New Copyright Regulation May Impact Small Business Owners

Small business owners who allow postings of user-generated content to their websites need to take immediate steps to preserve their safe harbor protection under the Digital Millennium Copyright Act (“DMCA”) in light of a recent rule change by the U.S. Copyright Office.

The DMCA’s safe harbor provision, found at 17 U.S.C. §512, provides website operators immunity from contributory infringement claims for user-posted content once they become “registered agents” with the Copyright Office. Before this procedure came into effect, website operators ran the risk of copyright infringement lawsuits if any of their users posted infringing content to their websites under a theory of contributory infringement.

Explanation of the New Regulations

Under the old regulations, registered agent designations were filed using paper applications one time for $105. The new regulations, which went into effect December 1, 2016, will now require filing electronically every three years, but will only cost $6 each time.

The problem lies in the fact that all existing paper-filed registered agent designations will expire on December 31, 2017. Consequently, if a website operator hosting user-posted content failed to re-file electronically before 12/31/16, a lapse will occur in their safe harbor protection exposing them to potential copyright infringement liability.

The DMCA's Notice and Takedown Procedure

The registration requirement is the cornerstone of the DMCA’s notice and takedown procedure; without this procedure, services such as Facebook and YouTube would have faced potentially crippling compliance issues to avoid copyright infringement claims. Under the notice and takedown procedure, any party claiming infringement must first contact the website’s registered agent, who is charged with receiving and responding to takedown notifications. The website then has the responsibility to “take down” the allegedly infringing content.

Contributory Copyright Infringement Explained

Contributory copyright infringement theory imposes liability even though a website did not actually engage in infringing activities. The Supreme Court weighed in on this theory, ruling that a party “who knowingly induces, causes or materially contributes to copyright infringement, by another but who has not committed or participated in the infringing acts him or herself, may be held liable as a contributory infringer if he or she had knowledge, or reason to know, of the infringement.” Hosting infringing content could be considered to "materially contribute" to infringement, and a website operator would be charged with knowledge of the infringement by virtue of the fact that the content was on their site.

While the new system promises to be less cumbersome for both website operators and the Copyright Office (and cheaper in the short to midterm), it will require more vigilance on the part of small business owners to maintain their safe harbor protection.

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