Laszlo Balogh / REUTERS U.S. musician Prince performs on the main stage during Budapest's Sziget music festival on an island in the Danube River August 9, 2011.

Remember the Pennsylvania Mom who posted a 29-second home movie of her toddler dancing to Prince’s “Let’s Go Crazy,” prompting the purple-hued pop star’s record label to demand that YouTube take down the video? That was in 2007. Now, six years later, the legal battle ignited by a 13-month-old with a penchant for His Royal Badness is approaching a critical juncture, in a case with important ramifications for copyright law and the nation’s largest Internet and entertainment companies.

When Universal Music demanded that YouTube remove the clip, the Google-owned video giant complied, but Stephanie Lenz, whose son Holden was the star of the video, decided to fight back. With the help of the Electronic Frontier Foundation, a San Francisco digital rights group, Lenz sued Universal Music for misrepresentation of copyright claims under the Digital Millennium Copyright Act, a 1998 law that defined the intellectual property rights and limits of companies in the Internet age.

The fundamental issue presented by the case is whether Internet users — from homemakers like Lenz, to artists, scholars, journalists and political activists — have any meaningful remedy for, and protection against, wrongful claims of copyright infringement. The legal dispute sparked by a pajama-clad toddler who loved Prince has become a closely watched test case of copyright law. The verdict could help crack down on the increasingly rampant abuse of takedown notices to suppress online criticism, stifle dissent, and violate free speech rights.

Lenz argued that her video (see below) was protected by the “fair use” principle of copyright law, and said that Universal Music’s actions harmed her financially and violated her First Amendment rights. Since then the case has wound its way through the legal system, with both Lenz and Universal Music arguing for summary judgment. After a federal judge in California said that the case could only be decided by a trial, both Lenz and Universal Music appealed to the United States Court of Appeals for the Ninth Circuit, which is preparing to hear the case.

Universal Music disputes Lenz’s assertion that she was harmed financially by the takedown notice, and argues that she has produced no evidence that the record label knowingly misrepresented its copyright claim. Lenz argues that Universal Music should have considered whether her video was protected by the “fair use” principle, but the record label disputes that such a requirement exists in the DMCA. Finally, Universal Music argues that Lenz has produced no evidence supporting her claim that the record label was “willfully blind” to “fair use” as it pertained to her video.

(MORE: How Google Beat Viacom in the Landmark YouTube Copyright Case — Again)

Lenz has some powerful allies. On Friday, lawyers for Google, Twitter, Tumblr and Automattic, the maker of the popular WordPress publishing platform used by TIME and other news websites, filed a friend of the court brief supporting Lenz. As online service providers (OSPs), these companies are very familiar with copyright takedown notices. They are protected by the “safe harbor” provisions of the DMCA, which limits the liability of websites if they remove content when notified of possible copyright violations. According to the DMCA, safe harbor protection applies if an online service provider “responds expeditiously to remove, or disable access to, the material that is claimed to be infringing.”

In recent years, abusive and unfounded copyright takedown notices have spread like a virus, wasting human and financial resources that could be put to more productive uses. For example, in August, a member of the group “Straight Pride UK” sent a takedown request to Automattic in order to suppress an interview published by a journalist on a WordPress blog that the interview subject himself had authorized, simply because the article included the individual’s own embarrassing words revealing homophobia. Automattic has sued the individual for misrepresentation of copyright claims.

In another case, a self-styled “poet” sent repeated takedown notices to Google aiming to suppress criticism and commentary at the respected news websites TechDirt and BoingBoing (among dozens of other websites) relating to the poet’s bizarre and unfounded online copyright enforcement campaign. The particulars of the now-infamous “Shaun Shane/On Press” affair are too ridiculous to explore in detail here, but suffice it to say, Google refused to remove the posts at TechDirt and BoingBoing. (Read more about the episode here. EFF has also assembled what it calls the “Takedown Hall of Shame,” detailing how such bogus notices are increasingly being used against journalists.)

“The Lenz decision will be very important, because it will set the legal standard for how all future cases having to do with abuse of DMCA takedown notices are judged,” says Marvin Ammori, a First Amendment lawyer who specializes in technology and wrote the brief filed by Google, Twitter, Tumblr and Automattic. “This will be a key precedent for all the cases that are brought in the Ninth Circuit. That’s important because California is home to Hollywood and many of the largest entertainment companies.”

Numerous other examples of improper takedown notices sent to online service providers can be found in the brief filed by the companies. “Abusive and unfounded takedown notices interfere with an OSP’s business, can silence valuable free expression, and can constitute harassment of an OSP’s users,” the companies wrote. “Some DMCA notices are obviously and facially indefensible, sent not to protect valid copyright interests, but instead to silence lawful speech.” The companies added: “Processing these abusive takedowns diverts resources from the OSPs’ more productive activities and can result in delays in processing for legitimate, good-faith takedown notices.”

