Metropolitan News-Enterprise


Wednesday, December 21, 2011


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Ninth Circuit Rejects Suit Against Online Video Site Operator

Copyright Act’s ‘Safe Harbor’ Protects Against Liability for Infringement, Panel Says




The operator of a file-sharing website cannot be held liable for the presence of copyrighted material on the site, as long as it takes the steps specified in the Digital Millennium Copyright Act’s “safe harbor” provisions, the Ninth U.S. Circuit Court of Appeals ruled yesterday.

In a closely watched case pitting the music publishing industry against content providers, the court upheld a 2009 ruling by U.S. District Judge—now Senior Judge—A. Howard Matz of the Central District of California.

 Matz ruled in favor of Veoh Networks in the suit by UMG Recordings, Inc. and other members of Universal Music Group. UMG owns the Motown, Def Jam, and Geffen labels, among others. Yesterday’s panel ruling appears to be the first appellate decision on the issue.

A similar case is pending in the Second Circuit, where Viacom is appealing a ruling in favor of YouTube.

Veoh, then based in San Diego, was launched in 2006. Combining video content from industry partners such as ABC and ESPN with user-uploaded videos, the site’s terms of use specifically prohibited the uploading of copyrighted material to which the user did not hold the rights.

Infringing Videos

But while the company said its filtering software removed more than 60,000 infringing videos, it acknowledged that some copyrighted videos have been downloaded from its site. UMG’s complaint filed in 2007, said Veoh’s protective measures were inadequate and claimed the company knew, or should have known, that it was displaying videos of songs copyrighted by the plaintiffs.

But Judge Raymond Fisher, writing yesterday for the Ninth Circuit, said that Matz was correct in ruling that Veoh was shielded by 17 U.S.C. § 512(c), which was enacted in 1998.

Under the safe harbor provision, a “service provider” may not be held liable “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” if certain requirements are met.

Those requirements include that the provider “not have actual knowledge” of infringement and not be aware “of facts or circumstances from which infringing activity is apparent,” or that it act “expeditiously” to remove such material upon learning that it is copyrighted.

The law also requires that the provider “not receive a financial benefit directly attributable to the infringing activity,” if it has the ability to prevent the infringement.

Narrow Reading

UMG argued that Veoh, in hosting music videos including some that bore the names of famous performers, must have known that some of the material was copyrighted, and that infringement was thus “apparent.”

It also claimed that certain activities of Veoh, such as the creation of “chunked” and Flash files and the streaming and downloading of videos went beyond mere facilitation and thus did not constitute “storage at the direction of the user.”

Fisher, however, said UMG was reading the statute too narrowly. Congress, he said, did not intend to limit the safe harbor to web hosting.

The judge went on to say that Veoh had complied with its obligation to remove infringing videos as soon as it learned they were posted. It’s up to publishing companies like UMG to notify websites of violations, he said.

“Copyright holders know precisely what materials they own, and thus are better able to identify infringing copies than service providers like Veoh,” Fisher wrote for the court.

Veho filed for bankruptcy protection last year, and its assets were purchased by Santa Monica-based Qlipso Media Networks Ltd. John Goldman, chief executive of that company, told The Associated Press that the decision was “a great result for conscientious operators of [user-generated content] sites like us ... who strictly follow DMCA rules to protect content holders.”

The case was argued in the Ninth Circuit by Steven A. Marenberg of Irell & Manella LLP for the plaintiffs, and by Michael S. Elontent holders.”

The case was argued in the Ninth Circuit by Steven A. Marenberg of Irell & Manella LLP for the plaintiffs, and by Michael S. Elkin and Thomas P. Lane of Winston & Strawn LLP, Robert G. Badal of Wilmer Cutler Pickering Hale and Dorr LLP and Glen L. Kulik of Kulik, Gottesman, Mouton & Siegel, LLP for the defendants, who included Veoh and several investors.

The case is UMG Recordings, Inc. v. Shelter Capital Partners LLC, 09-55902.


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