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CONTACT: Mike Wendy
June 24, 2010
(202) 969-2957
PFF's Sydnor Says All Lose with YouTube Court Order
Pirated Works OK for "Start-Up Capital" the Absurd Result of Decision

WASHINGTON D.C. — Late yesterday, the Court in Viacom Int'l, Inc. v. YouTube, Inc., issued an Opinion and Order that granted the Defendants' motion for summary judgment, holding that the original YouTube qualified for the so-called safe-harbor protections of Section 512(c) of the Digital Millennium Copyright Act even though its founders "not only were generally aware of, but welcomed" piracy so massive that the court called it "ubiquitous." The following statement can be attributed to Thomas D. Sydnor II, Senior Fellow and Director of the Center for the Study of Digital Property at the Progress & Freedom Foundation:

Judge Stanton held that federal law creates a "safe harbor" that protects not only criminal conduct, but criminal racketeering enterprises. That result made no sense in Grokster, and it makes no sense today. In doing so, Stanton's decision endangers consumers, hosting services, and artists—it leaves everyone worse off.
Judge Stanton thus endangered consumers by holding that federal law was intended to protect from civil liability even a criminal enterprise that intentionally uses consumers and children as human shields to deter the enforcement of federal rights and drive law-abiding competitors out of the market by using mass piracy as 'start up capital for their product.'
Judge Stanton also endangered hosting sites: in effect, he found that YouTube will be held liable not because its founders intended to use piracy as their start-up capital, but because Section 512(c) provides no protection to anyone except those few racketeering enterprises or businesses that engage only in an extremely narrow range of conduct.
Judge Stanton has also endangered the vitality of federal civil rights—the copyrights—that the Supreme Court has called an engine of free expression.
None of these results follow from the actual text of Section 512(c). For example, Section 512(c)(A)(ii) denies safe-harbor protections to any hosting-site operator that "is aware of facts and circumstances from which infringing activity is apparent." But Judge Stanton persuaded himself that a hosting-site operator can actually know that "infringement is 'ubiquitous'" on its site, yet be wholly unaware of any "facts and circumstances from which infringing activity is apparent." Appellate courts should find such self-contradiction most unpersuasive.
It is tragic and wasteful to force copyright owners to re-litigate Grokster in order to re-establish that federal law does not provide a civil safe-harbor for entities that intentionally induce mass piracy. Until this bizarre decision is reversed—and it should be—copyright owners suing hosting sites that may have intentionally used mass piracy as "start-up capital for their product" should thus protect their federal civil rights and the safety of Internet users by filing civil claims under both the Copyright Act and the Racketeer-Influenced and Corrupt Organizations Act (RICO)—a statute to which no "safe harbor" is applicable.

Thomas Sydnor is available for comment. Please contact Mike Wendy at for more information.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation