The Ninth Circuit Court of Appeals on Monday ruled that copyright holders must consider fair use before demanding companies such as YouTube remove potentially infringing content.

The three-judge panel on the court determined Stephanie Lenz, who posted a YouTube video of her child dancing to a Prince song in 2007, could proceed with her lawsuit seeking damages from Universal Music Corp., which pressed YouTube to remove the video under the Digital Millennium Copyright Act (DMCA).

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“We hold that the statute requires copyright holders to consider fair use before sending a takedown notification, and that failure to do so raises a triable issue as to whether the copyright holder formed a subjective good faith belief that the use was not authorized by law,” according to the majority opinion.

The video was eventually restored, but Lenz is seeking damages with help from the Electronic Frontier Foundation.

The ruling is an early victory for advocates who argue music and movie publishers are too quick to allege infringement when requesting that Web companies — like YouTube or Twitter — remove copyrighted content.

Even presidential candidates have been the victims of hasty takedown notices, with Sen. Rand Paul Randal (Rand) Howard PaulSecond GOP senator to quarantine after exposure to coronavirus GOP senator to quarantine after coronavirus exposure The Hill's Morning Report - Sponsored by National Industries for the Blind - Trump seeks to flip 'Rage' narrative; Dems block COVID-19 bill MORE’s (R-Ky.) presidential announcement video being briefly removed earlier this year because it contained John Rich’s song, “Shuttin' Down Detroit.”

The DMCA relieves online companies of liability for content their users post. But the law also requires that those online companies react quickly when artists and other copyright holders identify infringing material and ask for it to be removed.

Fair use, however, provides a large exception for otherwise copyrighted work. Copyrighted work can generally be used without infringing if it is being used for criticism, comment, reporting, teaching or research.

The court on Monday ruled copyright holders must have a good faith belief that content they ask to be removed does not fall under the fair use exception. Otherwise, they can be liable for damages.

“To be clear, if a copyright holder ignores or neglects our unequivocal holding that it must consider fair use before sending a takedown notification, it is liable for damages,” the court ruled.

The court added: “A copyright holder who pays lip service to the consideration of fair use by claiming it formed a good faith belief when there is evidence to the contrary is still subject to … liability.”

The facts of the case do not reflect the current takedown process. At the time, Universal had an employee monitor YouTube each day to spot infringing content and ask that it be removed.

With the mountains of new content posted online each day, that model became ineffective. Major movie and music publishers have moved to computer programs that search for potentially infringing content. But it is unclear how fair use is analyzed — if at all — with those programs.

Without making a precedent setting ruling, the court found that “the implementation of computer algorithms appears to be a valid and good faith middle ground for processing a plethora of content while still meeting the DMCA’s requirements to somehow consider fair use.”

It speculated about a model in which a company sets up a computer program to send automatic takedown notices for content it identifies as nearly identical to copyrighted work, while a backup process uses humans to manually review other content that the computer program identified with less certainty.