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Capitol Records, LLC v. Vimeo, LLC

United States Court of Appeals, Second Circuit

June 16, 2016

CAPITOL RECORDS, LLC, a Delaware Limited Liability Company, CAROLINE RECORDS, INC., a New York Corporation, VIRGIN RECORDS AMERICA, INC., a California Corporation, EMI BLACKWOOD MUSIC, INC., a Connecticut Corporation, EMI APRIL MUSIC, INC., a Connecticut Corporation, EMI VIRGIN MUSIC, INC., a New York Corporation, COLGEMS-EMI MUSIC, INC., a Delaware Corporation, EMI VIRGIN SONGS, INC., a New York Corporation, EMI GOLD HORIZON MUSIC CORP., a New York Corporation, EMI UNART CATALOG INC., a New York Corporation, STONE DIAMOND MUSIC CORPORATION, a Michigan Corporation, EMI U CATALOG, INC., a New York Corporation, JOBETE MUSIC CO., INC., a Michigan Corporation, Plaintiffs-Appellees-Cross-Appellants,
v.
VIMEO, LLC, a Delaware Limited Liability Company, a/k/a VIMEO.COM, CONNECTED VENTURES, LLC, a Delaware Limited Liability Company, Defendants-Appellants-Cross-Appellees, and Does, 1-20 inclusive, Defendants.

          Argued: November 6, 2015

         Defendant Vimeo, LLC, an Internet service provider, brings this interlocutory appeal on certified questions from the rulings of the United States District Court for the Southern District of New York (Abrams, J.), and Plaintiffs, who are owners of copyrights in recorded music, cross-appeal. The complaint alleges that recorded music contained in videos posted by users on the Vimeo website infringes Plaintiffs' copyrights. The certified questions relate to the district court's rulings on motions for partial summary judgment addressed to Vimeo's entitlement to a safe harbor established by the Digital Millennium Copyright Act. 17 U.S.C. § 512(c). The court granted partial summary judgment to Plaintiffs as to videos containing pre-1972 recordings, ruling that § 512(c)'s safe harbor was not applicable to sound recordings fixed prior to 1972, because these were protected by state, rather than federal, copyright laws. It granted summary judgment to Defendants as to post-1972 videos not viewed by Vimeo employees, ruling that Plaintiffs could not prevail on the theory of Vimeo's willful blindness to infringements. It denied summary judgment to either party for several videos, concluding that there was a question of material fact whether Vimeo possessed so-called "red flag" knowledge of circumstances that made infringement apparent.

         We conclude that the safe harbor of § 512(c) applies to pre-1972 sound recordings; the mere fact that a video contains all or virtually all of a "recognizable, " copyrighted sound recording and was viewed in some fashion by a service provider's employee is insufficient to prove knowledge or red flag knowledge of infringement; and Plaintiffs' evidence was insufficient to support the imputation of knowledge to Vimeo through the theory of willful blindness.

          KATHLEEN M. SULLIVAN, QUINN EMANUEL URQUHART & SULLIVAN, LLP, NEW YORK, NY (Robert L. Raskopf, Todd Anten, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY; Michael A. Cheah, Vimeo, LLC, New York, NY & Rachel Herrick Kassabian, Quinn Emanuel Urquhart & Sullivan, LLP, Redwood Shores, CA on the brief), for Defendants-Appellants-Cross-Appellees.

          CARTER G. PHILLIPS, SIDLEY AUSTIN, LLP, WASHINGTON, DC (Russell J. Frackman, Marc E. Mayer, Mitchell Silberberg & Knupp LLP, Los Angeles, CA; Constantine L. Trela, Jr., Sidley Austin LLP, Chicago, IL; Christine Lepera, Jeffrey M. Movit, New York, NY, Kwaku A. Akowuah, Washington, DC on the brief), for Plaintiffs-Appellees-Cross-Appellants.

          Matt Schruers, Computer & Communications Industry Association, Washington, DC, for amicus curiae Computer & Communications Industry Association.

          Corynne McSherry, Vera Ranieri, Electronic Frontier Foundation, San Francisco, CA; Sherwin Siy, Public Knowledge, Washington, DC; Art Neill, Teri Karobonik, New Media Rights, San Diego, CA; Elizabeth Rosenblatt, Rebecca Tushnet, Organization for Transformative Works, New York, NY, Emma Llansó, Center for Democracy and Technology, Washington, DC, for amicus curiae Electronic Frontier Foundation, Organization for Transformative Works, The Center for Democracy and Technology, Public Knowledge, and New Media Rights.

