Oh, Those Pesky, Pesky Employees!

From a legal* point of view, hardly anything good ever comes out of the employer-employee relationship**, when you think about it. Wrongful termination suits, reams of paperwork to create a “paper trail” to counter wrongful termination suits, making oral promises the company can’t keep, entering into contracts the company isn’t aware of, getting into accidents in the course of their employment (and making the company liable), and so on and on.

* Of course, hiring is based on need. Nobody ever said, “Oh, I’m really desperate for some help, and there’s lots of it, but I’m afraid of the legal ramifications!” Which isn’t to say there aren’t transaction costs to hiring employees.

** The one exception I could think of: works created by employees in their course of their employment are considered to have been created by the employer. Not that this “work made for hire” doctrine isn’t without controversy.

We can add one more thing to the list: when your employees are using a service that your company provides. Let’s say your company is in the business of hosting and publicly performing uploaded content, which might or might not infringe copyright. And let’s say your employees enjoy doing just that, in the same way a McDonald’s employee might enjoy eating a Big Mac now and then.* I mean, really, it looks kind of bad if your own employees aren’t using your service.**

* Actually, do McDonald’s employees ever want eat a Big Mac?

** For example, if you’re in the business of making luxury yachts, it just looks bad if your own employees aren’t commuting to work in luxury yachts of their own, you know?

But this leads to complications with respect to your DMCA safe-harbor protection, in two ways:

  1. What your employees knows is sometimes attributed to your company. As you know (by reading here), your company loses DMCA safe-harbor protection if it has actual knowledge of infringing activity. So what happens if your employee uploads, say, The Fifth Estate The Avengers? If your employee knows it’s infringing, does your company know, too?
  2. Are your employees, strictly speaking, users? Because, you know, the safe harbor extends only to content uploaded at the direction of your company’s users.

The “Flagpole Sitta” Lip-dub Is Awesome. That Is All.

That brings us to Capitol Records v. Vimeo. Vimeo, as you probably know, provides a platform for uploading and viewing video content. It deliberately focuses on user-created videos, which you would think would help it avoid copyright infringement. But, alas, much creativity relies on using other people’s work, and that’s not always a fair use. In particular, people like to set music to their videos, and they rarely get a license for the music.*

* In part because it’s impractical, if not impossible. If you’re making your own little video, to whom do you direct an inquiry for a sync license? How long will it take? How much will be asked? There might be money in this, but let’s be honest: the music industry has sort of a terrible track record for using technology to exploit nascent markets. I am aware, however, of several companies trying to create the technology necessary to smooth the complications of securing synch licenses. I genuinely wish them luck.

Oh, and Vimeo famously started a thing about mass-lip-dubbing to awesome songs. It shot one at a holiday party, posted it, then encouraged its users to do likewise: “Why don’t YOU make one??”* Lots of users seem to have taken them up on the suggestion.

* When the lawsuit was first filed in 2009, it was generally reported that it was sparked by this awesome mass lip-dub of “Flagpole Sitta”, which was directed by Vimeo’s co-founder (though I don’t believe those are, strictly speaking, Vimeo employees). It’s becoming clear to me, however, that the association was made simply because the lip-dub was so awesome and so well-known, but the plaintiffs’ complaint doesn’t specifically mention the video, and the video is not among the 55 videos most at issue in the judge’s opinion (which are listed out in note 15 thereto). It was reported at the time that Harvey Danger, the band that recorded (and wrote) “Flagpole Sitta,” was actually pretty excited by the lip-dub, but their opinion didn’t really matter since, like most artists, they no longer owned the copyright in their own recording.

Normally, these wouldn’t be big problems for a service provider like Vimeo because it could seek refuge in the DMCA safe harbor. And, with respect to 144 of 199 videos at issue, Vimeo was in good shape. The court held (on summary judgment) that Vimeo was immunized by the DMCA safe harbor as to those 144 videos. But (since you can do arithmetic) what happened to the other 55? Answer: those pesky, pesky employees.

Who Knew What, When and Were They Eating Chips at Home at the Time?

The court held that it could not tell whether Vimeo was entitled to DMCA safe-harbor protection for those 55 videos, reserving that question for the jury at trial.* You see, Vimeo employees had interacted with those 55 videos in some way, whether by commenting on the video, “liking” the video, “whitelisting” the video, or placing the video into a special “channel.” In addition, as to 10 of those 55 videos, the employees were actually the ones who uploaded the video in the first place.

* I’m not aware of any case in which the jury was given a chance to decide whether a service provider was entitled to DMCA safe-harbor protection. Fung might have, but he chose to rely on purely legal arguments rather than to present facts that might have at least created a genuine issue of material fact for the jury to decide.

Regarding those 10 videos, the key question was whether the employees were acting as employees or as mere users (i.e., customers), and that question turned on whether they were acting within the scope of their employment when they uploaded the videos. Whether one is acting within the scope of employment is a complex, multi-factor, fact-intensive analysis, depending on such things as what the employee’s responsibilities were, where they were, whose equipment was being used, and so forth. The court held that there were too many contradictory facts going to too many factors to determine, one way or another, whether the Vimeo employees were acting in the scope of their employment when they uploaded those 10 videos.

Regarding the Vimeo employees’ interactions with videos (as to all 55 videos), the court similarly held that it could not tell, one way or the other, whether those interactions were enough to give Vimeo actual or “red flag” knowledge about the infringing nature of the video in question.* What was interesting is that the court did not discuss the question of acting within scope of employment. In other words, it didn’t seem to matter whether the employee was “liking” or commenting on a video in his or her spare time, or as part of his or her duties for Vimeo.** I can’t think of a principled reason why that wouldn’t matter.***

* Remember that the knowledge (whether actual or “red flag”) must be about a particular infringing act, not infringing activity in general (despite what the statute says).

