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Lawsuits are the Inevitable Cost of YouTube Success

Posted in Copyright Law, Cyberspace Law, Entertainment Law, Web/Tech

Whenever there is a report of a YouTube creator being sued for copyright infringement, the response from the creator and the community seems to be one of shock and surprise.  The truth is, successful YouTube content creators should not be surprised when they get sued for copyright infringement.  Any person or company that creates content professionally, whether that’s a television network, a motion picture studio or a YouTuber, is a likely target for a copyright lawsuit.  When I began representing Anthony Padilla and Ian Hecox of Smosh over 10 years ago, only a few people were making digital video content, even fewer understood what YouTube was, and the amount and types of revenue opportunities was nowhere near what it is today.  But today, there are so very many successful YouTube content creators with millions and millions of subscribers and the amount of money flowing through the digital first content genera is significant.   Like it or not, popular YouTube creators are just as much a target for infringement claims as a television network or movie studio.  If a creator is surprised or caught off guard when they receive a claim of infringement, it means they were not adequately advised and prepared for this eventuality.

The truth is that, for the most part, anyone can sue anyone.  As one of my first year law school professors explained, one of the basic elements of the American system of jurisprudence is the concept of the “American Rule” in which each party pays their own attorneys’ fees as opposed to the “English Rule” whereby the loser pays the winner’s attorneys’ fees.  While the American rule does enable the bringing of questionable claims, the founders of our judicial system believed that this risk was outweighed by making the courts available to all without the fear of financial ruin.Scott-Hervey-10-web

Another truth about the American civil judicial system is that lawyers are expensive.  While there are vastly different rates that certain lawyers may charge, good lawyers are expensive.  And since most lawyers charge by the hour, this makes lawsuits a costly endeavor.

So with the reality that content creators are a likely target for lawsuits, that it’s relatively easy to bring a lawsuit and that lawyers (and thus lawsuits) are expensive, what is a content creator to do?  Doing nothing to prepare for the eventual lawsuit is not it.  Content creators should take the risk of lawsuits into account when doing business and take steps to hedge against that potentiality.   Like all other media businesses, creators should consider making the following part of their general business practices.  The following isn’t exclusive, but it’s a good place to start.

The first step any content creator should take is to “clear” the rights to any other person appearing on camera and any third-party music, pictures, videos or other content.  This sounds more complicated that it is.  Clearing rights is accomplished by using a written agreement to secure whatever rights are necessary that will allow you to feature that person, music or clip in your video.  If you have people other than yourself appearing in your video, they should sign what’s known as an appearance release.  Similarly, if you use third-party music or other content, there are specific documents that are appropriate for those situations as well.

Granted there are certain times when a content creator can’t obtain permission to include third‑party content in a video.  In those situations, a creator may still be able to use the content if the use satisfies the judicial test established for fair use.  I strongly suggest that all creators have a working knowledge of fair use.  (A good place to start is the fair use presentation Rian Bosak and I give each year at VidCon.)  However, unless a creator is absolutely certain that what he/she is doing qualifies as fair use, it may be best to consult an expert.  When I was the attorney for YouTube Nation, fair use review took up a fair amount of my time.  Fair use is a complicated legal theory that is constantly in flux; even our federal courts sometimes can’t agree on what is and what is not fair use.

Any content creator that includes third-party music, third-party pictures or videos or third-party brands in their video or that reviews products or services should consider the benefits of a media liability insurance policy.  This is a type of Errors and Omissions (E&O) insurance policy and generally covers against copyright and trademark infringement claims, privacy claims, defamation claims and others.  The coverage provided by such a policy not only includes the damage award resulting from a covered claim, but also includes the cost to defend against such a claim.  And while it is true that a media liability policy may be expensive, the cost to pay lawyers to defend against a claim is way more expensive.

In addition, YouTubers should consider adopting some of the methods television networks and film studios use in their production of content.  I am not necessarily saying that creators would need to employ a full-blown production team, but implementing some of their practices could lessen the risks inherent with the production and distribution of content.  Making use of some standard production forms and having a relationship with a lawyer who is extremely familiar with copyright, fair use and production issues will go a long way towards preventing claims.

The high odds of being on the receiving end of a cease and desist letter or a complaint (which are much worse than a strike or a takedown) is the cost of success as a creator.  The smart bet is to prepare in advance so you are not caught off guard and doesn’t put your financial wellbeing in jeopardy.

*Scott Hervey represents top content creators, studios and production companies in a wide variety of matters including financing, acquisitions, production, clearance and general business matters. Scott’s clients include STX, DreamWorks/YouTube Nation, Pharrell Williams’ I am Other channel, Smosh, Sawyer Hartman and Nerdwriter. Scott previously served as the acting business affairs director for the publicly traded digital content company, Digital Music Group, Inc. (now The Orchard). Scott was featured in Variety’s Legal Impact Report and is a Super Lawyer®. Scott is a professor of entertainment law at King Hall law school, U.C, Davis and he serves on the board of directors of the Hollywood Radio and Television Society (HRTS).