Leval, Circuit Judge:
This is an interlocutory appeal on certified questions from rulings of the United States District Court for the Southern District of New York (Abrams, J.). interpreting the Digital Millennium Copyright Act of 1998 ("DMCA"). The DMCA establishes a safe harbor in § 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. 17 U.S.C. § 512(c). Defendant Vimeo, LLC
The district court ruled on motions for partial summary judgment addressed to whether Vimeo was entitled to the DMCA's safe harbor protections. As for videos that allegedly infringed pre-1972 sound recordings, the court ruled in Plaintiffs' favor on the theory that § 512(c)'s safe harbor absolves a service provider only from copyright liability based on the federal copyright statute, which does not apply to pre-1972 sound recordings, which are protected only by state copyright laws. With respect to post-1972 sound recordings (which all agree are protected by the DMCA's safe harbor when its conditions are met), the district court granted summary judgment to Vimeo as to 153 videos, mostly on the basis that Plaintiffs lacked evidence that Vimeo's employees had viewed them. The court rejected Plaintiffs' arguments that knowledge should be imputed to Vimeo by reason of its alleged general policy of willful blindness to infringement of sound recordings. And as for the remaining challenged videos that incorporated post-1972 sound recordings, the
We affirm the district court's rulings in part and vacate in part. (i) On the first question — whether the safe harbor protects service providers from infringement liability under state copyright laws — we conclude it does and accordingly vacate the district court's grant of partial summary judgment to Plaintiffs on this question. (ii) As to whether some viewing by a service provider's employee of a video that plays all or virtually all of a recognizable copyrighted song is sufficient to establish red flag knowledge, disqualifying the service provider from the benefits of the safe harbor, we rule that, under the standard set forth in Viacom International, Inc. v. YouTube, Inc., 676 F.3d 19, 26 (2012), it does not. We therefore remand for reconsideration of the various denials of summary judgment in Vimeo's favor. (iii) On whether Plaintiffs showed a general policy of willful blindness that disqualifies Vimeo from claiming protection of the safe harbor, we agree with the district court's ruling in Vimeo's favor.
"The DMCA was enacted in 1998 to implement the World Intellectual Property Organization Copyright Treaty and to update domestic copyright for the digital age." Viacom, 676 F.3d at 26 (internal citations and quotation marks omitted). According to its legislative history, Title II, the Online Copyright Infringement Liability Limitation Act was designed to "clarif[y] the liability faced by service providers who transmit potentially infringing material over their networks," S. Rep. No. 105-190, at 2 (1998), and in the process to "ensure[] that the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will expand." Id. The Senate Report expressed the view that "without clarification of their liability, service providers may hesitate to make the necessary investment in the expansion of the speed and capacity of the Internet." Id. at 8. To that end, the DMCA established four safe harbors, codified at 17 U.S.C. § 512, which protect qualifying Internet service providers from liability for certain claims of copyright infringement. Viacom, 676 F.3d at 27. This case focuses on the safe harbor provided by § 512(c), which is supplemented by protections provided in § 512(m).
These portions of the statute undertake, through complex provisions, to establish a compromise, which, on the one hand, augments the protections available to copyright owners, and, on the other, insulates service providers from liability for infringements of which they are unaware, contained in material posted to their sites by users, so as to make it commercially feasible for them to provide valuable Internet services to the public.
The terms summarized above are set forth in the following statutory provisions:
§ 512(c)(1)(A)-(C).
§ 512(m)(1).
Vimeo has had great success as a site for the storage and exhibition of videos. Its Website hosts a wide array of home videos, documentaries, animation, and independent films. Founded in 2005, as of 2012 it hosted more than 31 million videos and had 12.3 million registered users in 49 countries. Approximately 43,000 new videos are uploaded to Vimeo each day. Users post videos onto the website without the intervention or active involvement of Vimeo staff, and Vimeo staff do not watch or prescreen videos before they are made available on the website. When a video is uploaded, it is automatically converted to Vimeo's format and stored on Vimeo's servers. Users can view the videos stored on Vimeo servers through a "streaming" process by visiting the website, and in many instances can download them.
