Editors Note: Caroline Horton Rockafellow is a member of the Research Triangle Park law firm of Daniels Daniels & Verdonik, P.A.

RESEARCH TRIANGLE PARK, N.C. – In the world of interesting copyright litigation, there may be a new kid on the block.

For anyone that has followed digital copyright issues, they have some familiarity with case names and technology such as Sony, Napster, Aimster, Grokster and Google. Now a relative newcomer to the digital word, YouTube, may either provide the next chapter in interesting copyright litigation or a useful template for other similar services that wish to comply with copyright laws.

YouTube Inc. was founded in February of 2005 for the purpose of providing an online community for the sharing of original videos. Users post videos on the site to share with other users in the community. YouTube has a detailed policy carefully outlining copyright infringement and what guiding principles the users should consider before posting videos. These policies are an attempt to ensure that users are not participating in copyright infringement. YouTube asserts the right to remove any materials where there is a third party claim that the material is subject to copyright protection and was posted in violation of that right.

YouTube has also focused on postings of short clips in order to avoid the media that is most attractive to pirates. Regardless of the steps that YouTube has taken to try and insulate itself from claims of copyright infringement, its efforts may not have been sufficient.

Late last week, YouTube was sued by L.A. News Service and its owner, Robert Tur for copyright infringement. Whether this is the next case in an increasingly long line of interesting digital copyright cases or merely a blip on the newswires will remain to be determined.

Background on Digital Rights

To understand the potential implications of any case that might result from the pending dispute between Robert Tur and You Tube, it is necessary to analyze the current status of digital copyright law, beginning with the 1984 Supreme Court case of Sony Corp. v. Universal City Studies. This case, which covered early videocassette recorder (VCR) technology, is commonly referred to as the “Betamax” case. In the Betamax case, the Supreme Court held that because the VCR was capable of substantial noninfringing uses, including time-shifting of television broadcasts by home views, the manufacturer was not liable for contributory infringement.

Sixteen years later, the 9th Circuit Court of Appeals held in A&M Records v. Napster that the peer-to-peer file sharing service of Napster was an infringing activity. Even though Napster was like Sony in that it did not participate in any copying of materials or posting of infringing items and that it did have a substantial noninfringing use, the Court found that Napster had actual knowledge the infringing activity was taking place and did nothing to prevent the infringement or to remove the infringing materials. As a result, Napster was liable because it ignored infringing activities it could have detected and corrected.

Considering the decision related to Napster, “Aimster” established a later-technology music service that attempted to remove the apparently critical knowledge factor. The Aimster system tutorials encouraged users to download copyrighted music. Aimster set up an encrypted system that made it impossible for Aimster to know exactly what files were being transferred. This meant that Aimster did not have the “actual knowledge” that was Napster’s ultimate downfall. Unfortunately for Aimster, the 7th Circuit Appeals Court held that the steps taken by Aimster supported an inference of “willful blindness.” In addition, Aimster was not able to support the argument that the software had any application other than use for infringing activity.

Finally, in 2005, a peer-to-peer file sharing case reached the Supreme Court in MGM v. Grokster. The Grokster case analyzed whether a distributor of a product capable of both infringing and noninfringing uses would be liable for copyright infringement by users of the product. Ultimately, Grokster and Streamcast, the other defendant in this case, lost because the Court determined that even though, like Sony, there were infringing and noninfringing uses of the technology, Grokster promoted the infringing use. It was this promotion of the infringing use that was the downfall for Grokster and Streamcast.

Where Does YouTube Fall into the Equation?

The YouTube technology clearly has the ability to provide both an infringing and a noninfringing use. Unlike Grokster, YouTube is careful not to promote the infringing use of its technology and provides a clear guideline that encourages its users to avoid activities that would constitute copyright infringement.

In addition, it is not falling into the trap of Aimster, since it does provide a process for third parties to notify it of copyright infringement and a process for removal of any materials that are believed to infringe a third party copyright. The removal of materials that are known to infringe copyright will address the problems that were the ultimate downfall of Napster. Accordingly, it would appear that YouTube has taken all of the steps necessary to avoid the copyright liability experienced by many of the earlier digital sharing services.

The question, of course, is not whether YouTube is taking the appropriate actions to put its users on notice. It clearly appears that it provides for all of the proper notices and adequately encourages its users to make a proper and noninfringing use of the service. Rather, the question is whether a significant number of YouTube users will ultimately use the service for proper or improper purposes. If YouTube is to become the next technology to make for interesting case law, it will turn on the actual activities taking place on the service.

It appears that the Tur allegations evolve around claims that the YouTube service provided a venue for individuals to post segments of Mr. Tur’s video’s of famous Los Angeles events, including the O.J. Simpson’s slow speed chase and the Regional Denny beating. If, a court determines that, regardless of the warnings posted by YouTube, YouTube did not take appropriate actions to prevent such infringing activities from occurring, or if it is shown that the primary activities on the YouTube service include posting of copyrighted videos and materials, then regardless of the posted warnings, YouTube could still find itself on the wrong side of this copyright litigation.

Interesting Case Study

It appears that YouTube may find itself in the unenviable position of providing an interesting case study in copyright law. YouTube has clearly studied the fate of its predecessors and has put protections in place that should protect it from the same fate as Napster, Grokster and others, but that does not mean that it should not fear copyright litigation.

This is particularly true, if history repeats itself, and users of YouTube are determined to use the service for unlawful purposes. The future of YouTube may depend on how the courts decide that it has monitored and run its service. It may well be that this service has found a way to stay on the right side of copyright protection.

Only time will tell the fate of YouTube.

Daniels Daniels & Verdonik, P.A. has been serving the legal needs of entrepreneurial and high technology clients for more than 20 years. Caroline Horton Rockafellow concentrates her practice in the representation of entrepreneurial and technology-based business, focusing on corporate, technology and licensing matters. Questions or Comments can be sent to crockafellow@d2vlaw.com.