Could Moderating Your Website Invalidate Your “Safe Harbor”?

Stephen Carlisle April 13, 2017

The answer seems to be “yes,” after the April 7, 2017 opinion by the 9^th Circuit Court of Appeals.

The case of Mavrix Photographs LLC v. LiveJournal, Inc. ¹ indicates that moderating a website, namely actively reviewing postings submitted by third parties for violations of the site “terms of service” might cause your site to lose its “safe harbor” from copyright infringement lawsuits under section 512 of the Digital Millennium Copyright Act.

The whole idea behind the safe harbor is that websites who allow outsiders or third parties to post material for their website, should not be liable for copyright infringement if they meet the following requirements:

• Must have a DMCA “designated agent”
• The material posted must be done “at the direction of a user”
• The website does not have actual or “red flag” knowledge that the material is infringing
• Does not receive any “financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.” ²

The defendant, LiveJournal, LLC, operates many websites, including the celebrity gossip site “Oh, No They Didn’t,” which is its most popular website. ³ At issue are 20 photographs owned by Mavrix which were posted to the ONTD website without permission. ⁴ Instead of taking the step of demanding removal via a DMCA takedown notice, which most likely would cause the removal of the offending photographs, Mavrix instead filed suit seeking damages and injunctive relief. LiveJournal defended on the grounds that they were protected by the safe harbor provisions of the DMCA. The District Court agreed ⁵ and Mavrix appealed.

In reversing the decision, the 9^th Circuit honed in on the role that moderators played in running the ONTD website. These moderators review all incoming posts for violations of the TOS, including scanning for “substance,” that is to say the comments are current and on topic, but also that they do not contain pornography, harassment and (ahem) copyright infringement. ⁶

“LiveJournal set up three types of unpaid administrator roles to run its communities. ‘Moderators’ review posts submitted by users to ensure compliance with the rules. ‘Maintainers’ review and delete posts and have the authority to remove moderators and users from the community. Each community also has one ‘owner’ who has the authority of a maintainer, but can also remove maintainers.” ⁷

The difference from most websites is that here the posts pass through the moderation process before they get posted to ONTD. ⁸ All in all, only 1/3 of all submitted postings make it through the moderation process to get posted on ONTD. ⁹

The question then becomes, are the postings really made “at the direction of a user,” or are they being made by the moderators, who are agents of LiveJournal? In reversing the District Court, the 9^th Circuit said that the evidence presented supported a finding that the moderators were agents of LiveJournal, and that summary judgment was inappropriate.

“Evidence presented by Mavrix shows that LiveJournal maintains significant control over ONTD and its moderators. [LiveJournal’s employee] gives the moderators substantive supervision and selects and removes moderators on the basis of their performance, thus demonstrating control. [LiveJournal’s employee] also exercises control over the moderators’ work schedule. For example, he added a moderator from Europe so that there would be a moderator who could work while other moderators slept. Further demonstrating LiveJournal’s control over the moderators, the moderators’ screening criteria derive from rules ratified by LiveJournal.” ¹⁰

Not only could LiveJournal lose its safe harbor on the basis that its agents (i.e. the maintainers and moderators) were responsible for the posting, but it could also lose it’s safe harbor if it had actual or “red flag” knowledge of copyright infringement.

Most importantly, the District Court had ruled that since Mavrix had failed to send takedown notices, that LiveJournal could not have had actual knowledge of the infringement. The 9^th Circuit makes it clear that this is not the case:

“The district court held that LiveJournal lacked actual knowledge of the infringing nature of Mavrix’s photographs solely on the basis of Mavrix’s failure to notify LiveJournal of the infringements. This was an incomplete assessment of the issue. To fully assess actual knowledge, the fact finder should also assess a service provider’s subjective knowledge of the infringing nature of the posts.” ¹¹

Mavrix contended that since many of the photographs contained either a generic watermark or a “mavrixonline.com” watermark, that this would give the ONTD moderators sufficient actual knowledge or “red flag” knowledge of copyright infringement. The 9^th Circuit agreed that this could indeed provide the requisite knowledge of infringement by ONTD and remanded the case for further consideration.

