Lawyers can go their whole careers without handling a case of first impression or a dispute with tremendous implications for their practice area. For Michael Elkin, who heads Winston & Strawn’s New York office, litigating such matters is a regular feature of his legal practice, which operates at the forefront of where the law meets the online distribution of content.
In U.S. District Court in Los Angeles last year, Elkin successfully defended video-sharing website Veoh Networks against copyright infringement claims by UMG Recordings. A federal judge ruled that Veoh’s services were protected by the safe harbor provisions of the Digital Millennium Copyright Act because the company took down infringing material when notified by UMG. The case is on appeal before the 9th Circuit. In June, a federal judge in New York made a similar ruling for YouTube against claims brought by Viacom (Elkin did not work on that case).
Elkin also won a case in 2008 for Launch Media Inc. (owned by Yahoo!), which was sued by Arista Records and other labels over an Internet radio service that produced songlists based on listener feedback. Elkin proved to a jury, and later to the 2nd Circuit, that Launch Media’s service did not qualify as “interactive” under the DMCA, which would have required the company to negotiate licensing fees with recording companies.
Lawdragon: The recent ruling for YouTube in New York federal court got a lot of attention. How was that similar to the case you handled for Veoh?
Michael Elkin: In Veoh and in YouTube, content owners sued the online service providers, alleging that these companies committed copyright infringement by copying unauthorized videos posted by their users. The websites defended the actions by invoking one of the safe harbors of the Digital Millennium Copyright Act, which insulates a website from damages arising from storing material on its services at the direction of its user. In both cases, the content owners argued that the online service providers went beyond providing mere storage of video files by permitting its users to stream or download these works.
In Veoh, the argument was that Veoh permitted users to stream video and download materials after converting the original files into a different format. But the court in the Veoh decision adopted our argument that the whole purpose of storing the materials was to provide access to the materials by third parties. Consequently, the court would not deprive the company from laying claim to the safe harbor provision of the Digital Millennium Copyright Act. In YouTube, the judge adopted the same reasoning and holdings.
LD: What do you think the significance of these decisions are?
ME: I don’t think we would see the proliferation of new media companies that are now so woven into our corporate institutional framework but for the protections afforded under the DMCA. By holding websites liable for acts of their parties, it would stifle innovation and have the opposite effect of what Congress intended when it passed the DMCA. Clearly, there is going to be tension between content owners and technology companies, but I think if many content owners have their way it will roll back many years of advancement, and it would create a treacherous path for any new investor in this field to embark upon.
LD: Are there any obligations for online distributors to take proactive steps to prevent copyrighted materials from being posted and downloaded?
ME: Based on the law so far, there is no obligation or duty on the part of the online service provider to investigate, monitor, filter or take any additional steps to learn if there is copyright infringement. I would add, however, that taking certain steps such as filtering does put the ISP on better footing with the courts; taking precautionary steps is all to the good. Recent decisions do not impose an obligation on the provider, but it is still prudent to help content owners whenever possible – as the main thrust of the DMCA was really to develop a partnership between content owners and technology companies to work cooperatively to detect and remove unauthorized copyrighted material.
LD: What’s the significance of the Launch Media case and the determination that the radio service was not interactive under the DMCA?
ME: LAUNCHcast’s Internet radio application took into account user ratings and preferences and based on that feedback, through an algorithm, spit out a new play list for the user. If this was “interactive,” the company would have to secure voluntary licenses from record companies and negotiate those rights; if not, the company would have to obtain a compulsory license and pay a statutory rate on orders of magnitude much less than what the labels would have charged. If the case had gone south, then it would have meant that Yahoo would have been required to get licenses for tens of thousands of recordings and there would have been copyright damages in excess of $1 billion.
The jury sided with us and the 2nd Circuit unanimously determined as a matter of law that it was non-interactive. It was a significant decision in that you can now have radio music over the Internet without having to pay much higher fees – online radio stations would have otherwise had to build those huge license fees into their business model, and I think consumers would not have the panoply of different services you now see.
Both the Veoh and the Launch Media cases dramatically affected the economies of two different business segments by testing the outer limits of the DMCA.
LD: How did you get into this area of law?
ME: For many years I represented content owners – record labels, publishers, performers, motion picture studios, and I still do on some matters. But I noticed an opportunity with the advent of the Internet, that there would be technology companies without entrenched counsel on entertainment and copyright cases. I really thought it would be useful for technology companies to have an insider’s view of what content companies were thinking, for example in the recording industry. I thought I could add a certain value to understanding what was in the heads of content owners, what they’re concerned about.
I’ve argued key issues in a number of cases where I think our being on the other side provided greater clarity and assisted in testing outer limits of these positions.
LD: What are some of the challenges of handling these types of cases?
ME: I think, number one, clients want predictability and are generally clamoring for lawyers to give a sense of how things are likely to turn out. Litigation is itself fairly unpredictable and when you graft onto that the challenges created by litigating in unchartered territory of the Internet, it sort of exacerbates the tension that exists. Number two, there is considerable acrimony between the content side and the technology side, with one side blaming the other for holding onto an antiquated business model and the other side claiming that companies are engaging in mass piracy. The opposing sides have fairly extreme views, and trying to harness those views to bring about a resolution short of all out war is a significant challenge.
LD: How did you come to take on the leadership position at Winston & Strawn after moving to the firm from Thelen Reid in 2007?
ME: When I made the move with a bunch of lawyers, I was not interested in management. I had held several management positions with my prior firm (including Vice Chairman of the firm and Chair of the Litigation Department) and just wanted to return full time to practice, to try cases and have fun. But I got dragged back into it. They needed someone with experience who was able to grow the office in pretty difficult times. I still practice full time, but the days are just longer and without the personal down time I was enjoying. Even though I didn’t want to do it, I find it professionally rewarding. I get to represent clients and also help run a business at a great firm like Winston.
LD: What have been the growth or strategic goals for the office?
We have added more than 25 lawyers last year in a variety of areas including private equity, outsourcing, M&A and bankruptcy. We are now undertaking efforts to develop critical mass and additional bench strength in securities and IP litigation for the New York office.
LD: When you do get some down time, what do you like to do?
ME: I like to spend time with my three girls. I live in Manhattan but also in Marina del Rey [near Los Angeles]. I like being by the beach and have taken up surfing. I also fancy myself a wine aficionado. Also, I love travelling to places to experience new civilizations.