In The United States Court of Appeals For The Second Circuit
In The United States Court of Appeals For The Second Circuit
In The United States Court of Appeals For The Second Circuit
10-3270 IN THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Jacob Schatz
ELECTRONIC ARTS INC.
209 Redwood Shores Parkway
Redwood City, CA 94065
(650) 628-1500
Counsel for Electronic Arts Inc.
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following:
of its stock.
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TABLE OF CONTENTS
Page
STATEMENT OF INTEREST..................................................................................1
ARGUMENT .............................................................................................................9
CONCLUSION........................................................................................................26
ii
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TABLE OF AUTHORITIES
Page(s)
CASES
17 U.S.C. § 512(c)(1)...............................................................................................14
iii
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Page(s)
OTHER AUTHORITY
Press Release, CBS Corp. et al., Internet and Media Leaders Unveil
Principles to Foster Online Innovation While Protecting Copyrights
(Oct. 18, 2007), available at
http://ugcprinciples.com/press_release.html (Oct. 18, 2007)........................23
Greg Sandoval, Microsoft temporarily closes video site, CNET News (Mar.
22, 2007), http://news.cnet.com/Microsoft-temporarily-closes-video-
site/2100-1025_3-6169851.html?tag=mncol;txt ...........................................25
iv
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STATEMENT OF INTEREST1
judgment regarding the applicability of the safe harbor provisions of the Digital
YouTube—that deliberately built its audience, its monetization, and its business
individuals and businesses throughout the world to realize their full potential by
creating technology that transforms the way people work, play, and communicate.
and services, including Windows and Windows Live, Microsoft Office and
Microsoft Office 365, Xbox and Xbox Live, and Bing. Microsoft invests
1
Pursuant to Federal Rule of Appellate Procedure 29(c)(5) and Local Rule
29.1(b), amici state that this brief was not authored in whole or in part by the
counsel of any party, and no party, party’s counsel, or person other than amici or
their counsel contributed money intended to finance the preparation or submission
of this brief.
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property law, including the safe harbor provision of the DMCA at issue in this
case.
case. On the one hand, Microsoft offers numerous online products and services
that engage in the lawful, digital distribution of content, in reliance on the DMCA
safe harbor provisions. Those provisions have been instrumental in fostering the
addressing the important copyright-related issues that such services face. In 2007,
for example, Microsoft joined with several of the world’s leading Internet and
principles governing user-generated content services that both allow for continued
growth of user-generated content online and respect for the intellectual property of
which are consistent with the spirit of that Act. Those principles—and the
2
See Principles for User Generated Content Services, available at
http://ugcprinciples.com (last visited Dec. 10, 2010) (reproduced in an addendum
to this brief (“ADD-”)).
2
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through the illegal conduct of online services and other intermediaries that abuse
the DMCA safe harbor provisions and encourage infringement by their users. In
fact, to illustrate the scope of the problem, Microsoft issues copyright-related take-
down notices to online service providers for millions of infringing files every year.
others. At the same time, EA has developed gaming products and services
incorporating features that allow users to upload and share content through online
interpretation of § 512(c) and in ensuring that the safe harbor strikes the balance
3
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copyright owners to cooperate to detect and deal with copyright infringements that
(1998). Amici respectfully submit this brief and accompanying Motion for Leave
encourage innovation and expansion in the number and type of online services
provided to end users, while at the same time “preserv[ing] strong incentives for
service providers and copyright owners to cooperate to detect and deal with
S. Rep. No. 105–190, at 1-2, 20; H.R. Rep. No. 105-551(II), at 49 (1998). Among
other things, Congress established that a provider may not avail itself of the safe
harbor if it “ha[s] actual knowledge that the material or an activity using the
The district court erred in concluding that the DMCA’s safe harbor provision
4
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that YouTube’s founders quickly discovered that YouTube was a magnet for
infringing material, and that infringing content was a primary driver of user traffic
Yourself.” But from the time it launched in 2005 until mid-2008, the evidence
shows, YouTube knew that the vast majority—some 80 percent—of the traffic to
copies of excerpts of popular movies and television shows. Other record evidence
shows that YouTube knowingly used that widespread infringement to expand its
audience and thereby increase its financial value. And when Google acquired
Grokster.” SUF 157.3 The district court’s decision holding that defendants’
Congress in enacting the DMCA’s safe harbor provision and encourages conduct
ultimately consumers.
