Universal sued for sending takedown notices maliciously?

[Thorin]

So this woman Stephanie Lenz records a 29 second home video of her toddler dancing to a Prince song and posts it on YouTube.  Four months later Universal, the corporation responsible for protecting the copyright of said song, sends a takedown notice to YouTube claiming it may be infringing.  Lenz counter-notifies YouTube, stating that the video is clearly fair-use.

It takes six weeks for YouTube to make the video available again.  Lenz is a bit pissed, and decides to sue Universal for interfering with her free speech when it sent a takedown notice for content that they should have known was fair-use.  Well, apparently the DMCA has a section that allows for suing under such a condition.  That is, if a copyright owner knows that their complaint of copyright infringement is baseless and they still send a takedown notice, they can be sued for mucho moola.

Since the video is still available on YouTube and Universal has made no further attempt at sending a takedown notice for it, I'm guessing they've realized it is indeed covered by fair-use.  So the question remains, was this a malicious takedown notice that should never have been sent?

Well, if you have an hour or more read all the legal text thus far here (CowGirl, you like reading legal texts, right?  I dare ya!):

http://www.eff.org/cases/lenz-v-universal

I promise you you'll be shaking your head when they start debating whether the word "knew" means that they had actual knowledge...  Keep in mind, too, that Universal is really only trying to avoid being fined for sending a takedown notice for a non-infringing use of a song it administers the copyright for.  Seems to me like they basically paid some young kid to do some searches on YouTube for song titles and happened to hit this one, and the kid didn't know the difference between fair-use and infringement.

If the EFF succeeds in this case, companies like Universal will have to spend time and money training the people they use to actively search for copyright infringement.  That makes me happy, because any time they have to actually *think* about whether something infringes copyright *before* they take action we as consumers win.  I've got no problem with them going after actual copyright infringers, but I hate when they try to strong-arm people with legal bullying.

[Tom]

I think these companies will just try to get fair-use abolished first. They are actually trying.

[Mr. Analog]

If they changed "fair use" policy to be fully exclusive to the copyright holder, the internet would be a much smaller place (Fan sites? GONE! Reviews? CRIPPLED! Mango chutney? DELICIOUS!)

[Darren Dirt]

It depends on what the meaning of "is" is...

Legalese, gotta lovehate it.