Case5:07-cv-03783-JF Document45 Filed08/20/08 Page1 of 10
`
`**E-Filed 8/20/08**
`
`DESIGNATED FOR PUBLICATION
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
`
`STEPHANIE LENZ,
` Plaintiff,
` v.
`UNIVERSAL MUSIC CORP., UNIVERSAL
`MUSIC PUBLISHING, INC., and UNIVERSAL
`MUSIC PUBLISHING GROUP,
`
` Defendants.
`
`Case Number C 07-3783 JF
`ORDER DENYING MOTION TO
`DISMISS
`[re: docket no. 38]
`
`Defendants Universal Music Corp., Universal Music Publishing, Inc., and Universal
`Music Publishing Group (collectively, “Universal”) move to dismiss the instant case for failure
`to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). The Court has
`read the moving papers and has considered the oral arguments of counsel. For the reasons set
`forth below, the motion will be DENIED.
`I. BACKGROUND
`On February 7, 2007, Plaintiff Stephanie Lenz (“Lenz”) videotaped her young children
`dancing in her family’s kitchen. The song “Let’s Go Crazy” by the artist professionally known as
`Prince (“Prince”) played in the background. The video is twenty-nine seconds in length, and
`
`Case No. C 07-3783 JF
`ORDER DENYING MOTION TO DISMISS
`(JFEX1)
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`
`Case5:07-cv-03783-JF Document45 Filed08/20/08 Page2 of 10
`
`“Let’s Go Crazy” can be heard for approximately twenty seconds, albeit with difficulty given the
`poor sound quality of the video. The audible portion of the song includes the lyrics, “C’mon
`baby let’s get nuts” and the song’s distinctive guitar solo. Lenz is heard asking her son, “what do
`you think of the music?” On February 8, 2007, Lenz titled the video “Let’s Go Crazy #1” and
`uploaded it to YouTube.com (“YouTube”), a popular Internet video hosting site, for the alleged
`purpose of sharing her son’s dancing with friends and family. YouTube provides “video
`1
`sharing” or “user generated content.” The video was available to the public at
`http://www.youtube.com/watch?v=N1KfJHFW1hQ.
`Universal owns the copyright to “Let’s Go Crazy.” On June 4, 2007, Universal sent
`YouTube a takedown notice pursuant to Title II of the Digital Millennium Copyright Act
`(“DMCA”), 17 U.S.C. § 512 (2000). The notice was sent to YouTube’s designated address for
`receiving DMCA notices, “copyright@youtube.com,” and demanded that YouTube remove
`Lenz’s video from the site because of a copyright violation. YouTube removed the video the
`following day and sent Lenz an email notifying her that it had done so in response to Universal’s
`accusation of copyright infringement. YouTube’s email also advised Lenz of the DMCA’s
`counter-notification procedures and warned her that any repeated incidents of copyright
`infringement could lead to the deletion of her account and all of her videos. After conducting
`research and consulting counsel, Lenz sent YouTube a DMCA counter-notification pursuant to
`17 U.S.C. § 512(g) on June 27, 2007. Lenz asserted that her video constituted fair use of “Let’s
`Go Crazy” and thus did not infringe Universal’s copyrights. Lenz demanded that the video be re-
`posted. YouTube re-posted the video on its website about six weeks later. As of the date of this
`order, the “Let’s Go Crazy #1” video has been viewed on YouTube more than 593,000 times.
`In September 2007, Prince spoke publicly about his efforts “to reclaim his art on the
`internet” and threatened to sue several internet service providers for alleged infringement of his
`
` Lenz has posted other home videos on YouTube, allegedly for the same purpose. These
`1
`additional videos are not at issue in this action.
