Streaming video platforms like Vimeo and YouTube host many more user-uploaded clips than could possibly ever be viewed and vetted for potential piracy by actual human beings, and federal law generally shields websites from liability of piracy they aren’t aware of. Yet, do these companies lose that protection if some employees have looked at content that was posted in violation of copyright?

Vimeo is currently being sued by Capitol Records (and a bunch of others under the Capitol/Universal umbrella), alleging — among other things — that because employees at the streaming video platform knew of multiple clips containing pirated music, Vimeo should not, in these instances, enjoy the “safe harbor” protections afforded by the Digital Millennium Copyright Act.

During the lawsuit, the record companies presented evidence of Vimeo employees allegedly encouraging users to test the limits of piracy when it comes to music.

One community director is quoted as telling a user that Vimeo allows the unauthorized use of copyrighted music but “if the copyright holder sent us a legal takedown notice, we would have to comply.”

Potentially more damning are statements from another community team member, who allegedly advised users that Vimeo has a “don’t ask, don’t tell” policy for music, while telling another “We can’t officially tell you that using copyright music is okay. But…”

The lawsuit, which accused Vimeo of 199 separate instances of copyright violation, was originally filed in 2009, but was effectively put on hold for several years while another high-profile streaming video dispute — between Viacom and YouTube — was sorted out.

In that case, which dated back to 2007, a federal court first ruled in 2010 that YouTube was indeed protected by the DMCA safe harbors. However, the Second Circuit Court of Appeals gave Viacom new life in 2012 when it ruled that there was good reason to consider whether or not YouTube employees knew of the allegedly infringing videos and didn’t take them down, and whether that knowledge should revoke the safe harbor protections.

The question to be asked, noted the appeals court at the time, was whether YouTube staffers had actual knowledge of infringement or “red flag” knowledge.

“[T]he actual knowledge provision turns on whether the provider actually or ‘subjectively’ knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement ‘objectively obvious to a reasonable person.'”

That case was eventually settled, but the guidance of the Second Circuit — the same appeals court that would eventually hear the Vimeo case — established a standard for considering when a company employee should know better.

In the Vimeo case, the District Court ruled in Sept. 2013 that the record companies could not prove Vimeo staffers had any knowledge of piracy for 153 of the 199 videos involved in the case, either for lack of evidence or some because the amount of copyrighted material used was too small to have raised a red flag. However, the judge allowed the record companies to continue with their complaints regarding the few dozen videos that remained.

Vimeo appealed this ruling, arguing that the record companies had not established that Vimeo staffers crossed the “red flag” standard established in Viacom. This morning, the Second Circuit agreed, ruling that the plaintiffs had not demonstrated that anyone at Vimeo should have proactively taken down the allegedly offending clips.

“The hypothetical ‘reasonable person’ to whom infringement must be obvious is an ordinary person — not endowed with specialized knowledge or expertise concerning music or the laws of copyright,” explains the court in its opinion [PDF].

The court points out that § 512(m) of the DMCA “makes clear that the service provider’s personnel are under no duty to ‘affirmatively seek'” red flags of piracy.

“The mere fact that an employee of the service provider has viewed a video posted by a user (absent specific information regarding how much of the video the employee saw or the reason for which it was viewed), and that the video contains all or nearly all of a copyrighted song that is ‘recognizable,’ would be insufficient for many reasons to make infringement obvious to an ordinary reasonable person, who is not an expert in music or the law of copyright,” explains the court.

The court also said that while it’s generally up to a service provider to raise and prove they deserve safe harbor protections, in cases like this, that burden shifts to the plaintiff to more concretely demonstrate that knowledge of infringement exists and that it should disqualify the defendant from safe harbor protections.

“The service provider cannot reasonably be expected to prove broad negatives, providing affidavits of every person who was in its employ during the time the video was on its site, attesting that they did not know of the infringement and did not know of the innumerable facts that might make infringement obvious,” writes the court, which contends that the record companies’ understanding of the law would “largely destroy the benefit of the safe harbor Congress intended to create.”

Merely demonstrating that (A) a clip exists containing pirated content, and (B) that an employee has seen some of that clip is not sufficient for two reasons, says the court.

“First, the employee’s viewing might have been brief,” reads the ruling. “The fact that an employee viewed enough of a video to post a brief comment, add it to a channel or hit the ‘like’ button, would not show that she had ascertained that its audio track contains all or virtually all of a piece of music.”

Second, that employee might have viewed the clip for a specific job-related purpose — “classification by subject matter, sampling to detect inappropriate obscenity or bigotry, and innumerable other objectives having nothing to do with recognition of infringing music in the soundtrack.”

Beyond those two reasons, the court explains that just because a piece of music is recognizable, doesn’t mean it is recognized by the person viewing the video.

“Some ordinary people know little or nothing of music,” writes the court. “Lovers of one style or category of music may have no familiarity with other categories.”

And finally, the court notes that there is no way for someone viewing a video to know for certain that the music is being used without authorization. Just because a song is in the soundtrack doesn’t mean it’s been pirated.

“Even an employee who was a copyright expert cannot be expected to know when use of a copyrighted song has been licensed,” explains the court. “Additionally, the service provider is under no legal obligation to have its employees investigate to determine the answers to these questions.”

Thus, the appeals court has remanded this question to the lower court, noting that “Vimeo is entitled to summary judgment on those videos as to the red flag knowledge issue, unless plaintiffs can point to evidence sufficient to carry their 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.”

Protections For Pre-1972 Recordings

Sound recordings were not given federal copyright protection until Feb. 15, 1972, and even then the copyright only applied to recordings made from that date on, meaning only state copyright laws protects older recordings — and barring changes in the law, they will continue this way until at least 2067.

In the lawsuit against Vimeo, the record companies argued that the video platform could not enjoy the safe harbor shield for any clips that used pre-1972 recordings. And the District Court judge sided with the record companies, noting that a 2011 report from the U.S. Copyright Office supports the idea of using of DMCA safe harbors to cover pre-1972 recording but concludes that the existing law just doesn’t allow it.

However, the appeals court says the Copyright Office is misreading the statute as saying that protection against liability only applies to federal copyright. In fact, explains the court, the statute in question does not provide any specific definition for “infringer of copyright,” other than as “Anyone who violates any of the exclusive rights of the copyright owner.”

“This provision… is in no way incompatible with interpreting the safe harbor as applying to infringement of state copyright laws,” explains the court. “To state that conduct x violates a law is not the same thing as saying that conduct x is the only conduct that violates the law.”

Under the appeals court’s reading of the law, someone is “liable for infringement of copyright” regardless of whether it’s a state or federal copyright law being violated.

Interpreting the safe harbor protections as only applying to federal copyright law would be, according to the court a “strained interpretation — one that could be justified only by concluding that Congress must have meant something different from what it said.”

Thus, the appeals court has vacated the lower court’s summary judgment of Vimeo’s liability on the pre-1972 recordings, establishing a potentially far-reaching precedent for internet content companies.

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