation standard of § 512(f).
The MPAA argued that the two standards were opposites: a knowing material misrepresentation is one made in bad faith. Moreover, the MPAA maintained that the counter notification process of § 512(g) itself “reflects an express recognition that takedown notices will not always be correct.”
In other words, Congress included the good faith belief and knowing material misrepresentation standards to prevent intentionally false takedown and putback notices and included the putback notice process in the first place in order to mitigate takedown notices sent in good faith that were nevertheless incorrect.
The MPAA's amici, twenty-five copyright owner organizations, buttressed the MPAA's arguments and impressed upon the court the negative impact that adopting an objective reasonableness standard would have on online copyright enforcement.
The amici argued that adopting the arguments of Rossi and his amici “would expand, in a manner neither expressed nor intended by Congress, copyright owners' exposure to civil liability for availing themselves of the very remedies Congress carefully crafted in the DMCA.”
The Ninth Circuit sided decisively with the MPAA. After stressing that Congress intended the notice-and-takedown process to provide “strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the digital networked environment,” the court stated that “the 'good faith belief' requirement in § 512(c)(3)(A)(v) encompasses a subjective, rather than objective standard.”
The court reached this conclusion, in part, based on the fact that “the overall structure of § 512 supports” it
: Juxtaposing the [good faith belief standard] with the [knowing material misrepresentation standard] reveals an apparent statutory structure that predicated the imposition of liability upon copyright owners only for knowing misrepresentations regarding allegedly infringing websites. Measuring compliance with a lesser “objective reasonableness” standard would be inconsistent with Congress' apparent intent that the statute protect potential violators from subjectively improper actions by copyright owners.
In other words, the Rossi court held that Congress only intended to create liability under § 512(f) where the sender of a takedown notice has “actual knowledge” that the claims in the notice are false and did not intend to impose liability for “an unknowing mistake . . . even if the copyright owner acted unreasonably in making the mistake.”
When one compares this view with the good faith belief standard, it becomes clear that Congress intended only to require a subjective belief that material is infringing, even if that subjective belief is reached in an unreasonable manner.
The conclusions reached by the Northern District of California in Diebold and the Ninth Circuit in Rossi interpreting § 512(f)'s knowing material misrepresentation standard could hardly be more different. Whereas the Diebold court held that “ '[k]nowingly' means that a party actually knew, should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith,” the Rossi court held that “knowingly” requires “actual knowledge” and that even “unreasonable” actions on the part of copyright owners do not create potential liability under § 512(f) so long as copyright owners do not engage in “subjectively improper actions.”
While it could be argued that Rossi's discussion of § 512(f) is dicta
because the issue directly before the court was the meaning of the good faith belief standard of § 512(c), this argument should be rejected. The Rossi court based its decision, in large part, on the statutory structure of § 512 as a whole, and concluded that the good faith belief standard and the knowing material misrepresentation standard were opposite sides of the same coin.
Moreover, courts subsequently applying Rossi have treated the Ninth Circuit's conclusions regarding § 512(f) as precedent rather than dicta.
In addition, even courts treating the knowing material misrepresentation standard of § 512(f) prior to Rossi disagreed with Diebold.
All of this adds up to Diebold's treatment of § 512(f) being bad law.
Complaints alleging violations of § 512(f) should conform their language to the Rossi court's interpretation of the provision and any complaint that alleges a claim under § 512(f) based on Diebold's interpretation should be rejected.
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