`
`Case No. C 07-3783 JF
` ORDER DENYING MOTION TO DISMISS
`(JFEX1)
`
`2
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`
`Case5:07-cv-03783-JF Document45 Filed08/20/08 Page3 of 10
`
`music copyrights. Lenz alleges that Universal issued the removal notice only to appease Prince
`2
`because Prince “is notorious for his efforts to control all uses of his material on and off the
`Internet.” Lenz’s Opposition Brief at 3. In an October 2007 statement to ABC News, Universal
`made the following comment:
`Prince believes it is wrong for YouTube, or any other user-generated site, to
`appropriate his music without his consent. That position has nothing to do with
`any particular video that uses his songs. It’s simply a matter of principle. And
`legally, he has the right to have his music removed. We support him and this
`important principle. That’s why, over the last few months, we have asked
`YouTube to remove thousands of different videos that use Prince music without
`his permission. 3
`Second Amended Complaint (“SAC”), ¶ 30; see also J. Aliva et al., The Home Video Prince
`Doesn’t Want You to See, ABC NEWS, Oct. 26, 2007, http://abcnews.go.com/print?id+3777651
`(last viewed July 23, 2008). Lenz asserts in her complaint that “Prince himself demanded that
`Universal seek the removal of the [“Let’s Go Crazy #1”] video . . . [and that] Universal sent the
`DMCA notice at Prince’s behest, based not on the particular characteristics of [the video] or any
`good-faith belief that it actually infringed a copyright but on its belief that, as ‘a matter of
`principle’ Prince ‘has the right to have his music removed.’” SAC ¶ 31.
`On July 24, 2007, Lenz filed suit against Universal alleging misrepresentation pursuant to
`17 U.S.C. § 512(f) and tortious interference with her contract with YouTube. She also sought a
`declaratory judgment of non-infringement. Universal filed a motion to dismiss, which the Court
`granted on April 8, 2008. Lenz was given leave to amend her complaint to replead her first and
`second claims for relief. On April 18, 2008, Lenz filed the operative SAC, alleging only a claim
`for misrepresentation pursuant to 17 U.S.C. § 512(f). On May 23, 2008, Universal filed the
`instant motion.
`
`II. LEGAL STANDARD
`“Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a
`
` See, e.g., M. Collett-White, Prince to Sue YouTube, eBay Over Music Use, REUTERS,
`2
`Sept. 13, 2007, http://www.reuters.com/article/internetNew/idUSL1364328420070914?feedtype
`=RSS&feedName_InternetNews&rpc=22&sp=true (last visited July 23, 2008).
`
`3
`
` Lenz has dubbed this alleged pattern of activity the “Prince Policy.”
`3
`
`Case No. C 07-3783 JF
` ORDER DENYING MOTION TO DISMISS
`(JFEX1)
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`
`Case5:07-cv-03783-JF Document45 Filed08/20/08 Page4 of 10
`
`cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v.
`Centinela Hosp. Medical Center, 521 F.3d 1097, 1104 (9th Cir. 2008). “While a complaint
`attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a
`plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than
`labels and conclusions, and a formulaic recitation of the elements of a cause of action will not
`do.” Bell Atlantic Corp. v. Twombly, --- U.S. ----, 127 S. Ct. 1955, 1964-65 (2007) (internal
`citations omitted).
`
`III. DISCUSSION
`The DMCA requires that copyright owners provide the following information in a
`takedown notice:
`(i) A physical or electronic signature of a person authorized to act on behalf of the
`owner of an exclusive right that is allegedly infringed.
`(ii) Identification of the copyrighted work claimed to have been infringed, or, if
`multiple copyrighted works at a single online site are covered by a single
`notification, a representative list of such works at that site.
`(iii) Identification of the material that is claimed to be infringing or to be the
`subject of infringing activity and that is to be removed or access to which is to be
`disabled, and information reasonably sufficient to permit the service provider to
`locate the material.
`(iv) Information reasonably sufficient to permit the service provider to contact the
`complaining party, such as an address, telephone number, and, if available, an
`electronic mail address at which the complaining party may be contacted.
`(v) A statement that the complaining party has a good faith belief that use of the
`material in the manner complained of is not authorized by the copyright owner,
`its agent, or the law.
