The Internet can breathe a sigh of relief today.  In the latesttwist in the long-running Viacom v. YouTubelitigation, the Second Circuit Court of Appeals revived the entertainment giant’s suit against Google – but simultaneously eviscerated most of the legal theories on which the lawsuit was based.  

Here’s the quick and dirty: Back in 2010, a district courtthrew out Viacom’s suit against YouTube, finding that the safe harbors outlined in the Digital Millennium Copyright Act protected YouTube from all copyright liability.  Viacom appealed, based on unprecedented legal theories that, if adopted, would have rendered the DMCA safe harbors a dead letter.

Today’s decision largely affirms that earlier ruling, finding that YouTube is protected from liability except where the company actually knew of (or was willfully blind to) specific instances of infringement of material at issue in the case, or facts of circumstances indicating such specific infringement.  

The appellate court also held that YouTube could be on the hook if it was “willfully blind” to specific infringement – but stressed that YouTube did not have a duty to monitor user activities.  In other words, the company can’t have made a deliberate effort to avoid guilty knowledge, but that doesn’t mean it had an affirmative duty to seek out infringing activity. And, in a bit of a technical point, the court said it was unclear whether syndicating clips might be the kind of activity contemplated by the safe harbors, but that it needed more facts as to whether any of the clips at issue were actually syndicated. 

Finally, the court also suggested that YouTube might be liable if it had exerted “substantial influence” on the infringing activities of users.  The court sent the case back to district court for more fact-finding on the unresolved issues, which means the case will linger on.  For now, this leaves a few questions that the district court will have to address (unless the case finally settles).   

What’s that all add up to?  A loss for YouTube (probably a small one – it is likely that only a small subset of clips remain in play, and YouTube's current practices are not at issue), but, on balance, a win for Internet users and innovation.  Indeed, while some havedeclared it a Viacom victory, it has to be a pyrrhic one at best given that the decision firmly (and correctly) rejected most of Viacom's litigation agenda -- an agenda that that would have upended the DMCA safe harbors on which so much Internet expression relies. 

For example, Viacom had argued that YouTube lost safe harbor protection because it had a general awareness of infringement and, therefore, had the obligation to take “commercially reasonable steps” to police it. That theory, if accepted, would have shifted the burden to police infringement from content owners to service providers – precisely what the safe harbors were intended to forestall.  Now that the Second Circuit has joined theNinth Circuit in rejecting it, perhaps big content will finally learn its lesson.

Similarly, Viacom tried to import the common law “vicarious liability” standard into the DMCA by an aggressive reading of a DMCA exception to the safe harbor where the ISP has the right and ability to control infringing activity. On that theory, any service provider whocould block access to particular materials could lose the safe harbor protections. As the court recognized, that theory doesn’t make sense: the notice and takedown provisions specifically contemplate such blocking where there is notice of infringement – if Viacom were right, the safe harbors would hardly be “safe.”  

What is more, the court rejected Viacom’s claim that YouTube was “willfully blind” to infringement because it failed to monitor for it.  Not so, said the court: while the DMCA does not countenance willful blindness, neither does a service provider have a duty to monitor.

Finally, the Second Circuit largely discounted Viacom's theory that YouTube didn't qualify as a service provider under the DMCA because it is more than a storage locker, but actually does a variety of things to facilitate user access to videos, such as generating a list of related videos -- a theory was already rejected by the Ninth Circuit.  Congress, the court concluded, did not intend for the statute to be interpreted so narrowly. 

So, while YouTube would doubtless have preferred a clean affirmance of the decision below, the Internet has much to celebrate tonight. The court’s decision adds to the growing weight of authority finding the DMCA safe harbors can provide the necessary room for innovation. But stay vigilant: big content is doubtless already on the phone to its friends in Congress, demanding anew SOPA/PIPA that will give it the power to stop the next YouTube before it can get started. 

For other views of interest, seePublic Knowledge,Prof. Eric Goldman andMike Masnick.