All Vimeo users must accept its Terms of Service. These require, inter alia, that: users upload (1) only videos that they have created or participated in creating, and (2) only videos for which they possess all necessary rights and that do not infringe on any third party rights. Vimeo's "Community Guidelines" also provide content restrictions and information about its copyright policy. Every time a user uploads a video, the Website displays three rules: (1) "I will upload videos I created myself," (2) "I will not upload videos intended for commercial use," and (3) "I understand that certain types of content are not permitted on Vimeo." Nonetheless, users have the technical ability to upload videos that do not comply with the rules.
Vimeo employs a "Community Team" of 16 employees to curate content. These employees identify some videos with a "like" sign, occasionally prepare commentary on a video, offer technical assistance to users, participate in forum discussions, and at times inspect videos suspected of violating Vimeo's policies. So far as we are aware, the record does not indicate that the videos as to which the district court denied
In order to upload a video to the Website, a user must register for a Vimeo account. Vimeo offers two forms of membership accounts — basic (free) and paid subscription services. It derives revenue from user subscription fees and advertising on its website — the vast majority of its revenue coming from subscription sales. Unless the posting user has limited access, any Internet user can view, download, and copy videos posted on the website for free.
A registered user has the ability to note her "likes" or comment on videos, subscribe to "groups" of users with common interests, and subscribe to or create "channels" of videos based on themes.
Vimeo uses multiple computer programs ("Mod Tools") that assist its Community Team in locating and removing videos that may contain content that violates the Terms of Service. When videos and/or users are identified by one of these tools, Vimeo staff review them individually. Vimeo also enables users to "flag" videos that they believe violate the Terms of Service. Community Moderators evaluate the flagged content and decide whether or not to remove it. The flagging interface also explains how to submit a DMCA claim.
Between October 2008 and November 2010, Vimeo deleted at least 4,000 videos in response to takedown notices by copyright owners. On the three identified occasions in which Plaintiffs had sent Vimeo takedown notices, the district court found that Vimeo had responded "expeditious[ly]." Plaintiffs did not send takedown notices regarding the videos involved in this suit.
While it appears that Vimeo followed a practice of screening the visual content of posted videos for infringement of films, it did not screen the audio portions for infringement of sound recordings. Plaintiffs contend that this fact, together with statements made by Vimeo employees (found in emails), show indifference and willful blindness to infringement of recorded music, and that Vimeo has furthermore actively encouraged users to post infringing videos. Plaintiffs' evidence of such statements by Vimeo employees included the following:
Plaintiffs filed complaints on December 10, 2009, charging Vimeo with direct, contributory, and vicarious copyright infringement. The complaints identified 199 videos that included recordings of music in which Plaintiffs claimed rights. From March 3, 2011, until April 4, 2012, the case was stayed pending our court's decision in Viacom.
In May, 2012, Plaintiffs sought leave to amend their complaints to add more than 1,000 videos to the suit. The Court denied the request without prejudice, on the ground that the additional videos would "require reopening of discovery and delay the timely adjudication of the proposed summary judgment motions."
On September 7, 2012, Vimeo moved for summary judgment on the basis of § 512(c)'s safe harbor. On November 16, 2012, Plaintiffs cross-moved for partial summary judgment that Vimeo was ineligible for the safe harbor.
In a September 18, 2013 order, the district court granted partial summary judgment to Plaintiffs as to videos that allegedly infringed pre-1972 sound recordings. The court granted summary judgment to Vimeo under the safe harbor as to 136 videos on the basis that there was no evidence that Vimeo employees had observed them. As to videos for which there was evidence of some observation by Vimeo employees, the court denied both sides' motions, ruling that there were triable issues of fact regarding whether Vimeo had acquired actual or red flag knowledge of infringement that would disqualify it from safe harbor protection.
On Vimeo's motion for reconsideration, the district court granted Vimeo summary judgment on an additional 17 videos, on 15 because of insufficient evidence of observation by Vimeo staff, and on two because they contained only short portions of the allegedly infringed recordings, which the court found insufficient to support a finding of red flag knowledge.
The court then certified two questions for interlocutory appeal: "(a) Whether the DMCA's safe-harbor provisions are applicable
The first question we consider is whether the district court erred in granting partial summary judgment to Plaintiffs, rejecting the availability of the DMCA's safe harbor for infringement of sound recordings fixed prior to February 15, 1972. (For convenience, we use the terms "pre-1972" and "post-1972" to refer to sound recordings fixed before, or after, February 15, 1972.) The district court concluded that, with respect to sound recordings, the safe harbor established by § 512(c) protects only against liability under the federal copyright law, and that the DMCA consequently gives service providers no protection for pre-1972 recordings, which are protected only by state laws of copyright.
