In copyright infringement suit against user-generated video website Vimeo, Second Circuit holds that DMCA safe harbor protections apply to pre-1972 sound recordings, and that Vimeo is entitled to DMCA protections even though its employees viewed and “liked” videos containing copyrighted songs and encouraged specific infringements.

Plaintiffs, a group of record and music publishing companies, including Capitol Records LLC, Virgin Records America Inc., EMI Blackwood Music Inc. and various related entities, sued Vimeo LLC and Connected Ventures LLC (collectively, Vimeo) for direct and secondary copyright infringement. The suit was based on Vimeo’s video-sharing website’s hosting, without permission, of 199 videos containing music for which plaintiffs owned the copyrights. Vimeo moved for summary judgment based on the Digital Millennium Copyright Act’s safe harbor protections, which shield from liability online service providers that meet certain criteria. Plaintiffs cross-moved for summary judgment, arguing that Vimeo was ineligible for safe harbor protections.

In 2013, the district court held that the DMCA safe harbor does not apply to pre-1972 sound recordings, which are covered by state law but not federal copyright protection, granting plaintiffs’ motion as to 55 videos containing sound recordings made before 1972. The district court also held that questions of fact existed as to whether Vimeo had actual or “red flag” knowledge, and thus was not protected by the DMCA, with respect to infringing videos that its employees had viewed to some degree. Finally, the district court held that evidence that Vimeo’s employees had, on a few occasions, encouraged users to upload infringing videos was insufficient to show that Vimeo had “willfully blinded” itself to infringement on its website, and thus forfeited the protection of the DMCA.

Both parties appealed. The interlocutory appeal focused on three issues: 1) whether the safe harbor of Section 512(c) of the Copyright Act applies to pre-1972 sound recordings; 2) whether evidence of some viewing by Vimeo employees of videos that contained all or virtually all of “recognizable” copyrighted songs was sufficient to satisfy the standard of red flag knowledge, which would make Vimeo ineligible for the DMCA safe harbor; and 3) whether plaintiffs had shown that Vimeo had a general policy of willful blindness to copyright infringement on its system, which would justify imputing to Vimeo knowledge of the specific infringements.

Becoming the first federal appeals court to decide the issue, the Second Circuit concluded that the DMCA safe harbors protect online service providers like Vimeo from liability for pre-1972 sound recordings, even though those recordings are protected by state, and not federal, copyright law. The Second Circuit explained that a contrary decision would compel service providers 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,” which ran contrary to the policy of Congress in passing the DMCA of protecting service providers from liability for infringements that occur in their systems without their knowledge, in order to encourage the development of new and faster internet services.

In reaching this conclusion, the Second Circuit disagreed with the position taken by the U.S. Copyright Office in a 2011 report that the safe harbor does not protect against liability for infringement of pre-1972 sound recordings. The court explained that the report’s interpretation of Section 512(c) “is based in major part on a misreading of the statute” because the DMCA safe harbor protection against “infringement of copyright” was not limited to copyrights protected by federal law.

The Second Circuit also vacated the lower court’s denial of Vimeo’s motion for summary judgment on the issue of red flag knowledge. The Second Circuit explained that once a defendant demonstrates that it qualifies for DMCA safe harbor protections, the burden shifts to the plaintiff to present facts showing that defendants had actual or red flag knowledge of specific infringing activity, and are thus not entitled to the DMCA protections for those infringements. Finally, the court held that although a service provider could, in theory, exhibit “willful blindness” and thereby forfeit the DMCA protections by actively encouraging users to post infringing content, the plaintiffs had offered evidence of only a few unrelated instances of Vimeo’s employees encouraging specific infringements, which were insufficient.

Apparently acknowledging the impact that its decision would have on copyright owners seeking to prevent online infringement of their works through the DMCA’s notice-and-takedown procedures, the court stated, in a footnote: “It may be that Congress overestimated the value to copyright owners of the notice-and-takedown provisions of the statute. We have no way of knowing. But assuming copyright owners’ complaint has merit, the need for remediation is a question for Congress. We have no choice but to apply the statute as Congress wrote it.”