3
This brief refers to the public version of Viacom’s Statement of Undisputed
Facts in Support of Its Motion for Partial Summary Judgment as “SUF.”
5
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YouTube users in short period of time in order to maximize its commercial value;
that they knew YouTube had quickly become a magnet for pirated works; that they
recognized the value of retaining infringing content on the site that, by YouTube’s
own estimates, accounted for 80% of its traffic; and that they affirmatively decided
their goal of rapidly expanding YouTube’s user base. The record includes
establishing these facts. A reasonable jury could find that YouTube became the
venture capital investors, who sold the site to Google for $1.65 billion little more
“‘rogue enabler’ of content theft” and recognized that YouTube’s business model
The district court reviewed the summary judgment record and acknowledged
that a reasonable jury could conclude that “defendants not only were generally
website,” because “[s]uch material was attractive to users, whose increased usage
6
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The district court nevertheless concluded that defendants were entitled to the
DMCA’s safe harbor as a matter of law, even on the extreme facts presented here.
and blatant,” the district court ruled, “is not enough” (SPA-20, 18) to create a
statutory provisions and a flawed assessment of the record. In enacting the DMCA
and its safe harbor provisions, Congress sought to encourage the proliferation of
with respect to their exposure for copyright infringement that they may unwittingly
make possible through their service. To be sure, the statutory safe harbor is a
knowingly facilitate blatant and widespread infringement on their service with the
intent to exploit that infringing activity in order to increase their bottom line. The
district court erred in concluding that the record fails to create a genuine dispute of
fact as to defendants’ wrongful intent to encourage, facilitate, and profit from its
users’ infringement.
7
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If, as the district court held, the evidence adduced by plaintiffs on summary
judgment does not raise a triable issue as to whether defendants had “aware[ness]
difficult to imagine what sort of record would suffice. On this record, a reasonable
jury could find that YouTube knew of, encouraged, participated in, and intended to
service. The district court’s holding reads the apparent knowledge provision (17
Congress never intended to shield when it enacted the DMCA, and destroys
“incentives for service providers and copyright owners to cooperate to detect and
deal with copyright infringements that take place in the digital networked
infringement, the district court exacerbates ongoing competitive harm in the online
content marketplace. During the time at issue, no other mainstream online video
9), in part because those competing services were trying to stay within the
8
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build its audience by exploiting others’ copyrighted content, its online video
competitors adhered to the proper limits of copyright law but, inevitably, fell far
acquiring YouTube and changing its corporate policies in order to capitalize on the
audience that YouTube built. Congress could not have intended to create these
perverse market incentives when it enacted the DMCA. The judgment of the
ARGUMENT
infringing content to its site. There is undisputed evidence in the record that
YouTube’s founders sought to quickly make YouTube the web’s most popular
video site—through any means necessary—and then cash in. SUF 30, 36, 49-50
(“our dirty little secret … is that we actually just want to sell out quickly”). As
F
9
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one of its founders candidly remarked, YouTube’s goal was to “build[] up [its
tactics, however evil.” SUF 85. Once it achieved a critical mass of users, the
$500m[illion],” and believed that there was “potential to get to $1 b[illion].” Id.