Confusion on this issue results from Congress's convoluted treatment of sound recordings. Although sound recordings have existed since the 19th century, for reasons not easily understood Congress first included them within the scope of federal copyright protection on February 15, 1972, and the grant of federal copyright protection to sound recordings on that date applied only to sound recordings to be made thereafter. UNITED STATES COPYRIGHT OFFICE, FEDERAL COPYRIGHT PROTECTION FOR PRE-1972 SOUND RECORDINGS 5 (2011), available at http://copyright.gov/docs/sound/pre-72-report.pdf ["Pre-1972 Sound Recordings Report"]. Pre-1972 recordings have never been covered by the federal copyright. Accordingly, copyright protection of pre-1972 sound recordings has depended on the copyright laws of the states. Id.
In 1976, Congress enacted an overall revision of the law of copyright. Section 301 of the new statute, in subsection (a), asserted federal preemption (ousting all state laws) with respect to works covered by the federal copyright. The preemption did not include pre-1972 sound recordings as these were not covered by the federal copyright. Subsection (c) of § 301 provided with respect to pre-1972 sound recordings that "any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until" February 15, 2047. After that date, federal law would preempt state law, so that state laws of copyright previously protecting pre-1972 sound recordings would cease to have effect, and all pre-1972 sound recordings would pass into the public domain. See Pub. L. No. 94-553, § 301, 90 Stat. 2541, 2572 (1976) (codified at 17 U.S.C. § 301). Subsequently, when Congress extended the duration of the federal copyright term, it passed parallel amendments to § 301(c), which similarly extended the period during which pre-1972 sound recordings would continue to be protected by state copyright laws. Section 301(c) in its present form postpones the date at which pre-1972 sound recordings will pass into the public domain until February 15, 2067 — 95 years after February 15, 1972. Pub. L. No. 105-298, 112 Stat. 2827 (1998).
On this question, the district court accepted without discussion the position taken by the United States Copyright Office in a report prepared in 2011 that the safe harbor does not protect against liability for infringement of pre-1972 sound recordings. Capitol Records, LLC v. Vimeo LLC, 972 F.Supp.2d 500, 536-37 (S.D.N.Y. 2013). The portion of the Report directed to § 512(c) begins by stating that the Office "sees no reason — and none has been offered — why the section 512 `safe harbor' from liability ... should not apply to the use of pre-1972 sound recordings." Id. at 130. It observes that § 512 was "innovative legislation" and that "the concept of providing safe harbors for certain good faith acts on the Internet remains a sound principle." Id. The Report found "no policy justification to exclude older sound recordings from section 512." Id. We agree completely with those conclusions.
Nonetheless, the Report concluded that § 512(c)'s safe harbor does not apply to pre-1972 sound recordings, which are protected only by state law. Id. at 132. The Report rejected interpreting § 301(c) as prohibiting "all subsequent regulation [by Congress] of pre-1972 recordings," id. at 131,
The Pre-1972 Sound Recordings Report arrived at its conclusion that § 512(c)'s safe harbor applies only to post-1972 sound recordings by the following reasoning: The term "infringement of copyright," which is employed in § 512(c), "is defined in section 501(a) as the violation of `any of the exclusive rights of the copyright owner as provided by sections 106 through 122.'" Id. at 131. Therefore, that term, when used in § 512(c), "only refers to infringement of rights protected under title 17, and does not include infringement of rights protected under [state] law." Id. at 131-32. The
While we unhesitatingly acknowledge the Copyright Office's superior expertise on the Copyright Act, we cannot accept its reading of § 512(c). It is based in major part on a misreading of the statute. The Report's main argument — that § 501(a) defines the words "infringement of copyright" as meaning infringement of the rights granted by the federal statute — misreads this provision. And as for the arguments based on canons of statutory construction, a subject not within the special expertise of the Copyright Office, we respectfully conclude that the pertinent canons were misunderstood and misapplied.
