Universal lose Veoh appeal

January 2012


The USA’s Ninth Circuit Court of Appeals has handed down its decision in UMG v Veoh, a case addressing copyright liability for ISPs that host infringing works. By way of background, Veoh operates a publicly accessible website that enables users to share videos with other users. UMG is one of the world’s largest recorded music and music publishing companies. In addition to producing and distributing recorded music, UMG produces music videos. Although Veoh has implemented various procedures to prevent copyright infringement through its system, users of Veoh’s service have in the past been able, without UMG’s authorisation, to download videos containing songs for which UMG owns the copyright.

UMG responded by filing suit against Veoh for direct and secondary copyright infringement in 2007. Two years later, the US District Court for the Central District of California granted summary judgment to Veoh after determining that it was protected by the DMCA “safe harbor” limiting service providers’ liability for “infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.” 17 U.S.C. §512(c).

UMG appealed the decision and made several arguments before the Ninth Circuit, including that the district court too broadly construed the scope of §512(c).

UMG never disputed that, when Veoh became aware of allegedly infringing material as a result of the Recording Industry Association of America’s DMCA notices, it removed the files. It claimed, however, that Veoh had knowledge or awareness of other infringing videos that it did not remove. In particular, argued UMG, the district court erred by improperly construing the knowledge requirement to unduly restrict the circumstances in which a service provider has “actual knowledge” under subsection (1) and setting too stringent a standard for “red flag” awareness based on facts or circumstances from which infringing activity is apparent.

Judge Raymond Fisher, in an unanimous decision, referred to Congress’ express intention that the DMCA “facilitate making available quickly and conveniently via the Internet … movies, music, software and literary works”. Being this the service Veoh provides, the Court did not find UMG’s narrow interpretation of §512(c) be plausible. In fact, if merely hosting material which falls within a category of content capable of copyright protection, with the general knowledge that one’s services could be used to share unauthorised copies of copyright-protected material, was sufficient to impute knowledge to service providers, the §512(c) safe harbor would be rendered a dead letter.

The onus to first identify infringing materials is on rights owners. Indeed, said the Court, copyright holders know precisely what materials they own, and are thus better able to efficiently identify infringing copies than service providers like Veoh, who cannot readily ascertain what material is protected by copyright and what is not. These considerations are reflected in Congress’ decision that DMCA notification procedures place the burden of policing copyright infringement on copyright holders, as well as in the “exclusionary rule” which prohibits consideration of substantially deficient §512(c)(3)(A) notices for purposes of “determining whether a service provider has actual knowledge or is aware of facts and circumstances from which infringing activity is apparent.”

In the light of these and other considerations, the Court affirmed the district court’s determination on summary judgment that Veoh is entitled to §512(c) safe harbor protection.

Many of these issues are at the centre of another case currently pending before the Second Circuit, Viacom v YouTube where a federal appellate ruling is expected soon in Viacom’s $1 billion suit against Google and YouTube. Again, the case centres on the “safe harbor” provision of the Digital Millennium Copyright Act. The district court has already ruled that YouTube was not liable for the tens of thousands of copyright-infringing clips of “South Park,” “The Colbert Report” and other Viacom properties on its site because it removed them when the company issued takedown notices. But Viacom says YouTube built a business on the content that Viacom owns and that it knew users were routinely uploading pirated clips.

From a post by Eleonora Rosati on the 1709 copyright blog www.the1709blog.blogspot.com . You can read some interesting thoughts from Michael Elkin, Veoh’s attorney, here: http://blogs.wsj.com/law/2011/12/21/law-blog-fireside-michael-elkin-counsel-for-veoh/ and more on ‘Key legal decisions in 2012’ here http://www.variety.com/article/VR1118047832?refCatId=13 and more on the proposed new US legislation (the Stop Online Piracy Act – or SOPA) here http://www.bloomberg.com/news/2011-12-22/it-s-time-hollywood-faced-the-music-over-internet-piracy-view.html

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