UMG Recordings v. Shelter Capital Partners

Citation
UMG Recordings, Inc. v. Shelter Capital Partners LLC, 2011 WL 6357788 (9th Cir. Dec. 20, 2011) (full-text).

Factual Background
Shelter Capital Partners, LLC (“SCP”) was a web hosting service that provided virtual storage lockers for customers to upload and store video content. When customers uploaded content, SCP had to agree to refrain from posting content that they did not have a legal right to be sharing.

In addition to other systems that SCP had installed in their web service, SCP had a system set up for checking the content of the virtual storage lockers that were uploaded in order to ensure that the content did not violate any copyright licenses.

UMG Recordings, Inc. (“UMG”) owned the copyright licenses to many songs. Despite SCP’s efforts to check the content of the virtual storage lockers to ensure that the content did not violate any copyright licenses, it admitted that some of the videos that were uploaded to SCP’s virtual storage lockers violated UMG’s copyright licenses.

Trial Court Proceedings
UMG brought suit against SCP for direct and secondary copyright infringement. The district court granted “safe harbor” to SCP after determining that it was protected by the Digital Millennium Copyright Act (DMCA), 17 U.S.C. 512(c).

The safe harbor defense of 512(c) mandates that the provider (1) have no actual knowledge of infringing activity; (2) is unaware of facts or circumstances from which infringing activity is apparent; (3) upon obtaining knowledge or awareness of infringing activity, the provider acts quickly to remove or disable infringing content; (4) does not receive financial benefit directly related to the infringing activity, and (5) upon notification of claimed infringement, quickly removes or disables claimed infringing content.

Appellate Court Proceedings
UMG appealed the district court’s decision, stating that SCP had knowledge or was aware of the infringing activity. However, the Court of Appeals affirmed the district court’s ruling of safe harbor for SCP because UMG failed to identity to SCP any specific infringing video and therefore SCP could not have actual knowledge or awareness of such activity.