New US Copyright Rule Sets Trap For Online Firms

The US Copyright Office is supposed to balance the interests of copyright owners with the interests of everyone else. However, the Office’s latest regulation, which takes effect 1 December, may be anything but fair and balanced. It could, according to critics, strip Facebook, YouTube, and other online companies of a vital statutory safe harbor, thus making these companies liable when their users post infringing material online. Online companies could face billions in infringement damages, driving them out of business.

The new regulation affects a relatively obscure requirement of the US Digital Millennium Copyright Act (DMCA). That statute set up a grand compromise between copyright owners and online service providers (OSPs) – such as Facebook, Dropbox, LinkedIn, and internet service providers. The OSPs received a statutory safe harbor, protecting them against liability when their users put infringing material on the internet. In return, the DMCA gave copyright owners a cheap and easy way to get rid of online infringements. Basically, a copyright owner need simply notify an OSP that a particular online file is infringing, and the OSP must take down the identified file … or else. Failure to remove the file pushes the OSP out of its statutory safe harbor, exposing it to liability for secondary copyright infringement. Such liability can be huge. Copyright owners have sought billions in damages from OSPs.

Safe harbor protection is thus vital for OSPs. And in order to obtain this protection, it is not enough for an OSP to comply with the DMCA’s notice-and-takedown regime. An OSP also must designate an agent to receive notifications of claimed infringements. This agent’s name and contact information must be displayed publicly online as well as registered with the Copyright Office.

Cheap and Easy

The Copyright Office’s new regulation, Designation of Agent To Receive Notification of Claimed Infringement [pdf], makes it cheaper for OSPs to register their agents with the Copyright Office. It also makes registration easier, replacing paper registration forms with an online registration system.

There is, however, a catch. Many OSPs, particularly small and mid-sized firms, have failed to keep their registrations of agents up to date. This, according to the Copyright Office, runs afoul of the DMCA’s mandate that the Copyright Office “shall maintain a current directory of agents.” So the Office’s new regulation requires all OSPs to electronically submit a new designation by December 31, 2017, and thereafter to re-register every three years.

This is a reasonable requirement, according to some experts. “It is important that the designations of agents be current. If somebody posts infringing material, the copyright owner needs to know whom to contact to take it down,” said David R. Haarz, a principal in the Harness Dickey law firm.

He adds that the new registration requirements impose only a modest burden on OSPs. “They ought to accept the responsibility of keeping their designations of agent up to date,” said Haarz. “And I don’t think re-registering every three years is such a big burden.”

One False Step

But critics of the regulation say it is unnecessary, because even if an OSP’s designation of agent is outdated, there are plenty of other ways to obtain an OSP’s contact info, including on the OSP’s website. “We have minimal evidence to suggest that copyright owners are unable to send takedown notices, at least notices to OSPs likely to honor them,” said Prof. Eric Goldman of Santa Clara University School of Law.

While the regulation provides little benefit to copyright owners, it creates a trap with potentially devastating consequences for OSPs, according to critics. OSPs could lose vital safe harbor protection should they fail to register online and to re-register every three years.

“This is a more draconian solution than makes sense,” said Prof. Jessica Litman of the University of Michigan Law School. “It is going to be a trap for the unwary. It will trip up a whole bunch of people in pursuit of not too much.”

Large OSPs, such as YouTube and Facebook, are unlikely to be tripped up. Their in-house staff and outside counsel will probably keep large OSPs properly registered.

Smaller OSPs are another story. “It has been a real problem for smaller OSPs to keep their registrations up to date,” said Litman. As a result, she says, the new regulation “will trap some smaller OSPs and some nonprofits that put up servers.”

Should an OSP lose its safe harbor protection, the consequences could be devastating. “This will hurt anyone who doesn’t jump through the Copyright Office’s hoops, in a way that could destroy their business,” said Goldman.

In short, Goldman says, “The [new] regulation is terrible public policy. It provides little incremental value for copyright owners and forecloses substantial value that many others depend upon. If the safe harbor is worthwhile, then the Copyright Office’s move is outrageous.”

Yet even the regulation’s critics concede that it difficult to predict how much harm the new regulation will cause. “We don’t know how many OSPs will attempt to comply with the regulation, but fail and then get sued,” said Goldman.

Copyright experts and copyright owners will be waiting to see what happens next.

Image Credits: Dave Braunschweig