Capitol Records filed a petition for a writ of certiorari to the Supreme Court on December 14th, 2016, asking it to hear a copyright case that could have huge consequences for sites with user-generated music content that hope to be protected from infringement liability.

Just before the turn of the millennium, Congress took a major step in helping the Copyright Act evolve for a digital world by passing the Digital Millennium Copyright Act (DMCA), which took effect in 2000. One of the main sections is ‘safe harbor’—also known as section 512—which provided Internet service providers (ISPs) with protection from liability for user copyright infringement, as long as they met certain conditions. For example, ISPs can’t have actual knowledge of the infringement happening on their sites, and when they receive proper notice from copyright holders that content on a site is suspected infringement, they are required to block or take down the materials. The benefits of section 512 are that it allows ISPs to host user content without actively having to police for infringement, and it alleviates some of the burden on the court system by not making it adjudicate every copyright matter. Of course, however, this system isn’t perfect and section 512 issues still end up in court.

Back in 2009, Capitol Records sued Vimeo, a video-sharing website, for copyright infringement over 199 videos that were posted on the site. These were creative lip-synching videos that users uploaded. At the same time, YouTube and Viacom were already in court over the same issue, stemming from Viacom’s 2007 suit, with Google using safe harbor as a defense. Capitol Records and Vimeo’s fight was put on hold since the ruling would affect that case. In 2013, a ruling was handed down in Google’s favor, but those parties ultimately settled.

The district court granted Capitol Records’ motion for summary judgment on the videos using sound recordings from before 1972 (the year sound recordings received federal copyright protection), because they were under state copyright law and federal safe harbor provisions wouldn’t apply. It also granted summary judgment in favor of Vimeo on 153 videos with sounds recordings from 1972 and beyond, ruling that they fell under safe harbor. Finally, the court found that there was a genuine issue of material fact regarding whether Vimeo employees saw or uploaded the remaining videos (“red flag” knowledge of infringement), which would possibly remove safe harbor protection, and granted neither party summary judgment on this issue. In June 2016, on appeal, the Second Circuit affirmed the district court’s ruling in part and vacated it in part. It ruled that safe harbor worked for videos with state copyright protection because “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.” It also ruled that employee viewing of videos did not alone establish “red flag” knowledge of user infringement.

Capitol Records is now asking the Supreme Court to answer the question of whether the Second Circuit made an error in holding that federal safe harbor can be used for pre-1972 sound recordings when section 301(c) of the Copyright Act says that “[w]ith respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any State shall not be annulled or limited [by the Copyright Act] until February 15, 2067.” That is, by holding that federal safe harbor protection applied to the pre-1972 sound recordings, the Second Circuit was allowing the rights and remedies under state law to be annulled or limited. “The Second Circuit’s decision puts it in square conflict with the state courts of New York, see UMG Recordings, Inc .v. Escape Media Grp., Inc., 107 A.D.3d 51 (2013), and the United States Copyright Office, and reads the Copyright Act in a manner contrary to this Court’s decisions,” says the petition. It goes on to describe the Second Circuit’s ruling as “plainly incorrect,” and says it “improperly altered that legislative balance [“the pairing of expanded protections for owners of federally-protected works with new safe harbor defenses against liability for certain internet service providers”] by finding that one of these safe harbor defenses applies to pre-1972 sound recordings, even though those recordings gained none of the additional protection provided in the DMCA or in the Copyright Act generally.”

Stay tuned to The Fried Firm blog for more updates on this dispute.