(MORE: Google Books Vindicated by Federal Judge on Fair Use)

Congress anticipated bogus takedown notices when it passed the DMCA. That’s why lawmakers included language requiring that copyright holders who send takedown notice must have a “good faith belief” that the allegedly infringing material is not, in fact, authorized by law, including the “fair use” principle. Section 512(f) of the DMCA was “intended to deter knowingly false allegations to service providers in recognition that such misrepresentations are detrimental to rights holders, service providers, and Internet users.” The law provides that if a plaintiff prevails in a case about false copyright claims, he or she shall be entitled to “any damages, including costs and attorneys’ fees.”

But the deck is often stacked against the vast majority of Internet users, many of whom lack the time or financial resources to fight, or counter-notify, improper takedown requests. Some users are simply intimidated by the prospect of going to court, which requires a user to provide a real name, address, and telephone number, something that can be “problematic for anonymous bloggers and commenters engaged in critical political speech or whistleblowing,” the companies wrote. (Anonymous and pseudonymous political speech has a long and distinguished history in the United States.) “Not only can false takedown notices censor lawful speech, they can also lead to self-censorship in the future, discouraging critics who have already received such notices.”

Here’s where the case of Stephanie Lenz’s Prince-loving toddler Holden gets tricky. In refusing to grant summary judgement to either party and ruling that the matter could only be decided at trial, U.S. District Court Judge Jeremy Fogel concluded that liability for copyright misrepresentation relies on the “subjective,” rather than “objective,” intent of the copyright holder. Judge Fogel was relying on the precedent set by the 2004 case Rossi v. MPAA, in which the Ninth Circuit Court of Appeals ruled that “good faith belief” is a subjective standard. “A copyright owner cannot be liable simply because an unknowing mistake is made, even if the copyright owner acted unreasonably in making the mistake,” the court held in the Rossi case. “Rather, there must be a demonstration of some actual knowledge of misrepresentation on the part of the copyright owner.”

This is the crux of the argument presented by Google, Twitter, Tumblr and Automattic in their friend of the court brief: The companies are arguing that an “objective” standard can and must be applied when determining whether a copyright holder is acting in “good faith” when sending a takedown request. Take the example of the “Straight Pride UK” member who tried to suppress an interview in which he expressed homophobic views to a journalist, simply because he found the article embarrassing after the fact. “If ‘good faith’ encompassed a purely subjective standard, then it may be possible for a copyright-holder to escape liability even while conceding to having an objectively unreasonable view of the facts or law,” the companies wrote.

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In arguing that an “objective” standard should be applied when determining “good faith” on the part of a copyright holder that issues a bogus takedown order, Google, Twitter, Tumblr, and Automattic are trying to bolster the deterrent effect of the DMCA in discouraging such abusive practices. “Requiring copyright holders to form an objectively reasonable good faith belief prior to sending a DMCA takedown notice would not impose an undue burden on copyright holders,” the companies wrote (emphasis in original). “An objective standard would only require that the ‘good faith belief’ regarding a potential fair use be a reasonable one.”

In other words, the courts should use an “objectively reasonable” standard when determining whether a copyright holder is acting in good faith. (In layman’s terms it’s called common sense.) Lenz argues that Universal Music should have known that her 13-month-old’s 29-second “Let’s Go Crazy” YouTube video did not violate copyright law because it was creative, noncommercial, transformative and brief — key legal criteria for “fair use” — and did not harm the market for Prince’s 1984 number-one smash hit. (If anything, the video, which had 1,260,092 plays as of this weekend, probably boosted sales of the song.)

Technology moves faster than law and regulation. Again and again, lawmakers, regulators, and judges face thorny challenges to federal statutes and legal rulings governing the Internet and intellectual property rights. The fair use doctrine of copyright law is now well-established, but ambiguity over the liability borne by parties that file bogus infringement claims, allows — and even encourages — unscrupulous, careless, or simply lazy actors to unjustly stifle Internet users who post legal speech online.

Congress intended for the DMCA to include a serious deterrent to help prevent abuse of the copyright takedown notice regime established by the law. Bogus copyright takedown notices are increasingly being used against news organizations and independent journalists, in an ominous development that threatens free speech online and wastes resources that could be put to more productive use. Holden Lenz isn’t even ten-years-old, but his case could establish an important legal precedent that helps reduce abuse of the U.S. copyright system and bolsters free speech protections.

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