IP Law Daily, COPYRIGHT—2d Cir.: EMI is seeing red over Vimeo, but the Second Circuit is not, (Jan 15, 2025)

By Matthew Hersh, J.D.

The prominent appellate court finds that the video service was unable to control infringement on its system and did not have “red flag” knowledge of its users’ misconduct.

A federal district court correctly decided that prominent online video service Vimeo was entitled to protection under the Digital Millennium Copyright Act because it did not have “red flag” knowledge of its users’ sharing of videos with infringing content, the U.S. Court of Appeals for the Second Circuit has held. The court, in the latest action in what is now more than 15 years of litigation, also agreed with the district court that Vimeo did not have the right and ability to control its users’ infringement (Capitol Records, LLC v. Vimeo, Inc., No. 21-2949 (2d Cir. Jan. 13, 2025)).

The target of the lawsuit is Vimeo, is video-sharing platform created in 2004. It has become one of the most popular websites on the internet. In 2007, Vimeo had only 40,000 registered users, but as of 2012, it had about 12.3 million registered users posting about 43,000 new videos a day. But some of those videos uploaded by users incorporate recordings of musical performances for which the rights are owned by music giant EMI. The record label’s lawsuit seeks to impose liability on Vimeo for those alleged infringements.

EMI filed its initial complaint in 2009 and eventually amended it to identify over one thousand allegedly infringing videos. Vimeo defended by asserting the “safe harbor” under the DMCA. In 2013, the district court issued a split decision on the safe harbor defense, finding that Vimeo did not have the right and ability to control the infringing material at issue but that there was a triable issue of fact over whether Vimeo had knowledge or awareness of infringing content for certain of its users’ videos. On an interlocutory appeal, the Second Circuit vacated the district court’s denial of summary judgment to Vimeo on Vimeo’s red flag knowledge of infringement, remanding the district court to reconsider the issue under a different legal standard. The district court then granted summary judgment to Vimeo on the red flag knowledge issue, leading to this appeal.

Red flag knowledge. The court of appeals affirmed the district court’s decision on red flag knowledge. Under the DMCA, an online service provided is entitled to the safe harbor provided that it “does not have actual knowledge” of infringing material on its system and, “in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent.” The second standard is known as “red flag” knowledge. The district court found that under the record built by the parties, EMI had not shown that Vimeo had such knowledge. The court of appeals agreed.

The court of appeals rejected EMI’s red flag argument because it was not persuaded by the evidence in the record. EMI pointed to evidence that Vimeo, in opening its licensing store in 2011, published a blog post saying that Vimeo employees were aware that licensing can be “confusing and painful.” But the court rejected the argument. “The fact that licensing music, as a general matter, can be challenging or confusing does not make it obvious that music accompanying a particular user-uploaded video was not licensed,” the court reasoned. “Even if a person without specialized knowledge would have intuited a likelihood that many of the posted videos were not authorized, that would not make it obvious that a particular video lacked authorization to use the music.”

The court also rejected EMI’s argument that its cease-and-desist letter, sent to Vimeo in 2008, put Vimeo employees on notice that any EMI music used on the website was unauthorized. But “an awareness that EMI sent a letter in the past demanding removal of its music gave no assurance that EMI did not thereafter make contracts licensing the use of its music, especially in view of evidence that some users who posted the videos containing EMI music asserted that EMI had provided them with authorization to use the music,” the court noted. “The DMCA does not require service providers to perform research on mere suspicion of a user’s infringement to determine the identity of the music in the user’s video, identify its source, and determine whether the user acquired a license.”

Moreover, even if Vimeo had red flag knowledge that EMI’s music in user videos was not authorized or licensed, the court noted, “that would be insufficient to satisfy [EMI’s] burden.” To the contrary, the court noted, EMI needed to show that “it would be apparent to a person without specialized knowledge of copyright law, or, alternatively, persons who have been demonstrated to possess specialized knowledge of copyright law, that the particular use of the music in the [videos] was not fair use.” At least during the period in question, the court noted, “the boundaries of fair use were not so well settled as to make clear even to persons well acquainted with copyright law whether and when a dancing, acting, or lipdubbing performance of copyrighted music might pass muster as a fair use.”

Right and ability to control. The court of appeals also agreed with the district court that EMI had not shown Vimeo had the right and ability to control infringement on its system. Under long-held circuit doctrine, the court noted, a showing of a “right and ability to control” requires “something more” than “the mere ability to remove or block access to materials on its website.” The district court found that that “something more” was not present here. The court of appeals agreed.

Central to the court’s ruling for Vimeo was its finding that it did not exercise “substantial influence” over its users’ infringing activity. EMI argued that Vimeo exercised such influence by promoting and demoting user posts based on their merit or their appeal to other users, as well as by banning videos that merely reproduced pre-existing content and gameplay videos. But the court of appeals did not agree. “Calling attention to selected videos by giving them a sign of approval or displaying them on a Staff Picks channel (or the contrary, by demoting them) did not restrict the freedom of users to post whatever videos they wished,” the court found.

The court also rejected EMI’s argument that Vimeo exercised substantial control by its ban of pornography as well as gameplay videos and other unoriginal content. These measures may well have been “somewhat more intrusive,” the court allowed. But they were “in the nature of (i) avoiding illegality and the risk of offending viewers and (ii) designing a website that would be appealing to users with particular interests,” the court emphasized. “It seems unlikely that, in Congress’s use of an ambiguous term in formulating the standards for eligibility for the safe harbor to encourage entrepreneurs to create websites, it intended to deny eligibility for the safe harbor to entrepreneurs merely because they sought to exclude content that violates other laws or because they sought to design sites to make them appealing to selected categories of consumer preferences.”

The Case is No. 21-2949.

Judge: Merriam, S.

Attorneys: Russell J. Frackman (Mitchell Silberberg & Knupp LLP) for Capitol Records, LLC. Todd Anten (Quinn Emanuel Urquhart & Sullivan, LLP) for Vimeo, Inc.

Companies: Capitol Records, LLC; Vimeo, Inc.

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