My last post related how Online Service Providers (OSPs) are subject to disqualification for § 512 safe harbor from copyright infringement liability based on actual or red flag knowledge of user-generated content (UGC) containing infringing material. Another disqualifier for safe harbor is the OSP’s control of and benefit from the infringing act.
Control and Benefit
A service provider may lose protection under the § 512(c) and § 512(d) safe harbors if a court finds it both able to control the infringement and in receipt of financial benefit directly attributable to the infringement. If a defendant OSP does not have the right and ability to control the alleged infringing activity, a court need not engage in the financial benefit analysis.
The ‘right and ability to control’ infringing activity, as the concept is used in the DMCA, means “something more” than just the ability of a service provider to remove or block access to materials posted on its website or stored in its system. The requirement presupposes some antecedent ability to limit or filter copyrighted material. To the extent a service provider’s activities go beyond what can fairly be characterized as meeting the collateral scope of “storage” and allied functions, and present the elements of infringement under existing principles of copyright law, those activities are not facially protected by § 512(c) and § 512(d).
Assuming an OSP is in control of its users’ content, that provider must take care that its planned business model avoids directly linking infringement to the company’s revenues to the level of direct financial benefit that would preclude DMCA safe harbor. An accuser may claim that a company in control of its UGC is not only generally aware of, but also welcomes, copyright-infringing material being placed on its website. Such material is attractive to users, whose increased usage enhances the host’s income from advertisements displayed on certain pages of the website, with no discrimination between infringing and non-infringing content.