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Stephanie LENZ, Plaintiff,
UNIVERSAL MUSIC CORP., Universal Music Publishing, Inc., and Universal Music Publishing Group, Defendants.
Case No. C 07-3783 JF.
United States District Court, N.D. California, San Jose Division.
August 20, 2008.
JEREMY FOGEL, District Judge.7
Defendants Universal Music Corp., Universal Music Publishing, Inc., and Universal Music Publishing Group (collectively, “Universal”) move to dismiss the instant case for failure to state a claim upon which relief may be granted. See Fed.R.Civ.P. 12(b)(6). The Court has read the moving papers and has considered the oral arguments of counsel. For the reasons set forth below, the motion will be DENIED.9
On February 7, 2007, Plaintiff Stephanie Lenz (“Lenz”) videotaped her young children dancing in her family’s kitchen. The song “Let’s Go Crazy” by the artist professionally known as Prince (“Prince”) played in the background. The video is twentynine seconds in length, and “Let’s Go Crazy” can be heard for approximately twenty seconds, albeit with difficulty given the poor sound quality of the video. The audible portion of the song includes the lyrics, “C’mon baby let’s get nuts” and the song’s distinctive guitar solo. Lenz is heard asking her son, “what do you think of the music?” On February 8, 2007, Lenz titled the video “Let’s Go Crazy # 1” and uploaded it to YouTube.com (“YouTube”), a popular Internet video hosting site, for the alleged purpose of sharing her son’s dancing with friends and family. YouTube provides “video sharing” or “user generated content.” The video was available to the public at http://www.youtube.com/ watch?v=N1KfJHFW1hQ.13
Universal owns the copyright to “Let’s Go Crazy.” On June 4, 2007, Universal sent YouTube a takedown notice pursuant to Title II of the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512 (2000). The notice was sent to YouTube’s designated address for receiving DMCA notices, “firstname.lastname@example.org,” and demanded that YouTube remove Lenz’s video from the site because of a copyright violation. YouTube removed the video the following day and sent Lenz an email notifying her that it had done so in response to Universal’s accusation of copyright infringement. YouTube’s email also advised Lenz of the DMCA’s counter-notification procedures and warned her that any repeated incidents of copyright infringement could lead to the deletion of her account and all of her videos. After conducting research and consulting counsel, Lenz sent YouTube a DMCA counter-notification pursuant to 17 U.S.C. § 512(g) on June 27, 2007. Lenz asserted that her video constituted fair use of “Let’s Go Crazy” and thus did not infringe Universal’s copyrights. Lenz demanded that the video be re-posted. YouTube re-posted the video on its website about six weeks later. As of the date of this order, the “Let’s Go Crazy # 1” video has been viewed on YouTube more than 593,000 times.15
In September 2007, Prince spoke publicly about his efforts “to reclaim his art on the internet” and threatened to sue several internet service providers for alleged infringement of his music copyrights. Lenz alleges that Universal issued the removal notice only to appease Prince because Prince “is notorious for his efforts to control all uses of his material on and off the Internet.” Lenz’s Opposition Brief at 3. In an October 2007 statement to ABC News, Universal made the following comment:17
On July 24, 2007, Lenz filed suit against Universal alleging misrepresentation pursuant to 17 U.S.C. § 512(f) and tortious interference with her contract with You-Tube. She also sought a declaratory judgment of non-infringement. Universal filed a motion to dismiss, which the Court granted on April 8, 2008, 2008 WL 962102. Lenz was given leave to amend her complaint to replead her first and second claims for relief. On April 18, 2008, Lenz filed the operative SAC, alleging only a claim for misrepresentation pursuant to 17 U.S.C. § 512(f). On May 23, 2008, Universal filed the instant motion.19
II. LEGAL STANDARD21
“Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Medical Center, 521 F.3d 1097, 1104 (9th Cir.2008). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the `grounds’ of his `entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, _ U.S. _, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007) (internal citations omitted).23
The DMCA requires that copyright owners provide the following information in a takedown notice:27
