Opt-out class-actions attack YouTube’s opt-out business model. Any irony there?

May 18, 2007, 2:11 PM UTC

The filing of a second class-action copyright suit against YouTube and its parent Google (GOOG) on May 10, this one listing mandolin player David Grisman as its name plaintiff, provides an occasion to ponder whether such suits don’t inadvertently highlight the relative reasonableness of what the defendant is doing.

In a class-action, the law allows a lawyer to sue on behalf of thousands of people he’s never met, but permits those people an opportunity to opt-out of the suit after it has been brought. YouTube’s business model works much the same way; it posts user-generated videos that, in some cases, include unauthorized use of copyrighted material, and only takes them down if and when a copyright holder objects after the fact. In context, YouTube’s opt-out business model seems at least as defensible as the opt-out class-actions being used to attack it.

(The Grisman suit, filed in federal court in San Francisco, was reported by Bloomberg here. The uncanny similarity between the complaint in that case and one filed six days earlier by different lawyers in Manhattan federal court is reported by The Wall Street Journal Law Blog here. Both class actions were preceded by Viacom’s (VIA) $1 billion individual suit against Google, which was filed in March, also in Manhattan.)

The first class-action complaint was authored by Bernstein Litowitz Berger & Grossman, a leading class action firm, and Proskauer Rose, a top New York commercial firm with special expertise in intellectual property litigation. Its name plaintiffs are the Football Association Premier League (the highest division of English soccer) and the independent music company Bourne Co. Soccer fans apparently lift unauthorized clips from televised games and then post them on YouTube, while other YouTube users (at least I assume they’d be different users) post videos that contain unauthorized renditions of songs like “Inka Dinka Do,” which is owned by Bourne.

The key legal issue presented by YouTube’s business model is that the company goes ahead and posts contributions that contain third parties’ copyrighted works without first obtaining the third-parties’ permission. Opt-out models are certainly unusual in the copyright context, where the law generally requires prior approval, no matter how cumbersome.

In the case of YouTube, of course, Google will argue that the Digital Millenium Copyright Act of 1998 effectively reversed the copyright-permissions default settings for Internet sites that, like YouTube, rely on “user-generated” content. Under that law, site owners are often protected from liability for posting user-generated content so long as they promptly take down offending files once someone complains. The plaintiffs, in turn, will reply that, for various reasons, the DMCA doesn’t apply and that, in any event, YouTube’s takedown procedures are intentionally designed to be futile, at least for plaintiffs like the Football Association, whose clips are constantly being re-posted by fans. (I don’t know if Inka Dinka Do fans are as recalcitrant.) I’m not taking a position here on how that ultimate question should be decided: That’s the issue properly presented in Viacom’s original, individual copyright suit against Google.

But a class-action suit against YouTube heaps additional knotty questions on top of that one. Ordinarily, when you are alleging securities fraud in a suit on behalf of shareholders, the opt-out class-action seems pretty sensible. It’s a good bet that most people, if they’ve lost money due to securities fraud, want it back. The main reason class members are even offered an opportunity to opt-out is just in case they want to hire their own lawyer to protect their rights.

Those assumptions don’t apply here. This case is brought on behalf of copyright holders whose works have been posted on YouTube without their prior approval — whether or not they ultimately turn out to have any objection to their works being posted there. Trying to interpret the silence of people who’ve not yet expressed any view about having their content on YouTube is dicey at best. The vast majority of files on Google — the entirely user-generated, home-video type stuff — is, in fact, being posted by the copyright holder him- or herself (i.e., the user who made it). Furthermore, there’s little question that at least some big corporate copyright owners — many news organizations, for instance — are pleased to have their content up on YouTube, which they see as free advertising. In most cases, those who are silent have not even availed themselves of the inexpensive remedies YouTube affords: e-mailing it to identify their copyrighted files and demand their takedown. (Yes, those procedures might be futile for something as popular as soccer highlights, but they probably work fine for less popular infringements.) If an absent class member learns, after the fact, that his work is being posted, but he’s okay with that, then it seems like no wrong has been committed as to him. Or do the plaintiffs theorize that the very fact that YouTube posts another’s copyrighted work without prior permission — even if the owner later finds out and doesn’t mind — is a legal wrong in itself? That doesn’t sound right. And what’s the status of class members who don’t even realize their works are posted on YouTube in the first place? If a tree falls in a forest and nobody hears it, can Bernstein Litowitz sue?

