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"A music company’s demand that YouTube take down a 29-second home video of two children dancing to a song by Prince backfired Monday...in a 3-0 ruling that requires copyright-holders to consider fair use before sending a takedown notification. Those that fail to do so can be held liable for damages"

A music company's demand that YouTube take down a 29-second home video of two children dancing to a song by Prince backfired Monday when a federal appeals court used the case to make it harder for copyright-holders to act against brief, non-commercial uses of their material.

Recording companies, motion picture studios and other copyright owners issue numerous takedown notices each day, targeting everything from home videos to campaign ads that include segments of songs or newscasts. When a copyright-holder tells a website like YouTube that one of its postings violates the holder's exclusive rights to license the material, federal law requires that the posting be removed immediately.

But the Ninth U.S. Circuit Court of Appeals in San Francisco said the copyright-holder must first consider whether such a video amounts to "fair use" of the work, making it eligible to be legally posted. Fair use includes journalistic accounts and criticism, educational uses for teaching or research, and brief, private postings that don't damage the commercial market for the work.

The law "requires copyright-holders to consider fair use before sending a takedown notification," and those that fail to do so can be held liable for damages, said Judge Richard Tallman in the 3-0 ruling, the first on the issue by any appeals court.

The court upheld a decision by a federal judge in San Jose allowing Stephanie Lenz, who posted the video of her children, to go to trial against Universal Music Corp., which was hired to enforce Prince's copyrights. The company's takedown order kept Lenz's video off YouTube for about six weeks in 2007.

The ruling "sends a strong message that copyright law does not authorize thoughtless censorship of lawful speech," said Lenz's lawyer, Corynne McSherry of the Electronic Frontier Foundation in San Francisco.

"Congress gave copyright-holders extraordinary power to send an e-mail and take content offline," McSherry said. "With that kind of power comes responsibility to consider whether the posting was authorized."

Representatives of Universal Music Corp. could not be immediately reached for comment. Music and motion picture industry groups filed arguments supporting the company.

Lenz, who lives in Pennsylvania, posted the homemade video of her children dancing and bouncing in the kitchen to Prince's "Let's Go Crazy," playing on a home stereo, in February 2007. About four seconds in, she asks her 13-month-old son, "What do you think of the music?" and he bobs up and down while holding a push toy.

Universal had assigned a staffer to monitor YouTube for Prince's songs and send takedown notices for any postings that made what the company considered "significant use" of the material — anything longer than a one-second excerpt of a song that isn't drowned out by background noise. The staffer decided that "Let's Go Crazy" was the focus of Lenz's video, and Universal directed YouTube, owned by Google, to remove the posting.

YouTube took the video down in early June 2007 and restored it in mid-July after Lenz argued there were no grounds for the removal. Universal did not pursue a claim of copyright infringement, but Lenz sued the company under a law allowing damages for mistaken or wrongful denial of access to a posting or publication. Although she suffered little economic harm from the takedown, the winner of such a suit can often recover attorneys' fees and costs from the opposition.

Universal argued that it had complied with the law because it had a "good-faith belief" that the video violated Prince's copyright. But the appeals court said the law also requires a company to consider whether the posting amounted to fair use, an exception that allows the publication of copyrighted material.

Tallman's opinion said a jury should decide whether Universal considered fair use before sending its takedown notice. In a partial dissent, Judge Milan Smith said Universal clearly had not considered fair use, so the only issue before the jury should be whether the posting was legal under the fair-use exception.

To watch the video, go to: http://sfg.ly/1Obj8Wz .

Bob Egelko is a San Francisco Chronicle staff writer. E-mail: begelko@sfchronicle.com Twitter: @egelko

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