Appeals Court Gives Big Loss To Record Labels In Their Quixotic Lawsuit Against Vimeo For Lipdubs

The record labels basically will find no innovation that's not worth suing, and so back in 2013 they sued the online video hosting/streaming site Vimeo, in part because the site had created a popular genre of videos known as "lipdubs" where people would lip sync to a song in a video. In the fall of 2013, the district court rejected most, but not all, of the record labels' arguments about the DMCA. The labels had argued that Vimeo lost its DMCA safe harbors for a variety of reasons, including not having a reasonable repeat infringer policy (and by "reasonable" the labels claimed it had to be the same as YouTube's), red flag knowledge, and the fact that because Vimeo lets people download videos there's no safe harbor. The court rejected basically all of those arguments -- but did leave open the possibility that red flag knowledge might apply if Vimeo employees had watched some of the videos at play in the case. There was also one very problematic part of the ruling, which is that the court said that pre-1972 sound recordings do not qualify for the DMCA's safe harbors because of the weird quirk of copyright law history by which pre-1972 sound recordings are not actually covered by federal copyright law (but, instead, various state laws and common law).

It's taken quite some time, but on appeal the 2nd Circuit has finally released a ruling that trashes every single of of the record labels' arguments and sides with Vimeo across the board. That is, it upholds all of the stuff the district court had about Vimeo not losing its safe harbors and goes one step further in overturning the lower court's ruling concerning pre-1972 music. The decision was written by Judge Pierre Leval, who tends to be awesome on copyright issues.

In overturning the district court on whether or not the DMCA applies to pre-1972 recordings, the ruling is pretty clear, even going against the Copyright Office's views that argued against the DMCA covering such works.

While we unhesitatingly acknowledge the Copyright Office's superior expertise on the Copyright Act, we cannot accept its reading of 512(c). It is based in major part on a misreading of the statute. The Report's main argument-that 501(a) defines the words "infringement of copyright" as meaning infringement of the rights granted by the federal statute-misreads this provision. And as for the arguments based on canons of statutory construction, a subject not within the special expertise of the Copyright Office, we respectfully conclude that the pertinent canons were misunderstood and misapplied.

To get to this conclusion, the court just reads the actual law:

A literal and natural reading of the text of 512(c) leads to the conclusionthat its use of the phrase "infringement of copyright" does include infringement ofstate laws of copyright. One who has been found liable for infringement ofcopyright under state laws has indisputably been found "liable for infringement ofcopyright." In this instance, Congress did not qualify the phrase "infringement ofcopyright" by adding, as it did in other circumstances, the words, "under this title."See, e.g., 106 ("Subject to sections 107 through 122, the owner of copyrightunder this title has the exclusive rights to do and to authorize any of the following .. . .); 201(a) ("Copyright in a work protected under this title vests initially in theauthor or authors of the work."). To interpret 512(c)'s guarantee that serviceproviders "shall not be liable . . . for infringement of copyright" to mean that theymay nonetheless be liable for infringement of copyright under state laws would be,at the very least, a strained interpretation-one that could be justified only byconcluding that Congress must have meant something different from what it said.

In contrast, there is every reason to believe that Congress meant exactlywhat it said. As explained above, what Congress intended in passing 512(c) wasto strike a compromise under which, in return for the obligation to take downinfringing works promptly on receipt of notice of infringement from the owner,Internet service providers would be relieved of liability for user-postedinfringements of which they were unaware, as well as of the obligation to scourmatter posted on their services to ensure against copyright infringement. Thepurpose of the compromise was to make economically feasible the provision ofvaluable Internet services while expanding protections of the interests of copyrightowners through the new notice-and-takedown provision. To construe 512(c) asleaving service providers subject to liability under state copyright laws for postingsby users of infringements of which the service providers were unaware woulddefeat the very purpose Congress sought to achieve in passing the statute. Serviceproviders would be compelled either to incur heavy costs of monitoring everyposting to be sure it did not contain infringing pre-1972 recordings, or incurringpotentially crushing liabilities under state copyright laws. It is not as if pre-1972sound recordings were sufficiently outdated as to render the potential liabilitiesinsignificant. Some of the most popular recorded music of all time was recordedbefore 1972, including work of The Beatles, The Supremes, Elvis Presley, ArethaFranklin, Barbra Streisand, and Marvin Gaye.

Whether we confine our examination to the plain meaning of the text, orconsider in addition the purpose the text was intended to achieve, we find noreason to doubt that 512(c), as it states, protects service providers from allliability for infringement of copyright, and not merely from liability under thefederal statute.

