Yesterday the 9th Circuit Court of Appeals clarified an important issue with regard to DMCA safe harbor immunity; specifically, whether the safe harbor of Section 512(c) applies to P2P torrent tracking sites like isoHunt. Columbia Pictures Industries, et al. v. Fung et. al., 10-55946 (9th Cir., March 21, 2013) — aka the isoHunt case.
By way of background, Section 512(c) of the DMCA provides website operators (or “service providers”) with immunity for hosting potentially infringing content uploaded by its users so long as the website takes no active role in the selection or uploading of the content, has no direct knowledge of the infringing content, in the absence of actual knowledge, is not ware of facts or circumstances from which infringing activity is apparent (lately termed “red flag” knowledge by the various courts), derives no financial benefit directly attributable to the infringement, and takes immediate action to take the content down when notified of its existence.
In the isoHunt case, the defendant (Fung, isoHunt’s owner) attempted to assert 512(c) immunity. The District Court denied the immunity on the basis that isoHunt is not a “service provider” under the DMCA because it does not actually host the infringing files, but merely hosts tracking information while the files themselves are hosted by the P2P users. The 9th Circuit decided that this was wrong:
The district court held that Fung is ineligible for this safe garbor for the same reason it rejected the 512(a) safe harbor that is, because the infringing material does not actually reside on Fung’s servers… this holding was in error.
512(c) explicitly covers not just the storage of infringing material, but also infringing “activit[ies]” that “us[e] the material [stored] on the system or network.
In other words, 512(c) can be asserted by torrent websites because the tracker files (a.k.a., “materials”) stored by the website are related to the alleged infringing activities transacted via the website. To this extent, torrent sites are “service providers” under the DMCA.
In the end, this did not save isoHunt. The court found that the “red flags” evidencing infringement were so obvious that 512(c) did not apply for this reason; but the qualification that otherwise innocent torrent tracking sites could take advantage of 512(c) is an important one.
Takeaway: Many e-commerce services have much to gain by using torrent technology for their various offerings. So long as the torrent tracking is used for “wholesome” reasons such that, unlike the isoHunt case, it is not plainly obvious that the torrent tracking is for pirating content, the technology could be used safely and the e-commerce business would be protected by DMCA 512(c) in the event that certain users abused the tech.