By Blake Brittain

Jan 13 (Reuters) - Video streaming site Vimeo VMEO.O fended off an appeal on Monday from units of record labels Universal Music Group UMG.AS and Sony Music 6758.T in a long-running U.S. copyright dispute over alleged piracy on Vimeo's platform.

The 2nd U.S. Circuit Court of Appeals affirmed that Vimeo was immune from the labels' claims based on federal protections for internet service providers that remove infringing user-posted content.

A Vimeo spokesperson said that the decision "ensures Vimeo can continue empowering innovation and artistic expression while respecting intellectual property rights." Spokespeople and an attorney for the labels did not immediately respond to a request for comment.

The labels -- imprints of former British music conglomerate EMI -- sued in Manhattan federal court in 2009, alleging that Vimeo was liable for hundreds of user-posted videos that included their music without permission.

The case revolves around the Digital Millennium Copyright Act, or DMCA. The law protects internet service providers from liability when users upload infringing content but requires ISPs to remove the material if they receive notice of the infringement.

The 2nd Circuit ruled for Vimeo based on the DMCA in 2016. The court said that Vimeo should prevail unless the labels could prove that Vimeo employees "either knew the video was infringing or knew facts making that conclusion obvious to an ordinary person."

The trial court ruled for Vimeo again in 2021. The labels appealed again later that year, arguing that Vimeo was not covered by the DMCA because its employees had "red flag knowledge" of the infringement.

"A jury could find that, based on the employees' knowledge or expertise, the employees knew that it was extremely unlikely that individual Vimeo users had somehow secured licenses from major rightsholders to use well-known hit songs in amateur video productions," the labels told the 2nd Circuit in a brief.

The 2nd Circuit rejected the labels' argument on Monday.

"Even if a person without specialized knowledge would have intuited a likelihood that many of the posted videos were not authorized, that would not make it obvious that a particular video lacked authorization to use the music," U.S. Circuit Judge Pierre Leval wrote for a three-judge panel.

The court also rejected the labels' argument that Vimeo was not covered by the DMCA because it profited from the infringement while having the "right and ability to control" it.

The case is Capitol Records LLC v. Vimeo Inc, 2nd U.S. Circuit Court of Appeals, No. 21-2949.

For the labels: Catherine Stetson of Hogan Lovells

For Vimeo: Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan

Read more:

Vimeo wins U.S. appeal in music copyright case

U.S. Supreme Court refuses to hear Vimeo music copyright dispute

(Reporting by Blake Brittain in Washington)

((blake.brittain@tr.com; +1 (202) 938-5713))