The plan worked better than anticipated: they ultimately sold YouTube to Google
The evidence establishes that YouTube understood that one sure-fire tactic
for attracting and retaining users was to make YouTube a haven for unauthorized
“bittorrent.” SUF 29. 4 As early as June 2005—just weeks after YouTube’s beta
F F
launch—the company received a complaint from its service provider that YouTube
was in violation of a user agreement. SUF 33. Founder Steve Chen told his
copyrighted content.” Id. But YouTube, Chen went on to admonish, was “not
about to take down content because our ISP is giving us sh[*]t.” Id. (alteration
4
These are references to well-known “peer-to-peer” sharing sites that “allow[]
users to download infringing copies of popular movies, television shows, sound
recordings, software programs, video games, and other copyrighted content free of
charge.” Columbia Pictures Indus., Inc. v. Fung, No. CV-06-5578, 2009 WL
6355911, at *2 (C.D. Cal. Dec. 21, 2009).
10
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added). And before too long, according to YouTube’s own estimates, as much as
80% of user traffic was driven by pirated videos. See, e.g., SUF 104 (March 1,
Maryrose Dunton and YouTube systems administrator Bradley Heilbrun: “the truth
of the matter is, probably 75-80% of our views come from copyrighted material.”);
SUF 95 (February 28, 2006 instant message conversation between Dunton and
material.”).
infringing material, “site traffic and virality [would] drop to maybe 20% of what it
is,” stunting YouTube’s growth. SUF 55; see also SUF 37-39, 57. So YouTube
“improve video uploads, videos viewed, and user registrations” until the founders
could cash out. SUF 58. Moreover, the evidence adduced by plaintiffs shows that
YouTube had much more than a mere “generalized” awareness that there was
what it regarded as infringing content and yet chose to do nothing about it during
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the period at issue. It is undisputed, for example, that in March 2006, one of
YouTube’s founders informed the board of directors that there was “blatantly
illegal” content on the site, including “episodes and clips of … Family Guy, South
Park, MTV Cribs, Daily Show, Reno 911, [and the] Dave Chapelle [Show].” SUF
109-11.
content to its site in an effort to increase traffic. See, e.g., SUF 40 (July 19, 2005
email from Steve Chen to YouTube co-founders Chad Hurley and Jawed Karim:
“We’re going to have a tough time [arguing] that we’re not liable for the
stealing content from other sites and trying to get everyone to see it.”); SUF 93
(instant message from Maryrose Dunton to Bradley Heilbrun stating that she had
becoming the web’s most popular video site and attracted the attention of Google,
which saw YouTube as a way of expanding its own reach. Plaintiffs adduced
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YouTube was a chief reason why YouTube was crushing its competitors, including
Google Video, in the race to be the first to attract a critical mass of users. Google
itself referred to YouTube as a “‘rogue enabler’ of content theft.” SUF 157; see
also SUF 145 (email from Google executive Peter Chane to the Video Team
YouTube: “We did a survey and more than 80 percent of video on this site is
“[t]raffic is high but content is mostly illegal”); SUF 230 (draft 2007 strategy
infringed content” was “among the primary drivers of YouTube traffic” and that
“[b]y developing and [sic] audience following the users first, YouTube has created
expansion in the number and type of online services provided to end users, while
cooperate to detect and deal with copyright infringements that take place in the
13
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digital networked environment.” S. Rep. No. 105–190, at 1-2, 20; H.R. Rep. 105-
551(II), at 49. It struck that balance by crafting statutory “safe harbors” intended
for infringements that may occur in the course of their activities,” given the
evolving state of the law concerning service providers’ liability for copyright
statutory safe harbor for service providers who store material “at the direction of a
user,” for copyright infringements that occur “by reason of” such storage. 17
U.S.C. § 512(c)(1). But the safe harbor does not confer absolute immunity on such
First, a provider may not avail itself of the DMCA’s safe harbor provision if
it “ha[s] actual knowledge that the material or an activity using the material on the
attributable to the infringing activity” and has “the right and ability to control such
activity.” Id. § 512(c)(1)(B). Third, a provider cannot qualify for the safe harbor
14
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to remove, or disable access to, the material that is claimed to be infringing.” Id.
provision.
