DMCA Modernization Efforts Must Include Startup Perspective
TLDR: The Senate is convening a hearing later today to discuss the law surrounding accusations of online copyright infringement. As it stands, online platforms (including startups) are not automatically liable for infringement based on content created or posted by their users. As the Senate reviews the law this year, it’s important to consider the interests of startups since changes in the law could create unreasonable burdens on fledgling companies.
What’s Happening This Week: The Senate Judiciary Committee’s Subcommittee on Intellectual Property will hold a hearing at 2:30 p.m. this afternoon on the Digital Millennium Copyright Act (DMCA). Passed in 1998, the DMCA provides the framework for addressing accusations of online copyright infringement in the U.S. Under the DMCA, companies—such as online platforms and Internet service providers—are not automatically liable when their users commit copyright infringement. Instead, if a company complies with the DMCA’s requirements, they can qualify for the law’s “safe harbors” and avoid liability.
One section of the DMCA, 17 U.S.C. § 512, establishes the notice-and-takedown framework for resolving claims of online infringement. That framework allows copyright holders who identify potential infringement online to notify the platform hosting that content. In order to qualify for the DMCA’s safe harbors, the platform must promptly remove the allegedly infringing content. If the accused infringers—often individuals or companies using the platform—disagree with the notice, they can file counter-notices to have their legitimate content restored to the platform. This area of the law reflects a carefully-crafted balance of the interests of copyright holders and online platforms.
Senator Thom Tillis (R-N.C.) announced plans to review the DMCA this year, including holding a series of hearings “to evaluate both the policy baseline created by the DMCA and the current practices and operations of both platforms and creators in response.” The first of those hearings this afternoon will address what the DMCA is, why it was enacted, and where the law stands now. This is the first of many hearings likely to occur throughout the year, and Senator Tillis has said that one of his goals is to draft legislation that would “modernize” the DMCA.
Why it Matters to Startups: The DMCA’s carefully-balanced framework remains valuable today, especially for startups. Any changes to the law which shift that balance would have an outsized and negative impact on startups.
First, with the DMCA in place, startups who host user-generated content are not automatically liable when one of their users infringes a copyright. Damages in copyright cases can be as high as $150,000 per work infringed. Even one such case over one act of infringement could bankrupt an early-stage Internet startup. The DMCA safe harbors protect startups against unaffordable copyright litigation over infringement they have no knowledge of or involvement in.
Second, if startups could be held liable for their users’ acts of infringement, the companies would have to hire staff and develop filtering technology to affirmatively police everything uploaded to their platforms. That sort of content filtering technology is very expensive, and even the most costly and sophisticated tools cannot accurately identify all infringement on a platform. Indeed, in many cases, a startup and its employees will have no way of knowing whether something is copyrighted and whether that right is infringed. So even with filtering in place, a startup would still be at risk of litigation and damages for the (many) things that inevitably slip through the cracks. Especially for small platforms that rarely see any infringing content, the high costs and risks of requiring filtering are unjustified. And those are costs and risks that many early-stage companies, and their investors, may be unable or unwilling to cover.
On the Horizon.
The House Energy and Commerce subcommittee on consumer protection is holding a hearing on self-driving vehicles and "promises and challenges of evolving automotive technologies” at 10 a.m. this morning.
The House Small Business subcommittee on innovation and workforce development is holding a hearing on “the innovation pipeline” from universities to small businesses at 10 a.m. this morning.
The House Financial Services Committee’s Task Force on Artificial Intelligence is holding a hearing to examine “ways to reduce AI bias in financial services” at 2 p.m. tomorrow.
