IP Law Daily Court erred in finding DMCA safe harbor protected LiveJournal from users’ infringing photos
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Friday, April 7, 2017

Court erred in finding DMCA safe harbor protected LiveJournal from users’ infringing photos

The federal district court in Santa Ana, California, erred in ruling as a matter of law that the Digital Millennium Copyright Act’s safe harbor shielded celebrity gossip website operator LiveJournal from liability for infringing photographs posted by users, the U.S. Court of Appeals in San Francisco has held. Reasonable fact finders could differ regarding whether the photographs at issue truly were posted "at the direction of users" or whether the volunteer moderators—who pre-screened and approved the posts containing the infringing photographs—were acting on behalf of LiveJournal itself, as determined under common law agency principles. The fact finder also had to decide disputed issues regarding whether LiveJournal possessed either actual, subjective knowledge of infringement or objective, "red flag" knowledge of infringement and whether LiveJournal financially benefited from infringements under its control (Mavrix Photographs, LLC v. LiveJournal, Inc., April 7, 2017, Paez, R.).

LiveJournal operated a web-based social media platform that allowed users to create personalized online "journals." LiveJournal users also could create "communities" focused on specific topics or shared interests. Users could post content to their personal journals or to communities they joined. LiveJournal communities had at least one user who served as a "maintainer," with administrative privileges to delete posts and comments and remove or ban users from the community. In addition, some communities were moderated by volunteers who could reject posts that were spam, pornographic, harassing, or off-topic.

Mavrix Photographs, LLC sued LiveJournal for infringement of 20 copyrighted photos of celebrities that were posted by users of LiveJournal’s popular Oh No They Didn’t! ("ONTD") community, a platform dedicated to celebrity gossip and pop culture. The photographs at issue included one of "Popstar Katy Perry in bikini in the Bahamas taken 7/18/2010" and another of "Beyonce Miami blue dress baby bump 111311." Mavrix did not send a DMCA take-down notice to LiveJournal or otherwise notify LiveJournal of any of the photos prior to filing suit. Upon receipt of Mavrix’s complaint, LiveJournal disabled access to the posts containing the photos at issue. The accounts of two users were terminated for being repeat infringers.

In September 2014, the district court granted summary judgment in favor of LifeJournal, concluding that it was protected from Mavrix’s infringement claims under the safe harbor provisions of the Digital Millennium Copyright Act (DMCA). Section 512(c) of the DMCA protects service providers from liability for "infringement of copyright by reason of the storage at the direction of a user of material that resides" on the provider’s system or network, if certain requirements are met. The court rejected Mavrix’s arguments that the safe harbor did not apply because (1) the posts at issue were not stored "at the direction" of a user; (2) LiveJournal had either actual or "red flag" knowledge of the infringing posts; and (3) LiveJournal received a direct financial benefit from the infringing activity and had the right and ability to control the infringing activity. The district court also denied Mavrix’s motion to disclose the identities of the volunteer ONTC community moderators who had approved the infringing posts. Mavrix appealed.

At the direction of users. In order for the safe harbor set forth in 17 U.S.C. § 512(c) to apply, LiveJournal had to make a threshold showing that Mavrix’s photographs were posted on ONTD at the direction of the user. According to the appeals court, the district court erred by determining on summary judgment that the infringing materials were posted at the direction of users. Contrary to the district court’s view, posting rather than submission was the critical inquiry.

The record showed that the user posts containing the infringing photographs were only posted to ONTD after they were reviewed and approved by volunteer moderators. ONTD had nine volunteer moderators, six maintainers, and one owner. The moderators were led by a LiveJournal employee (Brendan Delzer). The inquiry turned on the role of the moderators in screening and posting users’ submissions and whether their acts could be attributed to LiveJournal.