acknowledged, with some understatement, that a reasonable jury could find that
“defendants not only were generally aware of, but welcomed, copyright-infringing
material being placed on their website,” because “[s]uch material was attractive to
displayed on certain pages of the website.” SPA-9 (emphasis added). The district
court nevertheless concluded that defendants were entitled to the DMCA’s safe
harbor as a matter of law. The district court further held that defendants’
enough to create a triable issue as to whether they are entitled to the statutory safe
legislative history, the district court held that disqualifying “aware[ness] of facts or
15
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individual items.” SPA-18. Similarly, the district court held that defendants could
not have the “right and ability to control” its users’ infringing activities for
purposes of § 512(c)(1)(B), because they purportedly did not have sufficient “item-
specific” knowledge of the infringing activity from which they indisputably reaped
law, defendants were not “aware of facts or circumstances from which infringing
Congress excluded from the safe harbor not just those who have (i) “actual
knowledge” of infringing activity, but also those who, (ii) “in the absence of actual
“actual knowledge” of infringing activity. Under the district court’s test, which
apparent knowledge will never be enough unless the defendants also have actual
16
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construed, if possible, in a manner that gives effect to all of its parts. See Jacobs v.
New York Foundling Hosp., 577 F.3d 93, 99 (2d Cir. 2009) (“It is ‘a cardinal
superfluous, void, or insignificant.’”) (quoting TRW Inc. v. Andrews, 534 U.S. 19,
228 F.3d 82, 88 (2d Cir. 2000) (“[W]e are required to ‘disfavor interpretations of
defendants are entitled to benefit from the safe harbor, even though they intended
take-down notice. See SPA-26 (“[I]t is uncontroverted that when YouTube was
given the notices, it removed the material. It is thus protected ….”). The district
court seemed to suggest that that would be a fine result, remarking that “the present
case shows that the DMCA notification regime works efficiently.” SPA-19
17
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not share the district court’s belief that the notice-and-take-down regime alone
would be sufficient to protect against the risk of massive piracy in the digital age.
The structure of the statute is clear: service providers who want to avail
themselves of the statutory safe harbor must comply with take-down notices, but
they also must take action to remove infringing material when they obtain
makes clear that the safe harbor is not available unless a service provider can show
that it satisfies all of the requirements in § 512(c)(1). And although the text of the
statute alone establishes the district court’s error, the legislative history confirms
(“Section 512 does not require use of the notice and take-down procedure. A
service provider wishing to benefit from the [safe harbor] must ‘take down’ or
meets the ‘red flag’ test, even if the copyright owner or its agent does not notify it
of a claimed infringement.”).
Indeed, though the district court’s opinion consists largely of lengthy block
quotations from the legislative history, on closer examination the legislative history
tends to undercut, rather than support, the district court’s strained reading. The
18
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flag’ test.” Id. at 44. The House Committee Reports also use the “red flag”
in § 512(a) and (d). H.R. Rep. No. 105-551(I), at 25 (1998); H.R. Rep. No. 105-
551(II), at 57. Describing the “red flag” test in the context of § 512(d)’s safe
§512(c)(ii)), the House and Senate Reports explain that a service provider “would
not qualify for the safe harbor if it had turned a blind eye to ‘red flags’ of obvious
infringement.” S. Rep. No. 105-190, at 48; H.R. Rep. No. 105-551(II), at 57.
In the context of § 512(c), the safe harbor provision at issue here, the Senate
awareness” of wrongdoing was meant to be the touchstone of the “red flag” test.
Yet the district court’s test, with its almost myopic focus on the specificity
19
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intent of YouTube nor whether “infringing activity” would have been “apparent”
district court’s decision extends the DMCA’s safe harbor to the extreme situation
district court’s interpretation of the DMCA’s safe harbor provision in this case,
Content Sites and Section 512 of the US Copyright Act, in Copyright Enforcement
and the Internet 183, 185 (Irini A. Stamatoudi ed., 2010) (emphasis added)
Id. at 193.
