July 21, 2004 6:31 PM PDT

Federal court broadens DMCA safe harbors

Attorneys for a wide range of Internet companies may be in for a surprise with a little-noticed federal ruling on DMCA immunity.

In a 56-page order handed down June 22, U.S. District Court Judge Lourdes Baird muddied the already troubled waters of determining what Internet businesses qualify for the "safe harbor" provisions of the 1998 Digital Millennium Copyright Act.

"There is a lot in this decision that will surprise lawyers who thought they understood the safe harbors," said Fred von Lohmann, senior intellectual-property attorney for the Electronic Frontier Foundation. "Whatever a judge says is what goes, so we lawyers are learning afresh what we thought we already knew."

The DMCA has regularly inspired controversy since its passage six years ago, particularly for its prohibitions of technology designed to circumvent copy-protection devices. And its complex safe harbors have created headaches for lawyers and judges trying to determine who can berth there.

Baird's order on motions for summary judgment comes nearly two years after Perfect 10, an online pornography publisher, filed suit against four different Internet companies alleging copyright infringement, various trademark violations, unfair competition, false advertising, violation of right of publicity and RICO (Racketeer Influenced and Corrupt Organizations) Act violations.

Defendants in the case--age-verification service Internet Key; online payment processor iBill, now owned by Penthouse; Web hosting provider CWIE; and subscription payment manager CCBill--sought to have the charges against them thrown out on the grounds that they qualified for DMCA safe harbor protections.

Baird's ruling granted some motions for summary judgment and denied others. In the process, according to legal experts, it apparently articulated new protections for Internet businesses.

One law professor praised the order, saying it brought DMCA law more in line with congressional intent.

"There are several firsts in this ruling," said Eric Goldman, an assistant professor at Marquette University Law School. "Courts are beginning to realize that the early rulings under the DMCA safe harbor interpreted the safe harbor too strictly and unfairly, and therefore the courts are reversing those rulings and providing more expansive protections under the safe harbors."

In her order, Baird brought age-verification and payment services into the DMCA safe harbor, raising the possibility that more businesses that don't fall under the usual Web hosting and connectivity categories will qualify.

She ruled that the online service providers qualified for the DMCA's "information location," or "linking" safe harbor. Perfect 10 argued that that safe harbor only applied to search engines like Yahoo and Google, which locate and link to millions of sites they're not affiliated with.

According to Baird, however, a company that linked to a limited network of sites with which it had contractual relationships still qualified.

The DMCA requires that copyright holders alleging a violation must first issue a DMCA "takedown notice" to the company or individual in question. Baird raised the bar for how specific DMCA takedown notices must be before copyright owners can demand that a service provider terminate an allegedly infringing subscriber.

"This ruling provides some very important--and expansive--interpretations (of specific DMCA safe harbor sections), in each case finding that a broad array of online service providers could take advantage of the safe harbors and that copyright owners could not thwart the safe harbor with weakly drafted notices of infringement or by claiming that service providers aren't doing a good job policing infringements," Goldman said.

Baird also staked new ground in the ever-evolving landscape of CDA (Communications Decency Act) Sec. 230 immunity, a similar safe harbor provision in the landmark 1996 law aimed at controlling online smut. Sec. 230 shields ISPs and other online businesses from prosecution for many of their subscribers' actions.

Sec. 230 immunity does not apply, however, to laws governing intellectual property. In a potentially worrisome development for Web publishers, Baird said the right of publicity--under which public figures can sue businesses for using their likeness for commercial purposes--is an intellectual-property matter, ruling out Sec. 230 protection for publishers.

Calling the DMCA safe harbors "horrifically complicated" and "bewildering," the EFF's Lohmann said Baird's order may not have gotten the letter of the law exactly right--particularly in raising the bar for the specificity of DMCA takedown notices.

"I think the district court didn't really fully understand how the safe harbors work," Lohmann said. "This again demonstrates that the safe harbor provisions of the DMCA are so complicated that no judge can be expected to figure them out."

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As a new victim of copyright infringement by internet pirates I find myself at an unfair disadvantage/ I must 1st figure out how much money was lost to my small enterprise / I may have to lawyer-up in order to even get that info/ No wonder I haven't sold any downloads from iTunes / Well pirates beware, I'm gonna lawyer-up and take you all for every last nickel I can get and let the buffalo chips fall where they will!
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