All people who do A are Bs.
All Bs are immune when they do C.
Therefore doing A constitutes doing C. (????)

That said, there is a common sense core of truth to what the court is saying here—obviously a safe harbor for “storage” has to include, at minimum, the retransmission of the stored materials to the storer. It does not necessarily follow that a safe harbor for storage has to include transmission of stored materials to people other than the storer, or transmission in the form of displays or performances, particularly when the business model is one that reaps all its profits, not from providing “storage” services to uploaders, but from providing performances to people other than the uploader.

I think the Second Circuit has to answer two other interesting questions as well:

1) Is there any such thing as a judicially cognizable “red flag” of infringement? I love it how the opinion quotes at length the legislative history, which seems to state that the only thing that would qualify as a “red flag” is a pirate website that trumpets its pirate status. And then right after that we get the cite to CCBill, in which we learned that there really is no such thing as obviously trumpeting your pirate status, any more than there is any such thing as obviously infringing.

2) Is there any such thing as a violation of 512(c)(1)(A) or (B) that is not also a violation of (C)? If you need a “red flag” to be on the hook under either (A) or (B), and there is no such thing as a red flag, then really all we’re left with is (C). Maybe that’s the way it should be—I’m agnostic on that. But I tend to think that interpretations of statutory language that result in huge null sets are suspect.