Lenz v. Universal Music Corp., 801 F.3d 1126 (2015), is a decision by the United States Court of Appeals for the Ninth Circuit, affirming the 2008 ruling of the US District Court for the Northern District of California, holding that copyright holders must consider fair use in good faith before issuing a takedown notice for content posted on the Internet.
Stephanie Lenz posted on YouTube a home video of her children dancing to Prince's song "Let's Go Crazy". Universal Music Corporation (Universal) sent YouTube a takedown notice pursuant to the Digital Millennium Copyright Act (DMCA) claiming that Lenz's video violated their copyright in the "Let's Go Crazy" song.
Lenz claimed fair use of the copyrighted material and sued Universal for misrepresentation of a DMCA claim. In a decision rejecting a motion to dismiss the misrepresentation claim, the district court held that Universal must consider fair use when filing a takedown notice, but noted that to prevail a plaintiff would need to show bad faith by a rights holder.
In February 2007, Stephanie Lenz posted on YouTube a twenty nine second clip, of her 13 month old son dancing to Prince's song "Let's Go Crazy". The audio was of poor quality, and the song was audible for about twenty seconds of the twenty nine seconds. In June 2007, Universal, the copyright holder for "Let's Go Crazy", sent YouTube a takedown notice in compliance with DMCA requirements, claiming the video was a copyright violation. YouTube removed the video, and notified Lenz of the removal and the alleged infringement.
In late June 2007, Lenz sent YouTube a counter-notification, claiming fair use and requesting the video be reposted. Six weeks later, YouTube reposted the video. In July 2007, Lenz sued Universal for misrepresentation under the DMCA, and sought a declaration from the court that her use of the copyrighted song was non infringing.
According to the DMCA 17 U.S.C. § 512(c)(3)(A)(v), the copyright holder must consider whether use of the material was allowed by the copyright owner or the law. In September 2007, Prince released statements that he intended to "reclaim his art on the internet". In October 2007, Universal released a statement that Prince and Universal intended to remove all user-generated content involving Prince from the Internet, as a matter of principle.
Based on Prince's and Universal's statements, Lenz argued that Universal was issuing takedown notices in bad faith, as they attempted to remove all Prince related content rather than considering whether each posting violated copyright, and in particular was a non infringing "fair use." Universal expressed concerns over the fact intensive investigation and subjective results of determining whether a potentially infringing use falls under the general "fair use" doctrine.
The district court held that copyright owners must consider fair use before issuing DMCA takedown notices. Thus, the district court denied Universal's motion to dismiss Lenz's claims, and declined to dismiss Lenz's misrepresentation claim as a matter of law. The district court believed that Universal's concerns over the burden of considering fair use were overstated, as mere good faith consideration of fair use, not necessarily an in depth investigation, is sufficient defense against misrepresentation.
The court also explained that liability for misrepresentation is crucial in an important part of the balance in the DMCA. On February 25, 2010, Judge Fogel issued a ruling rejecting several of Universal's affirmative defenses, including the defense that Lenz suffered no damages, though the court did suggest that at that stage in the proceedings, Lenz's damages seemed nominal.
Both parties cross appealed to the Ninth Circuit Court of Appeals. Oral argument was held July 7, 2015. On September 14, 2015, the 9th Circuit affirmed the District Court, holding that while fair use arises procedurally as an affirmative defense, copyright holders have a "duty to consider — in good faith and prior to sending a takedown notification—whether allegedly infringing material constitutes fair use". 
Importantly, the court viewed fair use not as a valid excuse to otherwise infringing conduct but rather as not infringement in the first place. "Because 17 U.S.C. § 107 created a type of non-infringing use, fair use is 'authorized by the law' and a copyright holder must consider the existence of fair use before sending a takedown notification under § 512(c)."
Lenz appealed to the US Supreme Court asking the question:
Whether the Ninth Circuit erred in concluding that the affirmation of good faith belief that a given use of material use is not authorized “by the copyright owner, its agent, or the law,” required under Section 512(c) of the Digital Millennium Copyright Act (“DMCA”), may be purely subjective and, therefore, that an unreasonable belief—such as a belief formed without consideration of the statutory fair use factors—will not subject the sender of a takedown notice to liability under Section 512(f) of the DMCA?
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