Anti-Counterfeiting Trade Agreement

Too Soon to Worry about the Anti-Counterfeiting Trade Agreement (ACTA)?

Digital media law update: Despite the tremors caused by the Lenz case, a recent decision by a Wisconsin District Court shows that it can still be difficult to obtain a judgment holding a defendant liable for sending a false DMCA notice. See Third Education Group, Inc. v. Phelps, E.D.Wisc., No. 07-c-1094, Decision and Order Following Court Trial (November 25, 2009).

The Digital Millennium Copyright Act puts a powerful tool in the hands of a person who claims to be the owner of a copyright. Copyright law provides for six-figure statutory damages against an ISP who permits infringing material to reside on a site under its control after receiving notice of the presence of the material. However, the DMCA provides immunity from these civil damages if an ISP takes down such material in response to a notice from the putative owner of the copyright, and meets certain other tests. This provides a strong incentive for an ISP to reflexively take down infringing material — such as by disabling an entire website — upon receiving a DMCA takedown notice.

This puts serious weapon in the hands of the general public that can be used protect legitimate copyright interests — or can be misused by someone who has no rights in material used by a competing business to get its site shut down.

To prevent abuse of the notice and take down system, Congress put two major protective measures into the DMCA: the counter-notice procedures in § 512(g) and the misrepresentation rule in § 512(f). Section 512(f) provides that a person who “knowingly” misrepresents that material on a site is infringing is liable for any damages, including attorneys fees, incurred by the alleged infringer.”

It can be very hard to prove a knowing misrepresentation occurred. Courts interpreting this statute have generally found that to be liable, the person who sent a false DMCA notice must have lacked the honest belief that material was infringing. As stated by the 9th Circuit, “Congress’s apparent intent [was] that the statute protect potential violators from subjectively improper actions by copyright owners.” Rossi v. MPAA, 391 F.3d 1000, 1005 (9th Cir. 2004).

To determine whether the sender of a false DMCA notice had a good faith belief in the truth of the notice, courts do not limit themselves to the testimony of the sender. Rather, courts consider the information that the sender relied on. However, it doesn’t take much evidence for the court to find that the author of a DMCA notice acted in good faith.

For example, the Rossi case concerned the website, which Rossi described as an online magazine that provided visitors with a directory of websites containing information about movies. Rossi’s site contained the words “Join to download full length movies online now!” In fact, users could actually download no movies through Rossi’s site or through the links to which he referred users — a fact that MPAA investigators missed because they never attempted to download any movies from Rossi’s site.

However, the 9th Circuit stated that the sender of a DMCA takedown notice is not required to perform a “reasonable investigation” and “cannot be held liable simply because an unknowing mistake is made, even if the copyright owner acted unreasonably in making the mistake.” Id. at 1005. Accordingly, the 9th Circuit found that the MPAA acted in subjective good faith because the language on Rossi’s site “led the MPAA employees to conclude in good faith that motion pictures owned by MPAA members were available for immediate downloading from the website.”

In a more recent case, a director and president of a small Wisconsin corporation, Third Education Group, Inc., which operated an online magazine at and, had a falling out with the other directors. He resigned from the board, and then changed the passwords to the two sites, locking the corporation from access to the sites. He then utilized the domain names as the home for his own independent organization which he incorporated in Iowa under the same name — Third Education Group, Inc.

After being locked out of its own websites, the Wisconsin corporation created a new site under the domain name and populated it with material largely copied from and In response, the absconding former president of the Wisconsin corporation sent DMCA takedown notices to the ISPs which hosted the site, resulting in the ISPs blocking access to the site. See Third Education Group, Inc. v. Phelps, E.D.Wisc., No. 07-c-1094, Decision and Order Following Court Trial, November 25, 2009).

The absconding president argued that he could not be held liable for under Section 512(f) because he believed that he the right to take control of the websites. He was the person that had registered them, and he had registered them prior to the formation of the Wisconsin corporation — although after he had agreed with the other directors to form Third Education Group.

The Court ultimately found that the absconding president’s belief that he had a right to the websites was ill-founded and that the domain names belonged to the Wisconsin corporation. However, the Court nevertheless found that he could not be held liable for misrepresenting his entitlement to the domain names. The Court stated that “[d]etermining the ownership of the website material required resolution of complex and somewhat novel questions common law related to unincorporated associations and how the intellectual property of a voluntary association is affect when the association subsequently incorporates.” The absconding president was also largely responsible for coming up with the idea of the journal, and did or paid for nearly all the work on the website, including writing the allegedly infringing content at issue. As such, the judge concluded that there was no evidence that he acted in bad faith when he issued his DMCA notices. Id. at p. 16.

Many reading this are no doubt shouting, “What about the Lenz case?” Didn’t that essentially impose a duty on the sender of a DMCA notice to at least investigate whether the use of the content at issue was fair? See Lenz v. Universal Musical Corp., 572 F.Supp.2d 1150 (N.D. Cal. 2008). Actually, what Judge Fogel stated in Lenz was that the DMCA requires copyright owners to make an “initial review of the potentially infringing material prior to sending a takedown notice.” Id. at 1155 (emphasis added). As part of that initial review, there must a consideration of factors that relate to whether the use of copyrighted material is infringing, including the possible applicability of the fair use doctrine.

The impact of the Lenz case is that it implies that to act in good faith, the person sending a DMCA notice must have at least a basic knowledge of copyright law. This means that when reviewing a potentially infringing site (or setting up a review system), a copyright holder should consult with an expert on copyright law so that it can appropriately take into account the numerous factors that determine whether a use is infringing.

However, the case law on Section 512(f), as a whole also indicates that a copyright holder’s review of a potentially infringing site does not have to go very far. If the facially obvious evidence supports a conclusion that a use is infringing and there is no other evidence that the copyright holder acted in bad faith, a Court is unlikely to hold it liable for sending a DMCA notice that ultimately proves to rest on a false claim of infringement.