The Report begins its analysis by asserting that § 512(c)'s term "infringement of copyright" is defined in § 501(a) as the violation of "any of the exclusive rights of the copyright owner as provided by sections 106 through 122." Section 501(a), however, does not contain such a definition. The Copyright Act's definitions are set forth in § 101, and do not include a definition for "infringement of copyright." WILLIAM F. PATRY, PATRY ON COPYRIGHT § 9:1 (2016) ("The Copyright Act does not define `infringement.'") Neither does § 501(a) purport to define "infringement of copyright." It reads: "Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122 ... is an infringer of the copyright." The statement that one who violates rights identified in specified sections is an "infringer of copyright" does not purport to set forth an exclusive definition of "infringer of copyright." This provision of § 501(a) is in no way incompatible with interpreting the safe harbor as applying to infringement of state copyright laws. 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. And, in fact, within the terms of the Copyright Act, infringements are specified that are not among those specified in sections 106-122. See, e.g., § 1309 (re: infringement of vessel hull designs).
A literal and natural reading of the text of § 512(c) leads to the conclusion that its use of the phrase "infringement of copyright" does include infringement of state laws of copyright. One who has been found liable for infringement of copyright under state laws has indisputably been found "liable for infringement of copyright." In this instance, Congress did not qualify the phrase "infringement of copyright" by adding, as it did in other circumstances, the words, "under this title." See, e.g., § 106 ("Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following....); § 201(a) ("Copyright in a work protected under this title vests initially in the author or authors of the work."). To interpret § 512(c)'s guarantee that service providers "shall not be liable ... for infringement of copyright" to mean that they may nonetheless be liable for infringement of copyright under state laws would be, at the very least, a strained interpretation — one that could be justified only by concluding that Congress must have meant something different from what it said.
In contrast, there is every reason to believe that Congress meant exactly what it said. As explained above, what Congress intended in passing § 512(c) was to strike a compromise under which, in return for
Whether we confine our examination to the plain meaning of the text, or consider in addition the purpose the text was intended to achieve, we find no reason to doubt that § 512(c) protects service providers from all liability for infringement of all copyrights established under the laws of the United States, regardless whether established by federal law or by local law under the sufferance of Congress, and not merely from liability under the federal statute.
Nor do we find persuasive force in the Report's reliance on canons of statutory interpretation. The Report argued that interpreting § 512(c) as protecting service providers from liability under state law would ignore the "general rule of statutory construction that exemptions from liability... must be construed narrowly, and any doubts must be resolved against the one asserting the exemption." Pre-1972 Sound Recordings Report, at 132. As authority for this "rule," the Report cited our decision in Tasini v. New York Times Co., 206 F.3d 161, 168 (2d Cir. 2000), aff'd, 533 U.S. 483, 121 S.Ct. 2381, 150 L.Ed.2d 500 (2001). The argument is flawed in several respects.
First, the Report's conception that, under the canon it cited, statutes "must be construed" in a certain way misconceives what such canons are. They are not rules, but rather suggestive "guides." See Chickasaw Nation v. United States, 534 U.S. 84, 94, 122 S.Ct. 528, 151 L.Ed.2d 474 (2001) (emphasizing that "canons are not mandatory rules" and that "other circumstances evidencing congressional intent can overcome their force"). Such guides are based on commonsense logic and can aid in the interpretation of a legislature's intentions in the face of an ambiguous provision, but only to the extent that the logical propositions on which they are based make sense in the particular circumstance.
