Is this America's youngest music pirate?
Under the 1998 Digital Millennium Copyright Act, copyright owners can issue so-called "takedown notices" to sites like YouTube seeking the removal of infringing material. (This is a different section of the act than the anti-circumvention provision I criticized in a policy analysis last year.) According to Ars Technica, Universal issued such a takedown notice in June against this clip because of the Prince song playing in the background.
Now Stephanie Lenz, the owner of the clip, with help from the Electronic Frontier Foundation, a digital civil liberties group, has filed a lawsuit against Universal demanding the recovery of attorney's fees and a declaration that the file is fair use under copyright law.
I think that Lenz has an open-and-shut case that her use of the Prince song is fair, and therefore legal. But the question of whether Universal should be held responsible for issuing an erroneous takedown notice is more complicated. On the one hand, a takedown notice is a formal accusation of copyright infringement and it will often require seeking the advice of an attorney, which isn't cheap. It's not right for copyright holders to issue takedown notices too recklessly. On the other hand, it's not hard to sympathize with Universal's position. There are thousands of plainly infringing videos on YouTube, and so it's not too surprising that in the process of issuing thousands of takedown notices they'd make a few mistakes.
This is an area that will continue to evolve rapidly, as policymakers struggle to balance the need to protect copyright against the desire not to squelch innovative new products. A site like YouTube probably couldn't exist at all if the DMCA didn't provide service providers a "safe harbor" against liability for the infringing activities of their customers. But some copyright holders complain that the "safe harbor" shifts too much of the burden of enforcing copyright law onto them, by requiring them to issue an individual takedown notice against every instance of copyright infringement. As we see in this case, companies sometimes make honest mistakes. Striking the appropriate balance will be an ongoing challenge for Congress and the courts.