• by Wendy Davis , Staff Writer @wendyndavis, September 15, 2015

Movie studios and record companies that discover clips of professional films or music online can no longer send takedown notices first and ask questions later.

That's according to the 9th Circuit Court of Appeals, which ruled this week that content owners can't send takedown notices without first considering whether clips make fair use of copyrighted material. Companies that fail to do so could be on the hook for damages, the court ruled.

"We are mindful of the pressing crush of voluminous infringing content that copyright holders face in a digital age," Circuit Judge Richard Tallman wrote in an opinion issued on Monday. "But that does not excuse a failure to comply with the procedures outlined by Congress."

The ruling came in a long-running lawsuit by "Dancing Baby" mother Stephanie Lenz against Universal Music.

In 2007, Lenz posted 29-second clip to YouTube of her toddler dancing while Prince's “Let's Go Crazy” played in the background. Universal, which hires people to scour YouTube for clips that potentially infringe copyright, promptly told Google that the clip was infringing and must come down.

YouTube removed the clip, but Lenz protested that the video was protected by fair use principles.

Google eventually agreed, and restored the video.

Lenz then sued Universal, arguing that the company shouldn't have demanded the material be removed. She says she's entitled to damages because the Digital Millennium Copyright Act imposes liability on anyone who knowingly sends a Web site an improper takedown notice.

Universal countered that it didn't knowingly send a false takedown request, and shouldn't have to pay Lenz anything -- especially given that her clip was restored.

This week, the 9th Circuit sided with Lenz on one of the key issues: The judges ruled that content owners can't send takedown requests without first considering whether clips make fair use of copyrighted material.

"Fair use ... is wholly authorized by the law," Circuit Judge Richard Tallman wrote. "A copyright holder must consider the existence of fair use before sending a takedown notification."

But the judges also somewhat softened the mandate by ruling that copyright owners need not make the right call about whether a clip is protected by fair use, as long as they consider the question.

"If ... a copyright holder forms a subjective good faith belief the allegedly infringing material does not constitute fair use, we are in no position to dispute the copyright holder’s belief even if we would have reached the opposite conclusion," Tallman wrote, adding that copyright owners need not consider the issue in a "searching or intensive" way.

The Electronic Frontier Foundation, which represented Lenz, suggests that the ruling could affect political candidates' online ads -- which sometimes incorporate copyrighted material like clips from TV news broadcasts.

“We will all watch a lot of online video and analysis of presidential candidates in the months to come," EFF attorney Corynne McSherry writes. "This ruling will help make sure that information remains uncensored.”