content files. Because infringing materials did not reside on the defendants’ system, the
defendants could not rely on Section 512(c).^2804
On appeal, the Ninth Circuit held that the defendants could not rely on the Section 512(c)
safe harbor, but on a different rationale. The Ninth Circuit held that the district court was in
error to conclude that the defendants were ineligible for the Section 512(c) safe harbor because
the infringing material did not actually reside on the defendants’ servers. The court noted that
Section 512(c) explicitly covers not just the storage of infringing material, but also infringing
activities that use material stored on the system or network. Here, the infringing activity
associated with the peer-to-peer transfer of pirated content relied upon torrents stored on the
defendants’ web sites. Sometimes those torrents were uploaded by users of the sites, while other
torrents were collected for storage by the defendants’ web sites themselves. The former situation
would be at least facially eligible for the safe harbor, assuming the other criteria were met.^2805
Nevertheless, the court concluded that the defendants were not eligible for the Section
512(c) safe harbor because they satisfied the knowledge, financial benefit, and control prongs of
the safe harbor. With respect to the knowledge prong, the court noted that in UMG Recordings
v. Shelter Capital, it had endorsed the Second Circuit’s interpretation of Section 512(c)(1)(A) in
Viacom, that the actual knowledge provision turns on whether the service provider actually or
subjectively knew of specific infringement, while the red flag provisions turns on whether the
service provider was subjectively aware of facts that would have made the specific infringement
objectively obvious to a reasonable person. The defendants argued they lacked either type of
knowledge, because the plaintiffs failed to provide statutorily compliant notification of
infringement. The Ninth Circuit concluded that it need not determine the adequacy of the
plaintiffs’ notification of claimed infringement because the defendants had red flag knowledge of
a broad range of infringing activity for reasons independent of any notifications from the
plaintiffs. Specifically, the defendants had actively encouraged infringement by urging users to
both upload and download particular copyrighted works, providing assistance to those seeking to
watch copyrighted films, and help users burn copyrighted material onto DVDs. The material in
question was sufficiently current and well-known that it would have been objectively obvious to
a reasonable person that the material solicited and assisted was both copyrighted and not licensed
to random members of the public, and that the induced use was therefore infringing. Thus, while
the defendants’ inducing actions did not necessarily render them per se ineligible for the Section
512(c) safe harbor, they were relevant to a determination that the defendants had red flag
knowledge.^2806
The court noted in a footnote that it was not clear from the language of Section 512(c) or
from the pertinent case law whether exclusion from the Section 512(c) safe harbor because of
actual or red flag knowledge of specific infringing activity applies only with regard to liability
for that infringing activity, or more broadly. The court decided it need not reach that issue,
because it had also concluded, for the reasons set forth below, that the defendants were not
(^2804) Id. at *59-60.
(^2805) Columbia Pictures Industries, Inc. v. Fung, 710 F.3d 1020, 1042-43 (9th Cir. 2013).
(^2806) Id. at 1043.