Second, the proposition cited by the Report with citation to our Tasini decision was not the proposition we espoused in Tasini. What we said in that case was that reading a statutory exception to a general rule "as broadly as appellees suggest would cause the exception to swallow the rule," contravening the principle stated by the Supreme Court in Commissioner v. Clark, 489 U.S. 726, 739, 109 S.Ct. 1455, 103 L.Ed.2d 753 (1989), that "when a statute sets forth exceptions to a general rule,
We also disagree with the Report's citation of Tennessee Valley Authority v Hill, 437 U.S. 153, 189, 98 S.Ct. 2279, 57 L.Ed.2d 117 (1978), for the proposition that "one section of a statute cannot be interpreted in a manner that implicitly repeals another section." Pre-1972 Sound Recordings Report, at 132. The Report substantially overstated, and misapplied, what the Supreme Court said, which was merely that "repeals by implication are not favored." Hill, 437 U.S. at 189, 98 S.Ct. 2279 (quoting Morton v. Mancari, 417 U.S. 535, 549, 94 S.Ct. 2474, 41 L.Ed.2d 290 (1974)). The argument rejected by the Supreme Court was that Congress, by repeatedly funding the construction of a dam, had by implication repealed a provision of federal law protecting a wildlife species, the snail darter, whose habitat would be harmed by the operation of the dam. Id. Those circumstances had little in common with this one. Here, to the extent that Congress can be said to have repealed by § 512(c) an aspect of the rule it had previously enacted in § 301(c), it was not by implication but by specific statement. In the Hill case, the appropriations funding the dam had made no mention of any rule affecting protection of the snail darter, so that repeal through those acts of appropriation could only have been by implication. Here, in contrast, the partial repeal of § 301(c) was by the explicit statement in § 512(c) that "[a] service provider shall not be liable ... for infringement of copyright...." The Hill principle has no application to this issue.
Finally, construing the safe harbor of § 512(c) as not granting protection to service providers from liability for state-law-based copyright infringements would substantially defeat the statute's purposes. Internet service providers that allow the public to post works on their sites would either need to incur enormous expenses to monitor all postings to ensure the absence of infringing material (contravening the provision of § 512(m) excusing them from such obligation), or would incur state-law-based liabilities for copyright infringement by reason of user-posted infringements of which they were unaware. The financial burdens in either case would be substantial and would likely either dissuade service providers from making large investments in the expansion of the growth and speed of the Internet (which Congress sought to encourage) or perhaps cause them to charge so much for the service as to undermine substantially the public usefulness
Although an opinion expressed by the Copyright Office in such a report does not receive Chevron deference of the sort accorded to rulemaking by authorized agencies, we do recognize the Copyright Office's intimate familiarity with the copyright statute and would certainly give appropriate deference to its reasonably persuasive interpretations of the Copyright Act. See Skidmore v Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944) (explaining that the weight of such an interpretation "will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those facts which give it power to persuade, if lacking power to control"). In this instance, however, for the reasons explained above, we cannot accept its interpretation of § 512(c). See PATRY at § 17:102 (stating that courts should defer to the Copyright Office's interpretation of the statute only to the extent they find it persuasive); see also Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121, 129 (2d Cir. 2008) (assuming that a 2001 report by the Copyright Office "deserve[d] only Skidmore deference, deference based on its `power to persuade,'" and rejecting the Office's interpretation as unpersuasive). We conclude that the safe harbor established by § 512(c) protects a qualifying service provider from liability for infringement of copyright under state law. We therefore vacate the district court's grant of summary judgment to Plaintiffs as to the availability of the DMCA safe harbor to Vimeo in relation to liability for infringement of pre-1972 sound recordings.
The second certified question is "Whether, under Viacom Int'l, Inc. v. YouTube, Inc., a service provider's viewing of a user-generated video containing all or virtually all of a recognizable, copyrighted song may establish `facts and circumstances' giving rise to `red flag' knowledge of infringement" within the meaning of § 512(c)(1)(A)(ii). We consider this question in relation to the district court's denial of Vimeo's motion for summary judgment on a number of videos that conform to the facts specified in the district court's question. The district court's formulation of the question in connection with its ruling suggests that the court based its denial on the presence of the facts specified in the question. We conclude that Plaintiffs' establishment of those facts is insufficient to prove red flag knowledge. We therefore vacate the court's order denying Vimeo summary judgment as to red flag knowledge with respect to those videos.
Our court explained in Viacom that, in order to be disqualified from the benefits of the safe harbor by reason of red flag knowledge under § 512(c)(1)(A)(ii), the service provider must have actually known facts that would make the specific infringement claimed objectively obvious to a reasonable person.
Viacom, 676 F.3d at 31.
