OSPs may qualify for one or more of the Section 512 safe harbors under § 512(a)-(d), for immunity from copyright liability stemming from: transmitting,[4] caching,[5] storing,[6] or linking[7] to infringing material.
An OSP who complies with the requirements for a given safe harbor is not liable for money damages, but may still be ordered by a court to perform specific actions such as disabling access to infringing material.
Taken as a whole, OCILLA's passage represented a victory for telecom and Internet related industry groups over powerful copyright interests who had wanted service providers to be held strictly liable for the acts of their users.
Conversely, in Ellison v. Robertson,[11] the court held that AOL did not receive a direct financial benefit when a user stored infringing material on its server because the copyrighted work did not "draw" new customers.
It is clear from the statute and legislative history that an OSP has no duty to monitor its service or affirmatively seek infringing material on its system.
Instead of making a complex legal determination, OCILLA allows OSPs to avoid liability provided they comply with the terms of the statute, regardless of the validity of any claim of infringement.
If a notice which substantially complies with these requirements is received the OSP must expeditiously remove or disable access to the allegedly infringing material.
[14] So long as the notice substantially complies with clauses (ii), (iii), and (iv) the OSP must seek clarification of any unclear aspects.
[21] It may be prudent, though it is not required by the provisions of section 512 of the copyright law, to include the designated agent information on the page the legal link goes to, in addition to any other places where it is available.
The second way that an OSP can be put on notice that its system contains infringing material, for purposes of section 512(d), is referred to the "red flag" test.
[12] The "red flag" test stems from the language in the statute that requires that an OSP not be "aware of facts or circumstances from which infringing activity is apparent.
Even if a removal is found not to be "expeditious" within the meaning of the law and the so-called "safe harbor" under the DMCA is lost, in certain circumstances, the OSP may still be protected.
Through these two laws there are ways to balance the ISP's intent to assist with the protection of third-party copyright and the desire to preserve good customer relations.
The key difference in scope between this section, transitory network communications under 512(a), and caches, websites and search engine indexes under 512(b), 512(c) and 512(d) respectively, relates to the location of the infringing material.
If the cached material is made available to end users, the system provider must follow the Section 512(c) takedown and put back provisions.
Section 512(e) protects nonprofit educational institutions from liability for the actions of faculty and graduate student employees who place infringing material online.
This provision has been used in cases such as Online Policy Group v. Diebold, Inc.,[23] where an electronic voting technology firm was sanctioned for knowingly issuing meritless notices of infringement to ISPs, and more recently Lenz v. Universal, 801 F.3d 1126 (2015).
On 20 December 2003, the DSL ISP Verizon prevailed on appeal in its case seeking to prevent the use of this section for transitory network communications, the decision reversing a court order to supply customer details.
[26] The appeal decision accepted the argument that the key distinction was the location of the files, with this section applying only when the material is stored on equipment controlled by the OSP.
They began suing multiple "Doe" defendants at a time and issuing third-party discovery subpoenas to ISPs for the customer details.
On 6 October 2003 Charter Communications became the first cable Internet provider to challenge the RIAA use of this provision,[27] when it filed for a motion to quash the subpoenas to obtain the identities of 150 of its customers.
ISPs have incentive to cooperate with copyright holders and terminate the accounts of repeat infringers on pain of forfeiting the safe harbor created by OCILLA.
At the same time, copyright holders are deterred from improperly sending out notices by provisions that make them liable for resulting damages, and also by bad publicity.
This allows for copyright holders to send out take-down notices without incurring much liability; to get the content back up, the recipients need to expend considerably more resources.
Section 512(f) makes the sender of an invalid claim liable for the damages resulting from the content's improper removal, including legal fees, but that remedy is not always practical.
There have been recent claims[40] that the DMCA-embedded concepts of direct financial benefit, interference with standard technical measures, and the legislative red flag test for identifying infringing material are significantly challenged by the explosion of user-generated content unleashed by Web 2.0 technologies.
Web 2.0 has enhanced the ease of access to copyrighted works by introducing new and alternative electronic platforms in which information can be shared publicly.
[41] Recognizing the challenge that Web 2.0 presents, many OSPs have implemented programs that automatically scan every upload for potential infringing activity.
[42] The European Union's Electronic Commerce directive, Article 14, contains limited liability provisions for online hosts which provide the legal basis for notice and takedown in the EU.
France's Digital Economy Law ("Loi relative à l'économie numérique") is an example of an implementation of this directive, as is Finland's "Laki tietoyhteiskunnan palvelujen tarjoamisesta."