`(vi) A statement that the information in the notification is accurate, and under
`penalty of perjury, that the complaining party is authorized to act on behalf of the
`owner of an exclusive right that is allegedly infringed.
`17 U.S.C. § 512(c)(3)(A) (emphasis added). Here, the parties do not dispute that Lenz used
`copyrighted material in her video or that Universal is the true owner of Prince’s copyrighted
`music. Thus the question in this case is whether 17 U.S.C. § 512(c)(3)(A)(v) requires a
`copyright owner to consider the fair use doctrine in formulating a good faith belief that “use of
`the material in the manner complained of is not authorized by the copyright owner, its agent, or
`the law.”
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case No. C 07-3783 JF
` ORDER DENYING MOTION TO DISMISS
`(JFEX1)
`
`4
`
`

`
`Case5:07-cv-03783-JF Document45 Filed08/20/08 Page5 of 10
`
`Universal contends that copyright owners cannot be required to evaluate the question of
`fair use prior to sending a takedown notice because fair use is merely an excused infringement of
`a copyright rather than a use authorized by the copyright owner or by law. Universal emphasizes
`that Section 512(c)(3)(A) does not even mention fair use, let alone require a good faith belief that
`a given use of copyrighted material is not fair use. Universal also contends that even if a
`copyright owner were required by the DMCA to evaluate fair use with respect to allegedly
`infringing material, any such duty would arise only after a copyright owner receives a counter-
`notice and considers filing suit. See 17 U.S.C. § 512(g)(2)(C).
`Lenz argues that fair use is an authorized use of copyrighted material, noting that the fair
`use doctrine itself is an express component of copyright law. Indeed, Section 107 of the
`Copyright Act of 1976 provides that “[n]otwithstanding the provisions of sections 106 and 106A,
`the fair use of a copyrighted work . . . is not an infringement of copyright.” 17 U.S.C. § 107.
`Lenz asserts in essence that copyright owners cannot represent in good faith that material
`infringes a copyright without considering all authorized uses of the material, including fair use.
`Whether fair use qualifies as a use “authorized by law” in connection with a takedown
`notice pursuant to the DMCA appears to be an issue of first impression. Though it has been
`discussed in several other actions, no published case actually has adjudicated the merits of the
`issue. See, e.g., Doe v. Geller, 533 F. Supp. 2d 996, 1001 (N.D. Cal. 2008) (granting motion to
`dismiss for lack of personal jurisdiction).
`A.
`Fair Use and 17 U.S.C. § 512(c)(3)(A)(v).
`When interpreting a statute, a court must begin “with the language of the statute and ask
`whether Congress has spoken on the subject before [it].” Norfolk and Western Ry. Co. v.
`American Train Dispatchers Ass’n, 499 U.S. 117, 128 (1991). If “Congress has made its intent
`clear, [the court] must give effect to that intent.” Miller v. French, 530 U.S. 327, 336 (2000)
`(internal quotation marks and citation omitted). Here, the Court concludes that the plain meaning
`of “authorized by law” is unambiguous. An activity or behavior “authorized by law” is one
`permitted by law or not contrary to law. Though Congress did not expressly mention the fair use
`doctrine in the DMCA, the Copyright Act provides explicitly that “the fair use of a copyrighted
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case No. C 07-3783 JF
` ORDER DENYING MOTION TO DISMISS
`(JFEX1)
`
`5
`
`

`
`Case5:07-cv-03783-JF Document45 Filed08/20/08 Page6 of 10
`
`work . . . is not an infringement of copyright.” 17 U.S.C. § 107. Even if Universal is correct that
`fair use only excuses infringement, the fact remains that fair use is a lawful use of a copyright. 4
`Accordingly, in order for a copyright owner to proceed under the DMCA with “a good faith
`belief that use of the material in the manner complained of is not authorized by the copyright
`owner, its agent, or the law,” the owner must evaluate whether the material makes fair use of the
`copyright. 17 U.S.C. § 512(c)(3)(A)(v). An allegation that a copyright owner acted in bad faith
`by issuing a takedown notice without proper consideration of the fair use doctrine thus is
`sufficient to state a misrepresentation claim pursuant to Section 512(f) of the DMCA. Such an
`interpretation of the DMCA furthers both the purposes of the DMCA itself and copyright law in
`general. In enacting the DMCA, Congress noted that the “provisions in the bill balance the need
`for rapid response to potential infringement with the end-users [sic] legitimate interests in not
`having material removed without recourse.” Sen. Rep. No. 105-190 at 21 (1998).