The hypothetical "reasonable person" to whom infringement must be obvious is an
A significant aspect of our ruling relates to the burdens of proof on the question of the defendant's entitlement to the safe harbor — particularly with respect to the issue of red flag knowledge. The issue is potentially confusing because of the large numbers of factual questions that can arise in connection with a claim of the safe harbor. A service provider's entitlement to the safe harbor is properly seen as an affirmative defense, and therefore must be raised by the defendant. The defendant undoubtedly bears the burden of raising entitlement to the safe harbor and of demonstrating that it has the status of service provider, as defined, and has taken the steps necessary for eligibility. On the other hand, on the question whether the service provider should be disqualified based on the copyright owner's accusations of misconduct — i.e., by reason of the service provider's failure to act as the statute requires after receiving the copyright owner's notification or otherwise acquiring actual or red flag knowledge — the burden of proof more appropriately shifts to the plaintiff.
The Nimmer copyright treatise, noting Congress's failure to prescribe a roadmap, and observing that "courts [must] muddle through," furnishes valuable guidance on the shifting allocation of burdens of proof as to a service provider's entitlement to the protection of the safe harbor. See MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT § 12B.04[A][1][d], n.145 (2015). According to Nimmer, the service provider initially establishes entitlement to the safe harbor by showing that it meets
Acknowledging that the burden lies on the defendant to establish the affirmative defense, Nimmer explains,
Id. (internal citations omitted)(emphasis added).
We agree with Nimmer's proposed allocation of shifting burdens of proof. Proper allocation of the burden of proof will necessarily have an important bearing on determining entitlements to summary judgment. Following Nimmer's cogent analysis, it appears that a defendant would, in the first instance, show entitlement to the safe harbor defense by demonstrating its status as a service provider that stores users' material on its system, that the allegedly infringing matter was placed on its system by a user, and that it has performed precautionary, protective tasks required by § 512 as conditions of eligibility, including that it adopted and reasonably implemented a policy designed to exclude users who repeatedly infringe, that it designated an agent for receipt of notices of infringement, and that it accommodates standard technical measures used by copyright owners to detect infringements.
On the issue of disqualifying knowledge, however, the burden falls on the copyright owner to demonstrate that the service provider acquired knowledge of the infringement, or of facts and circumstances from which infringing activity was obvious, and failed to promptly take down the infringing matter, thus forfeiting its right to the safe harbor. The plaintiff is, of course, entitled to take discovery of the service provider to enable it to make this showing.
First, the employee's viewing might have been brief. The fact that an employee viewed enough of a video to post a brief comment, add it to a channel (such as kitten videos) 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, the insufficiency of some viewing by a service provider's employee to prove the viewer's awareness that a video contains all or virtually all of a song is all the more true in contemplation of the many different business purposes for which the employee might have viewed the video. The purpose of the viewing might include application of technical elements of computer expertise, 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. Furthermore, the fact that music is "recognizable" (which, in its dictionary definition of "capable of being recognized"
Furthermore, employees of service providers cannot be assumed to have expertise
It is of course entirely possible that an employee of the service provider who viewed a video did have expertise or knowledge with respect to the market for music and the laws of copyright. The employee may well have known that the work was infringing, or known facts that made this obvious. The copyright owner is entitled to discovery in order to obtain the specific evidence it needs to sustain its burden of showing that the service provider did in fact know of the infringement or of facts that made infringement obvious. But 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.
Plaintiff argues that, under this interpretation of the standard for finding red flag knowledge, red flag knowledge is so similar to actual knowledge of infringement as to violate the rule of statutory interpretation that no portion of the statute should be interpreted in a manner that renders it superfluous. This argument has no merit. While the difference between actual knowledge of infringement under § 512(c)(1)(A)(i) and red flag knowledge under § 512(c)(1)(A)(ii) may not be vast, it is nonetheless a real difference. 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. Plaintiffs further argue that this understanding of red flag knowledge reduces it to a very small category. Assuming this is so, it is of no significance. The fact that Congress was unwilling to extend the safe harbor to circumstances where the service provider did not subjectively know that the posted material infringed, but did know facts that made infringement objectively obvious, does not compel the conclusion that Congress expected this extension to cover a large number of instances. That is especially so in view of the fact that the purpose of § 512(c) was to give service providers immunity, in exchange for augmenting the arsenal of copyright owners by creating the notice-and-takedown mechanism.
