The court addressed Universal’s concern that, because the question of whether a
particular use of copyrighted material is fair is a fact-intensive inquiry, it would be difficult for
copyright owners to predict whether a court eventually would rule in their favor. “[W]hile these
concerns are understandable, their actual impact likely is overstated. Although there may be
cases in which such considerations will arise, there are likely to be few in which a copyright
owner’s determination that a particular use is not fair use will meet the requisite standard of
subjective bad faith required to prevail in an action for misrepresentation under 17 U.S.C. §
512(f).”^2910
The court then turned to whether the amended complaint contained sufficient allegations
of bad faith and deliberate ignorance of fair use to survive the motion to dismiss. The court
found that it did. The amended complaint alleged that Universal acted solely to satisfy Prince
and his personal agenda and that its actions had nothing to do with any particular YouTube video
that used his songs.^2911 The court concluded, “Although the Court has considerable doubt that
Lenz will be able to prove that Universal acted with the subjective bad faith required by Rossi,
and following discovery her claims well may be appropriate for summary judgment, Lenz’s
allegations are sufficient at the pleading stage.”^2912
Finally, the court considered Universal’s allegation that the amended complaint failed to
allege a compensable loss under the DMCA. The amended complaint alleged that Lenz had
incurred injury in the form of the financial and personal expenses associated with responding to
the claim of infringement and harm to her free speech rights, and that she had been intimidated
into not posting a single video on YouTube since she received Universal’s takedown notice. At
oral argument, Lenz’s counsel stated that while the damages incurred in preparing Lenz’s
counter-notice could not be elaborated upon for reasons of privilege, Lenz did incur actual
damages in reviewing counter-notice procedures, seeking the assistance of an attorney, and
responding to the takedown notice. The court ruled that, though damages might be nominal and
their exact nature yet to be determined, Lenz had adequately alleged cognizable injury under the
DMCA to survive Universal’s motion to dismiss.^2913
In a later opinion (designated not for publication) denying the defendants’ motion to
certify the court’s order for interlocutory appeal, the court elaborated on its ruling a bit as
follows: “The Court did not hold that every takedown notice must be preceded by a full fair use
investigation. Rather, it recognized, as it has previously, that in a given case fair use may be so
obvious that a copyright owner could not reasonably believe that actionable infringement was
taking place. In such a case, which is likely to be extremely rare, the policy objectives of the
(^2910) Id. at 1155.
(^2911) Id. at 1156.
(^2912) Id.
(^2913) Id. at 1156-57.