Legal approaches to new media, such as peer-to-peer networks and Internet forums of user-generated content, have been largely inconsistent. The passage of the DMCA in 1998 did not entirely address the dilemma facing courts, copyright owners, and website operators and maintainers: balancing the practical realities of the Internet against the rights of copyright owners. Legislation and case law have reflected the general sentiment that peer-to-peer networks like Napster and Grokster were primarily the domain of infringers encouraged by those who produced their software. This resulted in lawsuits that stretched the applications of direct and secondary (particularly vicarious) copyright liability. Websites that host user-generated content have received some immunity from liability in the form of Section 512 of the DMCA, but with notable exceptions, including those that strongly echo the language of vicarious liability. With the case law concerning these exceptions and their impact on Section 512 immunity still unsettled, the most practical way to view the exceptions would be to assess them through a lens that deals honestly with the continuing issues of large scale Internet infringement but also addresses the complications of pursuing copyright ownership online.
The DMCA liability exceptions evoke the two prongs of vicarious liability—financial benefit and ability to control the infringing activity. Though courts have consistently applied (if not stated) a higher bar for websites in what may constitute financial benefit, they have also noted the suggestions of vicarious liability in the statute, even though this is against its legislative history. Even prior to the passage of the DMCA, courts were hesitant in applying direct and secondary liability to ISPs and site managers for infringements committed by users. But it is also true that the differences between user-generated content sites and peer-to-peer networks are narrow. They both derive revenue from advertising and subscriptions, and they both rely on the content of their users in order to operate. While the Supreme Court had clear evidence of Grokster’s desire to acquire copyright protected works in order to maintain its user base,157 it could certainly be argued that YouTube similarly benefits from those who post and view copyrighted material on its site. Though the courts have interpreted the Section 512 exceptions to indicate that the financial benefit a site or business receives must be “directly attributable to the infringement”— meaning the lines drawn between the specific infringement and a financial benefit are clear—this may simply not be workable for copyright owners, even in the face of flagrant, widespread infringement. The more practical solution, though rejected by the Ninth Circuit in Ellison,158 may be to instead assess how substantially a site’s income is the result of its technology being used for a “legitimate business” purpose or is simply the product of the attraction of infringing works. Or, to reprise the standard of Sony, the primary inquiry should be whether the nature of the forum for user-generated content is one with a substantially noninfringing purpose.