• by Wendy Davis  @wendyndavis, January 25, 2013

A 6-year-old dispute between Universal Music and a mother who posted a clip of her toddler dancing to a Prince song will proceed to trial, a federal judge ruled on Thursday.

The battle centers on a takedown notice sent to YouTube by Universal. The music company initially claimed that the 29-second clip, which was uploaded by Stephanie Lenz and featured her 13-month-old dancing to "Let's Go Crazy," infringed copyright. Lenz countered that the short video was protected by fair use principles. Google agreed and eventually restored the clip.

Lenz subsequently sued Universal, arguing that Digital Millennium Copyright Act imposes liability when companies send improper takedown notices. On Thursday, U.S. District Court Judge Jeremy Fogel in San Jose, Calif. ruled that the case presented factual issues that can only be decided by a trial. But the decision also curbed the amount of damages that Lenz can potentially recover.

One of the key issues for trial will turn on whether Universal acted in bad faith for sending a takedown notice without first considering whether the clip was protected by fair use. Lenz argues in the affirmative. She says that Universal's failure to consider fair use amounts to "willful blindness."

Universal says the evidence already brought to light shows that the company did not act in bad faith.

Fogel said the question needs to be resolved at a trial. "Lenz is free to argue that a reasonable actor in Universal’s position would have understood that fair use was 'self-evident,' and that this circumstance is evidence of Universal’s alleged willful blindness," Fogel wrote. "Universal likewise is free to argue that whatever the alleged shortcomings of its review process might have been, it did not act with [bad faith]."

But Fogel also said that even if Lenz wins, the damages she can recover will be very low -- possibly no more than around $1,300, which represents reimbursement for legal bills related to fighting the original takedown notice. (The Electronic Frontier Foundation is representing Lenz for free, but Fogel says the group might still be entitled to recover legal fees for the time it spent countering the DMCA notice.)

Fogel specifically rejected Lenz's theory that she was entitled to damages because her "freedom to express herself through video had been restricted." Fogel ruled that people can only recover damages when the government -- not a private company -- acts in a way that chills free speech.

That portion of the decision makes it unlikely that other Web users will file lawsuits against content owners for sending improper takedown notices, says Santa Clara University law professor Eric Goldman. "If someone could show harm from having a video taken down, it might be worth it to consider suing," he says. "But those cases are going to be rare -- really rare."