4. The district court’s decision in this case also effectively interprets the
DMCA’s safe harbor provision to immunize conduct that the Supreme Court held
20
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Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005). Here,
that defendants built their business model based on “aiming to satisfy a known
source of demand for copyright infringement”; evidence that defendants had actual
or apparent knowledge of the massive infringement on the site; and evidence that
defendants actively sought to profit from that infringement. See id. at 922-27, 937-
41. Indeed, Google understood that YouTube was known as the “video Grokster.”
SUF 157.
merely “imputed” from “red flags” that would indicate, objectively, that infringing
activity is happening. The record is replete with evidence of the defendants’ state
of mind, all pointing to the conclusion that they intended to multiply traffic on their
21
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for the defendants on a proper interpretation of the DMCA’s safe harbor provision.
See id. at 941; see also id. at 942 (“There is here at least a ‘genuine issue as to a
(Ginsburg, J., joined by Rehnquist, C.J., and Kennedy, J., concurring) (alterations
market bonanza, many competitors who worked cooperatively with content owners
dealing with the infringement problem. The members of the group recognized that
22
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“[t]he ease of uploading video content on the Internet has led to the creation of
parody. It also has resulted in the proliferation of uploaded content that infringes
members of the digital media and Internet industries developed a set of “best
practices” for user generated video services, referred to as the Principles for User
5
Press Release, CBS Corp. et al., Internet and Media Leaders Unveil Principles
to Foster Online Innovation While Protecting Copyrights (Oct. 18, 2007), available
at http://ugcprinciples.com/press_release.html (Oct. 18, 2007).
6
See ADD-1-4. Signatories to the UGC Principles include both online
services—MySpace, dailymotion, Crackle, sevenload, Veoh, and Microsoft—and
content owners—CBS Corporation, Disney, Fox Entertainment Group, NBC
Universal, Sony Pictures, and Viacom. YouTube declined to participate.
23
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The district court’s test creates a powerful disincentive for cooperative efforts such
as the UGC Principles. It thus frustrates Congress’s sensible objective in the face
for service providers and copyright owners to cooperate to detect and deal with
The suggestion that courts should err on the side of conferring absolute
experience for the consumer, creativity must be fostered on the content side as well
“[d]ue to the ease with which digital works can be copied and distributed
works readily available on the Internet without reasonable assurance that they will
be protected against massive piracy.” Id. at 8. The district court’s test would stifle
both technological innovation and artistic creation in ways that will hurt the digital
exacerbates and perpetuates a particular competitive harm. YouTube won the race
24
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to be “the” online source to search for and view video content on the web, but only
by unleashing an aggressive business model that sought to (and did) expand its
YouTube built its business by exploiting copyrighted content in order to capture its
critical audience, many of its competitors in online video worked with content
content site, called Soapbox, in 2006. Like YouTube, Microsoft saw that
infringing videos were uploaded to the site and heard strong concerns from content
owners. But unlike YouTube, Microsoft was determined to act responsibly and
address those concerns. In March 2007, shortly after Soapbox debuted, Microsoft
temporarily closed the site to new users so that it could implement better
7
See Greg Sandoval, Microsoft temporarily closes video site, CNET News (Mar.
22, 2007), http://news.cnet.com/Microsoft-temporarily-closes-video-site/2100-
1025_3-6169851.html?tag=mncol;txt; James Delahunty, MSN’s Soapbox re-opens
with filtering technology, AfterDawn (June 4, 2007),
http://www.afterdawn.com/news/article.cfm/2007/06/04/msn_s_soapbox_reopens_
with_filtering_technology.
25
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advantage of YouTube’s audience and concluded that the only way it could attain a
YouTube’s pursuit of growth at any cost came at the expense not only of
content owners like Viacom but also of YouTube’s competitors and, ultimately,
safe harbor, as the district court did below, to invite such competitive harms.
