DMCA (Digital Millennium Copyright Act)

A 1998 U.S. federal statute that implements international copyright treaties, creates safe harbors for online service providers from secondary liability for user-generated infringing content, and establishes anti-circumvention prohibitions on bypassing digital rights management technologies. The DMCA's Section 512 safe harbor is the most litigated provision in copyright litigation finance — online platforms routinely assert it as a defense, and litigation turns on whether the platform had actual or red flag knowledge of infringement and whether it exercised control over and received a direct financial benefit from infringing content. Funders evaluating copyright cases against platforms must assess whether the defendant satisfies safe harbor requirements, because safe harbor eligibility can eliminate damages liability entirely. DMCA anti-circumvention claims under Section 1201 are separately valuable in software and digital media IP cases where the copyrighted work is protected by technological controls.

Section 512 safe harbor eligibility is a threshold underwriting question for any claim against a platform defendant — if the platform can show it lacked actual or red-flag knowledge and did not receive a direct financial benefit tied to control over the infringing content, safe harbor can eliminate damages liability entirely regardless of the underlying infringement's strength. Funders therefore diligence the platform's takedown-notice history and content-moderation practices as closely as the copyright ownership chain itself, since a strong safe-harbor defense can render an otherwise clean infringement case worthless.