`Universal suggests that copyright owners may lose the ability to respond rapidly to
`potential infringements if they are required to evaluate fair use prior to issuing takedown notices.
`Universal also points out that the question of whether a particular use of copyrighted material
`constitutes fair use is a fact-intensive inquiry, and that it is difficult for copyright owners to
`predict whether a court eventually may rule in their favor. However, while 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). See
`Rossi v. Motion Picture Ass’n of America, Inc., 391 F.3d 1000, 1004 (9th Cir. 2004) (holding that
`“the ‘good faith belief’ requirement in § 512(c)(3)(A)(v) encompasses a subjective, rather than
`
` The Supreme Court also has held consistently that fair use is not infringement of a
`4
`copyright. See e.g., Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 433
`(1984) (“[a]nyone . . . who makes a fair use of the work is not an infringer of the copyright with
`respect to such use.”).
`
`Case No. C 07-3783 JF
` ORDER DENYING MOTION TO DISMISS
`(JFEX1)
`
`6
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`
`Case5:07-cv-03783-JF Document45 Filed08/20/08 Page7 of 10
`
`objective, standard”). 5
`The Copyright Act unequivocally establishes the four factors used to determine fair use:
`In determining whether the use made of a work in any particular case is a fair use
`the factors to be considered shall include--
`(1) the purpose and character of the use, including whether such use is of a
`commercial nature or is for nonprofit educational purposes;
`(2) the nature of the copyrighted work;
`(3) the amount and substantiality of the portion used in relation to the
`copyrighted work as a whole; and
`(4) the effect of the use upon the potential market for or value of the
`copyrighted work.
`The fact that a work is unpublished shall not itself bar a finding of fair use if such
`finding is made upon consideration of all the above factors.
`
`17 U.S.C. § 107. Undoubtedly, some evaluations of fair use will be more complicated than
`others. But in the majority of cases, a consideration of fair use prior to issuing a takedown notice
`will not be so complicated as to jeopardize a copyright owner’s ability to respond rapidly to
`potential infringements. The DMCA already requires copyright owners to make an initial review
`of the potentially infringing material prior to sending a takedown notice; indeed, it would be
`impossible to meet any of the requirements of Section 512(c) without doing so. A consideration
`of the applicability of the fair use doctrine simply is part of that initial review. As the Ninth
`Circuit observed in Rossi, a full investigation to verify the accuracy of a claim of infringement is
`not required. Rossi, 391 F.3d at 1003-04.
`The purpose of Section 512(f) is to prevent the abuse of takedown notices. If copyright
`owners are immune from liability by virtue of ownership alone, then to a large extent Section
`512(f) is superfluous. As Lenz points out, the unnecessary removal of non-infringing material
`
` One might imagine a case in which an alleged infringer uses copyrighted material in a
`5
`manner that unequivocally qualifies as fair use, and in addition there is evidence that the
`copyright owner deliberately has invoked the DMCA not to protect its copyright but to prevent
`such use. See, e.g., Online Policy Group v. Diebold, Inc., 337 F. Supp. 2d 1195, 1204-05 (N.D.
`Cal. 2004) (suggesting that the copyright owner sought to use the DMCA “as a sword to suppress
`publication of embarrassing content rather than as a shield to protect its intellectual property”).