CONCLUSION
The judgment of the district court should be reversed, and this Court should
hold that defendants were not entitled, on this extraordinary record, to summary
Respectfully submitted,
Thomas W. Burt
MICROSOFT CORPORATION
One Microsoft Way
Redmond, WA 98052
(425) 882-8080
Counsel for Microsoft Corporation
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CERTIFICATE OF COMPLIANCE
and 32(a)(7)(B) and (C), the foregoing brief contains 5,831 words, excluding the
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 10th day of December, 2010, a true and
correct copy of the foregoing Brief of Amici Curiae Microsoft Corporation and
counsel of record in this appeal via CM/ECF pursuant to Local Rule 25.1(h)(1)&
(2):
Counsel for Appellants The Football Ass’n Premier League Ltd., et al. (10-3342):
- - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Related Releases Leading commercial copyright owners (“Copyright Owners”) and services providing user-
uploaded and user-generated audio and video content (“UGC Services”) have collaborated to
• sevenload Protects establish these Principles to foster an online environment that promotes the promises and
Professional Content
Partners and User
benefits of UGC Services and protects the rights of Copyright Owners. In this context, UGC
Generated Video Services are services such as Soapbox on MSN Video, MySpace, Dailymotion and Veoh.com,
and not other technologies such as browsers, applets, email, or search services. While we
• Sony Pictures may differ in our interpretation of relevant laws, we do not mean to resolve those
Entertainment and Crackle
differences in these Principles, which are not intended to be and should not be construed as
Join Pioneering User-
Generated Content a concession or waiver with respect to any legal or policy position or as creating any legally
Coalition binding rights or obligations. We recognize that no system for deterring infringement is or
will be perfect. But, given the development of new content identification and filtering
• Internet and Media
technologies, we are united in the belief that the Principles set out below, taken as a whole,
Industry Leaders Unveil
Principles to Foster Online strike a balance that, on a going-forward basis, will result in a more robust, content-rich
Innovation While online experience for all.
Protecting Copyrights
In coming together around these Principles, Copyright Owners and UGC Services recognize
------------- that they share several important objectives: (1) the elimination of infringing content on
The following companies UGC Services, (2) the encouragement of uploads of wholly original and authorized user-
support these principles: generated audio and video content, (3) the accommodation of fair use of copyrighted
content on UGC Services, and (4) the protection of legitimate interests of user privacy. We
believe that adhering to these Principles will help UGC Services and Copyright Owners
achieve those objectives.
ADD-1
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with respect to Reference Material and user claims that content that
was blocked by the Filtering Process was not infringing or was
blocked in error.
10. Consistent with applicable laws, including those directed to user privacy,
UGC Services should retain for at least 60 days: (a) information related
to user uploads of audio and video content to their services, including
Internet Protocol addresses and time and date information for uploaded
content; and (b) user-uploaded content that has been on their services
but has been subsequently removed following a notice of infringement.
UGC Services should provide that information and content to Copyright
Owners as required by any valid process and consistent with applicable
law.
11. UGC Services should use reasonable efforts to track infringing uploads of
copyrighted content by the same user and should use such information in
the reasonable implementation of a repeat infringer termination policy.
UGC Services should use reasonable efforts to prevent a terminated user
from uploading audio and/or video content following termination, such as
blocking re-use of verified email addresses.
12. In engaging in the activities set forth in these Principles outside the
United States, UGC Services and Copyright Owners should follow these
Principles to the extent that doing so would not contravene the law of the
applicable foreign jurisdiction.
13. Copyright Owners should not assert that adherence to these Principles,
including efforts by UGC Services to locate or remove infringing content
as provided by these Principles, or to replace content following receipt of
an effective counter notification as provided in the Copyright Act, support
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14. If a UGC Service adheres to all of these Principles in good faith, the
Copyright Owner should not assert a claim of copyright infringement
against such UGC Service with respect to infringing user-uploaded
content that might remain on the UGC Service despite such adherence to
these Principles.
15. Copyright Owners and UGC Services should continue to cooperate with
each other's reasonable efforts to create content-rich, infringement-free
services. To that end, Copyright Owners and UGC Services should
cooperate in the testing of new content identification technologies and
should update these Principles as commercially reasonable, informed by
advances in technology, the incorporation of new features, variations in
patterns of infringing conduct, changes in users' online activities and
other appropriate circumstances.
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