17 U.S.C. § 512(c)(3)(A) (emphasis added). Here, the parties do not dispute that Lenz used copyrighted material in her video or that Universal is the true owner of Prince’s copyrighted music. Thus the question in this case is whether 17 U.S.C. § 512(c)(3)(A)(v) requires a copyright owner to consider the fair use doctrine in formulating a good faith belief that “use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.”29
Universal contends that copyright owners cannot be required to evaluate the question of fair use prior to sending a takedown notice because fair use is merely an excused infringement of a copyright rather than a use authorized by the copyright owner or by law. Universal emphasizes that Section 512(c)(3)(A) does not even mention fair use, let alone require a good faith belief that a given use of copyrighted material is not fair use. Universal also contends that even if a copyright owner were required by the DMCA to evaluate fair use with respect to allegedly infringing material, any such duty would arise only after a copyright owner receives a counternotice and considers filing suit. See 17 U.S.C. § 512(g)(2)(C).31
Lenz argues that fair use is an authorized use of copyrighted material, noting that the fair use doctrine itself is an express component of copyright law. Indeed, Section 107 of the Copyright Act of 1976 provides that ”[n]otwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work … is not an infringement of copyright.” 17 U.S.C. § 107. Lenz asserts in essence that copyright owners cannot represent in good faith that material infringes a copyright without considering all authorized uses of the material, including fair use.33
Whether fair use qualifies as a use “authorized by law” in connection with a takedown notice pursuant to the DMCA appears to be an issue of first impression. Though it has been discussed in several other actions, no published case actually has adjudicated the merits of the issue. See, e.g., Doe v. Geller, 533 F.Supp.2d 996, 1001 (N.D.Cal.2008) (granting motion to dismiss for lack of personal jurisdiction).35
A. Fair Use and 17 U.S.C. § 512(c)(3)(A)(v).37
When interpreting a statute, a court must begin “with the language of the statute and ask whether Congress has spoken on the subject before [it].” Norfolk and Western Ry. Co. v. American Train Dispatchers Ass’n, 499 U.S. 117, 128, 111 S.Ct. 1156, 113 L.Ed.2d 95 (1991). If “Congress has made its intent clear, [the court] must give effect to that intent.” Miller v. French, 530 U.S. 327, 336, 120 S.Ct. 2246, 147 L.Ed.2d 326 (2000) (internal quotation marks and citation omitted). Here, the Court concludes that the plain meaning of “authorized by law” is unambiguous. An activity or behavior “authorized by law” is one permitted by law or not contrary to law. Though Congress did not expressly mention the fair use doctrine in the DMCA, the Copyright Act provides explicitly that “the fair use of a copyrighted work … is not an infringement of copyright.” 17 U.S.C. § 107. Even if Universal is correct that fair use only excuses infringement, the fact remains that fair use is a lawful use of a copyright. Accordingly, in order for a copyright owner to proceed under the DMCA with “a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law,” the owner must evaluate whether the material makes fair use of the copyright. 17 U.S.C. § 512(c)(3)(A)(v). An allegation that a copyright owner acted in bad faith by issuing a takedown notice without proper consideration of the fair use doctrine thus is sufficient to state a misrepresentation claim pursuant to Section 512(f) of the DMCA. Such an interpretation of the DMCA furthers both the purposes of the DMCA itself and copyright law in general. In enacting the DMCA, Congress noted that the “provisions in the bill balance the need for rapid response to potential infringement with the end-users [sic] legitimate interests in not having material removed without recourse.” Sen. Rep. No. 105-190 at 21 (1998).39
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”).41
The Copyright Act unequivocally establishes the four factors used to determine fair use:43
17 U.S.C. § 107. Undoubtedly, some evaluations of fair use will be more complicated than others. But in the majority of cases, a consideration of fair use prior to issuing a takedown notice will not be so complicated as to jeopardize a copyright owner’s ability to respond rapidly to potential infringements. The DMCA already requires copyright owners to make an initial review of the potentially infringing material prior to sending a takedown notice; indeed, it would be impossible to meet any of the requirements of Section 512(c) without doing so. A consideration of the applicability of the fair use doctrine simply is part of that initial review. As the Ninth Circuit observed in Rossi, a full investigation to verify the accuracy of a claim of infringement is not required. Rossi, 391 F.3d at 1003-04.45
