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Economists Amicus
Economists Amicus
10-3270
10-3342 IN THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Richard B. Kendall
Laura W. Brill (Counsel of record for Amici Curiae)
Joshua Y. Karp
KENDALL BRILL & KLIEGER LLP
10100 Santa Monica Blvd., Suite 1725
Los Angeles, California 90067
(310) 556-2700
Case: 10-3270 Document: 95 Page: 2 12/10/2010 164862 21
v.
YOUTUBE, INC., YOUTUBE, LLC, GOOGLE, INC.,
Defendants-Appellees.
v.
YOUTUBE, INC., YOUTUBE, LLC, GOOGLE, INC.,
Defendants-Appellees.
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TABLE OF CONTENTS
Page
INTEREST OF THE AMICI CURIAE .................................................................. 1
ARGUMENT ............................................................................................................ 4
CONCLUSION....................................................................................................... 11
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TABLE OF AUTHORITIES
Page(s)
CASES
In re Aimster Copyright Litig.,
334 F.3d 643 (7th Cir. 2003) .......................................................................4, 9
Mackey v. Fullerton,
7 Colo. 556 (1884) ...........................................................................................5
STATUTES
15 U.S.C. §1117(b). ...................................................................................................2
17 U.S.C. § 504 ..........................................................................................................8
17 U.S.C. § 512(c) .................................................................................................5, 6
18 U.S.C. § 983(d) .....................................................................................................2
21 U.S.C. § 841(a) .....................................................................................................2
OTHER AUTHORITIES
Arlen & Kraakman, Controlling Corporate Misconduct: An Analysis of
Corporate Liability Regimes,
72 N.Y.U. L. Rev. 687 (1997) .........................................................................8
Charlow, Wil[l]ful Ignorance and Criminal Culpability,
70 Tex. L. Rev. 1351 (1992 .............................................................................5
Edwards, The Criminal Degrees of Knowledge,
17 Mod. L. Rev. 294 (1954) ............................................................................5
Perkins, “Knowledge” as a Mens Rea Requirement,
29 Hastings L. J. 953 (1977-78) ......................................................................5
Polinsky & Shavell, law, economic analysis of, in The New Palgrave
Dictionary of Economics (Steven N. Durlauf & Lawrence E. Blume
eds., Palgrave Macmillan 2008) ......................................................................7
Posner, An Economic Theory of the Criminal Law,
85 Colum. L. Rev. 1193 (1985) .....................................................................10
Robbins, The Ostrich Instruction: Deliberate Ignorance as a Criminal Mens
Rea,
81 J. Crim. L. & Criminology 191 (1990).......................................................5
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62091 iii
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their work on the economic incentives of legal liability rules, including questions
about efficiency and deterrence. They are Matthew L. Spitzer, John R. Allison,
the individual amici is provided at the end of this brief. Amici file solely as
individuals and not on behalf of the institutions with which they are affiliated.
Amici represent neither party in this action, and write because this appeal raises
what they understand to be a very basic and important economic question: whether
an economic perspective, the answer is clearly no; amici write here to succinctly
explain why.2
1
This brief was not written in whole or in part by counsel for a party. No
person or entity other than amici made any monetary contribution to the
preparation or submission of this brief. Amici and their counsel were not
compensated in any way.
2
All parties have consented to the filing of this amicus brief.
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bad actor had knowledge of certain facts. The Lanham Act, for example,
authorizes treble damages in instances where the seller of counterfeit goods knew
that the goods were in fact counterfeit.3 The Civil Asset Forfeiture Act of 2000
prevents an owner’s property interest from being forfeited if that owner lacked
trafficking require that the accused trafficker knew that he was peddling a
controlled substance, like cocaine, and not merely selling some harmless look-alike
proscribe socially undesirable acts, for a simple and practical reason: The law can
refrain from doing so or at least to mitigate the bad act’s detrimental consequences,
whereas an unknowing actor is immune to the law’s incentives. The overall goal is
an obvious one, namely creating an incentive for informed parties to act well, and