Later the court doubles down on the idea that pretending the DMCA's safe harbors don't apply to pre-1972 sound recordings would basically undermine the entire DMCA:

Finally, construing the safe harbor of 512(c) as not granting protection toservice providers from liability for state-law-based copyright infringements wouldsubstantially defeat the statute's purposes. Internet service providers that allow thepublic to post works on their sites would either need to incur enormous expenses tomonitor all postings to ensure the absence of infringing material (contravening theprovision of 512(m) excusing them from such obligation), or would incur statelaw-based liabilities for copyright infringement by reason of user-postedinfringements of which they were unaware. The financial burdens in either casewould be substantial and would likely either dissuade service providers frommaking 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 muchfor the service as to undermine substantially the public usefulness of the serviceCongress undertook to promote.

On the infamous question of "red flag knowledge" the court notes that the Viacom v. YouTube case settled this a while ago. And this includes the fact that employees of Vimeo may have seen copyright-covered music on Vimeo, so the lower court was wrong to say that just because an employee watched a video, the "red flag" knowledge question could go to trial:

The mere fact that an employeeof the service provider has viewed a video posted by a user (absent specificinformation regarding how much of the video the employee saw or the reason forwhich it was viewed), and that the video contains all or nearly all of a copyrightedsong that is "recognizable," would be insufficient for many reasons to makeinfringement obvious to an ordinary reasonable person, who is not an expert inmusic or the law of copyright.

This is a useful point. Over and over again we see people who support the current copyright system (or who want it expanded) insist that it's "obvious" to everyone when there's infringement happening. We've tried to explain repeatedly why that's not necessarily the case. There are all sorts of factors that make it difficult -- from the fact that the songs may be authorized to questions around fair use to a variety of other issues. So it's good to see the court make such a clear statement on this point and to overturn the lower court ruling that would have made life difficult for a number of platform companies. The court clearly understands this issue that so many copyright maximalists miss:

First, the employee's viewing might have been brief. The fact that anemployee viewed enough of a video to post a brief comment, add it to a channel(such as kitten videos) or hit the "like" button, would not show that she hadascertained that its audio track contains all or virtually all of a piece of music.Second, the insufficiency of some viewing by a service provider's employeeto prove the viewer's awareness that a video contains all or virtually all of a song isall the more true in contemplation of the many different business purposes forwhich the employee might have viewed the video. The purpose of the viewingmight include application of technical elements of computer expertise,classification by subject matter, sampling to detect inappropriate obscenity orbigotry, and innumerable other objectives having nothing to do with recognition ofinfringing music in the soundtrack. Furthermore, the fact that music is"recognizable" (which, in its dictionary definition of "capable of beingrecognized" would seem to apply to all music that is original and thusdistinguishable from other music), or even famous (which is perhaps what thedistrict court meant by "recognizable"), is insufficient to demonstrate that themusic was in fact recognized by a hypothetical ordinary individual who has nospecialized knowledge of the field of music. Some ordinary people know little ornothing of music. Lovers of one style or category of music may have no familiaritywith other categories. For example, 60-year-olds, 40-year-olds, and 20-year-olds,even those who are music lovers, may know and love entirely different bodies ofmusic, so that music intimately familiar to some may be entirely unfamiliar toothers.

Furthermore, employees of service providers cannot be assumed to haveexpertise in the laws of copyright. Even assuming awareness that a user postingcontains copyrighted music, the service provider's employee cannot be expected toknow how to distinguish, for example, between infringements and parodies thatmay qualify as fair use. Nor can every employee of a service provider beautomatically expected to know how likely or unlikely it may be that the user whoposted the material had authorization to use the copyrighted music. Even anemployee who was a copyright expert cannot be expected to know when use of acopyrighted song has been licensed. Additionally, the service provider is under nolegal obligation to have its employees investigate to determine the answers to thesequestions.

The court does allow that, during discovery, a copyright plaintiff may work to establish that employees who did view the videos were able to understand that it was infringing, but merely having employees view a video is not evidence of red flag knowledge. The court also rejects the idea -- as many copyright maximalists insist -- that this interpretation of red flag knowledge writes it out of the statute. Not so, the court points out:

This argumenthas no merit. While the difference between actual knowledge of infringementunder 512(c)(1)(A)(i) and red flag knowledge under 512(c)(1)(A)(ii) may notbe vast, it is nonetheless a real difference. If the facts actually known by anemployee of the service provider make infringement obvious, the service providercannot escape liability through the mechanism of the safe harbor on the ground thatthe person with knowledge of those facts never thought of the obvious significanceof what she knew in relation to infringement. Plaintiffs further argue that thisunderstanding of red flag knowledge reduces it to a very small category. Assumingthis is so, it is of no significance. The fact that Congress was unwilling to extendthe safe harbor to circumstances where the service provider did not subjectivelyknow that the posted material infringed, but did know facts that made infringementobjectively obvious, does not compel the conclusion that Congress expected thisextension to cover a large number of instances. That is especially so in view of thefact that the purpose of 512(c) was to give service providers immunity, inexchange for augmenting the arsenal of copyright owners by creating the noticeand-takedown mechanism.

