Strange Rulings at the Second Circuit

Copyright split 2The Second Circuit Court of Appeals handed down opinions on June 16th with two important implications—one that looks like legislating from the bench by ignoring Section 301(c) of the Copyright Act and another that appears to create a split with the Ninth Circuit over interpretation of what’s called “red flag” knowledge referring to § 512(c) of the DMCA.

The case Capital Records v Vimeo involves the alleged infringement of pre-1972 sound recordings that were uploaded to the platform in a manner likely to be infringing. With the passage of the 1976 Copyright Act, sound recordings that were fixed prior to February 15, 1972 remained under the protection of the state copyright laws in which the works were registered.  And as Stephen Carlisle at Nova Southeastern University points out in his in-depth analysis of the circuit court ruling, these pre-1972 recordings have never been covered by federal law, but this court just ruled that they are covered by the provisions in the DMCA (which is of course federal law), which means that Vimeo is therefore eligible for the safe harbor shield in regard to alleged infringement of these recordings.

The EFF and other proponents of the ruling have stated that the court applied common sense on the grounds that the intent of Congress with the DMCA could not have been to “leave service providers subject to liability under state laws.”  It is certainly true that a ruling in the other direction would have major implications for a site like YouTube, which could face numerous litigations under state copyright laws or would have to figure out how to keep all the possibly-infringing, pre-1972 music off its platform.  While this would arguably not be consistent with the intent of DMCA, is this fact alone reason for the appeals court to ignore the federal copyright law statute as it stands?

Keeping in mind that it was also not the intent of Congress that the DMCA would shield the volume of infringements that occur today, Carlisle’s main point is that Section 301 of the Copyright Act is explicit on the copyright status of these recordings and so writes, “Section 512 [of the DMCA] takes away my right to sue a service provider from infringing my pre-1972 sound recordings. This limits my remedies under state law. Unless Congress is going to amend 301 [of the Copyright Act] to provide for an exception for ‘safe harbor’ it cannot act in the way that this Court has just ruled that it did.”  In short, this ruling strips owners of pre-1972 recordings of the ability to enforce their rights under state law even though Congress has not yet folded them into protection of federal law—a proposal that is currently being considered.

The other important opinion in this case, according to Devlin Hartline at the Center for the Protection of Intellectual Property, is that it creates a split with the Ninth Circuit on the issue of what’s called “red flag” knowledge of infringement by the defendant OSP. One of the conditions an OSP must meet in order to retain safe harbor is to “expeditiously” remove infringing material once the provider has “actual knowledge” of an infringement or once the provider becomes “aware of facts or circumstances from which infringing activity is apparent.”  This second part of the statute is generally referred to as “red flag” knowledge, and it is just vague enough to be the basis of an ongoing tug-o-war between rights holders and service providers.  For instance, common sense would dictate that any reasonable person working at Vimeo and monitoring the platform would know that a lot of popular and famous music was not licensed to the individuals uploading it.  And that’s essentially what Capitol Records argued.  But the court disagreed.

The Second Circuit opinion held that Capitol had not presented sufficient evidence to find that the defendant had “red flag” knowledge, stating the following:

[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.

But Hartline’s point is that the Second Circuit is applying a different standard to “red flag” knowledge than the one imposed by the Ninth Circuit and that the two courts are now split on two separate issues in this regard.  The first opinion is whether or not “red flag” knowledge has to pertain to the works-in-suit.  The Ninth says No; the Second says Yes.  The other opinion is whether or not employees at an OSP can have “red flag” knowledge without having either industry or legal expertise.  The Ninth says Yes; the Second says No.

In other words, the Ninth Circuit court has held that employees of an OSP, by seeing that numerous, famous titles are being uploaded, can intuit that infringement is probably happening, while the Second Circuit disagrees that this is sufficient.  Then, the Ninth Circuit holds that “red flag” knowledge of any infringement not “expeditiously removed” by the OSP is sufficient to void safe harbor protection, while the Second Circuit holds that only knowledge of the works-in-suit may be considered in this regard.  Hartline speculates that this split could result in the Supreme Court taking up the matter, for better or worse.

I have to say that it could not have been the intent of Congress that OSP employees should need to have industry and/or legal expertise in order to at least suspect that infringement is likely occurring on a web platform.  My nine-year-old is used to asking if stuff is legal on the web; it’s not a concept that requires a law degree or even high-school civics.  We’re taught as just regular folks that “ignorance of the law is no excuse,” and the Second Circuit’s opinion in this case seems to run afoul of this common-sense application—suggesting that a professional who works at a place like Vimeo can’t make an educated guess that UserDude8394 probably did not license that Beatles song he uploaded.

In another twist on this story, there are ten videos in contention for which Vimeo may be liable because these were made by employees themselves. The brief filed by Capitol in NY District Court in January of 2013 states the following:

“Vimeo admits that ten of the infringing videos on the schedules to the complaints in this action reside in the accounts of Vimeo employees, accessible from the user page of the Vimeo employee who uploaded them.  Almost all bore a flag (or “badge”) or other indication designating them as having been made by Vimeo employees.”

Because safe harbors apply only to videos uploaded at the direction of users, these ten videos were not considered in the appeal by Second Circuit Court.  It is odd, of course, to consider that Vimeo employees could directly infringe famous musical works while the court assumes innocent blindness regarding infringement on Vimeo’s platform.  As of March 2013, the Community Development Director at Vimeo states on Quora that “we’re quickly approaching 100 employees.” So, how much of a small workforce has to directly and consciously infringe for the courts to consider that veil of ignorance is unlikely?  Stay tuned. We may find out.

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