3
15 U.S.C. § 1117(b).
4
18 U.S.C. § 983(d).
5
21 U.S.C. § 841(a).
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the law depends. If the law were otherwise, bad actors would readily and actively
phrase – is thus in obvious tension with the law’s underlying purpose. In order to
incentivize the proper behavior the law is seeking, those who choose willful
Judge Richard Posner has said explicitly from the bench. We write only to add
that this pervasive body of law gets the analysis exactly right: When a legal rule is
keyed to knowledge, the goal is not to promote taking active steps to ensure
ignorance and discourage knowledge. Rather, the law underscores the fact that
knowledge should be used to reduce harm and that one who acts wrongfully in the
have culpable knowledge of specific facts when that actor has taken active steps to
avoid knowledge simply as a ploy toward avoiding legal liability. Applied here,
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ARGUMENT
generally.”7 With this singular sentence, Judge Richard Posner summarizes the
core principle of this amicus brief: Willful blindness, in both civil and criminal
law, has long been held to be the equivalent of knowledge. When the law
proscribes actions taken with the mental state of knowledge, an actor generally
cannot escape liability by purposely avoiding such knowledge. Instead, the law
6
For purposes of this brief, amici assume that Plaintiffs-Appellants have put
forth evidence (1) that Defendants-Appellees knew that YouTube had very high
levels of infringing material on its site, and (2) that they adopted a deliberate
strategy to seek to blind themselves to specific acts of infringement in order to
remain eligible for the DMCA’s safe harbor under 17 U.S.C. § 512(c). This
amicus brief does not address the separate question of whether there was sufficient
evidence in the record from which a jury could infer that YouTube had actual
knowledge of specific acts of infringement, or whether YouTube was aware of
“facts or circumstances” from which infringing activity was apparent. This brief
solely addresses the implications of YouTube’s assumed willful blindness to
infringing activity on its website.
7
In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003) (Posner,
J.) (“One who, knowing or strongly suspecting that he is involved in shady
dealings, takes steps to make sure that he does not acquire full or exact knowledge
of the nature and extent of those dealings is held to have a criminal intent, because
a deliberate effort to avoid guilty knowledge is all that the law requires to establish
a guilty state of mind.” (internal citations omitted)).
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imputes to the willfully ignorant the knowledge they contrive to avoid.8 There is
The Digital Millennium Copyright Act, like numerous other laws and
512(c) of the DMCA provides that internet service providers (“ISPs”) are not liable
8
Rollin M. Perkins, “Knowledge” as a Mens Rea Requirement, 29 Hastings
L. J. 953, 956-58 (1977-78); see also Robin Charlow, Wil[l]ful Ignorance and
Criminal Culpability, 70 Tex. L. Rev. 1351, 1412 n. 250 (1992) (Willful ignorance
“‘requires in effect a finding that the defendant intended to cheat the administration
of justice.’” (quoting Glanville Williams, Criminal Law: The General Part, § 57, at
159 (2d ed. 1961)).
9
Civil cases have long equated willful blindness with knowledge. E.g.,
Mackey v. Fullerton, 7 Colo. 556, 560 (1884) (“Willful ignorance is equivalent, in
law, to actual knowledge. A man who abstains from inquiry when inquiry ought to
be made, cannot be heard to say so, and to reply upon his ignorance.”). The
history of criminal law is no different. Edwards, The Criminal Degrees of
Knowledge, 17 Mod. L. Rev. 294, 298 (1954) (“For well-neigh a hundred years, it
has been clear from the authorities that a person who deliberately shuts his eyes to
an obvious means of knowledge has sufficient mens rea for an offense based on
such words as ‘permitting,’ ‘allowing,’ ‘suffering,’ and ‘knowingly.’”); see also Ira
P. Robbins, The Ostrich Instruction: Deliberate Ignorance as a Criminal Mens
Rea, 81 J. Crim. L. & Criminology 191, 192 n. 4 (1990) (“‘Men readily regard
their suspicions as unworthy of them when it is to their advantage to do so. To
meet this, the rule is that if a party has his suspicion aroused but he deliberately
omits to make further enquiries, because he wishes to remain in ignorance, he is
deemed to have knowledge.’” (quoting Williams, supra note 8, § 57, at 157)).
