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Vimeo Shielded from Record Labels’ Onslaught

MANHATTAN (CN) — In a major victory for Internet service providers, the Second Circuit on Thursday rejected claims by a dozen record labels that Vimeo ignored red flags of infringement when employees encountered recognizable recordings on their website.

The New York-based federal appeals court also affirmed that the Digital Millennium Copyright Act, or DMCA, grants providers safe harbor from infringement claims, regardless of whether the recordings were published before or after 1972.

Vimeo faced a threat to its online video-sharing website when major labels — led by Universal Music Group's subsidiary Capitol Records — sued it in Manhattan Federal Court for copyright infringement. Other labels joining the lawsuit included Caroline Records, Virgin Records, Stone Diamond Music Corporation and several EMI subsidiaries.

The DMCA, passed under President Bill Clinton's administration, has typically shielded Internet providers and other intermediaries from such claims through so-called "safe harbor" provisions.

A New York state appeals court chipped away at these protections three years ago in Universal's lawsuit against the music-sharing service Grooveshark, in an opinion finding that the DMCA's protections did not extend to unlicensed music recorded before 1972.

In the wake of that ruling, U.S. District Judge Ronnie Abrams granted partial summary judgment to Capitol Records in 2014.

Her opinion found that DMCA's safe-harbor provision did not apply to pre-1972 recordings, as these were protected by state rather than federal law.

For recordings made after that year, Abrams found, Vimeo avoided infringement claims for content that their employees did not view, but they remained potentially liable for claims that they showed willful blindness toward other potential copyright violations.

The Electronic Frontier Foundation, a San Francisco-based digital rights group, warned at the time that the ruling would jeopardize online speech and innovation at online hosting sites.

"The safe harbors are critical to the Internet's success as a forum for innovative art, discussion, and expression of all kinds, forestalling crippling litigation that would force most websites to close their doors," the group's intellectual property director, Corynne McSherry, wrote in 2014. "Yet the district court created new liability, contrary to the law and the intent of Congress."

The foundation joined forces with the Organization for Transformative Works, the Center for Democracy and Technology, Public Knowledge, and New Media Rights in urging the ruling's reversal.

On Thursday, the Second Circuit unanimously overturned Abram's decision in a 55-page opinion.

Lead author Judge Pierre Leval, who also wrote the influential copyright treatise "Toward a Fair Use Standard," found that excluding state copyright infringement would misread the DMCA and misconstrue Congress's intent in passing it.

"The purpose of the compromise was to make economically feasible the provision of valuable Internet services while expanding protections of the interests of copyright owners through the new notice-and-takedown provision," he wrote. "To construe § 512(c) as leaving service providers subject to liability under state copyright laws for postings by users of infringements of which the service providers were unaware would defeat the very purpose Congress sought to achieve in passing the statute."

The court noted that potential liabilities for music recorded before 1972 are hardly insignificant.

"Some of the most popular recorded music of all time was recorded before 1972, including work of The Beatles, The Supremes, Elvis Presley, Aretha Franklin, Barbra Streisand, and Marvin Gaye," the opinion states.

Judges Peter Hall and Gerard Lynch joined the ruling.

The labels claimed that Vimeo should also be held liable for videos uploaded onto its site that a "reasonable" employee should have known had red flags of copyright infringement.

Rejecting this argument, Leval wrote: "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."

Since Vimeo monitors only video content for signs of infringement, the labels argued that the site showed willful blindness toward audio infringement.

Leval said that this would punish the company for good behavior.

"We see no reason why Vimeo's voluntary undertaking to monitor videos for infringement of visual material should deprive it of the statutory privilege not to monitor for infringement of music," the judge wrote.

Vimeo's spokesman Kevin Turner called the ruling "a significant win for not just Vimeo, but all online platforms that empower creators to share content with the world."

"The court rightly preserved the balance struck by the DMCA in protecting rights holders and service providers, and we are very pleased with the decision," he said in a statement.

Universal Music Group did not immediately reply to an email request for comment Thursday.

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