Today’s post was co-authored by Shane Wagman, a 2009 Google Policy Fellow at Future of Music Coalition. She is currently a law student at the Benjamin N. Cardozo School of Law and a Howard M. Squadron Media Fellow / legal intern at the Electronic Frontier Foundation. The views and opinions in this post are wholly her own and do not reflect the views of any other organization.

Yesterday, Judge Louis Stanton of the U.S. District Court for the Southern District of New York handed down a victory for YouYube (owned by Google), which essentially states that the company cannot be held liable for acts of copyright infringement committed by its users. (Here’s a PDF of the court opinion.)

Many see the ruling as a positive development for user-oriented sites and services, even ones that are still just a twinkle in some developer’s eye. Basically, if YouTube had been found liable for infringement, so, too might services like Twitter, Facebook and Flickr. It’d be a shame if they had to shut down Facebook now that your mom has finally joined.

The question in this case was whether YouTube had knowledge of infringement, to what degree, and whether they were taking active steps to deal with it. All of this would determine whether the site qualifies for the “safe harbor” protections within the Digital Millennium Copyright Act (DMCA) — a chunk of legislation passed in 1998. Under safe harbor, online services (like ISPs, search engines, etc.) are not liable for infringement, provided they fulfill a few statutory requirements (which we’ll get to in a minute).

Was it sufficient that YouTube executives had “generalized knowledge” that someone, somewhere was uploading infringing videos to the site? Or, would YouTube need knowledge of specific instances of infringement to lose their safe harbor? If generalized knowledge is enough to strip protections, it could expose other content-hosting websites to widespread litigation.

The court did not take this broad view, however. Instead, Judge Stanton held that YouTube must have “specific and identifiable infringements of particular individual items” to be outside of the DMCA’s safe harbor:

“If a service provider knows … of specific instances if infringement, the provider must promptly remove the infringing material.  If not, the burden is on the owner to identify the infringement. General knowledge that infringement is “ubiquitous” does not impose a duty on the service provider to monitor or search its service for infringement.”

From there, the judged ruled that YouTube does indeed qualify for safe harbor protections. YouTube did not have knowledge as defined by the DMCA and had effective policies for removing infringing content, once notified.

Viacom argued that this was not always the case, pointing to early correspondence between YouTube founders indicating that they were aware of infringement. Judge Stanton focused on more current evidence. “Indeed, the present case shows that the DMCA notification regime works efficiently,” he stated. “When Viacom over a period of months accumulated some 100,000 videos and then sent one mass takedown notice on Feb. 2, 2007, by the next business day YouTube had removed virtually all of them.”

Some would say the decision legitimizes an “infringe now, comply later” approach to business development. It’s not a new argument, and there have been several cases of infringing sites going “legit” with the participation of major rightsholders.

On the other hand, YouTube is a vital promotional tool for both major and indie acts. This decision removes the specter of massive infringement lawsuits, allowing for more potentially worthwhile innovations. Which in turn means that musicians can continue to enjoy a broad range of services to help build buzz.

YouTube makes it possible for anyone’s expression to be seen and heard by millions. But things are still a bit fuzzy on the revenue-generation side, with no guaranteed path to revenue. To its credit, YouTube seems willing to work with creators large and small on compensation strategies, as evidenced by the “partner” arrangements on YouTube and spinoff sites like Vevo.

Still, it’s clear that some people use the service to upload videos containing copyrighted music, including songs owned by Viacom. Which is why they sued for no less than 1 billion dollars.

Judge Stanton’s decision says that YouTube doesn’t owe diddly.

The DMCA safe harbor doesn’t work perfectly — sites like YouTube aren’t able to make determinations about possible “fair uses” or even licensed content. They simply take stuff down when alerted to an infringement. On the other hand, safe harbor has clear benefits to the public, including rightsholders and music lovers. We’re willing to bet that some of you have discovered your new favorite band on these kinds of services. 

There’s no doubt that the YouTube decision is significant. But the fight is hardly over — Viacom has vowed to appeal, and there’s a real possibility of the verdict being overturned. We’ll be keeping an eye on this one. The other eye will be watching that new OK Go video.