False in this case.

The 17 USC (2)(c)(1)(C) safe-harbour protections apply only to hosting of infringing works, and neither youtube-dl nor its test suites infringe on any RIAA or member copyrights as averred in RIAA's notice.

https://www.law.cornell.edu/uscode/text/17/512

The RIAA's letter does not claim infringement within the text of youtube-dl source or test suites, though it tries hard to appear so, but rather anti-circumvention of a "copyright protection mechanism", under §1201. That is also part of the DMCA, but falls outside the safe-harbour.

At best, youtube-dl's test suite may be infringing works when run, in which case infringement would accrue to the operator, presumably a tester or Github's CI/CD process. Even that argument is specious.

Given output is discarded, no permanent copy is retained, and the action is for research and development, and numerous Fair Use affirmative defence claims exist under §107, notably (1) and (4), test suite execution falls outside exclusive rights. Any one fair-use test is sufficient, or none at all. Test suite execution could be argued non-infinging under numerous theories, including reverse engineering, research, interoperability, all under §1201, or under general limitations on exclusive rights in §112, §117, or elsewhere.

This is where ... things get interesting....

- The "copyright protection scheme" in question, if it even is one, was written by and is provided by Google/Youtube, not the RIAA.

- It is not even clear to me the RIAA has standing to sue under §1203: "Any person injured by a violation of section 1201 or 1202 may bring a civil action in an appropriate United States district court for such violation." RIAA are not injured due to utilisation of a non-member's mechanism.

- Does not pass the 17 USC 1201 (a)(2)(B) test: "has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title".

- Yes, Microsoft / Github may have liability under 17 USC 1201 (a)(2), "offer to the public, provide, or otherwise traffic" the code, subject to the same test above. However there is no safe-harbour provision for such violations.

- Microsoft (owner of Github) is listed on the RIAA's members page. Neither Google LLC, its Youtube subsidiary, nor parent Alphabet Inc. are. The RIAA are threatening a member for a §1201 violation against a nonmember. That's ... weird. https://www.riaa.com/about-riaa/riaa-members/

- There's an exception in §1201(f)(2) "a person may develop and employ technological means to circumvent a technological measure, or to circumvent protection afforded by a technological measure, in order to enable the identification and analysis under paragraph (1), or for the purpose of enabling interoperability of an independently created computer program with other programs".

- Youtube-dl is executing code as a World Wide Web user agent, provided by Google/YouTube, and meant to be accessed and run by user agents in order to access YouTube content. That is, youtube-dl's operation is entirely within YouTube's technical design and intent.

- Any potential copyright infringement which might occur through use of youtube-dl is at the volition of users, not the software's authors, actions would properly be directed at such users for individual acts of infringement, and much of this is subject to the same and other defences listed above.

The remaining question is whether or not this claim should be contested. I argue that it should, on numerous grounds;

1. Though the claim is made under US law, similar anti-circ provisions exist in international law, which is highly standardised in large part thanks to the RIAA, MPAA (video), SIIA (software), WIPO, and other copyright monopoly cartels' special-interest deep-pockets lobbying. Offshore legal safe havens are limited and vulnerable. Defence within DMCA /anti-circ / WIPO / Berne regions is unfortunately necessary. Simply hosting the repository outside US jurisdiction is not sufficient, though a valid immediate response.

2. Such claims are specious at best, carry heavy chilling efects, may be entirely fraudulent, and should carry considerable risk. A countersuit agaist RIAA may help make this cartel, or others, think twice about repeating such attempts, as well as establish precedent agaist future such attemps.

3. The future of software, to which Microsoft claims to have harnessed its own wagon, is open, collaborative, Free Software. As such, the software and information services industry's interests diverge from those of regressive copyright maximalists.

TL;DR: This is not a 17 USC 512 infringement/safe-harbour, RIAA's standing is highly questionable, it is threatening a member for an averred nonmember's §1201 injury, any actual works duplication is not performed by youtube-dl's developers directly, nor is the work itself or its test suite an infringement of RIAA / members copyrights, and numerous defences exist for routine use or incidental transmission or copies made by others. Further, youtube-dl, digital and information liberties groups, Microsoft, and Google/Youtube should fight the RIAA's claim.