Capital Records, LLC v. Vimeo, LLC
1:09-cv-10101
S.D.N.Y.Mar 31, 2018Background
- Plaintiffs (Capitol Records, Caroline Records, Virgin Records) own copyrights in numerous songs, including pre-1972 sound recordings for which federal copyright protection does not apply.
- Plaintiffs sued Vimeo for alleged infringements of those recordings based on videos uploaded by users; they pleaded state-law claims for pre-1972 works, including unfair competition.
- This Court previously held the DMCA safe harbor did not apply to pre-1972 recordings, but the Second Circuit reversed, ruling §512(c) can protect against state-law copyright claims.
- After remand and an amended complaint adding more Videos-in-Suit, Vimeo moved to dismiss Plaintiffs’ unfair-competition claims, arguing the DMCA safe harbor and other defenses apply and, alternatively, that Plaintiffs fail to plead bad faith.
- The Court assessed whether the DMCA safe harbor covers non-copyright claims grounded in copyright infringement, whether Plaintiffs pleaded red-flag knowledge/bad faith, and which specific unfair-competition claims survive dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the DMCA §512(c) safe harbor protects state-law unfair-competition claims grounded in copyright infringement | The DMCA protects only copyright claims; unfair-competition claims differ and require bad faith, so they should not be swept into the safe harbor | The safe harbor bars liability for "infringement of copyright" generally, so it also shields state-law unfair-competition claims that rest on copyright infringement | The safe harbor applies to unfair-competition claims that necessarily depend on proving copyright infringement |
| Whether claims lacking allegations of red-flag knowledge survive the safe harbor | Plaintiffs did not contest on many claims but argued some involve broader conduct | Vimeo argued 273 claims lack red-flag knowledge and should be dismissed | The Court dismissed the 273 claims that lack any allegation of red-flag knowledge |
| Whether remaining claims alleging red-flag knowledge should be dismissed under Rule 12(b)(6) for failure to plead bad faith | Plaintiffs urged the Court to assess bad faith over the course of conduct and argued unfair competition is broad | Vimeo argued Plaintiffs rely on the same facts as their copyright claims and fail to plead bad faith as required for unfair competition | The Court denied dismissal: 59 claims alleging red-flag knowledge plausibly plead bad faith and survive 12(b)(6) |
| Standard for resolving remaining claims | Plaintiffs said broader factual review appropriate; procedural posture argued for deference to prior rulings | Vimeo asked dismissal now for additional claims | Court held remaining 59 claims survive dismissal and will be addressed on summary judgment; parties may supplement briefing if needed |
Key Cases Cited
- Vimeo, 826 F.3d 78 (2d Cir.) (DMCA §512(c) safe harbor can protect service providers from state-law copyright claims)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard: plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not entitled to assumption of truth)
- Capitol Records, Inc. v. Naxos of Am., Inc., 830 N.E.2d 250 (N.Y. 2005) (elements of unfair competition predicated on copyright infringement)
- Star Indus., Inc. v. Bacardi & Co., 412 F.3d 373 (2d Cir. 2005) (bad faith inference from actual or constructive knowledge)