The purpose of Section 512(f) is to prevent the abuse of takedown notices. If copyright owners are immune from liability by virtue of ownership alone, then to a large extent Section 512(f) is superfluous. As Lenz points out, the unnecessary removal of non-infringing material causes significant injury to the public where timesensitive or controversial subjects are involved and the counter-notification remedy does not sufficiently address these harms. A good faith consideration of whether a particular use is fair use is consistent with the purpose of the statute. Requiring owners to consider fair use will help “ensure that the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will expand” without compromising “the movies, music, software and literary works that are the fruit of American creative genius.” Sen. Rep. No. 105-190 at 2 (1998).47
B. The Sufficiency of Lenz’s Second Amended Complaint49
1. The “Prince Policy”51
The operative SAC contains sufficient allegations of bad faith and deliberate ignorance of fair use to survive the instant motion to dismiss. Lenz alleges that Universal is a sophisticated corporation familiar with copyright actions, and that rather than acting in good faith, Universal acted solely to satisfy Prince. SAC ¶ 31. Lenz alleges that Prince has been outspoken on matters of copyright infringement on the Internet and has threatened multiple suits against internet service providers to protect his music. Id. at ¶ 28. Lenz also alleges that Universal acted to promote Prince’s personal agenda and that its actions “ha[ve] nothing to do with any particular [YouTube] video that uses his songs.” Id. at ¶ 30. Although the Court has considerable doubt that Lenz will be able to prove that Universal acted with the subjective bad faith required by Rossi, and following discovery her claims well may be appropriate for summary judgment, Lenz’s allegations are sufficient at the pleading stage.53
Universal also contends that the SAC fails to allege a compensable loss under the DMCA. Universal Brief at 2. The SAC provides that:57
SAC ¶ 38. Universal nonetheless claims that Lenz has not alleged a compensable loss because: (1) Universal is a private entity and thus not subject to First Amendment actions; (2) Lenz did not suffer any actual injury as a result of the notice; (3) Universal is not liable for damages for intimidation; and (4) Section 512 does not provide for injunctive relief.59
At oral argument, counsel for Lenz indicated that while the damages incurred in preparing Lenz’s counter-notice cannot be elaborated upon for reasons of privilege, Lenz did incur actual damages in reviewing counter-notice procedures, seeking the assistance of an attorney, and responding to the takedown notice. See Transcript of Law & Motion Hearing, July 18, 2008, p. 5:15-25. Though damages may be nominal and their exact nature is yet to be determined, the Court concludes that Lenz adequately has alleged cognizable injury under the DMCA.61
Good cause therefor appearing, IT IS HEREBY ORDERED that the motion to dismiss is DENIED. Universal shall file its answer within twenty (20) days of the date of this order.65
 Lenz has posted other home videos on You-Tube, allegedly for the same purpose. These additional videos are not at issue in this action.67
 See, e.g., M. Collett-White, Prince to Sue YouTube, eBay Over Music Use, REUTERS, Sept. 13, 2007, http://www.reuters.com/article/ internetNew/idUSL1364328420070914? feedtype=.RSS&feedName_InternetNews& rpc=22&sp=true (last visited July 23, 2008).69
 Lenz has dubbed this alleged pattern of activity the “Prince Policy.”71
 The Supreme Court also has held consistently that fair use is not infringement of a copyright. See e.g., Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 433, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984) (”[a]nyone … who makes a fair use of the work is not an infringer of the copyright with respect to such use.”).73
 One might imagine a case in which an alleged infringer uses copyrighted material in a manner that unequivocally qualifies as fair use, and in addition there is evidence that the copyright owner deliberately has invoked the DMCA not to protect its copyright but to prevent such use. See, e.g., Online Policy Group v. Diebold, Inc., 337 F.Supp.2d 1195, 1204-05 (N.D.Cal.2004) (suggesting that the copyright owner sought to use the DMCA “as a sword to suppress publication of embarrassing content rather than as a shield to protect its intellectual property”).
May 22, 2017
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