In denying Viacom’s allegations of direct and secondary copyright infringement, YouTube will seek to obtain the protection of the safe harbor provisions of the 1998 Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. 512.  A finding that YouTube satisfies the DMCA’s safe harbor requirements would immunize it from monetary damages or injunctions even if it were found to have directly or secondarily violated the copyright laws.  The statute explicitly mandates a series of threshold requirements (17 U.S.C. 512(i)) and core requirements (17 U.S.C. 512(c)(1)) that a service provider must meet to be entitled to safe harbor protection.  Most problematic for YouTube will be whether it meets the DMCA’s core requirements under section 512(c)(1)(A),(B), and (C).  Subpart A requires that the service provider not have actual or apparent knowledge that the material on its network infringes on the rights of a copyright holder.  The legislative history will be examined to determine the scope of “apparent knowledge” including an examination of the “red flag” test stated in the Congressional Reports dealing with the DMCA.  Subpart B requires that the service provider not receive a financial benefit directly attributable to the infringing activity where it has the right and ability to control such activity.  Of critical importance to Subpart B will be YouTube’s business model for generating revenue from advertisements.  Subpart C requires the service provider, upon notification by the copyright holder of claimed infringement on its website, respond “expeditiously to remove” the infringing work.  Both Viacom’s arguments and YouTube’s counter arguments will be examined in an effort to determine whether YouTube’s removal policy conforms to the DMCA requirements.

       My paper will address some of the conflicting cases that have examined the various sections of the DMCA described above and rely on the legislative history at H.R. Rep. No. 105-551 (1998) and S. Rep. No. 105-190 (1998) to amplify congressional intent.  Critical to my analysis will be the application of the facts of this lawsuit to the language of the DMCA, taking into account its legislative history, to determine whether YouTube should meet the requirements of the DMCA’s safe harbor provision.

       Perfect 10, an adult entertainment website, sued Cybernet Ventures, an online age verification service, for infringing photographs found on its affiliated websites.  In this case, the court refused to provide Cybernet with safe harbor protection under the Digital Millennium Copyright Act (“DMCA”).   The reasoning of the court provides some insights into whether or not YouTube will be protected by the DMCA.

       In determining whether Cybernet would be afforded safe harbor protection, the court analyzed each of the DMCA’s requirements.  The court looked to the legislative history as guidance and relied upon Congress’ mandate to “take a common-sense, fact based approach not a formalistic one.”  Overshadowing much of the court’s discussion was evidence of Cybernet’s attempt to undermine the intent of the DMCA to forge a working relationship between copyright holders and service providers.  Of particular importance was the fact that Cybernet, after receiving notice from the copyright holder, failed to expeditiously remove infringing material from its system evidencing bad faith and undermining congressional intent. 

       Also significant for purposes of my paper is the Cybernet court’s analysis of the DMCA’s direct financial benefit test.  Here, the court found a direct financial benefit where Cybernet’s income was based on the number of new users to affiliated sites including infringing sites.  The court found that the quality of Perfect 10’s copyrighted images attracted new subscribers.  Thus, the infringing images acted as a draw which increased Cybernet’s revenue.  This case could be problematic for YouTube since Viacom has argued that the infringing works on YouTube’s website attracts more users which in turn drives higher advertising revenue.  Accordingly, the manner in which YouTube generates its revenue will be highly relevant to the financial benefit test.  Whether YouTube satisfies the financial benefit test will be analyzed under Cybernet’s reasoning, other court opinions, and the legislative history that interprets the direct financial benefit test.