An area of concern for website providers, promotions operators, sponsors, and others that permit third parties to post user-generated content ("UGC") is the possibility that the UGC will infringe copyright. Discussing the problem and the safe harbor defense provided by the Digital Millennium Copyright Act (“DMCA”), Alan L. Friel and Nathan D. Meyer write:
[T]he Online Copyright Infringement Liability Limitation Act, passed in 1998 as Title II of the [DMCA] provides that an online service provider, including potentially a single sponsor website and joint operators of co-branded websites, may be able to create a safe harbor defense for what is truly UGC stored at the direction of users if it maintains a proper DMCA compliant notice and take down process.
If the website does not “receive a financial benefit directly attributable to the infringing activity” in a situation where it “has the right and ability to control such activity,” has registered an agent of service with the U.S. Copyright Office and maintains a procedure compliant with the Act for the removal of UGC upon a valid take down request, it should have a defense to copyright infringement claims by copyright holders for UGC stored at the direction of users. The service provider must respond expeditiously to remove, or disable access to, material that a proper notice identifies as infringing. If the user whose content is taken down files a proper counter-notification requesting the restoration of removed content, the service provider must send a copy of such request to the party that originally requested the removal. Unless that party then obtains a court order supporting removal of the material at issue, the service provider must restore access to the material. A service provider does not have a duty to monitor its website for infringing content, but must terminate repeat offenders and must not have actual knowledge that material is infringing. However, “if the service provider becomes aware of a ‘red flag’ from which infringing activity is apparent, it will lose the limitation of liability if it takes no action.”
A further requirement for safe harbor under the DMCA is implementation of “standard technical measures.” On this issue, the industry arguably appears to be moving toward a standard as of early 2008. . . . The use of content filters, however, is likely to result in complaints by the fair use community that First Amendment protected transformative uses of third-party content (i.e., fair use) are improperly blocked by such technology. The Copyright Act codifies the concept of fair use at 17 U.S.C. § 107as a defense to a copyright infringement claim. Under the DMCA’s notice and take down scheme, the user that posted allegedly infringing UGC has a procedure, in the form of the counter-notice, for raising the fair use defense. The UGC Principles provide that “Copyright Owners and UGC Services should cooperate to ensure that Information Technology is implemented in a manner that effectively balances legitimate interests in (1) blocking infringing user uploaded content, (2) allowing wholly original and authorized uploads, and (3) accommodating fair use.” However, they fall short of setting forth ways in which fair use will be respected and . . . a method for users to raise a fair use defense to removal or blocking of UGC by filtering technology. Accordingly, it remains unsettled how users will be able to advance a fair use position with respect to UGC caught by filters, short of bringing a declaratory relief action, which few users will have the resources to pursue.
(citations and footnotes omitted.)
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