Business Casual Holdings, LLC v. Youtube, LLC

Background

Business Casual Holdings, LLC created and posted two documentary videos on YouTube: How Rockefeller Built His Trillion Dollar Oil Empire and J.P. Morgan Documentary: How One Man Financed America. Business Casual obtained federal copyright registrations for both videos.

Business Casual alleged that TV-Novosti, which operated multiple YouTube channels including RT Arabic, posted three videos that copied copyrighted content from Business Casual’s documentaries. Business Casual submitted copyright complaints under the Digital Millennium Copyright Act. YouTube removed the three videos at different times, applied copyright strikes to the RT Arabic channel, and received counter-notifications concerning two of the videos. YouTube briefly terminated and then reinstated the RT Arabic channel. At the argument on the motion, YouTube stated that TV-Novosti had been suspended from YouTube.

Business Casual sued YouTube, LLC, Google LLC, and Alphabet, Inc. It alleged three counts of direct copyright infringement, one count of contributory copyright infringement, and one count of vicarious copyright infringement. YouTube moved to dismiss under Rule 12(b)(6), which asks whether the complaint states a legally sufficient claim.

Direct infringement claims

The court held that Business Casual had not adequately alleged the required “volitional conduct”—active conduct by the platform that caused the infringement. The complaint alleged that YouTube removed the videos after receiving Business Casual’s complaints and had systems designed to detect and police copyrighted content. The court concluded that these allegations showed YouTube was policing alleged infringement, not actively causing it. The alleged delay in removing one video did not plausibly show that YouTube deliberately caused the infringement, and Business Casual identified no legal requirement that YouTube complete its investigation more quickly.

The court also rejected the argument that YouTube’s failure to terminate TV-Novosti’s channels constituted active conduct causing infringement. The complaint did not allege that content still posted on those channels infringed Business Casual’s copyrights. In addition, the decision not to terminate the channels occurred after the alleged infringement and therefore could not have caused TV-Novosti to upload the allegedly infringing videos.

The court separately held that YouTube’s license provided an independent basis for dismissing the direct-infringement claims. YouTube’s terms required users who uploaded content to grant YouTube a worldwide, nonexclusive, royalty-free, sublicensable, and transferable license to reproduce, distribute, make derivative works from, display, and perform that content. Business Casual did not dispute agreeing to the terms or argue that the license was unenforceable. The court found the license broad and clear enough to prevent YouTube from being liable for directly infringing copyrights in content Business Casual uploaded to its channel.

The court also explained that the Digital Millennium Copyright Act’s safe-harbor provisions are defenses to copyright infringement claims, not independent claims. Thus, even if YouTube failed to satisfy the statute’s repeat-infringer-policy requirements, that alleged failure could not itself create liability where Business Casual had not plausibly pleaded an underlying infringement claim against YouTube.

The court therefore granted YouTube’s motion to dismiss the direct-infringement claims in Counts 1 through 3.

Contributory and vicarious infringement claims

For contributory infringement, Business Casual needed to allege that YouTube knew about and substantially participated in TV-Novosti’s direct infringement. The court found the allegations insufficient. The complaint did not allege that YouTube knew of the alleged infringement before Business Casual’s complaints, and it alleged that YouTube removed each challenged video after learning of the allegations. Those facts did not plausibly show that YouTube acted together with TV-Novosti or substantially participated in the alleged infringement.

For vicarious infringement, Business Casual needed to allege that YouTube profited from direct infringement while failing to use its ability to stop or limit it. The court found that YouTube removed the challenged videos after learning of the allegations. Because the complaint did not allege that other content currently hosted on TV-Novosti’s channels infringed Business Casual’s copyrights, the court also rejected the theory that YouTube became vicariously liable by failing to terminate those channels.

The court granted YouTube’s motion to dismiss Business Casual’s contributory- and vicarious-infringement claims, identified in the opinion’s conclusion as Counts 4 and 5.

Disposition

The court granted YouTube’s motion to dismiss and dismissed Business Casual’s claims without prejudice. Business Casual could file a motion to amend, with a copy of the proposed amended complaint, within 21 days of the opinion. The court stated that if Business Casual did not file that motion, the current dismissal would be with prejudice. The Clerk was directed to close all pending motions.

Judge

John G. Koeltl, United States District Judge, signed the opinion and order.