In sum, a showing by plaintiffs of no more than that some employee of Vimeo had some contact with a user-posted video that played all, or nearly all, of a recognizable song is not sufficient to satisfy plaintiffs' burden of proof that Vimeo forfeited the safe harbor by reason of red flag knowledge with respect to that video. As it appears that the district court employed that inappropriate standard as the basis for its denial of Vimeo's motion for summary judgment on numerous videos conforming to that description, we vacate
Our final issue on this appeal involves Plaintiffs' contention that the district court, in rejecting their claim of willful blindness, misapplied our teachings in Viacom, which recognized that "the willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA." Viacom, 676 F.3d at 35. We disagree with Plaintiffs' argument and see no reason to disturb the district court's ruling.
Plaintiffs essentially make three arguments. First, based on evidence that Vimeo monitored videos for infringement of visual content but not for infringement of audio content, they argue that they have demonstrated willful blindness to infringement of music, which justifies liability under Viacom. Their second argument is that Vimeo's awareness of facts suggesting a likelihood of infringement gave rise to a duty to investigate further, and that Vimeo's failure to do so showed willful blindness that justifies liability. Finally, they argue that, having encouraged users to post infringing matter, Vimeo could not then close its eyes to the resulting infringements without liability.
The first two arguments are easily disposed of. As we made clear in Viacom, § 512(m) relieves the service provider of obligation to monitor for infringements posted by users on its website. 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. Plaintiffs' argument is refuted by § 512(m).
Their second argument, that awareness of facts suggesting a likelihood of infringement gave rise to a duty to investigate further, does not fare better. Section 512(c) specifies the consequences of a service provider's knowledge of facts that might show infringement. If the service provider knows of the infringement, or learns of facts and circumstances that make infringement obvious, it must act expeditiously to take down the infringing matter, or lose the protection of the safe harbor. But we can see no reason to construe the statute as vitiating the protection of § 512(m) and requiring investigation merely because the service provider learns facts raising a suspicion of infringement (as opposed to facts making infringement obvious). Protecting service providers from the expense of monitoring was an important part of the compromise embodied in the safe harbor. Congress's objective was to serve the public interest by encouraging Internet service providers to make expensive investments in the expansion of the speed and capacity of the Internet by relieving them of burdensome expenses and liabilities to copyright owners, while granting to the latter compensating protections in the service providers' takedown obligations. If service providers were compelled constantly to take stock of all information their employees may have acquired that might suggest the presence of infringements in user postings, and to undertake monitoring investigations whenever some level of suspicion was surpassed, these obligations would largely undo the
Plaintiffs' third argument may fare better in theory, but is not supported by the facts of this case, at least as we understand them. In Viacom, we made clear that actual and red flag knowledge under the DMCA ordinarily must relate to "specific infringing material," id. at 30, and that, because willful blindness is a proxy for knowledge, id. at 34-35, it too must relate to specific infringements. Plaintiffs argue, however, that Vimeo, in order to expand its business, actively encouraged users to post videos containing infringing material. They argue that, notwithstanding the formulation in Viacom, a service provider cannot adopt a general policy of urging or encouraging users to post infringing material and then escape liability by hiding behind a disingenuous claim of ignorance of the users' infringements.
We need not decide whether Plaintiffs' proposed gloss on Viacom is correct as a matter of law. Assuming that it is, Plaintiffs still cannot rely on such a theory in this instance. The evidence cited to us by Plaintiffs, consisting of a handful of sporadic instances (amongst the millions of posted videos) in which Vimeo employees inappropriately encouraged users to post videos that infringed music cannot support a finding of the sort of generalized encouragement of infringement supposed by their legal theory. It therefore cannot suffice to justify stripping Vimeo completely of the protection of § 512(m). Moreover, because that evidence was not shown to relate to any of the videos at issue in this suit, it is insufficient to justify a finding of red flag knowledge, under the principle of Viacom, as to those specific videos. Thus, notwithstanding a few unrelated instances in which its employees improperly encouraged specific infringements, Vimeo can still assert the protection of § 512(m) for the present suit, and claim the benefit of the safe harbor, in the absence of a showing by Plaintiffs of facts sufficient to demonstrate that Vimeo, having actual or red flag knowledge of infringement in the videos that are the subject of Plaintiffs' suit, failed to promptly take them down.
