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Fraudulent DMCA take down notices can be costly [Online Policy Group v. Deboid]

Nov 28th, 2016 | By | Category: Copyright Litigation

Digital Millenium Copyright Act Essentials – Sending fraudulent DMCA takedown notices

copyright DMCA bad faith lawyer

Introduction

If your company is doing business online (ex. selling software, running an eBay or Etsy store, engaged in photography or simply running your own eCommerce or streaming video / broadcasting website) and you receive a DMCA take down notice, or worse, have your account terminated, contact us to discuss your legal rights. If the DMCA notice is asserting federal copyright infringement in bad faith (meaning there are knowing false statements being asserted to your ISP or social media account provider) we can help you determine whether you may have a 512(f) claim for monetary damages against the perpetrator who sent the false take down notice.  This blog discusses some federal case law in this cutting edge area of the law.

Online Policy Group v. Diebold, Inc.

Diebold was a case that discussed liability for sending DMCA notices containing misrepresentations.  The Northern District Court of California noted:

 17 U.S.C. § 512(d) provides a similar safe harbor from liability for copyright infringement resulting from use of “information location tools,” which include “hypertext links” (“hyperlinks”). Section 512(g) provides for replacement of the removed material upon counter-notice by the alleged infringer. Upon counter-notice of non-infringement by an ISP subscriber, the ISP may reestablish access to the content without fear of liability. Such replacement generally must be performed within approximately fourteen days. See 17 U.S.C. § 512(g)(2)(C).
17 U.S.C. § 512(f) provides as follows:
Misrepresentations.—Any person who knowingly materially misrepresents under this section—
(1) that material or activity is infringing, or
(2) that material or activity was removed or disabled by mistake or misidentification,
shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer, by any copyright owner or copyright owner’s authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.  Thus, any person who sends a cease and desist letter with knowledge that claims of infringement are false may be liable for damages.  See Online Policy Grp. v. Diebold, Inc., 337 F. Supp. 2d 1195, 1201–02 (N.D. Cal. 2004).

The Court in Diebold then discussed what the standard of proof is on the issue of “knowingly materially misrepresents” to prove a 512(f) violation.  The Court held:

2. Diebold violated section 512(f).
Plaintiffs argue that Diebold “knowingly materially misrepresented” that publication of the email archive constituted copyright infringement and thus is liable for damages pursuant to 17 U.S.C. § 512(f). The parties dispute the meaning of the phrase “knowingly materially misrepresents.” Plaintiffs argue that a type of preliminary injunction standard should be applied. That is, the Court should conclude that Diebold violated section 512(f) if it did not have a “likelihood of success” on the merits of a copyright infringement claim when it sent the DMCA letters. Diebold contends that the Court should apply a type of Federal Rule of Civil Procedure 11 (“Rule 11”) standard and thus conclude that Diebold did not violate section 512(f) unless sending the DMCA letters was “frivolous.” Because the DMCA is of relatively recent vintage, the issue appears to be one of first impression.
The Court concludes that neither standard is appropriate. A requirement that a party have an objectively measured “likelihood of success on the merits” in order to assert claims of copyright infringement would impermissibly chill the rights of copyright owners. At the same time, in requiring a showing of “knowing material misrepresentation,” Congress explicitly adopted a standard different from that embodied in Rule 11, which contains a variety of other requirements that are not necessarily coextensive with those set forth in section 512(f). The Court concludes that the statutory language is sufficiently clear on its face and does not require importation of standards from other legal contexts. A party is liable if it “knowingly” and “materially” misrepresents that copyright infringement has occurred.
“Knowingly” means that a party actually knew, should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith, that it was making misrepresentations.
See Black’s Law Dictionary (8th ed.2004) (definitions of “knowledge,” in particular, “actual” and “constructive” knowledge). “Material” means that the misrepresentation affected the ISP’s response to a DMCA letter.
See Online Policy Grp. v. Diebold, Inc., 337 F. Supp. 2d 1195, 1204 (N.D. Cal. 2004).  Many people believe this case settled for $125,000, but this is not confirmed.

