Copyright and trademark infringement used to be easier to identify. Movie studios, book publishers and record companies knew who was manufacturing products for the consumer market, how many were produced, where they were shipped, and how many were returned unsold. Piracy happened, and it could be profitable. However, pirates had to make a financial investment to physically copy books, movies, or recordings.

The internet made it much easier and more lucrative to get around copyright laws. It costs almost nothing to copy and distribute digital work, and millions of copies can be in the hands of consumers within minutes. Usually, all that is required is one or two clicks.

Obviously, the companies that had paid the expenses to produce the work were losing money. Authors and others who were compensated through royalty programs were also losing money. One step that the federal government took was to pass the Digital Millennium Copyright Act, usually abbreviated as the DMCA. Although the DMCA offered a great deal of support to ISPs, it also provided some support for the legitimate holders of the copyrights.

ISP Liability for Copyright Infringement

Under certain circumstances, an ISP can be held liable for copyright infringement committed by the ISP’s users. There are three circumstances that could result in an ISP being found liable.

1. If the ISP knowingly hosts copyrighted items and directly benefits from it financially, the ISP could be guilty of direct infringement.
2. If the ISP knows about the infringing activity and materially contributes to or assists with the infringement, it could be guilty of contributory infringement.
3. If the ISP receives a financial benefit from the infringement and has the ability and right to control its users, the ISP could be guilty of vicarious liability.

Most cases fall under the heading of contributory infringement, and cases of direct infringement are rare. Vicarious infringement can be difficult to prove because plaintiffs must prove the ISP’s ability and right to control its users. However, some ISPs have been tripped up because their terms of service specifically state that they can terminate a user’s account for a list of violations, including copyright infringement.

Safe Harbor for ISPs Under the DMCA

The DMCA contains a safe harbor provision that can shield an ISP against liability for copyright infringement. To qualify, all four of the following points must be true.

1. The ISP has no direct knowledge of or substantial reason to suspect an infringement.
2. The ISP is not receiving a financial benefit from the infringement.
3. The ISP complies with any takedown notice provisions related to the removal of the copyrighted material.
4. The ISP must have a designated agent for handling complaints of copyright infringement.

However, several recent lawsuits have revealed that the waters of the safe harbor have become more treacherous. It is no longer enough to simply go through the motions of complying with the DMCA. Instead, ISPs need to make sure that they are following the DMCA rules carefully.

Three Ways to Help Prevent Being Held Liable for Copyright and Trademark Infringement

It would be naive to assume that none of your users would ever violate intellectual property laws. If you want to protect yourself, there are three ways to shield yourself against potential liability.

1. The first step is one that ISPs often overlook. You must designate an agent to receive claims of copyright infringement if you want to benefit from the safe harbor provisions of the DMCA. This will require registering for an account with the United States Copyright Office and submitting an Interim Designation form or its equivalent. You will need to pay a small fee, and you will need to post the agent’s contact information on your website so that the public can find it.
2. You will need to adopt a copyright infringement policy and communicate it to your users. You can display it in a prominent position on your website or incorporate it in your terms of use. The policy should explain that you will respond promptly and terminate accounts or ban users who are guilty of repeated infringements. You might also want to include information about the proper form that a notice must follow. This includes an electronic or physical signature of someone authorized by the copyright owner to file the claim, identification of the works, and the complaining party’s contact information. It should also include statements that the filer believes in good faith that the copyright owner did not authorize the use of the material and that the information submitted in the complaint is accurate.
3. Recent lawsuits have proven that ISPs must take action when they receive a valid notice of infringement. Once you have verified that the notice substantially complies with the formal requirements detailed above in the second point, you must expeditiously disable access to or remove the material. You must notify your subscriber or user of the removal so that he or she can file a counter-notice. If you receive a valid counter-notice, you should notify the copyright owner and include a copy.

Digital piracy is a problem that is not going to disappear in the immediate future. As copyright holders become even more aggressive in pursuing cases of infringement, ISPs must ensure that they comply with all provision of the DMCA to qualify for the safe harbor provisions. The best way to do this is through automation.

AbuseHQ can help increase your efficiency while reducing your costs. A recent study found that at most ISPs without AbuseHQ, the average abuse department had up to 10 people who only managed to process less than 15% of the reports received. After going live with AbuseHQ, 100% of the reports were being processed within weeks of the implementation, and staffing was reduced to just one or two people. Furthermore, AbuseHQ can help ISPs prove that they have done everything possible to comply with the DMCA should the ISP find itself in a court case.

If you are serious about reducing your potential liability, AbuseHQ is an excellent first step. To learn more, submit our contact form.