Despite the current media attention on the disclosure order, the YouTube case will eventually get down to the merits.  The question of whether YouTube is eligible for the DMCA service provider safe harbor protections will be a key issue.  This post takes a closer look at that question in follow-up to the recent discussion with Mr. Blomquist and Mr. Lee at the Technology Liberation Front  (TLF Post ).

In order to be eligible for the safe harbor, the entity in
question must first meet the definition of a "service provider."  That means
before we even get to questions about  hosting, knowledge, control, and financial
benefits, the question of whether there is a "service provider" must be
determined.

  A "service provider" is defined in section 512(k)as:

"(1)(A)… an entity offering the transmission, routing, or providing of
connections for digital online communications, between or among points
specified by a user, of material of the user’s choosing, without
modification to the content of the material as sent or received.
(B)…a provider of online services or network access, or the operator
of facilities therefor, and includes an entity described in
subparagraph (A)."

To be eligible for the 512(c) safe harbor for the storage of information on
systems or networks at the direction of users, the service provider
must meet the definition in 512(k)(1)(B).

Now, let’s look at what YouTube does. It takes uploaded videos and
reformats them, categorizes them for user searches, sells advertising on targeted videos and allows them to
be accessed by millions of users each day.  I would argue that it isn’t
providing online services or network access. And, since it does not route
communications, they do not qualify as a service provider for the transitory
communications safe harbor in 512(a).

At the time the DMCA was written, a website like YouTube was not
envisioned. The intent was to provide protection to entities
that did not know of or participate in the infringing activities of its users.
Title II of the DMCA is there because Verizon, the Bells, and the other
Internet service providers effectively lobbied for protections to cover their basic functions.  As is
the nature of technology, innovation has produced products and services
that were unimaginable just a few years ago.

So, the judge in the Viacom case could decide
that YouTube is in fact a "service provider" under the definition of providing online services.  Then you move on to determine whether YouTube would be able to avail itself of the safe harbor protections. 

512(c) provides:

"A service provider shall not be liable…for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider…"

The "system or network" question isn’t the key here.  Certainly, an entity renting pipes to operate a system or network could be eligible for the safe harbor. However, section 512(c) focuses on the "storage" of material as key to the determination of whether a service provider can be eligible for the safe harbor.

Again, YouTube actively reformats all user uploads to a Flash format before it allows public access to the videos.  And, it sells advertising which it places on selected videos.  These two facts alone make it difficult to argue that YouTube is merely "storing" material at user direction.

Finally, 512(c) provides protection only if the service provider storing user information does not have actual knowledge of the infringing activity, does not receive a financial benefit from it, and responds expeditiously when notified of it.  These, I believe, are the death knell for allowing YouTube the safe harbor protections. 

In his post, Tim Lee linked to the  DMCA chilling effects demonstrates a basic misunderstanding
about the DMCA.  Content owners send out takedown notices or cease and
desist letters to website operators and alleged online infringers all
the time.  However, simply getting one does not indicate that the
recipient is a "service provider" under the DMCA.   These notices are
often just simply that, a notice that the infringing activity should
stop or else there may be legal action.  Perhaps these copyright owners and their lawyers thought it would be a
good policy to offer alleged infringers the opportunity to stop before they sued them.  It seems that copyright owners are
damned if they do and damned if they don’t.