Online Service Provider Liability Under the Digital Millennium Copyright Act

By Elizabeth A. McNamara

As the Internet continues to grow and more companies move into the online world, the federal government has taken steps to protect those entities that provide conduits for online information. In the area of defamation law, Section 230(c) of the Communications Decency Act immunizes online service providers from liability for defamatory information that originates with third parties.¹ In the area of copyright law, the newly implemented Digital Millennium Copyright Act ("DMCA") provides that online service providers "shall not be liable . . . for infringement of copyright" for doing any of five things: storing, linking, transmitting, routing, or caching infringing material.² This article discusses how service providers can limit their copyright liability under the DMCA, which took effect on October 28, 1998. Although the conditions of each limitation differ, the essence of the DMCA is that a service provider may not be liable for monetary damages for copyright infringement caused by third parties as long as the service provider does not know about the infringement, does not participate in the infringement and acts in good faith.³

Understanding the DMCA is important not only for service providers, but also for copyright holders - including traditional media content providers - who wish to limit potential online infringement. The DMCA specifies notification procedures, discussed later in this article, that must be followed before an eligible service provider is required to remove or block access to infringing material.

General Guidelines for Eligibility

In order to qualify for any limitation on liability, an entity must first meet the definition of service provider under the DMCA. Two definitions exist for the term "service provider." In the context of transmitting and routing, "service provider" is defined as an entity which offers transmission, routing, or connections for digital online communications for materials sent by Users which are not modified by the entity. For the remaining sections of the service provider provisions of the DMCA, a service provider includes the entities in the previous definition as well as "a provider of online services or network access." Both definitions clearly contemplate including entities such as Netcom Communications and MCI WorldCom, which serve as conduits in transporting messages from computer to computer across the Internet. The second definition also clearly encompasses "traditional" Internet or online service providers such as America Online, Prodigy, Yahoo!, and bulletin board services.

Less obviously, the definition is broad enough to potentially include employers who provide e-mail accounts to their employees, and may even include other entities - including newspapers, magazines, and other media companies - who simply host informational websites. Although this definition may be broad enough to cover these less traditional "service providers", the definition was not intended to cover all parties who provide content or services online. How broadly this definition will be read, however, depends entirely on the interpretations of the courts.

If an entity does fit the definition of a service provider ("SP"), it must adopt, reasonably implement, and inform its subscribers and account holders (its "Users") of a policy providing for termination of Users who repeatedly infringe copyrighted works. Also, SPs cannot interfere with any technological measures used by copyright owners to protect or identify their copyrighted works (such as digital watermarks).

In order to qualify for the exemptions, a SP does not need to police its website or actively seek out information about copyright infringement on its site (except as necessary to not interfere with the technical measures discussed above).⁴

Immunity for System Storage and Links

The first limitations on liability cover two common activities. The first, especially common among media websites, is referring or linking Users to an online site containing infringing material by means of, for example, a search engine or hypertext link. Second, liability is limited for storing infringing material (such as on a bulletin board or website created by a User) on the SP's system at a User's request. The DMCA limits a SP's liability for copyright infringement based on these activities if the following conditions are met:

• the SP (a) does not know that the material is infringing; (b) is not aware of facts or circumstances from which the infringing activity is apparent; or (c) if the SP acquires such knowledge or awareness, it acts expeditiously to remove or disable access to the material; and
• if the SP has the right and ability to control the infringing material, it does not get a financial benefit directly attributable to the infringing material (for example, a fee paid by each person that accesses the material); and
• the SP complies with the "notice and take down" provisions of the DMCA (discussed below).

Protection for Transmission and Routing

The next limitation on liability under the DMCA covers the transmission or routing of infringing information that travels through a SP's service. The Internet works by the interconnection of computers and networks, each of which serves as a relay point to transmit information across the network. For example, hundreds of computers and networks may be involved in sending an e-mail message from New York to Seattle, each of which may or may not duplicate that message in the process of transferring it through its own systems and on to the next computer in the chain. The DMCA provides a safe harbor for a SP's activities in acting as this type of intermediary for material travelling between other parties or other computer systems.

To qualify for this exemption, several conditions must be met:

• the transmission of the material is initiated by or at the direction of someone other than the SP, such as a User or another SP;
• the activities covered by this limitation are carried out through an automatic technical process without selection of the material by the SP;
• the SP does not select the recipients of the material except as an automatic response to the request of another person;
• the SP does not maintain a copy of the material on its system in a manner ordinarily accessible to anyone other than anticipated recipients and does not keep a copy of the material on its system for a period longer than reasonably necessary for a SP's transmission or routing; and
• the SP does not modify the content of the material as it transmits it through its system or network.

These requirements largely reflect what typically occurs when a SP routes transmissions, and thus should not prove difficult to satisfy. To assure compliance with the DMCA, however, SPs should review their all practices to confirm that they are in compliance with these requirements. For example, SPs should verify that their systems do not retain copies of transmitted material for longer than necessary.