If, on the other hand, the case were brought as an opt-in class action — with the lawyers required to get each individual class member’s permission beforehand, I’d have no objection. True, an opt-in model might not be workable as a practical matter. But that’s exactly what YouTube says about it’s business model, too.

Since I was sure Sean Coffey of Bernstein Litowitz would disagree, I invited him to respond, and offered him up to as much space as I used. Despite pressing demands on his time, he has kindly accepted. Here’s his response:


Thank you, Roger, for allowing me a chance to respond to your comments about the YouTube class action that Bernstein Litowitz and Proskauer Rose recently filed in federal court in New York. My Proskauer colleague Lou Solomon joins me in explaining just how badly your views on the utility of our case miss the mark.
Far from “ironic,” this is a matter where the class action procedure makes the most sense. Given the massive nature of the infringement on the YouTube website, a class action addressing the common factual and legal issues is the only feasible way to make YouTube conform its conduct to the laws protecting the creative works of thousands of copyright holders. Viacom’s lawsuit – meritorious as it is – is unlikely to do that because Viacom is quite reasonably looking out for its interests, not those of other holders. Perhaps you would prefer to have thousands and thousands of individual Viacom-like actions further clog the courts. In fairness, however, it seems that your skepticism about our case rests principally on the notions that (a) there is some simple “inexpensive” way for concerned copyright holders to ask YouTube to take down infringing material, and (b) if a copyright holder is unaware that YouTube is making its works available to hundreds of millions of internet users for free (that clever “tree in the forest” line in your post), there is no harm to that holder. Wrong on both points.
As for the takedown option, there are thousands of copyright holders who have sent take down notices. Thousands. Those notices are statements of objection by the holders themselves. These companies and individuals are, collectively, spending millions of dollars a month sending the notices, only to see their stuff not taken down, or taken down oh so slowly, or taken down and then going right back up. For details on how impractical YouTube has made this “option” we refer you to our complaint (or if you don’t have our complaint handy, read the Grisman complaint since it copies verbatim some 93 paragraphs of our infringement complaint- now that’s ironic). This group of copyright holders wants to know if YouTube can get away with acting like this. Indeed, we have been contacted by many holders who report to us at our website www.youtubeclassaction.com their own frustrations with YouTube’s footdragging. This group would seem to overcome each of your objections. What say you?
Second, the “if I don’t know I’ve been ripped off what’s the harm” angle. Interesting. But the fact that the grocer may not notice that someone has been pulling crates of grapes off his loading dock doesn’t mean the grocer hasn’t been ripped off. If consumers who want to view our class members’ works can get them on YouTube without paying for them, we respectfully submit that the person who created that work and is otherwise entitled to be compensated for it has been harmed. Someone does make money – YouTube and Google, whose business plan is blatantly founded on drawing eyeballs to the site with the lure of viewing other people’s works for free. (On a related point, you also seem to think, as you say, that the “vast majority” of files are being posted by the holder himself. But you don’t cite any data to support that. We intend to show that your premise is wrong, certainly when we look at the postings that matter – i.e., the postings that bring eyeballs to YouTube in the first place.)
At the heart of the class action relief sought in our case is structural change of the way YouTube (with the blessing of its parent Google) encourages and benefits from the massive infringement by requiring YouTube to use available technology to prevent copyright infringement for those who don’t want their property taken without license or permission. This structural relief will benefit all users, without cost to them. Copyright holders who are not interested in utilizing the available technology do not have to. Doesn’t this, too, satisfy your objections?
At the end of the day, the Court will weigh all the factors, including whether your concerns are valid before the action is formally certified as a class. We think this is a proper class action, without question.

Okay reader, there’s the point-counterpoint. What do you think?