          Michael Elkin, Thomas P. Lane, Winston & Strawn LLP, New York, NY; Robert Turner, Yahoo!, Inc., Sunnyvale, CA; A. John P. Mancini, Mayer Brown LLP, New York, NY, for amici curiae Google Inc., Facebook, Inc., Yahoo!, Inc., and Microsoft, Inc.

          Brian M. Willen, Wilson Sonsini Goodrich & Rosati, P.C., New York, NY; Sara E. Rowe, Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, CA, for amici curiae Pinterest, Inc., Tumblr, Inc., and Twitter, Inc.

          Thomas G. Hentoff, Jessica S. Richard, Williams & Connolly LLP, Washington, DC, for amici curiae Recording Industry Association of America, Inc., American Association of Independent Music Inc., National Music Publishers' Association, Inc., The Harry Fox Agency, Inc., Authors Guild, Inc., Association of American Publishers, American Society of Composers, Authors and Publishers, Broadcast Music, Inc., American Federation of Musicians of the United States and Canada, and Screen Actors Guild-American Federation of Television and Radio Artists.

          Andrew H. Bart, Jenner & Block LLP, New York, NY; Luke C. Platzer, J. Douglas Wilson, Jenner & Block LLP, Washington, DC, for amicus curaie The Copyright Alliance.

          Before: LEVAL, HALL, LYNCH, Circuit Judges

          Leval, Circuit Judge

         This is an interlocutory appeal on certified questions from rulings of the United States District Court for the Southern District of New York (Abrams, J.). interpreting the Digital Millennium Copyright Act of 1998 ("DMCA"). The DMCA establishes a safe harbor in § 512(c), which gives qualifying Internet service providers protection from liability for copyright infringement when their users upload infringing material on the service provider's site and the service provider is unaware of the infringement. 17 U.S.C. § 512(c). Defendant Vimeo, LLC[1] is an Internet service provider, which operates a website on which members can post videos of their own creation, which are then accessible to the public at large. Plaintiffs are record companies and music publishing companies, which own copyrights in sound recordings of musical performances. Their complaint alleges that Vimeo is liable to Plaintiffs for copyright infringement by reason of 199 videos posted on the Vimeo website, which contained allegedly infringing musical recordings for which Plaintiffs owned the rights.

         The district court ruled on motions for partial summary judgment addressed to whether Vimeo was entitled to the DMCA's safe harbor protections. As for videos that allegedly infringed pre-1972 sound recordings, the court ruled in Plaintiffs' favor on the theory that § 512(c)'s safe harbor absolves a service provider only from copyright liability based on the federal copyright statute, which does not apply to pre-1972 sound recordings, which are protected only by state copyright laws. With respect to post-1972 sound recordings (which all agree are protected by the DMCA's safe harbor when its conditions are met), the district court granted summary judgment to Vimeo as to 153 videos, mostly on the basis that Plaintiffs lacked evidence that Vimeo's employees had viewed them. The court rejected Plaintiffs' arguments that knowledge should be imputed to Vimeo by reason of its alleged general policy of willful blindness to infringement of sound recordings. And as for the remaining challenged videos that incorporated post-1972 sound recordings, the court denied summary judgment to either side, concluding that there was a question of material fact whether Vimeo possessed so-called "red flag" knowledge of circumstances that made infringement apparent, which would make Vimeo ineligible for the protection of the safe harbor under the terms of § 512(c). This interlocutory appeal focuses on three issues: (i) whether the safe harbor of § 512(c) applies to pre-1972 sound recordings; (ii) whether evidence of some viewing by Vimeo employees of videos that played 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 (iii) whether Plaintiffs have shown that Vimeo had a general policy of willful blindness to infringement of sound recordings, which would justify imputing to Vimeo knowledge of the specific infringements.

         We affirm the district court's rulings in part and vacate in part. (i) On the first question-whether the safe harbor protects service providers from infringement liability under state copyright laws-we conclude it does and accordingly vacate the district court's grant of partial summary judgment to Plaintiffs on this question. (ii) As to whether some viewing by a service provider's employee of a video that plays all or virtually all of a recognizable copyrighted song is sufficient to establish red flag knowledge, disqualifying the service provider from the benefits of the safe harbor, we rule that, under the standard set forth in Viacom International, Inc. v. YouTube, Inc., 676 F.3d 19, 26 (2012), it does not. We therefore remand for reconsideration of the various denials of summary judgment in Vimeo's favor. (iii) On whether Plaintiffs showed a general policy of willful blindness that disqualifies Vimeo from claiming protection of the safe harbor, we agree with the district court's ruling in Vimeo's favor.

