Question

What is a safe harbour, what are the legal requirements of meeting safe harbour in corporation law?

What are the benefits of meeting safe harbour requirements in the event of insolvency litigation ?

I need reference and research material to study and understand and use it in a case study

Answer 1

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In 1998, Congress updated the copyright laws by passing the Digital Millennium Copyright Act (DMCA). In the report that accompanied the Senate version of the bill, the Committee on the Judiciary stated the reasons why Congress needed to act:

Due to the ease with which digital works can be copied and distributed worldwide virtually instantaneously, copyright owners will hesitate to make their works readily available on the Internet without reasonable assurance that they will be protected against massive piracy. Legislation implementing the treaties provides this protection and creates the legal platform for launching the global digital on-line marketplace for copyrighted works. It will facilitate making available quickly and conveniently via the Internet the movies, music, software, and literary works that are the fruit of American creative genius. It will also encourage the continued growth of the existing off-line global marketplace for copyrighted works in digital format by setting strong international copyright standards.

The Four Safe Harbors

In the DMCA, Congress provided a series of safe harbors for network service providers. The term “safe harbor” is a nautical metaphor, indicating a place where a ship will be safe from stormy weather. But as in the case of a ship, being outside a safe harbor does not mean that you are in danger. It just means that your safety is not assured. Each DMCA safe harbor substantially limits the liability for copyright infringement. Each is separate, and if you fall within any one, your liability is limited. And even if you don’t meet the requirements of one of the safe harbors, that is not an indication that you are infringing a copyright. Other defenses, such as fair use, still remain available.

The four safe harbors provided by Congress, in the following subsections of Section 512, are:

(a)   Transitory digital network communications

(b)   System caching

(c)   Information residing on systems or networks at the direction of users

(d)   Information location tools

Each of these safe harbors represent a particular aspect of the normal operation of the Internet that Congress wanted to protect and promote, albeit with some limitations. Each has a set of particular conditions, all of which must be met to enjoy the protection of that safe harbor. You don’t get to pick and choose from the different safe harbors to create a new one. Each safe harbor addresses a different aspect of potential copyright liability, and meeting the conditions of any one is sufficient to receive protection for the acts included in that safe harbor, even if the same act would not meet the requirements of another safe harbor.

Just because a service provider does not qualify for any of the safe harbors does not mean that it might not have a defense to a charge of copyright infringement. Subsection (l) makes it clear that the safe harbors are not intended to list all defenses, nor is conduct outside the safe harbors an indication that the service provider must be infringing.

The failure of a service provider’s conduct to qualify for limitation of liability under this section shall not bear adversely upon the consideration of a defense by the service provider that the service provider’s conduct is not infringing under this title or any other defense.

Even though the DMCA became law in 1998, there have been very few court cases that interpret its language. Until there are more cases, the best guidance can be found in the congressional reports that accompanied its passage.

Benefits of Being in the Safe Harbor

Each of the safe harbors begins the same way:

A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of [the particular act covered by the safe harbor].

The safe harbors don’t say that an act by a service provider is not an infringement, like the many exceptions to the exclusive rights of a copyright owner that are detailed starting with Section 107. Instead, they go to the penalties against a service provider for any infringement. A service provider can still be found to have infringed a copyright, even within the safe harbor. Congress was concerned that it might be difficult to get an injunction against a service provider when that service provider was not an infringer.

Congress felt that it was important for a court to be able to order a service provider to help in stopping an ongoing infringement. But the scope of such an injunction is limited by subsection (j). When a service provider is acting as a “mere conduit” carrying the communications of others, and meets all the conditions of Subsection (a), a court can grant injunctions only in one or both of the following forms:

(i) An order restraining the service provider from providing access to a subscriber or account holder of the service provider’s system or network who is using the provider’s service to engage in infringing activity and is identified in the order, by terminating the accounts of the subscriber or account holder that are specified in the order.

(ii) An order restraining the service provider from providing access, by taking reasonable steps specified in the order to block access, to a specific, identified, online location outside the United States.

For all the other safe harbors, the following injunctive relief is available:

(i) An order restraining the service provider from providing access to infringing material or activity residing at a particular online site on the provider’s system or network.

(ii) An order restraining the service provider from providing access to a subscriber or account holder of the service provider’s system or network who is engaging in infringing activity and is identified in the order, by terminating the accounts of the subscriber or account holder that are specified in the order.

(iii) Such other injunctive relief as the court may consider necessary to prevent or restrain infringement of copyrighted material specified in the order of the court at a particular online location, if such relief is the least burdensome to the service provider among the forms of relief comparably effective for that purpose.

Congress was concerned that injunctions not become burdensome for service providers, and it indicated a number of factors to be considered by a court when deciding whether to grant an injunction and in determining its scope:

(A) whether such an injunction, either alone or in combination with other such injunctions issued against the same service provider under this subsection, would significantly burden either the provider or the operation of the provider’s system or network;

(B) the magnitude of the harm likely to be suffered by the copyright owner in the digital network environment if steps are not taken to prevent or restrain the infringement;

(C) whether implementation of such an injunction would be technically feasible and effective, and would not interfere with access to noninfringing material at other online locations; and

(D) whether other less burdensome and comparably effective means of preventing or restraining access to the infringing material are available.

Finally, Congress made it clear that injunctions were not to be granted without proper notice to a service provider, so that the service provider can determine the true nature of any alleged infringement and contest the issuance of an injunction, except under very exceptional circumstances.

Injunctive relief under this subsection shall be available only after notice to the service provider and an opportunity for the service provider to appear are provided, except for orders ensuring the preservation of evidence or other orders having no material adverse effect on the operation of the service provider’s communications network.

Siems, M. M., & De Cesari, A. (2012). The law and finance of share repurchases in Europe. Journal of Corporate Law Studies, 12(1), 33-57.

Nimmer, D. (2000). A riff on fair use in the Digital Millennium Copyright Act. University of Pennsylvania Law Review, 148(3), 673-742.