The Ninth Circuit recently resolved the question of whether fair use is a free speech right or an affirmative defense in Lenz v. Universal Music Corp., a closely watched suit known as the "dancing baby case." The opinion can be found here.
Eight years ago (yes, the "dancing baby" is now 9 years old!), Stephanie Lenz ("Lenz") sued Universal Music Corporation ("Universal") alleging misrepresentation following YouTube's removal of a 30-second clip Lenz posted of her son dancing to Prince's "Let's Go Crazy." The clip was removed after Universal sent YouTube a takedown notice, pursuant to the Digital Millennium Copyright Act ("DMCA"), alleging that the clip made unauthorized use of Prince's song. Lenz claimed that the video was legal fair use and that Universal had thus violated the DMCA by knowingly misrepresenting in the takedown notice that the clip was an unauthorized use of a copyrighted work. Universal responded that fair use is not a use "authorized by law," but rather is an affirmative defense that excuses otherwise infringing conduct.
Section 512(c) of the DMCA permits service providers such as YouTube to avoid copyright infringement liability for storing users' content if the service provider "expeditiously" removes or disables access to the content after receiving notification from a copyright holder that the content is infringing. Section 512(c)(3)(A) sets forth the requirements for a valid takedown notification. The notification must identify the copyrighted work, identify the allegedly infringing material, and state that the copyright holder believes in good faith that the infringing material "is not authorized by the copyright owner, its agent, or the law." If an entity abuses the DMCA, it may be subject to liability under Section 512(f), which provides: "Any person who knowingly misrepresents under this section that material or activity is infringing . . . shall be liable for any damages[.]"
Section 512 was at the heart of the dispute in Lenz. The parties disagreed as to whether fair use is an authorization under law as contemplated by the statute. The Ninth Circuit ruled against Universal in holding that "[f]air use is not just excused by the law, it is wholly authorized by the law." For that reason, the Ninth Circuit held that copyright owners can send takedown notices only after they have come to a good faith conclusion that the targeted content is not a protected fair use of the copyrighted work. If copyright owners fail to consider fair use prior to sending takedown notices, then they can be liable for damages.
However, the Ninth Circuit also balanced the needs of copyright owners like Universal, citing the "pressing crush of voluminous infringing content that copyright holders face in a digital age." Striking that balance, the opinion clarified that the copyright owner need only come to a subjective good faith belief that the use is unauthorized, even if this belief is objectively unreasonable on either the law or facts at issue. Indeed, the copyright owner's consideration of fair use need not be "searching or intensive," and the formation of a good faith belief does not require "investigation of the allegedly infringing content." Thus, although it is unclear what it means to "consider" fair use, it is clear that the copyright owner need not engage in a full-fledged fair use analysis.
So what does the Lenz opinion teach us? Well, it depends on which of three categories you fall under:
(1) For the small business copyright owner who is unfamiliar with the concept of fair use and lacks legal counsel, the Lenz opinion may make it more difficult (or expensive) to issue takedown notices.
(2) For large copyright owners and enforcers like Universal, the opinion has less than drastic implications. Indeed, Universal already has guidelines in place to direct the review of allegedly infringing internet content. These guidelines will likely be altered to require the good faith consideration of fair use and contemporaneous documentation of the same, and disputes like this sub-issue in Lenz will be avoided in the future.
(3) Finally, for individual creators and content providers, the Lenz opinion is crucial. It is now clear that fair use is not some kind of loophole in copyright protection or a way to excuse otherwise infringing activity; fair use is a positive right.
It is too soon to definitively tell what impact Lenz will have, but FI&C attorneys will be monitoring future developments as they become available. For now, it appears that this baby may be dancing all the way to trial to determine if (1) the video in question is covered by the fair use provision, and (2) appropriate consideration was given to fair use during the process undertaken by Universal in issuing the takedown notice.
 At the time Lenz posted the video, Universal was Prince's publishing administrator responsible for enforcing his copyrights. Lenz, 2015 U.S. App. LEXIS 16308 at *5.