The Second Circuit has released its long-awaited opinion in Capitol Records v. Vimeo, fully vindicating Vimeo’s positions. EFF along with a coalition of advocacy groups, submitted a friend-of-the-court brief in the case, supporting Vimeo.

The Second Circuit considered three important issues. First, whether a service provider could rely on the DMCA safe harbor when it came to pre-1972 sound recordings. Second, whether evidence of Vimeo employees watching certain well-known songs was enough to create “red flag” knowledge that the videos were infringing. And third, whether Vimeo was “willfully blind” to infringement occurring on its service.

For each of these issues, the Second Circuit ruled for Vimeo.

The DMCA Safe Harbor Applies to Pre-1972 Sound Recordings

In an important decision, the court held that the DMCA safe harbors apply to pre-1972 sounds recordings.

Pre-1972 sound recordings, “for reasons not easily understood,” are not subject to federal copyright laws, but instead are governed by a patchwork of state laws that provide varying degrees of protections and rights. Because these recordings fall under state law, the labels, relying on a supporting opinion from the Copyright Office, argued that the DMCA also did not apply.

The Second Circuit rejected the labels’ and the Copyright Office’s argument. It based its decision on the statutory text of the DMCA, which was supported by the policy goals the DMCA was intended to achieve. Specifically:

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. It is not as if pre-1972 sound recordings were sufficiently outdated as to render the potential liabilities insignificant. 

Some Employees Watching “Recognizable” Videos Isn’t Enough to Create Red Flag Knowledge

In reaffirming Viacom v. YouTube, the Second Circuit clarified that the “reasonable person” standard incorporated into the red flag knowledge standard was an ordinary person, not someone with specialized knowledge of copyright law or music. The Second Circuit also clarified that the burden of showing red flag knowledge is on copyright holder, not on the service provider claiming the protections of the DMCA. That is:

[A] showing by plaintiffs of no more than that some employee of Vimeo had some contact with a user-posted video that played all, or nearly all, of a recognizable song is not sufficient to satisfy plaintiffs’ burden of proof that Vimeo forfeited the safe harbor by reason of red flag knowledge with respect to that video.

The Second Circuit sent this part of the case back to the district court to determine whether the plaintiffs could “point to evidence sufficient to carry [plaintiffs’] 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.” If the plaintiffs can’t show that, Vimeo can’t be said to have “red flag” knowledge of infringement.

Vimeo Was Not Willfully Blind

Finally, the Second Circuit upheld the lower court’s finding that Vimeo was not willfully blind to infringement on its platform, so as to remove DMCA safe harbor protections. The rightsholders had argued that Vimeo was willfully blind to infringement based on three facts: Vimeo monitored videos for infringement of video content (but not audio content); Vimeo had a duty to investigate further once it learned facts that made would make it suspicious of infringement; and Vimeo itself encouraged infringement, thus couldn’t “close its eyes” to resulting infringement.

Each of these arguments was rejected by the Second Circuit. The Court held that (1) there was no duty to monitor for infringement, (2) that suspicion of infringement wasn’t enough unless infringement was obvious, and (3) a few sporadic videos out of millions where Vimeo employees “inappropriately” encouraged users to post infringing videos was insufficient to remove the DMCA safe harbor protections, especially where the videos did not relate to the videos at issue in the lawsuit.

The Second Circuit's finding that Vimeo didn't have a duty to investigate is important and essential to an open Internet that includes user-generated content. A duty to investigate would place a significant burden on small companies and non-commercial hosts, making it less likely that a new company could compete with those already entrenched in the market, or a non-commercial host can survive. More broadly, however, we're concerned about how often companies get hauled into court to challenge their safe harbors or worse. This ruling protects Vimeo, but it is disappointing that it took several years, and surely several million dollars, to get there.