On September 14, 2015, the Ninth Circuit Court of Appeals issued a ruling in Lenz v. Universal Music Corp, et al., 2015 U.S. App. LEXIS 16308 (the “Dancing Baby Case”), holding that prior to sending a takedown notice under the Digital Millennium Copyright Act (“DMCA”), a copyright owner must make a subjective good faith determination that the matter complained of is not a protected fair use of the copyrighted work. If a copyright owner does not make such a determination prior to sending a DMCA takedown letter, then it may be liable for nominal damages (which may consist of costs and attorneys’ fees).

What This Decision Means for Brand Owners:

Practical Advice – It’s a best practice to document the decision/analysis that the allegedly infringing use is not “fair” under either copyright or trademark law. This can be a brief e-mail. But being able to show that you considered the fair use argument and rejected it may provide immunity from countersuit.

Summary of the Case:

This seven year old case involved a 29-second YouTube video recorded and uploaded by Stephanie Lenz, a mother, of her two young children with Prince’s song, “Let’s Go Crazy,” playing in the background. During the video, Lenz’s 13-month old son is shown walking with a push-toy and “dancing” to the music.

A Universal employee charged with monitoring for infringing uses of Universal’s content sent a DMCA takedown notice to YouTube, the Internet service provider (“ISP”), regarding Lenz’s video and more than 200 other videos unrelated to Lenz. YouTube removed the video and notified Lenz of the DMCA counter-notification procedures. Lenz filed a counter-notice asserting that the video constituted fair use of “Let’s Go Crazy.” Lenz then filed suit, claiming misrepresentation by Universal pursuant to 17 U.S.C. § 512(f). The Ninth Circuit affirmed the district court’s denial of the parties’ cross-motions for summary judgment, holding that Universal’s failure to consider fair use before sending a DMCA takedown notice raises a triable issue as to whether Universal made a subjective good faith determination that the matter complained of was not authorized by law.

DMCA Background

Under § 512 of the U.S. Copyright Act, ISPs enjoy a “safe harbor” from a claim of copyright infringement if the ISP removes infringing online material after receiving a takedown notice under the statute. To be effective, the notice must include a statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law. However, § 512(f) also provides that any person who knowingly materially misrepresents that the complained-of material or activity is infringing shall be liable for nominal damages resulting from the misrepresentation.

What Will Courts Consider “Fair Use?”

The Ninth Circuit held that fair use is “authorized by law” under the U.S. Copyright Act, 17 U.S.C. § 107 and that fair use is therefore a defense to an allegation of copyright infringement. In determining fair use, courts will consider the following:

1. the purpose and character of the use (including whether such use is of a commercial nature or is for nonprofit educational purposes);

2. the nature of the copyrighted work;

3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

4. the effect of the use upon the potential market for or value of the copyrighted work.

Recognizing the “pressing crush of voluminous infringing content that copyright holders face in a digital age,” Lenz makes clear that while a copyright owner has a duty to consider the fair use factors, it is not required to engage in a “searching or intensive” examination. The Ninth Circuit explained that if the copyright owner forms a subjective good faith belief that the allegedly infringing material does not constitute fair use, then a court is “in no position to dispute the copyright holder’s belief,” even if the court “would have reached an opposite conclusion.” To be liable for failure to make a good faith determination, the copyright owner must have “knowingly misrepresented” that it had a subjective good faith belief the work was infringing. Note, however, that the Court warned against paying “lip service to the consideration of fair use” when “there is evidence to the contrary.” The Court made clear that “[c]opyright holders cannot shirk their duty to consider – in good faith and prior to sending a takedown notification – whether allegedly infringing material constitutes fair use, a use which the DMCA plainly contemplates as authorized by law.”