Here are the basic case facts:

“Defendants Diebold, Inc. and Diebold Election Systems, Inc. (collectively “Diebold”) produce electronic voting machines. The machines have been the subject of critical commentary. Both the reliability and verification procedures of the machines have been called into question, in part because not all of the machines provide a means for verifying whether a voter’s choice has been recorded correctly. It is undisputed that internal emails exchanged among Diebold employees (the “email archive”) contain evidence that some employees have acknowledged problems associated with the machines. See Plaintiffs’ Motion for Summary Judgment, pp. 3–4. According to Diebold, the email archive also contains discussion of “the development of Diebold’s proprietary computerized election systems, as well as Diebold trade secret information, and even employees’ personal information such as home addresses and cell phone numbers.” Defendants’ Motion for Summary Judgment, p. 9. At some point early in 2003, the entire email archive was obtained and reproduced on the internet by unknown persons, giving rise to the events pertinent to the present motions.”
“Plaintiffs Nelson Chu Pavlosky (“Pavlosky”) and Luke Thomas Smith (“Smith”) are students at Swarthmore College (“Swarthmore”). Using internet access provided by Swarthmore, which for present purposes is considered their internet service provider (“ISP”), Pavlosky and Smith posted the email archive on various websites. See Declaration of Nelson Chu Pavlosky in Support of Plaintiff’s [sic] Application for Temporary Restraining Order and for Preliminary Injunction (“Pavlosky PI Decl.”), An on-line newspaper, IndyMedia, published an article criticizing Diebold’s electronic voting machines and containing a hyperlink to the email archive. See Plaintiffs’ Motion for Summary Judgment, p. 5. Plaintiff Online Policy Group (“OPG”) provides IndyMedia’s internet access. OPG, in turn, obtains internet access from an upstream ISP, Hurricane Electric (“Hurricane”).
In response to the activities of Pavlosky, Smith, and IndyMedia, and in an alleged effort to prevent further public viewing of the email archive, Diebold sent cease and desist letters to many ISPs, including Swarthmore, OPG, and Hurricane, pursuant to the safe harbor provisions of the Digital Millennium Copyright Act (“DMCA”). Swarthmore, OPG, and Hurricane were advised that pursuant to these provisions they would be shielded from a copyright infringement suit by Diebold if they disabled access to or removed the allegedly infringing material. Swarthmore thereafter required Pavlosky and Smith to remove the email archive from their website. At the same time, Hurricane notified OPG that it might be required to terminate OPG’s internet access if IndyMedia’s hyperlink to the email archive was not removed. Hurricane agreed, however, not to act during the pendency of the present action, and consequently OPG did not disable access to or remove any material.
Diebold has not filed any lawsuits related to publication of the email archive. Plaintiffs Smith, Pavlosky, and OPG nonetheless seek injunctive, declaratory, and monetary relief from this Court, alleging that Diebold’s claim of copyright infringement was based on knowing material misrepresentation and that Diebold interfered with Plaintiffs’ contractual relations with their respective ISPs.
Plaintiffs seek a judicial declaration that publication of the email archive, hosting or providing colocation services to websites that link to allegedly infringing material, and providing internet services to others who host websites that link to allegedly infringing material are lawful activities. They request an injunction to prevent Defendants from threatening or bringing any lawsuit for copyright infringement with respect to the email archive arising from the publication, linking, or hosting services described in the complaint and a judgment barring Defendants from enforcing any copyright in the email archive unless and until Defendants’ alleged copyright misuse has ceased. They also seek $5,185.50 in damages and attorneys’ fees pursuant to 17 U.S.C. § 512(f) for Diebold’s alleged misrepresentation or as otherwise allowed by law, as well as costs and disbursements.
The Court discussed the emails posted online by Plaintiff:

“At the hearing on Plaintiffs’ motion for preliminary injunction, Diebold’s counsel asserted that portions of the email archive contain material that is copyrighted and has no “public interest” value. Transcript of Law and Motion Hearing, November 17, 2003, p. 8:7–12. However, Diebold did not identify and has never identified specific emails that contain copyrighted content, and thus it has not provided evidence to support its counsel’s assertion.  At the same time, Diebold appears to have acknowledged that at least some of the emails are subject to the fair use doctrine.”

This being the case, the DMCA takedown notice asserting copyright infringement had occurred, was knowingly false.

Are attorney demand letters immune or privileged?

