Capitol Records v. Vimeo: Courts Should Stop Coddling Bad Actors in Copyright Cases

Just how much knowledge about piracy on its system does an online service provider need before it loses its safe harbor protection, which severely limits its potential liability for copyright infringement, under the Digital Millennium Copyright Act (DMCA)? In Capitol Records v. Vimeo, the Second Circuit sets the bar very high, further blurring one of most important lines in copyright law—the line between actual and red flag knowledge—and protecting a not-so-innocent service provider in the process. Worse still, the Second Circuit leaves copyright owners with little chance of a remedy in the face of rampant piracy, even against a service provider that welcomes the infringement.

The evidence against Vimeo, a video-sharing site, is quite damning—including smoking gun emails from Vimeo employees. One user questioned whether copyrighted material could be posted to the site, and a Vimeo employee responded, “Off the record answer … Go ahead and post it ….” Another asked the same question and was told, “We can’t officially tell you that using copyright music is okay. But ….” Vimeo’s VP of Product and Development even sent an email encouraging other employees to infringe one of the plaintiff’s copyrights. Despite Vimeo’s obvious lack of concern for the property rights of others, the problem for Capitol Records and the other plaintiffs is that, under copyright law today, it’s nearly impossible to make any claims against a service provider stick.

The Second Circuit here is willing to overlook the generalized evidence that Vimeo’s employees encouraged infringement because it is not directly tied to any of the specific videos at issue in the suit. As to the videos that are at issue, the Second Circuit creates a test so insurmountable that victory seems all but assured for Vimeo once the case goes back to the district court. One central issue in the case is whether Vimeo has so-called “red flag” knowledge under Section 512 of the DMCA. Under the statute, red flag knowledge exists when, “in the absence of . . . actual knowledge,” the service provider is “aware of facts or circumstances from which infringing activity is apparent.”

In a similar case from 2012, the Second Circuit held in Viacom v. YouTube that “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.” Applying that standard to Vimeo in the district court below, Judge Ronnie Abrams held that there is sufficient evidence of interaction by Vimeo employees with the specific videos at issue such that the infringement could be “objectively obvious to a reasonable person.” She rejected Vimeo’s motion for summary judgment on the DMCA safe harbor defense, holding instead that “a reasonable jury could find that the employee viewed the video containing copyrighted music and had ‘red flag’ knowledge of its infringing nature.”

Judge Abrams reasoned that the videos contain “recognizable songs by well-known artists” used “in essentially unaltered form,” with most displaying “both the artist and song title.” One video is even titled “Christina Aguilera—Genie in a Bottle” and includes “a full length video showing the artist performing her popular song at a concert, with the location and date of the concert displayed on the web page below the box where users can watch the video.” Judge Abrams noted that “virtually every aspect of this video makes it obvious that it is infringing: the music, the lyrics, the visual image (which consists exclusively of the artist singing at her concert), and the description on the website explaining what the video is and when it was recorded.”

When questioned at oral argument about what could constitute a red flag, Vimeo suggested that such knowledge would be found if an uploaded video consists solely of an entire film, such as The Big Chill. Judge Abrams pointed out that one of the videos at issue is “the official full-length music video of the song ‘Move (If You Wanna)’ by the artist Mims,” which even includes a copyright notice: “© 2009 Capitol Records. All Rights Reserved.” Additionally, Judge Abrams cited the Ninth Circuit’s opinion in Columbia Pictures v. Fung, where the court held that some material was “sufficiently current and well-known that it would have been objectively obvious to a reasonable person that the material . . . was both copyrighted and not licensed to random members of the public.”

As Judge Abrams saw it, some works could be obviously copyrighted and some uses could be obviously infringing, and it should be up to the jury to decide whether Vimeo has red flag knowledge of the infringement. She did not think these red flags were obvious enough to grant the plaintiffs summary judgment, nor did she think they were ambiguous enough to grant summary judgment to Vimeo. But she certainly thought there was enough to turn it over to the factfinder. However, the Second Circuit, in a unanimous opinion by Circuit Judge Pierre N. Leval, disagrees. The appellate court decides as a matter of law that the plaintiffs haven’t presented enough evidence to even let the jury take a look.

While the Second Circuit here reiterates its test under Viacom, i.e., that “the service provider must have actually known facts that would make the specific infringement claimed objectively obvious to a reasonable person,” it then adds new gloss to the identity of this “reasonable person.” This person is not, Judge Leval writes, someone “endowed with specialized knowledge or expertise concerning music or the laws of copyright.” Applying this understanding of a non-expert “reasonable person,” the Second Circuit holds that Vimeo could not have red flag knowledge:

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.

How is this a question of law and not fact? The Second Circuit doesn’t say. One would think that it should be up to a jury to decide whether under the facts of the case, including much evidence of Vimeo’s employees encouraging users to infringe and interacting with the videos-in-suit, whether the infringements at issue would have been obvious to a reasonable person. Yet, under the Second Circuit’s new spin on the red flag knowledge standard, such cases won’t even get to a jury. The courts should stop coddling bad actors in copyright cases.