The court goes into detail about the different burdens that each party needs to carry in trying to establish red flag knowledge:

A significant aspect of our ruling relates to the burdens of proof on thequestion of the defendant's entitlement to the safe harbor-particularly withrespect to the issue of red flag knowledge. The issue is potentially confusingbecause of the large numbers of factual questions that can arise in connection witha claim of the safe harbor. A service provider's entitlement to the safe harbor isproperly seen as an affirmative defense, and therefore must be raised by thedefendant. The defendant undoubtedly bears the burden of raising entitlement tothe safe harbor and of demonstrating that it has the status of service provider, asdefined, and has taken the steps necessary for eligibility. On the other hand, on thequestion whether the service provider should be disqualified based on thecopyright owner's accusations of misconduct-i.e., by reason of the serviceprovider's failure to act as the statute requires after receiving the copyright owner'snotification or otherwise acquiring actual or red flag knowledge-the burden ofproof more appropriately shifts to the plaintiff. The service provider cannotreasonably be expected to prove broad negatives, providing affidavits of everyperson who was in its employ during the time the video was on its site, attestingthat they did not know of the infringement and did not know of the innumerablefacts that might make infringement obvious. And to read the statute as requiring atrial whenever the plaintiff contests the credibility of such attestations wouldlargely destroy the benefit of the safe harbor Congress intended to create.

Finally the court is fine with the lower court rejecting the argument of "willful blindness." The court points out that the law is clear that services have no proactive duty to monitor sites for infringement, no matter how many times copyright holders insist they must. And this holds true even if they monitor for other stuff:

We see no reason why Vimeo's voluntaryundertaking to monitor videos for infringement of visual material should deprive itof the statutory privilege not to monitor for infringement of music.

The court also rejects the related claim that once Vimeo had some info suggesting some music may be infringing, it had a duty to further investigate -- and the failure to do that was willful blindness. Not so, says the court:

Section512(c) specifies the consequences of a service provider's knowledge of facts thatmight show infringement. If the service provider knows of the infringement, orlearns of facts and circumstances that make infringement obvious, it must actexpeditiously to take down the infringing matter, or lose the protection of the safeharbor. But we can see no reason to construe the statute as vitiating the protectionof 512(m) and requiring investigation merely because the service provider learnsfacts raising a suspicion of infringement (as opposed to facts making infringementobvious). Protecting service providers from the expense of monitoring was animportant part of the compromise embodied in the safe harbor. Congress'sobjective was to serve the public interest by encouraging Internet service providersto make expensive investments in the expansion of the speed and capacity of theInternet by relieving them of burdensome expenses and liabilities to copyrightowners, while granting to the latter compensating protections in the serviceproviders' takedown obligations. If service providers were compelled constantly totake stock of all information their employees may have acquired that might suggestthe presence of infringements in user postings, and to undertake monitoringinvestigations whenever some level of suspicion was surpassed, these obligationswould largely undo the value of 512(m). We see no merit in this argument.

Finally, the labels had tried to argue that Vimeo employees encouraging users to create lipdubs constituted a form of willful blindness because they then refused to recognize that this encouraged infringement. The court isn't buying it:

The evidence cited to us by Plaintiffs, consisting of a handful ofsporadic instances (amongst the millions of posted videos) in which Vimeoemployees inappropriately encouraged users to post videos that infringed musiccannot support a finding of the sort of generalized encouragement of infringementsupposed by their legal theory. It therefore cannot suffice to justify strippingVimeo completely of the protection of 512(m).

In short, just because some employees may have encouraged lipdub videos it most certainly does not remove all of Vimeo's safe harbors.

This ruling is a complete and total victory for Vimeo against the labels -- and an important win for the safe harbors of the DMCA (and for the ability for websites that create useful services for the public to protect themselves). I'm sure the labels will try to challenge this decision, but it's a very strong and useful ruling as it stands.

Permalink | Comments | Email This Story