There COULD be a potential argument that attorney demand letters that are in the context of anticipated litigation COULD be privileged.  We have talked in other blogs how lawyers have a privilege to defame.  However, it is not clear that a privilege to violate the DMCA laws exists, and likely it doesn’t.

Section 512(f) damages

In another case, Automattic Inc. v. Steiner, 82 F. Supp. 3d 1011, 1029 (N.D. Cal. 2015), the Northern District court recently entered a default judgement for a bogus DMCA take down notice and discussed the issue of damages under 512(f):

“Section 512(f) provides that any person who makes knowing, material misrepresentations in filing a DMCA takedown notice “shall be liable for any damages, including costs and attorneys’ fees incurred by the alleged infringer or by a service provider.  Plaintiffs have filed supplemental declarations supporting their claims to damages under § 512(f), including:

(1) time and resources expended in dealing with the takedown notice;

(2) damages for reputational harm;

(3) damages for Hotham’s emotional harm;

(4) damages for Hotham’s chilled speech;

and

(5) costs and attorneys’ fees incurred by Automattic.

Hotham requests $4,960 for lost time, reputational harm, emotional distress, and chilled speech. Automattic requests $8,860 for lost time, costs of media relations, and reputational harm. Plaintiffs also request $22,264 for attorneys’ fees.  This district construes damages under § 512(f) broadly, as the statute’s use of “any damage” in its language “suggests strong Congressional intent that recovery be available for damages even if they do not amount to substantial economic damages.” Lenz v. Universal Music Corp., No. 5:07–cv–03783–JF, 2013 WL 271673, at *9 (N.D.Cal. Jan. 24, 2013).

The “subjective intent” wrinkle

One federal court (in an alleged music infringement case) imposed a “subjective intent” standard whereby the Plaintiff filing suit under 512(f) has to show the sender of the DMCA copyright infringement notice basically has to know there was no willful infringemement claim and sent the letter anyway.  This can be a tough standard to show in Court, and may favor the large movie, music, and software companies that send take down notices virtually whenever they feel like it (with no fear of being hit for attorney fees and a Declaratory Judgement lawsuit).  The case was Lenz v. Universal Music Corp., 572 F. Supp. 2d 1150, 1155 (N.D. Cal. 2008):

“Universal suggests that copyright owners may lose the ability to respond rapidly to potential infringements if they are required to evaluate fair use prior to issuing takedown notices. Universal also points out that the question of whether a particular use of copyrighted material constitutes fair use is a fact-intensive inquiry, and that it is difficult for copyright owners to predict whether a court eventually may rule in their favor. However, while these concerns are understandable, their actual impact likely is overstated. Although there may be cases in which such considerations will arise, there are likely to be few in which a copyright owner’s determination that a particular use is not fair use will meet the requisite standard of subjective bad faith required to prevail in an action for misrepresentation under 17 U.S.C. § 512(f). See Rossi v. Motion Picture Ass’n of America, Inc., 391 F.3d 1000, 1004 (9th Cir.2004) (holding that “the ‘good faith belief’ requirement in § 512(c)(3)(A)(v) encompasses a subjective, rather than objective, standard”

Conclusion

Section 512(f) is a good section of the copyright laws that seeks to deter false and fraudulent DMCA notices.  However, it may not always be easy to show that the sender of the DMCA notice “knowingly” made a misstatement in regard to their being copyright infringement.  If the knowing material mis-statement can be shown however, a Plaintiff may be able to recover a broad array of damages under the statute, including potential attorney fees.  Thus, lawyers and non-lawyers sending demand letters need to be careful before trying to force the take down under the DMCA, and should consider defenses to copyright infringement, including fair use, parody and public domain.   Hurdles to bring a “contingency” fee case may still exist as the complaint may be subject to a motion to dismiss, discovery and a motion for summary judgement which could create a financial hurdle to asserting this types of claims.

Contact a DMCA litigation attorney

If your business has received a fraudulent DMCA take down notice forcing a “take down” of non-copyright infringing materials call us for a free no-cost consultation.  We can defend and assert claims of bad faith DMCA, or DMCA bullying in the copyright law context.  We can help with letters to ISP, and in drafting counter-notification letters.  Call (877) 276-5084.

 

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