Judge Leval lays out many reasons for this new rule: (1) “the employee’s viewing might have been brief,” (2) the purpose of the viewing might have been for “different business purposes,” (3) the fact that the music was “recognizable . . . or even famous” wouldn’t show “that the music was in fact recognized by a hypothetical ordinary individual who has no specialized knowledge of the field of music,” (4) the “employee cannot be expected to know how to distinguish . . . between infringements and parodies that may qualify as fair use,” (5) the employee cannot “be automatically expected to know how likely or unlikely it may be that the user who posted the material had authorization to use the copyrighted music,” and (6) “the service provider is under no legal obligation to have its employees investigate to determine the answers to these questions.”

Under the Second Circuit’s new test, specialized knowledge cannot be presumed for an ordinary person, but it does leave open the possibility that the plaintiffs can demonstrate sufficient knowledge on remand: “The employee may well have known that the work was infringing, or known facts that made this obvious.” The plaintiffs will have to explore this further in discovery. However, the Second Circuit’s ultimate holding is that “the mere fact that a video contains all or substantially all of a piece of recognizable, or even famous, copyrighted music and was to some extent viewed (or even viewed in its entirety) by some employee of a service provider would be insufficient (without more) to sustain the copyright owner’s burden of showing red flag knowledge.” This “without more” caveat leaves the plaintiffs with some chance of showing red flag knowledge, but that chance is incredibly slim—as Judge Leval explicitly acknowledges.

Tackling an issue that comes up repeatedly in such cases, Judge Leval looks at the plaintiffs’ argument that “red flag knowledge is so similar to actual knowledge” that it renders the former “superfluous.” Judge Leval rejects this as having “no merit,” and he points to the “real difference” that purportedly survives: “If the facts actually known by an employee of the service provider make infringement obvious, the service provider cannot escape liability through the mechanism of the safe harbor on the ground that the person with knowledge of those facts never thought of the obvious significance of what she knew in relation to infringement.” That this reduces red flag knowledge “to a very small category . . . is of no significance,” he reasons, especially considering that Congress’s supposed purpose “was to give service providers immunity.”

The problems with this reasoning are myriad, including the Second Circuit’s insistence that red flag knowledge applies only to “specific infringing material.” The Senate and House Reports show that Congress anticipated the possibility that entire sites could be so “obviously pirate” that the “infringing nature of such sites would be apparent from even a brief and casual viewing.” And a search engine that views such a site yet still chooses to provide links to it “must do so without the benefit of a safe harbor.” The fact that entire sites can be deemed “obviously pirate” upon a brief viewing demonstrates that Congress did not intend for red flag knowledge to apply only to specific material. The venerable Nimmer on Copyright treatise takes the position that red flag knowledge is more generalized, and I recently joined a group of copyright scholars arguing the same in comments submitted to the Copyright Office.

But even accepting that red flag knowledge requires knowledge of specific infringement, it’s hard to see how the Second Circuit leaves open any possibility for there to ever be red flag knowledge in such cases. Even if the plaintiff can show that the defendant’s employee not only watched a video, but also realized that it contained an entire copyrighted song, the question still wouldn’t go to a jury because the employee can’t be expected to know whether it’s fair use or whether there’s a license. The employee would have to know of facts that make the infringement obvious, including that it’s not fair use and that there’s no license. The only difference between this and actual knowledge would be that, despite knowing all of these facts, the employee never puts them together and surmises that they add up to infringement. When would this ever happen?

One commentator suggests that, despite the Second Circuit’s further shrinking of the standard, “red flag knowledge is alive and well.” And like Judge Leval, this commentator thinks that a toothless standard is just what Congress intended. The truth is that Congress sought, as the Senate and House Reports note, to “preserve[] strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the digital networked environment.” But if service providers can turn a blind eye in the face of red flags, they will not be incentivized to cooperate with copyright owners to “detect and deal” with infringement. Congress sought to incentivize cooperation by requiring service providers to take action in the face of red flags, under penalty of losing the safe harbor. Without that incentive, service providers will do as little as possible—a fact that has sadly played out in real life since the DMCA was enacted.

Here’s where we are after Capitol Records v. Vimeo: A service provider can encourage its users to infringe on a massive scale, and so long as the infringement it encourages isn’t the specific infringement it gets sued for, it wins on the safe harbor defense at summary judgment. This is so even if there’s copious evidence that its employees viewed and interacted with the specific infringing material at issue. No jury will ever get to weigh all of the evidence and decide whether the infringement is obvious. At the same time, any proactive steps taken by the service provider will potentially open it up to liability for having actual knowledge, so the incentive is to do as little as possible to proactively “detect and deal” with piracy. This is not at all what Congress intended. It lets bad faith service providers trample the rights of copyright owners with impunity.