This appeal arises from a copyright infringement lawsuit brought by major record labels, including Capitol Records and EMI affiliates, against the video-sharing platform Vimeo. The plaintiffs alleged that 281 user-uploaded videos on Vimeo contained their copyrighted musical recordings without authorization. The core dispute centered on whether Vimeo lost its immunity under Section 512(c) of the Digital Millennium Copyright Act (DMCA). The DMCA provides a safe harbor for online service providers against liability for user-uploaded infringing material, provided they do not have actual or red flag knowledge of the infringement and do not have the right and ability to control the infringing activity while receiving a direct financial benefit. The district court had previously granted summary judgment to Vimeo, finding that while Vimeo employees had interacted with the videos, there was insufficient evidence that they knew the content was infringing or that Vimeo exercised the requisite control. The plaintiffs appealed, arguing that Vimeo's curation practices and knowledge of licensing complexities should have disqualified it from the safe harbor.
Circuit Judge Leval, writing for the panel, addressed two primary grounds for disqualification from the safe harbor: red flag knowledge and the right and ability to control. First, regarding red flag knowledge, the court reiterated the standard from its prior decision in Vimeo I, which requires plaintiffs to show that Vimeo employees were aware of facts making infringement 'objectively obvious' to an ordinary person without specialized knowledge of copyright law. The court rejected the plaintiffs' argument that Vimeo's awareness that music licensing is 'confusing' or its general advice that using copyrighted music 'generally' constitutes infringement created red flag knowledge. The court reasoned that knowing licensing is difficult does not make it obvious that a specific video lacks a license, especially given Vimeo's music store where licenses could be purchased. Furthermore, the court noted that distinguishing between infringement and fair use is complex even for experts, citing the Supreme Court's divided decision in Andy Warhol Foundation v. Goldsmith, and concluded that Vimeo employees could not be expected to identify fair use violations in user videos like lip-dubs. Second, regarding the right and ability to control, the court analyzed whether Vimeo's editorial activities constituted 'substantial influence' over user content. The court distinguished Vimeo's actions from cases where providers were found to have control, such as dictating layout or reviewing every submission. Vimeo's practices—such as promoting videos on 'Staff Picks,' giving 'likes,' or banning specific categories like gameplay or pornography—were deemed non-coercive and applied to a tiny fraction of the millions of daily uploads. The court emphasized that Congress intended the safe harbor to encourage entrepreneurs to create websites without imposing prohibitive monitoring burdens. Denying protection for minor editorial judgments would undermine this legislative compromise. The court also noted that while encouraging 'lip-dub' videos might seem to encourage infringement, the plaintiffs had waived this specific argument on appeal.
The decision preserves Vimeo's immunity from liability for user-uploaded content absent specific evidence of actual or red flag knowledge of infringement. It sets a high bar for copyright holders, requiring them to prove that a platform's editorial curation amounts to 'substantial influence' rather than standard site management. The ruling confirms that service providers are not required to actively monitor for infringement and that general financial benefits from subscriptions do not trigger liability. The case remains open on the specific issue of whether Vimeo's encouragement of lip-dub videos constituted inducement, as the plaintiffs reserved that argument for potential future proceedings.
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