We conclude: (1) The safe harbor of § 512(c) of the DMCA does apply to pre-1972 sound recordings, and therefore protects service providers against liability for copyright infringement under state law with respect to pre-1972 sound recordings, as well as under the federal copyright law for post-1972 recordings. The district court's grant of partial summary judgment to Plaintiffs with respect to Vimeo's entitlement to the safe harbor for infringements of pre-1972 recordings is therefore vacated. (2) The various factual issues that arise in connection with a service provider's claim of the safe harbor of § 512(c) are subject to shifting burdens of proof, as described above. Because, on a defendant's claim of the safe harbor of § 512(c), the burden of showing facts supporting a finding of red flag knowledge shifts to the plaintiff, and the district court appears to have denied Vimeo's motion for summary judgment as to a number of videos on this issue based on a test that would improperly deny service providers access to the safe harbor, we vacate the court's denial of Vimeo's motion for summary judgment on that issue, and remand for reconsideration and further proceedings. (3) We reject Plaintiffs' argument that the district court erred in its ruling in Vimeo's favor as to the Plaintiffs' reliance on the doctrine of willful blindness.
The district court's rulings are accordingly affirmed in part and vacated in part
The plaintiff in Allen, an importer of bituminous coal subsequently utilized to power vessels engaged in the coasting trade, paid a tariff on importation of the coal and sued the United States to recover the tariffs it had paid. The plaintiff relied on an 1883 act of Congress, which expressly provided a "drawback" of the tariff on imported coal used to power vessels engaged in the coasting trade. That drawback, if applicable, would have entitled the plaintiff to a refund of the tariff. The problem for the plaintiff was that the 1883 tariff act had been replaced by a new enactment in 1890 that did not include any mention of the drawback for coal used in the coasting trade. The plaintiff claimed that the 1890 act should be interpreted as inferentially incorporating the drawback from the earlier act. The Supreme Court rejected the argument, explaining that the plaintiff's claim would contravene "the general principle that exemptions must be strictly construed, and that doubt must [be] resolved against the one asserting the exemption." As authority for that "general principle," the Supreme Court cited People v. Cook, 148 U.S. 397, 13 S.Ct. 645, 37 L.Ed. 498 (1893) and Keokuk & W. R. Co. v. Missouri, 152 U.S. 301, 14 S.Ct. 592, 38 L.Ed. 450 (1894).
Those two cases, Cook and Keokuk, involved claims by railroads that they should be deemed exempt from taxes imposed by their states of incorporation. The Supreme Court rejected both claims. It explained in Cook that "exemption from taxation, so essential to the existence of government, must be expressed in the clearest and most unambiguous language, and not be left to implication or inference." Cook, 148 U.S. at 409, 13 S.Ct. 645 (emphasis added). And in Keokuk, the Court explained by reference to the "general rule" that "the taxing power of the state should never be presumed to be relinquished, unless the intention to do so be declared in clear and unambiguous terms." Keokuk, 152 U.S. at 306, 14 S.Ct. 592. Thus the authorities cited in Allen did not lay down a general rule about "exemptions from liability." They specifically addressed claims of taxpayers of exemption from liability for taxes, and justified the requirement that the exemption be set forth in clear and unambiguous language by the importance of the taxing power to the survival of the state. The Allen case, like the two precedents it cited, was also about a claim of exemption from the taxing power of the state. In the circumstances, the principle cited in Allen that "exemptions must be strictly construed" must be understood as referring to claims of exemption from the obligation to pay taxes, and not to all exemptions from statutory obligations, regardless of subject matter. Apart from the fact that the three Supreme Court cases in question all dealt with claims of inferential exemption from tax obligations, the Court justified the principle requiring strict construction of the exemption by the state's need to collect taxes in order to survive. There is no logical principle that would justify an across-the-board rule requiring strict construction of all exemptions, regardless of subject matter or of manifestations of legislative intent.
While providing such a statement would not be difficult in some circumstances, as when all of the persons employed by the service provider while the videos were on its website remain in its employ, such a declaration may be impossible to make where there has been turnover in the service provider's personnel — especially if some former employees have died or cannot be located. If such a statement were required as a prerequisite to the imposition of the burden on the copyright owner with respect to disqualifying knowledge, service providers might be disqualified from the safe harbor for no reason other than inability to locate or communicate with former employees. We see no reason why the burden of proof should not fall on the plaintiff to show the service provider's knowledge or red flag knowledge without need for the service provider's prior formulaic disclaimer.