Protection for System Caching

The final safe harbor in the DMCA limits a SP's liability for system caching. System caching is defined by the DMCA as the practice of retaining, for a limited time, material that has been made available online by a person other than the provider, and then transmitted to a third party at his or her direction. To qualify for the exemption from liability regarding such cached material, a SP must meet the following conditions:

• the SP's storage of the cached material is carried out through an automatic technical process for the purpose of providing the material to subsequent Users who request the material;
• the SP transmits the cached material to subsequent Users without modification to its content;
• the SP complies with any rules concerning the refreshing or updating of the cached material that are specified by the person making the material available online (subject to qualifications);
• the SP does not interfere with any technology associated with the cached material that returns certain information to the person making the material available online (subject to qualifications);
• if the person making the material available online has placed conditions on access to the cached material (such as the payment of a fee or provision of a password), the SP permits access to the cached material only to Users that have met those conditions and only in accordance with those conditions; and
• the SP complies with the "notice and take down" provisions of the DMCA (discussed below).

Notice and Take Down Procedures

The limitations on liability for links, system storage, and caching require a SP to expeditiously remove or block access to any infringing materials once it is made aware of such materials by the receipt of proper notice sent by the owner of rights in those copyrighted materials.

In order for a SP to limit its liability, it must designate an agent for notification of claimed infringements by providing contact information to the Copyright Office and by placing that information online where it is accessible to Users. The Copyright Office's suggested interim form for designating an agent is available at http://lcweb.loc.gov/copyright/onlinesp/agent.pdf. Once an agent is designated, the website should also clearly identify who should receive notice.

In order to limit a SP's liability, the DMCA does not require SPs to remove infringing material unless a copyright holder meets its burden of supplying proper notice of an alleged infringement or of bringing a lawsuit if the User responsible for the alleged infringement files a counter-notification.

An effective notice from a copyright owner to a SP must be in writing and include, among other things: (a) identification of the copyrighted work claimed to have been infringed; (b) identification of the allegedly infringing material; (c) information sufficient to permit a SP to locate the infringing material; (d) a statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent or licensee, or the law; and (e) a statement that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the copyright owner, agent or licensee. Anyone who knowingly misrepresents that material is infringing in such a notice will be liable for any damages incurred by the SP, any alleged infringer, or any copyright owner or its authorized agent or licensee.

A SP cannot be liable for removing works from its system upon receipt of notice if it, in turn, notifies the affected User that it is removing or disabling access to the materials. The User may then file a counter-notice stating that they have a good faith belief that the information was removed by mistake, misidentification or is actually non-infringing. Upon receipt of the counter-notice, the SP must forward it to the party filing the original notice. Unless the copyright owner who originally filed the notice subsequently informs the SP that the owner has filed a lawsuit to enjoin the infringement, the SP must replace or unblock access to the material within 10 to 14 business days after receipt of the counter-notice.

The DMCA also provides procedures for a copyright owner to obtain a subpoena ordering a SP to disclose to the copyright owner the identity of an alleged infringer.

Compliance Checklist

SPs can take the following steps to bring themselves within the protections of the DMCA:

• Designate an agent for notice of claimed infringements and post that information online where it is accessible to Users.
• Register the agent with the Copyright Office.
• Adopt, reasonably implement, and inform its subscribers and account holders of a policy providing for termination of Users who repeatedly infringe copyrighted works.
• Follow the Notice and Take Down procedures identified above when provided with notice of an alleged infringement of a copyrighted work.

Conclusion

Along with Section 230 on the defamation front, the DMCA is another tool media-based websites can use to protect themselves from online liability. Although the DMCA's procedures are, to a certain degree, highly formalistic, service providers can afford themselves significant protection if they follow these procedures. It should be noted that if a SP fails to meet one or more of the requirements for limiting its liability under these DMCA provisions, all of the traditional copyright defenses will still be available to the SP to defend against a claim of copyright infringement. The DMCA provides SPs with a mechanism for limiting their liability without enduring the rigors of a full trial.

FOOTNOTES:

1 47 U.S.C. § 230 ; see Zeran v. America Online, Inc., 129 F.3d 327 (4th Cir. 1997), cert. denied, 118 S.Ct. 2341 (1998) (Section 230 barred liability against AOL for allegedly negligently permitting third-party to post defamatory information about plaintiff).
2 105 Pub. L. No. 304, 112 Stat. 2860, October 28, 1998, Title II, Online Copyright Infringement Liability Limitation Act §§ 201 - 203, amending Chapter 5 of title 17 of the United States Code by adding "Sec. 512. Limitations on liability relating to material online."
3 See 7 No. 4 Mealey's Litig. Rep.: Intell. Prop 35, The Millennium Arrives (At Least For Copyrights)
(Nov. 16, 1998).
4 See The Digital Millennium Copyright Act of 1998: U.S. Copyright Office Summary at 9 (Dec.1998), available at http://lcweb.loc.gov/copyright/legislation/dmca.pdf.

The requisite information must be accompanied by a $20.00 fee, payable to the Register of Copyrights, and be sent to Copyright GC/I&R, P.O. Box 70400, Southwest Station, Washington, D.C. 20024.