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Congress, through this provision, has proclaimed that an ISP is not entitled to
invoke the safe harbor, and must instead face the potential for legal liability, when
facts or circumstances from which infringing activity is apparent and elects to sit
on its hands rather than to remove or disable access to the infringing materials.
allow an ISP to escape liability by taking active steps to deliberately avoid actual
knowledge of infringement on its system or network, such that the willfully blind
would be entitled to invoke the DMCA’s safe harbor. From a law and economics
perspective, the answer is clearly no; any rule that would give ISPs the shelter of
the safe harbor as a reward for taking active steps as a ploy to remain willfully
10
17 U.S.C. § 512(c)(1)(A).
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The economic analysis of law, also known as the “law and economics”
approach to law, “seeks to identify the effects of legal rules on the behavior of
relevant actors and to determine whether these effects are socially desirable.”11
This approach analyzes liability rules in both tort and criminal law through the
accidents and intentional harms.12 Liability rules deter bad actors by creating
appropriate incentives for socially desirable outcomes and, conversely, create the
11
A. Mitchell Polinsky & Steven Shavell, law, economic analysis of, in The
New Palgrave Dictionary of Economics (Steven N. Durlauf & Lawrence E. Blume
eds., Palgrave Macmillan 2008), available at
http://www.dictionaryofeconomics.com/article?id=pde2008_L000038.
12
See, e.g., Steven Shavell, Foundations of Economic Analysis of Law
(Harvard University Press 2004); Stacey Neumann Vu, Note, Corporate Criminal
Liability: Patchwork Verdicts and the Problem of Locating a Guilty Agent, 104
Colum. L. Rev. 459, 487-88 (2004).
13
Steven Shavell, liability for accidents, in The New Palgrave Dictionary of
Economics, supra note 11, available at
http://www.dictionaryofeconomics.com/article?id=pde2008_E000215.
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social welfare “by minimizing the net social costs of wrongdoing and its
prevention.”14
circumstances from which infringing activity is apparent, has clearly indicated that
Congress made ISPs that refuse to take action liable for the full gamut of copyright
damages.15 By making knowing actors ineligible for the safe harbor, Congress
attempted to deter such actors from sitting on their hands while their services are
the deterrent effects of copyright protection, and the narrow scope of the DMCA’s
safe harbor exemption, if willful blindness – defined as taking active steps to avoid
we ask what would happen if ISPs that have general knowledge of widespread
14
Jennifer Arlen & Reinier Kraakman, Controlling Corporate Misconduct:
An Analysis of Corporate Liability Regimes, 72 N.Y.U. L. Rev. 687, 691 (1997).
15
See 17 U.S.C. § 504 (“Remedies for infringement: Damages and profits”).
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to nonetheless be eligible for the safe harbor when they fail to remove or disable
Under such a rule, the deterrent effects of copyright law would suffer so
severely that it is implausible to conclude that this was Congress’ intent. In such a
scenario, the economic incentives on ISPs are twisted. Despite knowing that its
site is being used for rampant copyright infringement, the ISP would have no
infringing material upon detection. Nor would the ISP have an incentive merely to
resources avoiding knowledge and the associated obligations. For example, the
ISP in such a regime would have a strong incentive to spend resources (1) training
more burdensome, (3) developing a cynical corporate culture that belittles the
interests of copyright owners, and (4) exploiting infringement for financial gain.16
16
Such conduct is comparable to the facts of In re Aimster, where defendant
encrypted the copyrighted files being transferred through its service in order to
shield itself from actual knowledge. 334 F.3d at 650-51. Judge Posner refused to
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every copyright creator has to develop its own means to search for infringing
material. Those efforts are also far less effective than comparable measures by the
ISP because they necessarily can result in the removal of infringing material only
after infringement and the resulting damage has already occurred. This shifting of
costs – when the ISP has intentionally taken active steps to avoid knowledge –
The goal of the DMCA is not to penalize ISPs for having knowledge of
blameworthy. Instead, the DMCA targets knowing ISPs because such ISPs have
the ability to act efficiently on such knowledge and to prevent the harms that result
avoid this knowledge as a ploy turns the DMCA’s goal on its head by encouraging
countenance such tactics. Id. (“[A] service provider that would otherwise be a
contributory infringer does not obtain immunity by using encryption to shield itself
from actual knowledge of the unlawful purposes for which the service is being
used.”).
