Justices decline case contesting net providers’ ‘safe harbor’ protections for pre-’72 music recordings, infringement claims

Where the justices of the U.S. Supreme Court decline to go can matter as much as where they do.

The lesson has played out anew with the high court’s recent refusal to take up a much-watched Entertainment Law dispute involving pre-1972 sound recordings and online service providers.

That has left the services, the music industry, and judges in courts across the country with some complex copyright issues hanging more than a little bit. For now, performers may have been dealt a setback,  while the providers look like they won a victory rooted in the Digital Millennium Copyright Act’s “safe harbors.”

This controlling case may have executives at the online video service Vimeo sighing in some relief after they were sued in 2009 by Capitol Records for copyright infringement.

A federal district judge hearing the case ruled the video site liable for infringement where pre-1972 recordings had been uploaded without license to Vimeo’s site.

But the U.S. Court of Appeals for the Second Circuit overturned that judgment, finding the lower court’s exempting older recordings from the DMCA’s safe harbors would “defeat the very purpose Congress sought to achieve in passing [it].” The appeals court refused to reconsider the case in August, leading the record industry to appeal in December to the U.S. Supreme Court. But the high court declined to hear the case, leaving the Second Circuit judgement in place, especially since it was joined by another appellate circuit.

What’s this dispute about and why does it matter?

Safe harbors

When Congress passed the DMCA, it granted Vimeo and other online- and internet-service providers limited protection against infringement claims via the act’s “safe harbor” provisions. These grant providers, in exchange for their putting up a robust range of materials, a shield of sorts so long as they don’t review and alter posted materials. Providers long have insisted the volumes of material are so huge they can’t do this. The Online Copyright Infringement Liability Limitation Act, outlining these safe harbors, covers providers acts, as neutral parties, that may be direct infringement as well as protecting them from secondary liability for others’ infringements. This means, for example, they’re safe in allowing unedited comments on content.

But under the DMCA, copyright holders also may follow a process to complain to providers, filing take-down notices, and affirmatively informing the services of potential infringements. The providers become liable for copyright woes only if they fail to respond or to follow DMCA procedures.

Safe harbors have allowed companies like SiriusXM, Pandora radio, and others to avoid liability when customers use their servers to infringe on performers’ and record labels’ protected works.

But the recording industry also has taken the position that the protections shouldn’t apply to recordings pre-dating 1972. That’s because copyrights then were rooted in state not federal law. Some rights holders, including recording companies, have sued internet- and online-providers, asserting infringement due to online posting or uses of older recordings—and, effectively, seeking to leverage the litigation to try to secure more favorable payments for use of the intellectual property.

The influence of an appellate circuit

But the appellate judges in the Second Circuit rejected the recording industry’s arguments on safe harbors and pre-1972 recordings, deciding that copyright holders don’t possess exclusive performance rights under New York state law. Because the safe harbors‘ sought to allow Web companies to offer interactive platforms while freeing them from the obligation to monitor users’ posts in advance, excluding some material from the shield would defeat that purpose, the judges said. “Service providers would be compelled either to incur heavy costs of monitoring every posting to be sure it did not contain infringing pre-1972 recordings, or incurring potentially crushing liabilities under state copyright laws,” the three-judge panel in New York wrote.

That Second Circuit decision holds for now, not only because the high court left it standing but also because it has been joined by judges in the U.S. Circuit Court of Appeals for the Ninth Circuit. Because the two appellate circuits, overseeing New York and Los Angeles, handle so many music industry matters, they heavily influence courts across the country on Entertainment Law matters.

While Vimeo and other web service providers may be shielded on pre-1972 recordings and infringement claims for now, a dissent in the Second Circuit case also underscored the consequences to performers and record labels. The judge complained that the courts have justified “turning a blind eye to the exploitative practices of today’s music industry made possible by technological advances” of providers like Pandora, SiriusXM, and Vimeo, and said the safe harbor provision “limits a creator’s opportunity to derive financial benefit from their performance.” With the creative and financial stakes so high, and with copyrights on pre-1972 recordings in play in other ways under the law, how long will the Second Circuit’s findings hold, and how soon before the justices find they may need to stop ducking and step into this area of law?