Vimeo’s Second Circuit DMCA Safe Harbor Win Over Capitol Records
This is an important DMCA safe harbor opinion. It’s from the Second Circuit, an influential court, and it extends the Second Circuit’s 2012 key Viacom v. YouTube ruling in important ways. Still, the DMCA safe harbors remain defectively designed, and while this opinion fixes one flaw, it highlights some remaining ones.
Like YouTube, Vimeo runs a UGC video hosting site that has 31M videos. Like the UMG v. Veoh case, this case implicates the music on those videos, ranging from background music to “lip dubs.” Although Vimeo would screen videos for certain attributes, it did not screen the music part of the videos. Vimeo expeditiously responded to three takedown notices from the plaintiffs, but “Plaintiffs did not send takedown notices regarding the videos involved in this suit.” (Why? WHY? WWWWHHHYYY?)
The court made three principal rulings, all of which should benefit Section 512 defendants:
1) The Section 512 safe harbors apply to both federal and state copyrights. As the court explains:
To construe § 512(c) as leaving service providers subject to liability under state copyright laws for postings by users of infringements of which the service providers were unaware would defeat the very purpose Congress sought to achieve in passing the statute. Service providers would be compelled either to incur heavy costs of monitoring every posting to be sure it did not contain infringing pre-1972 recordings, or incurring potentially crushing liabilities under state copyright laws….
Internet service providers that allow the public to post works on their sites would either need to incur enormous expenses to monitor all postings to ensure the absence of infringing material (contravening the provision of § 512(m) excusing them from such obligation), or would incur state-law-based liabilities for copyright infringement by reason of user-posted infringements of which they were unaware. The financial burdens in either case would be substantial and would likely either dissuade service providers from making large investments in the expansion of the growth and speed of the Internet (which Congress sought to encourage) or perhaps cause them to charge so much for the service as to undermine substantially the public usefulness of the service Congress undertook to promote.
Bingo. Indeed, I highlighted the lower court’s adverse ruling on state copyrights in my essay, How the DMCA’s Online Copyright Safe Harbor Failed. I hope this ruling will plug one of the major holes in 512 defenses, though it still conflicts with the Grooveshark ruling from the New York state courts. Will the persuasiveness of this opinion moot the Grooveshark ruling? Let’s hope so.
2) Vimeo did not have red flags of infringement. In Viacom, the Second Circuit said that for a service provider to have red flags of infringement, “the service provider must have actually known facts that would make the specific infringement claimed objectively obvious to a reasonable person.” The court now explains this “reasonable person” has no special expertise in music or copyright law. As a result:
The mere fact that an employee of the service provider has viewed a video posted by a user (absent specific information regarding how much of the video the employee saw or the reason for which it was viewed), and that the video contains all or nearly all of a copyrighted song that is “recognizable,” would be insufficient for many reasons to make infringement obvious to an ordinary reasonable person, who is not an expert in music or the law of copyright.
It’s also irrelevant if the service provider’s employee commented on a user’s video item, “liked” it or categorized it.
The court adds that if a service provider makes the prima facie showing of its eligibility for the safe harbor, the copyright owners bear the evidentiary burden of disqualifying the service provider from the safe harbor. However, the “copyright owner is entitled to discovery in order to obtain the specific evidence it needs to sustain its burden of showing that the service provider did in fact know of the infringement or of facts that made infringement obvious.”
The court tries to articulate the differences between “actual knowledge” and “red flags” knowledge:
If the facts actually known by an employee of the service provider make infringement obvious, the service provider cannot escape liability through the mechanism of the safe harbor on the ground that the person with knowledge of those facts never thought of the obvious significance of what she knew in relation to infringement. Plaintiffs further argue that this understanding of red flag knowledge reduces it to a very small category. Assuming this is so, it is of no significance.
The Second Circuit remands the case to the district court to reconsider the red flags question, but with a major thumb on the scale:
Vimeo is entitled to summary judgment on those videos as to the red flag knowledge issue, unless plaintiffs can point to evidence sufficient to carry their burden of proving that Vimeo personnel either knew the video was infringing or knew facts making that conclusion obvious to an ordinary person who had no specialized knowledge of music or the laws of copyright.