17
See Richard A. Posner, An Economic Theory of the Criminal Law, 85
Colum. L. Rev. 1193, 1195-96 (1985) (noting that “if I am allowed to [steal a] car
[without being punished] I will have an incentive to expend resources on taking it
and my neighbor will have an incentive to expend resources on preventing it from
being taken, and these expenditures considered as a whole, yield no social
product”).
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those who would otherwise have the ability to prevent copyright infringement
efficiently to invest in tools to avoid that ability and perpetuate the harm.
ISPs should thus be incentivized to gain this knowledge, not to avoid it. The
only way to accomplish this goal is to hold that willfully blind actors have the
knowledge they seek to avoid. Under this rule, ISPs would, as the law hopes,
choose knowledge over willful blindness, because only then will they be able to
disable infringing materials and activities on their networks and thus qualify for the
safe harbor. Consequently, it would then be unprofitable for the ISP to choose
willful blindness, because such a decision, and the resources needed to implement
it, would lead to liability for copyright infringement; such ISPs would be held to
have specific knowledge and as such they would not qualify for the safe harbor. In
short, a rule that deems the willfully blind to have the knowledge they seek to
avoid deters willful blindness and incentivizes the use of resources to obtain
knowledge and prevent copyright infringement. This is the efficient result of the
DMCA’s safe harbor scheme. Any rule excusing the willfully blind is detrimental
and inefficient.
CONCLUSION
Economic analysis of the deterrent effects of the Digital Millennium
Copyright Act’s safe harbor for internet service providers leads to one conclusion:
An internet service provider should not be able to invoke the safe harbor of the
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Digital Millennium Copyright Act after hiding its head in the sand to avoid the
copyrighted materials. When the law penalizes actors who cause harm while
acting with willful blindness to the same degree as it penalizes actors who
knowingly harm, the result is that the willfully ignorant forego expenditures they
would otherwise make to avoid knowledge and instead spend resources to acquire
the knowledge needed to eliminate future harm. Any rule that excuses willfully
blind actors encourages ignorance over knowledge, and perpetuates the harm the
Respectfully submitted,
Richard B. Kendall
Laura W. Brill (Counsel of record for Amici Curiae listed below)
Joshua Y. Karp
KENDALL BRILL & KLIEGER LLP
10100 Santa Monica Blvd., Suite 1725
Los Angeles, California 90067
(310) 556-2700
Robert G. Bone
G. Rollie White Professor of Law, University of Texas at Austin
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Hugh C. Hansen
Professor of Law, Fordham University School of Law
Director, Intellectual Property Law Institute, Fordham University School of Law
Reinier H. Kraakman
Ezra Ripley Thayer Professor of Law, Harvard Law School
Michael S. Knoll
Theodore K. Warner Professor, University of Pennsylvania Law School
Professor of Real Estate, Wharton
Co-director, Center for Tax Law and Policy, University of Pennsylvania
Alan Schwartz
Sterling Professor of Law, Yale Law School
Robert E. Scott
Alfred McCormack Professor of Law, Columbia Law School
Director, Center for Contract and Economic Organization, Columbia Law School
Matthew L. Spitzer
Hayden W. Head Regents Chair for Faculty Excellence, University of Texas at
Austin School of Law
Professor, McCombs School of Business, University of Texas at Austin
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X this brief contains 3,122 words, excluding the parts of the brief
exempted by Fed. R. App. P. 32(a)(7)(B)(iii),
or
__ this brief uses a monospaced typeface and contains [state the number
of] lines of text, excluding the parts of the brief ex empted by Fed. R.
App. P. 32(a)(7)(B)(iii).
__ this brief has been prepared in a monospaced typeface using [state name
and version of word processing program] with [state number of
characters per inch and name of type style].
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I HEREBY CERTIFY that on this 10th day of December, 2010, I caused the
foregoing Brief of Amici Curiae to be served on all counsel of record in this appeal
via Electronic Mail generated by the Court’s electronic filing system (CM/ECF)
with a Notice of Docket Activity pursuant to Local Appellate Rule 25.1(h)(1) &
(2):
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Andrew H. Schapiro
A. John P. Mancini
Brian M. Willen
MAYER BROWN LLP
1675 Broadway
New York, NY 10019
(212) 506-2500
David H. Kramer
Michael H. Rubin
Bart E. Volkmer
WILSON SONSINI GOODRICH
& ROSATI P.C.
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
Laura W. Brill
62091 16