Wednesday, April 27, 2016

Website can use DMCA safe harbor for acts of its independent contractors

BWP Media USA, Inc v. Clarity Digital Group, LLC, No. 15-1154 (10th Cir. Apr. 25, 2016)  
BWP owns the copyrights to various celebrity photos, and its business model appears to be lawsuit-based, at least in part.  It sued defendant (AXS) for infringing 75 photos on the website.  BWP’s July 2013 letter notifying AXS of the alleged infringements (note: not a DMCA notice) prompted AXS to remove the photos, as it told BWP, but BWP sued anyway. The district court granted summary judgment based on AXS’s DMCA safe harbor defense, and BWP appealed. characterizes itself as a “dynamic entertainment, news and  lifestyle network that serves more than 20 million monthly readers across the U.S.  and around the world.” Independent  contractors, called “Examiners,” create its content. Prospective examiners must fill out an application including a proposed topic and a short writing  sample. evaluates the writing sample and conducts a background  check.  The contract between AXS and its Examiners provides that they’re independent contractors and that copyright infringement is prohibited.
BWP argued that, because of the contractual relationship between AXS and the Examiners who posted the infringing photos, the photos didn’t qualify as having been stored “at the direction of a user.”  BWP argued that Examiners weren’t users, and that, even if they were, AXS directed them to post the infringing content.  The court of appeals concluded instead that the DMCA provision should be construed as a whole, rather than by isolating particular words.  “User” was straightforward and unambiguous: for DMCA purposes, a “‘user’ describes a person  or entity who avails itself of the service provider’s system or network to store  material.”  
BWP, without legal authority, argued that “user” should exclude an ISP’s owners, employees, and  agents, or that it should exclude anyone who entered  into a contract and received compensation from an ISP.  BWP contended that, otherwise, every ISP would be protected from liability. The court of appeals disagreed.  Safe harbor protection was conditioned on various factors, including user-directed storage, lack of actual or red flag knowledge, and expeditiou action to remove or disable access to the  infringing material.
BWP further argued that Examiners were agents of AXS, not “users.” There was no evidence supporting the agency argument, which was “contrary to the language of the contract, our interpretation of the  term ‘user,’ and agency principles generally.”  A “user “is  anyone who uses a website — no class of individuals is inherently excluded.”  The contract made Examiners independent contractors, and nothing in CCNV v. Reid counseled to the contrary; even if, against the evidence, Examiners had apparent authority to act for AXS, that didn’t make them employees—even if employees couldn’t also be “users” under §512.
Nor was the infringing material stored at the direction of AXS.  Key to the question of who directed the storage of the material was control.  “[I]f the infringing content has merely gone through a screening or automated process, the ISP will generally benefit from the safe  harbor’s protection.”  BWP argued that AXS directed Examiners to post the infringing content by instructing them on the general topics to cover and suggesting that Examiners include slide shows or pictures to accompany articles. 
BWP, however, fails to explain how this evidence crosses the chasm between  encouraging the Examiners to post pictures with articles and encouraging  Examiners to post infringing content. Not only did AXS make clear copyright  infringement was prohibited, it also provided Examiners with licensed  photographs to accompany their articles. No reasonable trier of fact could find  that the infringement was at the direction of AXS.
Finally,  AXS did not have actual or circumstantial knowledge of the  copyright infringement.  Mere knowledge that celebrity photos are typically protected by copyright was insufficient. AXS encouraged the use of photos, but also provided Examiners access to a photo bank of licensed images.  “Prior  cases also clearly establish that ‘merely hosting a category of copyrightable  content, such as music videos, with the general knowledge that one’s services could be used to share infringing material, is insufficient to meet the actual  knowledge requirement under § 512(c)(1)(A)(i).’”
Agency principles couldn’t be used to impute Examiners’ knowledge to AXS; BWP didn’t raise this argument until the appeal.

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