Copyright “safe harbors” shrink in wake of MP3Tunes, other red flag rulings

Studios have long came up short in controversial court campaigns to force websites to do more to stop piracy, but new developments this week show again they may be gaining the upper hand. This could be good news for the movie and music industries, but it could also be a cause for alarm for internet and technology advocates.

In case you missed it, a jury this week found that Michael Robertson, CEO of defunct music service MP3Tunes, was liable for copyright infringement. The jury concluded that Robertson, whose websites permitted users to upload songs and store them in “lockers,” had turned a blind eye to piracy — meaning that they forfeited the so-called “safe harbor” protections under copyright law that normally ensure that a website is not liable for the misdeeds of its users.

The significance of the case has little to do with MP3Tunes, which has long been closed, but instead stands as a strategic victory for copyright owners. That’s because the jury found Robertson liable on the basis of so-called “red flag” knowledge rather than “actual” knowledge. The distinction may sound arcane, but it’s one the studios have fought hard to establish as part of their strategy to change the level of proof needed to prove piracy.

Until recently, movie and music studios that wanted to win copyright cases had to prove that a website’s owner actually knew about widespread piracy or was participating in it. Simply saying that a site’s owner should have known was not enough. In 2011 and 2012, judges in a pair of appeals court decisions (one involving YouTube(s goog) and the other defunct music site Veoh) all but shut the door on studios that wanted to use “red flags” to overcome safe harbors.

That door began to open again in 2013, however, as judges began to pay increased attention to the “red flag” part of the copyright law. In particular, a judge’s earlier ruling against MP3Tunes this year (that led to this week’s jury verdict) explicitly centered around red flags, as did other decisions against file-locker Hotfile and piracy index, IsoHunt.

The upshot of all this is that studios, sensing that safe harbors are weaker than they used be, may feel emboldened to go after more sites for alleged infringement. Conversely, weaker safe harbors could make entrepreneurs less willing to experiment with new platforms and technologies.

The recent legal shift is also significant because Google(s goog), a powerful advocate for safe harbors, settled a long-running red flag case with Viacom(s VIA) this week. Meanwhile, Congress is undertaking an examination of the safe harbor rules, which many credit with building today’s internet economy, partly in response to entertainment industry complaints about “whack-a-mole” enforcement problems.