Congress Does Not Hide Elephants in Mouse Holes: How Vimeo Paid No Heed to that Caution.

• Author: Bailey, Mitch

INTRODUCTION I. SETTING THE STAGE: THE DIGITAL MILLENNIUM COPYRIGHT ACT II. "RED FLAG" KNOWLEDGE III. THE INTRA-STATE SPLIT IV. THE BALANCE SHIFTS WHEN THE BAR IS SET TOO HIGH CONCLUSION Introduction

With the passage of the 1976 Copyright Act, sound recordings fixed prior to February 15, 1972 remained under the protection of the state copyright laws where the works were registered. (1) Some incredible culturally significant songs were fixed before February 15, 1972, including songs from "The Beatles, The Supremes, Elvis Presley, Aretha Franklin, Barbara Streisand, and Marvin Gaye." (2) To date, state law protects the owner's rights without interference from federal law, including the Digital Millennium Copyright Act ("DMCA"). (3)

Given its location, the Second Circuit significantly influenced the development of intellectual property law in the United States, especially copyright law. (4) Many businesses where intellectual property rights are "key assets, or at the heart of an endeavor," are concentrated in the greater New York City metropolitan area. (5) Implementing a reasonable application of the DMCA safe harbor provision is thus important for copyright law, but more specifically, the music industry in New York City and other metropolitans in the United States.

This comment focuses on the Second Circuit's interpretation of the Copyright Act of 1976. Section II offers background for the analysis that follows. Section III focuses on whether "red flag" knowledge must pertain to the particular work being sued over in the suit and whether a service provider gains "red flag" knowledge just by looking at an infringing work. Section IV examines the intra-state split between the New York State Appellate Court, First Department, and the Court of Appeals for the Second Circuit on the issue of whether the DMCA safe harbor is applicable to sound recordings fixed before February 15, 1972. Section V discusses the balance needed between the obligations of Internet service providers and copyright holders. In the conclusion section, I look at favorable positions in answering these issues regarding the DMCA safe harbor provisions. Ultimately, I conclude that this issue warrants attention from the Supreme Court.

1. Setting the Stage: The Digital Millennium Copyright Act

   The Digital Millennium Copyright Act was enacted to implement the World Intellectual Property Organization Copyright Treaty and to update domestic copyright for a constantly evolving digital age. (6) Congress enacted the DMCA safe harbors to stimulate growth in this digital age. With a "greater certainty" concerning the legal exposure for infringements that may occur in the "course of common activities," websites and other online service providers would have more incentive to grow and expand their respective businesses. (7) Congress recognized that without such certainty, service providers would hesitate to invest in, and develop, new and valuable Internet services. (8) The DMCA was therefore designed to "clarif[y] the liability faced by service providers who transmit potentially infringing material over their networks," and, in the process, "ensure[] that the efficiency of the Internet will continue to improve and that the variety and quality of the services on the internet continue to expand." (9)

   The DMCA establishes a safe harbor in [section] 512(c), which gives qualifying Internet service providers protection from liability for copyright infringement when their users upload infringing material on the service provider's site and the service provider is unaware of the infringement. (10) A safe harbor is an affirmative defense where defendants have the burden of establishing the statutory requirements. (11) In the context of the DMCA's safe harbor provision, a "service provider," is given a rather expansive definition, encompassing "entities] [that offer] the transmission, routing, or providing of connections for [unmodified] digital online communications." (12)

   To qualify for immunity from liability under [section] 512(c), a service provider must satisfy the following criteria: (1) a service provider cannot have actual or constructive ("red flag") knowledge of infringing content, or upon gaining such knowledge it must "expeditiously" act to remove such content; (2) a service provider cannot "receive a financial benefit directly attributable to the infringing activity" where the service provider "has the right and ability to control" the infringing activity; and (3) a service provider must, "upon notification of claimed infringement [respond] expeditiously to remove, or disable access to, the material that is claimed to be infringing." (13)

   In Viacom International v. YouTube, Inc. (14) the Second Circuit held that "service providers must have knowledge or awareness of specific and identifiable instances of infringement on their websites" for there to be secondary liability for copyright infringement. (15) The Viacom court explained the difference between two key DMCA provisions, "actual" knowledge and "red flag" knowledge. (16) The difference, as the Viacom court explained, is not between "specific" and "generalized" knowledge, rather the difference is between a "subjective" and "objective" standard. (17) Stated differently, "actual" knowledge turns on whether a provider "actually" or "subjectively" knew of specific infringement, whereas "red flag" knowledge turns on whether a provider was subjectively aware of facts that would have made the specific infringement 'objectively' obvious to the reasonable person." (18)

   In Capitol Records, LLC v. Vimeo, LLC (19) "the Second Circuit addressed an important question of first impression regarding the proper interpretation of the safe harbor provision of the DMCA." (20) Founded in 2004, Vimeo operates an online video-sharing service that allows its users to upload and share original, creative videos that others can stream over the Internet, subject to Vimeo's terms of service. (21) "Vimeo hosted more than 31 million videos and had 12.3 million registered users in 49 countries, who collectively uploaded approximately 43,000 new videos per day." (22) With only a small group of employees dedicated to "community" support issues (16 employees as of 2012), Vimeo does not review every video that is uploaded per day. (23) The Vimeo court addressed, among other issues, whether the statutory safe harbor applies to non-preempted state copyright law. (24) The district court relied largely on the Copyright Office Report, ruling that the DMCA safe harbors do not extend to...