Contrary to the district court’s determination, the common law of agency applied to LiveJournal’s safe harbor defense. The Supreme Court and the Ninth Circuit have applied common law of agency in cases involving federal copyright law, including the DMCA. The Ninth Circuit concluded that there were genuine issues of material fact as to whether the moderators were LiveJournal’s agents, with either actual or apparent authority. There was evidence in the record that LiveJournal gave moderators express directions about their screening functions, including criteria for accepting or rejecting posts. Mavrix also presented evidence that LiveJournal users may have reasonably believed that the moderators had authority to act for LiveJournal. The evidence also showed that LiveJournal maintained "significant control over ONTD and its moderators," the court noted. On the current record, reasonable jurors could conclude that an agency relationship existed.

The court explained that posts are "at the direction of the user if the service provider played no role in posting them on its site or if the service provider carried out activities that were ‘narrowly directed’ towards enhancing the accessibility of the posts." Accessibility-enhancing activities include automatic processes, for example, to reformat posts or perform some technological change, the court noted. Thus, the question for the fact finder is "whether the moderators’ acts were merely accessibility-enhancing activities or whether instead their extensive, manual, and substantive activities went beyond the automatic and limited manual activities we have approved as accessibility-enhancing".

Knowledge of infringement. If LiveJournal showed that the photographs were posted at the direction of the user, it next had to prove under 512(c)(1)(A) that it lacked both actual and "red flag" knowledge of the infringements. In this case, the district court erred in finding that LiveJournal lacked actual knowledge of infringement based on Mavrix’s failure to provide notice of infringement. This was powerful evidence of lack of actual knowledge. However, to fully assess actual knowledge, a fact finder should also consider a service provider’s subjective knowledge of the infringing nature of the posts.

In order to assess LiveJournal’s knowledge, Mavrix argued that it should have the opportunity to depose the ONTD moderators to determine their subjective knowledge of the posts at issue. The appeals court vacated the district court’s denials of Mavrix’s discovery requests for the identities of the moderators. On remand, the court was to determine whether Mavrix’s need for discovery outweighed the moderators’ interest in anonymous internet speech.

In the event the fact finder determined that LiveJournal lacked actual knowledge of the infringements, it must then assess whether LiveJournal lacked "red flag" knowledge. Red flag knowledge arises when a service provider is "aware of facts that would have made the specific infringement ‘objectively’ obvious to a reasonable person." Some of the photographs at issue in this case contained either a generic watermark or a watermark containing Mavrix’s website, "Mavrixonline.com." Therefore, "the fact finder should assess if it would be objectively obvious to a reasonable person that material bearing a generic watermark or a watermark referring to a service provider’s website was infringing," the court said.

Right and ability to control infringement. The fact finder next would be required to determine whether LiveJournal showed that it did not financially benefit from infringements that it had the right and ability to control, as required by Section 512(c)(1)(B). The "right and ability to control" involves "something more than the ability to remove or block access to materials posted on a service provider’s website," the court noted. In assessing the service provider’s right and ability to control the infringements, a fact finder should consider the service provider’s general practices and procedures that existed at the time of the infringements. In determining whether LiveJournal had the right and ability to control infringements, the court instructed that the fact finder must assess whether LiveJournal’s extensive review process, infringement list, and blocker tool constituted high levels of control to show "something more".

LiveJournal also had to show that it did not derive a financial benefit from infringement it could control. The financial benefit need not be substantial or a large proportion of the service provider’s revenue, the court noted. In this case, a relevant consideration was the revenue LiveJournal derived from advertising based on the number of views of infringing material on ONTD.

The district court’s grant of summary judgment to LiveJournal was reversed, its order denying discovery vacated, and the case was remand for further proceedings consistent with the court’s opinion.

The case is No. 14-56596.

Attorneys: Peter Afrasiabi, Christopher W. Arledge, and John Tehranian (One LLP) for Mavrix Photographs, LLC. Wayne Mitchell Barsky, Blaine H. Evanson, and Brandon J. Stoker (Gibson Dunn & Crutcher LLP) for LiveJournal, Inc.

Companies: Mavrix Photographs, LLC; LiveJournal, Inc.

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