`
`Case No. C 07-3783 JF
` ORDER DENYING MOTION TO DISMISS
`(JFEX1)
`
`7
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`
`Case5:07-cv-03783-JF Document45 Filed08/20/08 Page8 of 10
`
`causes significant injury to the public where time-sensitive or controversial subjects are involved
`and the counter-notification remedy does not sufficiently address these harms. A good faith
`consideration of whether a particular use is fair use is consistent with the purpose of the statute.
`Requiring owners to consider fair use will help “ensure[] that the efficiency of the Internet will
`continue to improve and that the variety and quality of services on the Internet will expand”
`without compromising “the movies, music, software and literary works that are the fruit of
`American creative genius.” Sen. Rep. No. 105-190 at 2 (1998).
`B.
`The Sufficiency of Lenz’s Second Amended Complaint
`1. The “Prince Policy”
`The operative SAC contains sufficient allegations of bad faith and deliberate ignorance of
`fair use to survive the instant motion to dismiss. Lenz alleges that Universal is a sophisticated
`corporation familiar with copyright actions, and that rather than acting in good faith, Universal
`acted solely to satisfy Prince. SAC ¶ 31. Lenz alleges that Prince has been outspoken on matters
`of copyright infringement on the Internet and has threatened multiple suits against internet
`service providers to protect his music. Id. at ¶ 28. Lenz also alleges that Universal acted to
`promote Prince’s personal agenda and that its actions “ha[ve] nothing to do with any particular
`[YouTube] video that uses his songs.” Id. at ¶ 30. 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.
`2. Damages
`Universal also contends that the SAC fails to allege a compensable loss under the
`DMCA. Universal Brief at 2. The SAC provides that:
`[Lenz’s] injury includes, but is not limited to, the financial and personal expenses
`associated with responding to the claim of infringement and harm to her free
`speech rights under the First Amendment. Because Universal’s notice was
`intimidating, Ms. Lenz is now fearful that someone might construe some portion
`of a new home video to infringe a copyright. As a result, she has not posted a
`single video on YouTube since she received the takedown notice.
`
`SAC ¶ 38. Universal nonetheless claims that Lenz has not alleged a compensable loss because:
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case No. C 07-3783 JF
` ORDER DENYING MOTION TO DISMISS
`(JFEX1)
`
`8
`
`

`
`Case5:07-cv-03783-JF Document45 Filed08/20/08 Page9 of 10
`
`(1) Universal is a private entity and thus not subject to First Amendment actions; (2) Lenz did not
`suffer any actual injury as a result of the notice; (3) Universal is not liable for damages for
`intimidation; and (4) Section 512 does not provide for injunctive relief.
`At oral argument, counsel for Lenz indicated that while the damages incurred in preparing
`Lenz’s counter-notice cannot 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. See Transcript of Law & Motion Hearing, July 18, 2008, p.
`5:15-25. Though damages may be nominal and their exact nature is yet to be determined, the
`Court concludes that Lenz adequately has alleged cognizable injury under the DMCA.
`IV. ORDER
`Good cause therefor appearing, IT IS HEREBY ORDERED that the motion to dismiss is
`DENIED. Universal shall file its answer within twenty (20) days of the date of this order.
`
`DATED: August 20, 2008
`
`
`JEREMY FOGEL
`United States District Judge
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case No. C 07-3783 JF
` ORDER DENYING MOTION TO DISMISS
`(JFEX1)
`
`9
`
`

`
`Case5:07-cv-03783-JF Document45 Filed08/20/08 Page10 of 10
`
`This order has been served upon the following persons:
`
`Corynne McSherry
`Email: corynne@eff.org
`Jason M. Schultz
`Email: jason@eff.org
`Marcia Clare Hofmann
`Email: marcia@eff.org
`Michael Soonuk Kwun
`Email: michael@eff.org
`Kelly Max Klaus
`Email: kelly.klaus@mto.com
`Amy C. Tovar
`Email: amy.tovar@mto.com
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case No. C 07-3783 JF
` ORDER DENYING MOTION TO DISMISS
`(JFEX1)
`
`10