Published by LawTechie - September 20, 2013 - LawTechie

Intellectual Property LawThe latest ruling in the copyright infringement lawsuit by Capitol Records against video streaming provider Vimeo highlights how digital media companies can get in trouble when they do not have clear policies outlining employees’ use of the company’s services. Capitol Records, LLC v. Vimeo, LLC, 09-Civ-10101 (SDNY, September 18, 2013).

In a motion for summary judgment, the Federal District Court for the Southern District of New York has ruled that questions of triable fact existed to preclude granting Vimeo summary judgment on its attempt to secure DMCA “Safe Harbor” protection with respect to a large number of the videos that Vimeo was accused of infringing.

Legal Background

The DMCA at Section 512(c) provides immunity to service providers, like Vimeo, that store user-uploaded videos on their networks. In order to be eligible for Section 512(c) immunity, the service providers must be able to show that (1) the infringing content was stored at the direction of the user, not the service provider; (2) that the service provider did not have actual “red flag” knowledge of the infringement or make itself willfully blind to it; (3) the service provider had no right or ability to control the infringement or financially benefit from it; and (4) the service provider expeditiously removes the infringing content upon notice from the content owner (the “notice and take-down” requirement).

Employee Actions Jeopardize Vimeo’s Defense

Whereas the Court found that Vimeo easily qualified as a “service provider” within the meaning of DMCA Section 512, and that Vimeo otherwise satisfied #3 and #4 of the above 512(c) requirements for summary judgment, it was not so clear from the record that Vimeo satisfied #1 and #2.

Specifically, the record showed that, at one point or another, several Vimeo employees themselves uploaded infringing videos to the service. In many cases, the employees uploaded the videos while logged into their employee accounts, where the resultant content pages displayed a “Staff” badge reserved to employee account users.

Thus the Court could not rule as a matter of law that the infringing content on Vimeo was stored at the direction of the user rather than the service provider.

Reasonable minds could differ… as to the extent to which the videos at issue here were uploaded by Vimeo employees in their personal capacities as opposed to as agents of Vimeo. Accordingly, a triable issue has been raised…

In other words, to the extent that Vimeo employees uploaded infringing videos to the service, there was a question of fact that needed to go to a jury as to whether the uploading by Vimeo employees was in their capacities as employees (and therefore counted as uploading by Vimeo itself) or in their personal capacities as website users.

The record also showed several instances where Vimeo employees “liked,” commented, or otherwise interacted with infringing videos. This type of interaction by employees could potentially thwart requirement #2 of Section 512(c), that¬† the service provider did not have actual “red flag” knowledge of the infringement. The Court noted:

Although it is conceivable that a Vimeo employee “liked,” commented on or otherwise interacted with a video without actually watching it… Vimeo presented no evidence indicated that this is the case as to any of the videos in question.

Thus, again, the Court found that this was another question of fact best left to a jury.

Takeaway

In sum, where Vimeo could have otherwise disposed of this lawsuit at a relatively “early” summary judgment stage by relying DMCA Section 512 immunity, its employees’ conduct required the Court to deny summary judgment because the conduct required subsequent analysis by a jury at trial to decide whether the conduct constituted the company’s official conduct versus the personal use of several “rogue” employees.

I often find myself advising my digital media clients on the policies they should incorporate in order to bring their businesses under the protection of DMCA Section 512.

On the simple end of the scale, start-up clients want to upload initial content themselves in order to populate their newly launched services — the clear answer here is don’t do it, the DMCA “Safe Harbor” only kicks in if the content is uploaded at the direction of non-company users of your service.

On the more complex end of the scale, the Vimeo case makes clear that digital media companies need to implement strict policies prohibiting employees from acting as users. Otherwise, such activity could be potentially seen as company activity and, therefore, make the company ineligible for DMCA immunity.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.

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