** Some actions, such as “whitelisting” a video, appear by their very nature to be acts within the scope of employment, since (presumably) only employees could carry out those actions. Others, such as “liking” a video could plausibly be carried out in one’s spare time, but just as plausibly as part of a company policy of promoting certain videos.

*** The court apparently believed it was following Viacom v. YouTube on this point, inasmuch as the Viacom court relied on emails among YouTube executives that suggested actual knowledge of infringing activity. However, is there not a pretty big difference between what a company’s executives know and what its employees know? A corporation is imputed to all of the knowledge gained by its managing officers, not necessarily its employees. Fairly basic corporate law. Could you imagine if McDonald’s was imputed to know everything every one of its employees knew?

Oh, I Left the Correct Legal Standard in my Other Briefs.

If the employees’ knowledge really is imputed to Vimeo, then summary judgment for the plaintiffs should have logically followed. The court acknowledges that The Beatles’ “All You Need Is Love” is “iconic” and “legendary,” thereby indicating to anyone who “liked” or commented on a video using this song that there is a likely copyright violation. Yet, the court denies the plaintiffs’ motion, too:

[T]he court is not prepared to hold that this automatically compels the conclusion that the service providers, through its employees, was aware of facts and circumstances [i.e., “red flag” knowledge] that would make it obvious to a reasonable person that those videos were infringing. Rather, the Court finds that a triable issue remains as to whether, under the totality of the circumstances, this standard is met as to teach of the fifty-five videos in question.

If that’s the “standard,” I’m not sure what is left for the jury to decide, at least for the “iconic” songs.*

* Is what is “iconic” enough to put everyone on notice that the song is under copyright (as opposed to having been composed by the uploader) also a question for the ordinary person? If so, is a song by Daft Punk “iconic” enough? Or does it come down to what the ordinary millennial hipster knows?

How Much Do People Know About Copyright Law, Anyway?

For its part, Vimeo argued* that, to have the requisite knowledge, the employee not only had to know that the song in question was under copyright, but that the use of the song was illegal. This is a tricky argument. On the one hand, the point here is not simply to stop the use of copyrighted material, but to stop the illegal use of copyrighted materials. On the other hand, no human being can tell, just by looking at it, whether a use is legal. Fair use is a mystery that surpasseth all understanding, and it’s not as though the terms of licensing deals are common knowlege. Yes, the uploader might have a license, but how likely is that (at least for well-known songs)?

* If Vimeo argued that employee knowledge shouldn’t be automatically imputed to the corporation, that isn’t apparent from the opinion.

The court concluded that this was too high a standard, nearly unreachable. The question was one for the jury: was there enough there, in just viewing (and listening to) the video to give an ordinary person enough information that the video was infringing. One supposes (but one is not certain) that good-faith belief in licensing arrangements and the existence of fair-use defenses will come into the analysis, but it all goes into the black jury box.*

* Presumably, the standard would incorporate what an ordinary person knows about copyright law. Given the disconnect between the perception and reality of copyright law, even on very basic concepts, does this mean that a defendant might gain or lose DMCA safe-harbor protection based not on whether the content in question was actually infringing (since even an experienced copyright lawyer can’t always tell), but based on whether the ordinary person would believe, even if that belief were grossly mistaken, so long as the mistaken belief were widely held?

Substantially and Expeditiously Influence with an Inducement. Repeat.

The opinion has other notable holdings (exaggerated somewhat because I know you’ll read the opinion yourself before drawing any hard-and-fast conclusions from it):

  • Re: having and communicating repeat-infringer policy: It’s sufficient for you (the service provider) to tell your users in the terms of use that they may not use the service to infringe copyright, if you also reserve the right (in said terms of use) to terminate users for violating the terms of service.
  • Re: implementing repeat-infringer policy: It’s sufficient to just review the DMCA takedown notices and kind of eyeball which users are behaving badly.
  • Re: storage: Just because you allow downloading doesn’t mean that you don’t store stuff at the direction of your users. (I’ll admit: I have NO idea what the plaintiffs were arguing here.)
  • Re: willful blindness: It doesn’t matter how many completely mortifying emails indicating your complete disregard for takedown notifications, unless and until the plaintiff can actually connect the mortifying emails to actual acts of contributory or vicarious infringement (e.g., a decision to ignore a takedown notice related to one of the videos at issue).
  • Re: ability to control (“substantial influence” flavored): Completely awesome and powerful “moderator tools” might be completely awesome and powerful, but they don’t actually influence what the users do, really, when you sit down and think about it.
  • Re: ability to control (“inducement” flavored): Assisting users in synchronizing music to video isn’t inducement because the users have already decided to do the synchronizing before you got involved, and all Vimeo was doing was helping users use its technology. In short, Vimeo isn’t Grokster, and it isn’t IsoHunt.
  • Re: expeditious removal: Sitting on your butt and waiting three-and-a-half weeks before removing a video pursuant to a proper DMCA takedown notice was “expeditious.” (Actually, that’s unfair. There was no evidence that Vimeo was, in fact, sitting on its butt the whole time, just that it seemed to take a long time to remove a video. Maybe the notice got lost or something.)
  • Re: “Flagpole Sitta”: Court fails to hold that “Flagpole Sitta” is an awesome song. A terrible oversight.

This opinion is just a trial-level one. Usually, these sorts of orders are quickly appealed, but that might not be the case for this one. Since this opinion didn’t resolve the whole case—remember that 55 songs remain “alive” in the suit—it normally can’t be appealed until the entire case is resolved. But this ruling may fall within the exception, since it treads a lot of new ground and, if it came out differently, would radically alter the case’s outlook. Stay tuned.

Thanks for reading!

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.