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How a Formerly Obscure Patent Issue Could Cost YouTube

This week, the Supreme Court issued a nearly unanimous opinion in Global-Tech Appliances v. SEB, a case dealing with an issue so seemingly unimportant (to me, at least) that I had forgotten it was even on the docket. In short, the Court held 8-1 that inducing patent infringement required knowledge of the patent.

Well, duh. Proof that it’s a rare and not that important issue is that it took so long to get Supreme Court clarity on this basic point – the key issue was simply resolving an ambiguity introduced by 1964 case. Proof of the “duh” is that it is unusual of late for the Court to affirm the judgment of the Federal Circuit (although the Court did reject some of prior rule followed by the Federal Circuit).

So, why does the case matter? Because the Court announced a “new” test for knowledge – willful blindness. Courts may impute knowledge where: “(1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must  take deliberate actions to  avoid learning of that fact.”

(1) the defendant must
subjectively believe that there is a high probability that a
fact exists  and (2) the defendant must  take deliberate
actions to  avoid learning of that fact.

This is a big deal because it comes from interpretation of criminal statutes, though apparently the Supreme Court has not necessarily used the interpretation before.

And this is where YouTube comes in. The Supreme Court is happy to import secondary liability standards from patent law into copyright law. In the famous Sony Betamax case, the Court imported patent’s contributory liability standard into copyright law relating to the sale of components that aid in infringement. And more recently in Grokster, the Court used patent law’s inducement standard to judge Grokster’s inducement of copyright infringement. Indeed, Grokster is discussed in Global-Tech, but the Court said that Grokster had actual knowledge of infringement, so willful blindness was moot.

In the much watched Viacom v. YouTube case, one of YouTube’s main defenses is that it had no “knowledge” of infringing acts by its users. Secondary liability in copyright requires at least constructive knowledge of infringement, and some key defenses rely on lack of knowledge.

Viacom has worked hard to make arguments that YouTube had general knowledge that infringement was going on somewhere on the site, and also had constructive knowledge (red flags) of specific acts but failed to investigate.

In contrast, YouTube has steadfastly insisted that so long as it did not directly know about a specific instance of infringement, it did not need to take any action.

This is where Global-Tech comes in – most of Viacom’s “red flag” arguments are really arguments that YouTube deliberately ignored information it knew existed. One of YouTube’s defenses is that it could ignore what it wants under the law. One reading of Global-Tech — and a reasonable one, I think — is that a concerted effort by YouTube to avoid learning more about infringement that it knew existed constitutes knowledge by willful blindness.

Of course, even if one accepts this interpretation, this does not answer the question entirely. There are thousands and thousands of posts on YouTube every day. Even if YouTube knew with certainty that some of the posts infringed, the cost of actually finding them might be high – so high that not looking is not willful blindness of the specific infringement, but instead lack of knowledge about an entirely different fact. Knowledge that infringement exists somewhere and not investing to find it is not the same as knowledge that a specific act of infringement exists and turning a blind eye.

On the other hand, with the advent of filtering technology, one reading of the willful blindness rule might require the use of filters to find specific acts, where one knows that they exist. Viacom argues that YouTube had such filters but stopped using them (the true facts are much more complicated, of course, like how Viacom got caught posting its own videos on the site).

My prediction is that appellate courts are going to want to take this new rule out for a spin, and that we will start seeing “willful blindness” analysis in copyright secondary liability cases. I won’t go so far as to predict what action the rule will require of website operators – that will be more fact specific.