Source: http://www.medialawmonitor.com/2016/06/internet-service-providers-and-oldies-fans-rejoice-%E2%80%A8second-circuit-holds-the-dmca-safe-harbor-covers-pre-1972-sound-recordings/
Timestamp: 2019-04-25 04:09:23+00:00

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The U.S. Court of Appeals for the Second Circuit’s June 16, 2016, decision in Capitol Records, LLC v. Vimeo, LLC was a victory for internet service providers who host third-party content. It plugged a major loophole in the Digital Millennium Copyright Act (DMCA) safe harbor for information stored on a service provider’s system or network at the direction of a user, 17 U.S.C. § 512(c), by holding that the safe harbor applies to pre-1972 sound recordings. It also forcefully reaffirmed that a service provider must have either actual or “red flag” knowledge of specific copyright infringement—rather than merely generalized knowledge of infringing activity on its system—and fail to remove the infringing material expeditiously in order to lose the safe harbor and be held liable for that infringement.
A slew of record companies and music publishers sued Vimeo, the operator of a website on which users can post videos. The parties’ appeal to the Second Circuit followed the district court’s rulings on whether Vimeo was entitled to the DMCA’s safe-harbor protections set out in § 512(c). Broadly, the district court ruled in the plaintiffs’ favor that the DMCA safe harbor only absolves service providers from liability based on federal copyright law, which does not apply to pre-1972 sound recordings. The court granted Vimeo summary judgment as to 153 videos on the basis that the plaintiffs lacked evidence that Vimeo’s employees had viewed them and denied summary judgment to either side on remaining videos incorporating post-1972 sound recordings because of a question of material fact as to whether Vimeo had “red flag” knowledge of their infringement.
Whether the plaintiffs showed that Vimeo had a general policy of willful blindness to infringement of sound recordings, justifying imputation to Vimeo of knowledge of the specific infringements at issue.
The court decided all three issues in Vimeo’s favor and both clarified and strengthened its prior decision in Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012) in the process. We summarize the court’s reasoning and holdings below.
Congress first included sound recordings within the scope of federal copyright protection in 1972, and pre-1972 recordings have never been covered by federal copyright. Section 301 of the Copyright Act asserts federal pre-emption of state copyright laws but provides with respect to pre-1972 sound recordings that “any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until February 15, 2067,” after which time federal law would pre-empt state law and cause pre-1972 sound recordings to pass into the public domain. 17 U.S.C. § 301(c). The plaintiffs argued that if § 512(c) were interpreted to protect service providers from infringement liability under state copyright laws, it would be irreconcilable with § 301(c)’s exclusion of pre-1972 recordings from pre-emption. Thus they argued that § 512(c) should be read to cover only infringement of federal copyright law; because federal copyright law does not apply to pre-1972 recordings, the federal safe harbor could not apply either.
The Second Circuit saw a stark contradiction between the plain meaning of the safe-harbor provision and the Copyright Office’s interpretation of it. According to the court, “the district court accepted without discussion the position taken by the United States Copyright Office in a report prepared in 2011 that the safe harbor does not protect against liability for infringement of pre-1972 sound recordings.” The Copyright Office had misconstrued the Copyright Act and misapplied certain canons of construction, incorrectly limiting the scope of the safe harbor to federal copyright infringement claims. While the Second Circuit “unhesitatingly acknowledge[d] the Copyright Office’s superior expertise on the Copyright Act,” the court found the Copyright Office’s interpretation of the Copyright Act “not reasonable” and instead held that safe harbor “protects service providers from all liability for infringement of copyright, and not merely from liability under the federal statute.” Accordingly, the Second Circuit reversed the grant of summary judgment to the plaintiff record companies for infringement of the pre-1972 recordings.
Under YouTube, in order to be disqualified from the safe harbor due to red-flag knowledge under § 512(c)(1)(A)(ii), the provider must be “subjectively aware of facts that would have made the specific infringement ‘objectively obvious to a reasonable person.’” This “reasonable person” is an ordinary person without specialized music or copyright law knowledge. The Second Circuit held that merely viewing a video that contains all or nearly all of a “recognizable” copyrighted song is insufficient to make infringement “obvious” to the reasonable person without specialized knowledge. It noted that § 512(m) makes clear that a service provider’s personnel are under no duty to “affirmatively seek” indicia of infringement or “investigate” whether the use was licensed or whether the “fair use” or “parody” exceptions apply.
Significantly, the Second Circuit took the opportunity to clarify the parties’ burdens of proof in a safe-harbor case, adopting a description from Nimmer on Copyright. A defendant must show entitlement to the safe harbor by demonstrating its status as a service provider that stores users’ material, that the allegedly infringing matter was placed there by a user, and that it has performed § 512’s conditions of liability, including having a policy to exclude repeat infringers, a designated agent, and standard technical measures to detect infringements. It is the copyright owner’s burden to demonstrate disqualifying knowledge, by showing the service provider: (1) acquired knowledge of the infringement or facts and circumstances from which infringing activity was obvious and (2) failed to promptly take down the infringing material.
The court strongly rejected the Copyright Office’s interpretation of the Copyright Act. The court stated that, although the Copyright Office’s report does not receive Chevron deference, given the office’s intimate familiarity with the Copyright Act, the Second Circuit would “give appropriate deference to its reasonably persuasive interpretations of the Copyright Act.” Here, however, the court found the Copyright Office’s interpretation unpersuasive, flatly rejecting it as a misreading of the law.
The court was clear that red-flag knowledge must be based on knowledge of specific facts going to specific instances of infringement. It clarified and strengthened YouTube, including by precisely allocating the burdens of proof in a DMCA safe-harbor case, based on the allocation set out in the Nimmer treatise. The court even embraced the plaintiffs’ characterizations of its holding as rendering red-flag knowledge a very small category, not vastly different from actual knowledge.
Relatedly, while the plaintiffs identified seemingly damning communications in which Vimeo employees seemed to encourage, or at least condone, infringement by users, it was apparently compelling to the court that none of those communications related to videos in the lawsuit.
Moreover, as of the time of publication, the record companies have petitioned for rehearing en banc, and additional record companies, the American Association of Independent Music and Recording Industry Association of America have submitted amicus briefs in support of that petition for rehearing.
Jim Rosenfeld, partner and co-chair of the media practice group, and George Wukoson, associate, are based in DWT’s New York office.

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