         BACKGROUND

         I. The DMCA

         "The DMCA was enacted in 1998 to implement the World Intellectual Property Organization Copyright Treaty and to update domestic copyright for the digital age." Viacom, 676 F.3d at 26 (internal citations and quotation marks omitted). According to its legislative history, Title II, the Online Copyright Infringement Liability Limitation Act was designed to "clarif[y] the liability faced by service providers who transmit potentially infringing material over their networks, " S. Rep. No. 105-190, at 2 (1998), and in the process to "ensure[] that the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will expand." Id. The Senate Report expressed the view that "without clarification of their liability, service providers may hesitate to make the necessary investment in the expansion of the speed and capacity of the Internet." Id. at 8. To that end, the DMCA established four safe harbors, codified at 17 U.S.C. § 512, which protect qualifying Internet service providers from liability for certain claims of copyright infringement. Viacom, 676 F.3d at 27. This case focuses on the safe harbor provided by § 512(c), which is supplemented by protections provided in § 512(m).

         These portions of the statute undertake, through complex provisions, to establish a compromise, which, on the one hand, augments the protections available to copyright owners, and, on the other, insulates service providers from liability for infringements of which they are unaware, contained in material posted to their sites by users, so as to make it commercially feasible for them to provide valuable Internet services to the public.

         The Act augments the rights of copyright owners by establishing a notice-and-takedown regime. The notice-and-takedown regime requires a service provider, to preserve its eligibility for the safe harbor, to "expeditiously . . . remove . . . material that is claimed to be infringing, " or disable access to it, whenever the service provider (1) receives a notice of infringing material on the service provider's site or (2) otherwise becomes aware of the infringement or of circumstances making the infringement apparent. § 512(c)(1)(C), (A)(iii).[2] The provisions favoring Internet service providers, first, immunize those that qualify for the statute's benefits[3] from liability for copyright infringements posted by users on the providers' websites if the service providers are unaware of the infringements, and, second, expressly relieve them of any obligation to monitor the postings of users to detect infringements as a condition of qualifying for the safe harbor. Service providers, however, forfeit entitlement to the safe harbor if they fail to expeditiously remove the infringing material upon receipt of notification of the infringement or upon otherwise becoming aware of it.[4]

         The terms summarized above are set forth in the following statutory provisions:

(c)(1) In general. – A service provider shall not be liable for monetary relief, or [with certain exceptions] for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider –
(A)
(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;
(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or
(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;
(B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and
(C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.
§ 512(c)(1)(A)-(C).
(m) Protection of privacy.– Nothing in this section shall be construed to condition the applicability of [the safe harbor of § 512(c)] on –
(1) a service provider monitoring its service or affirmatively seeking facts indicating infringing activity, [with exceptions not relevant to this inquiry].

§ 512(m)(1).

         II. Vimeo's Website

         Vimeo has had great success as a site for the storage and exhibition of videos. Its Website hosts a wide array of home videos, documentaries, animation, and independent films. Founded in 2005, as of 2012 it hosted more than 31 million videos and had 12.3 million registered users in 49 countries. Approximately 43, 000 new videos are uploaded to Vimeo each day. Users post videos onto the website without the intervention or active involvement of Vimeo staff, and Vimeo staff do not watch or prescreen videos before they are made available on the website. When a video is uploaded, it is automatically converted to Vimeo's format and stored on Vimeo's servers. Users can view the videos stored on Vimeo servers through a "streaming" process by visiting the website, and in many instances can download them.

         All Vimeo users must accept its Terms of Service. These require, inter alia, that: users upload (1) only videos that they have created or participated in creating, and (2) only videos for which they possess all necessary rights and that do not infringe on any third party rights. Vimeo's "Community Guidelines" also provide content restrictions and information about its copyright policy. Every time a user uploads a video, the Website displays three rules: (1) "I will upload videos I created myself, " (2) "I will not upload videos intended for commercial use, " and (3) "I understand that certain types of content are not permitted on Vimeo." Nonetheless, users have the technical ability to upload videos that do not comply with the rules.

         Vimeo employs a "Community Team" of 16 employees to curate content. These employees identify some videos with a "like" sign, occasionally prepare commentary on a video, offer technical assistance to users, participate in forum discussions, and at times inspect videos suspected of violating Vimeo's policies. So far as we are aware, the record does not indicate that the videos as to which the district court denied summary judgment were inspected by the Community Team for the purpose of detecting infringement.

         In order to upload a video to the Website, a user must register for a Vimeo account. Vimeo offers two forms of membership accounts-basic (free) and paid subscription services. It derives revenue from user subscription fees and advertising on its website-the vast majority of its revenue coming from subscription sales. Unless the posting user has ...


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