Lastly, the Court turned to whether LiveJournal received a “financial benefit” from the posting of material that they had the right to control. It seems clear that in this case it does. As noted above, ONTD is LiveJournal’s most popular website, and LiveJournal derives advertising revenue from the stream of visitors to the site. The Court held:

“The financial benefit need not be substantial or a large proportion of the service provider’s revenue. [citation omitted]…[W]e [have previously] held that a financial benefit was shown when “there was a vast amount of infringing material on [the service provider’s] websites … supporting an inference that [the service provider’s] revenue stream is predicated on the broad availability of infringing materials for [its] users, thereby attracting advertisers.” [citation omitted] On the other hand, the service provider in that case “promoted advertising by pointing to infringing activity” and “attracted primarily visitors who were seeking to engage in infringing activity, as that is mostly what occurred on [the service provider’s] sites.” ¹²

Mavrix contends that 84% of the posts on ONTD contained infringing material. ¹³ Combine this with the fact that 2/3rds of the proposed posts never make it onto ONTD, and it seems there could be a significant problem for LiveJournal on remand.

What may make this decision a bitter pill for some to swallow is that LiveJournal seems to take a more pro-active stance than most in keeping infringing material off of their website. Not only do they screen before the material goes up, but they maintain an active “do not post” list in their rules and in at least one case have an active “automatic block” on material from one source. ¹⁴ That they wish to keep their site free from unwanted pornography and user harassment to promote a better user experience is also laudable. That a web site seems to actually take steps to co-operate with copyright owners should be encouraged. Indeed, this type of co-operation is what was envisioned by the DMCA when it was passed, only for right holders to discover that large internet companies had no real interest in co-operation, and when it occurred was spooned out in tiny amount and only in the most begrudged, foot dragging manner possible. ¹⁵

The flip side is that LiveJournal cannot have it both ways. It cannot take steps to improve the desirability of visiting their site while at the same time turning a blind eye to the infringing material that also drives traffic to the site. To say that somehow LiveJournal “can’t know” if something is infringing or not just doesn’t hold up under even the most cursory analysis. ONTD traffics in celebrity gossip, and only of the most modern up-to-the-moment kind. It admonishes its users that they should “Keep it recent. We don’t need a post in 2010 about Britney Spears shaving her head.” ¹⁶

The provision of the 1976 copyright act that copyright vests at the moment of its creation, ¹⁷ is 40 years old now and if you’re in the media business you cannot seriously contend that you don’t know this is the law. So unless the user/uploader took the picture themselves, then there is an existing copyright in someone else and ONTD is infringing that right if they post it. Particularly, if that photograph has a watermark on it identifying the owner, as is the case here.

As the Court noted:

“Mavrix is a celebrity photography company specializing in candid photographs of celebrities in tropical locations. The company sells its photographs to celebrity magazines. According to Mavrix, infringement of its photographs is particularly devastating to its business model. Since Mavrix’s photographs break celebrity news, such as the pregnancy of Beyoncé, infringing posts on sites like ONTD prevent Mavrix from profiting from the sale of the photographs to celebrity magazines.” ¹⁸

Surely this is an unpalatable choice for websites. You have the choice not to moderate at all, and keep your safe harbor. Doubtlessly, you will see your website over-run with spam, trolling, flame wars and the like. As your website slowly but surely becomes an online garbage dump, your visits decline and the advertising dollars shrink. If you do moderate, you run the risk of being tagged with copyright infringement, because even though the content is user generated, you are controlling what goes on the website. Plus, your review will likely uncover obvious copyright infringement, which is your duty to take down.

So, sorry, internet, but you can’t have it both ways. The days of websites operating under the principle of “heads I win, tails you lose” seems to be coming to a close.