3) Vimeo did not have “willful blindness.” I still don’t know what the term “willful blindness” means in the DMCA context. The term isn’t used in the statute, and the Second Circuit’s Viacom ruling added the concept without defining it. The Second Circuit still isn’t ready to unveil a definition that mortals can understand, but this ruling helps a bit by saying more about what isn’t willful blindness.
First, the fact Vimeo screened the visual parts of the video doesn’t create willful blindness for audio:
§ 512(m) relieves the service provider of obligation to monitor for infringements posted by users on its website. We see no reason why Vimeo’s voluntary undertaking to monitor videos for infringement of visual material should deprive it of the statutory privilege not to monitor for infringement of music.
Second, it’s not willful blindness for Vimeo to fail to investigate videos “merely because the service provider learns facts raising a suspicion of infringement (as opposed to facts making infringement obvious). The court explains:
If service providers were compelled constantly to take stock of all information their employees may have acquired that might suggest the presence of infringements in user postings, and to undertake monitoring investigations whenever some level of suspicion was surpassed, these obligations would largely undo the value of § 512(m).
Third, willful blindness cannot be generated from a few anecdotes of employees’ activities. Thus:
The evidence cited to us by Plaintiffs, consisting of a handful of sporadic instances (amongst the millions of posted videos) in which Vimeo employees inappropriately encouraged users to post videos that infringed music cannot support a finding of the sort of generalized encouragement of infringement supposed by their legal theory. It therefore cannot suffice to justify stripping Vimeo completely of the protection of § 512(m).
This opinion helpfully supplements the Viacom v. YouTube ruling by filling in some of the obvious gaps left open by the prior opinion, such as the murky boundaries of “red flags” knowledge and willful blindness. Unfortunately, the Second Circuit guaranteed it would need to revisit the safe harbor to fix the holes in its Viacom opinion; and the new ambiguities from this opinion will necessitate further clarifications from the Second Circuit in future opinions. Circle of life, etc.
Overall, the opinion sends a clear message to copyright owners: STOP IT WITH THE TENDENTIOUS ANECDOTES. Finding “gotcha” anecdotes has been a preferred trick of copyright owners in DMCA litigation, and this opinion shows little patience for that game. The subtext is equally clear: the copyright owners could have just sent takedown notices and avoided the lawsuit altogether, but of course that was never the copyright owners’ plan. Instead, they wanted to use it as another test case to overturn 512(c)’s notice-and-takedown judicially, and the effort failed. So this ruling reiterates the message all along: Copyright owners should send takedown notices or quityerbeefin.
As a result, I’m going to call this opinion a net win. However, I need to highlight some of the bad news.
First, as is typical for DMCA safe harbor rulings, this is a long opinion (55 pages). That usually means two things: (1) it was an expensive win for the defense, and (2) there are enough stray words in the opinion for copyright owners to tendentiously stir up more trouble in the next wave of DMCA litigation.
Second, as is typical for kill-a-technological-niche DMCA safe harbor litigation, this case has dragged on for 7 years. As we know, most defendants can’t afford to fight in court that long, and most investors aren’t thrilled to see tens of millions of dollars of their investment dollars going to litigation just to validate the business’ legitimacy. Think about it this way: would you invest in a revolutionary new UGC online video service to leapfrog YouTube and Vimeo? Yes, but only if you can make a good investment return after you set aside the first $100M+ for the inevitable litigation.
Third, this case further endorses copyright owners’ overreaching and expensive discovery requests. Remember the court says the “copyright owner is entitled to discovery in order to obtain the specific evidence it needs to sustain its burden of showing that the service provider did in fact know of the infringement or of facts that made infringement obvious.” Although this opinion demarcates some irrelevant lines of inquiry, the shapelessness of the “red flags” doctrine will continue to embolden copyright owners to make some aggressive discovery demands. Thus, this opinion will contribute to the ongoing dilemma that DMCA safe harbor litigation takes too long and costs too much to help any start-ups that deep-pocketed copyright owners choose to target for destruction.
Case citation: Capitol Records, LLC v. Vimeo, LLC, 2016 WL 3349368 (2d Cir. June 16, 2016)