Earlier this month, the 2nd U.S. Circuit Court of Appeals rendered what may be a crucial decision for the future of the Digital Millennium Copyright Act in Viacom vs. YouTube. While the decision sent much of the case back to the New York trial court for more litigation, many portions of the 2nd Circuit’s decision, concerning the knowledge required to find copyright infringement, may have profound consequences for useruploaded sites like tube sites and file lockers, and those whose content ends up on them.

The DMCA is a portion of the Copyright Act that Congress enacted to protect compliant sites from liability for copyright infringement committed by its users. It has allowed message boards, blogs and other user-generated content services to flourish. Whether many of these services comply with the DMCA, though, has been a subject of heated debate and litigation.

Most significantly in the Viacom decision, the 2nd Circuit vacated the U.S. Distict Court in New York’s 2010 order finding that YouTube needed to have item-specific actual knowledge of infringement in order to have the “right and ability” to control infringing content.

By holding that less than item-specific knowledge of infringement could make a site operator liable for copyright infringement, the 2nd Circuit opened the door for site operators who generally know that infringement occurs on their site, but do not know specifically what files are infringing, to be held liable for copyright infringement.

However, the 2nd Circuit also signaled that site operators will need to have some knowledge of infringement to be held liable for infringement, even if it is not item-specific knowledge.

The court disagreed with Viacom’s argument that the “right and ability” to control infringing material under the DMCA was continuous with the common law definition of the term, which requires only the literal right and ability to control infringing content.

Instead, the appeals court found that the “right and ability” to control infringing material under the DMCA requires more than the mere ability to remove or block access to materials on the defendant’s website.

It is unclear how much circumstantial knowledge of infringement above and beyond the bare right and ability to control infringing content – often referred to as “red flag knowledge” – will be required for site operators to be liable for copyright infringement. All that is known at this point, though, is that it will not require item-specific knowledge.

The 2nd Circuit declined to define what level of knowledge is needed, leaving the issue to be determined by the U.S. Distict Court in New York.

The 2nd Circuit clarified two other issues that are of particular concern to tube site operators and rights holders who may wish to sue them. The court found YouTube’s repeat infringer policy and other software tools used to avoid the posting of infringing content, such as content fingerprinting technology, were not sufficient to strip the site of its DMCA protections.

The DMCA conditions its protections on sites having and implementing a repeat infringer termination policy, so that serial copyright infringers are banished from the service. Because the 2nd Circuit remanded a substantial portion of the case to the U.S. Distict Court in New York, the Viacom case is still far from done.

For the time being, however, one of the leading decisions suggesting that user-generated content service operators could not be liable for copyright infringement without item-specific knowledge of infringement has been vacated.

Although the trend for tube sites over the last several years has been to comply with the DMCA and license content, the standard for complying with the DMCA will likely increase with this decision.

Simultaneously, content owners who seek to hold sites liable for infringement may have a means to do so if they can show service operators had some knowledge of infringement — even if it was not item-specific.