Advertising Law Blog

A federal judge has ruled that Veoh Networks Inc., a web-video host, is entitled to safe harbor under the Digital Millennium Copyright Act ("DMCA") and is not liable for monetary or injunctive relief to members of Universal Music Group ("Universal"), which sued Veoh for copyright infringement. See UMG Recordings, Inc., et al. v. Veoh Networks Inc., et al., CV 07-5744 (AHM) (C.D.C.A. September 11, 2009).

Two years ago, Universal sued Veoh for copyright infringement. The suit alleged that Veoh's business was essentially based on the infringing use of copyrighted works of others, notably from Universal's viewpoint, musical groups and artists. Judge A. Howard Matz of the U.S. District Court for the Central District of California granted Veoh's motion for summary judgment on September 11, 2009.

At the center of the dispute and the court's order was the extent to which the DMCA obligates internet-based services like Veoh, which rely on content contributed by users, to police their systems to prevent all copyright infringement. Judge Matz' order noted that "[t]he DMCA does not place the burden of ferreting out infringement on the service provider" and that "the record presented demonstrates that, far from encouraging copyright infringement, Veoh has a strong DMCA policy, takes active steps to limit incidents of infringement on its website and works diligently to keep unauthorized works off its website."

To qualify for the DMCA safe harbor, an interactive service provider must show, inter alia, that: (1) it has no actual or constructive knowledge of the infringement, (2) upon receiving knowledge of an act of infringement, it "acts expeditiously to remove, or disable access to, the material", (3) it does not receive a direct financial benefit from infringing conduct that it controls, (4) it operates a notice and takedown system for infringing material, and (5) it reasonably implements a policy for terminating repeat infringers. 17 U.S.C. § 512(c), (i), (j).

A key requirement for insulation from liability for copyright infringement under the DMCA is, when a company becomes aware of infringing content, to promptly remove it from use and display. The Central District of California ruled that Veoh had done just that: Veoh showed that "when it did acquire knowledge of allegedly infringing material - whether from DMCA notices, informal notices, or other means - it expeditiously removed such material, and UMG has failed to rebut that showing." Consequently, the safe harbor provisions of the DMCA served to protect Veoh from liability in this case.

This ruling finalized a preliminary decision from January 2009. Universal is expected to appeal.

This is the second federal court ruling to find Veoh protected under the DMCA. A similar lawsuit brought by Io Group, an adult entertainment company, was also decided in favor of Veoh last year. You can read our report on the Io Group v. Veoh Networks, Inc. decision here. While this Ninth Circuit decision is not binding on the Second Circuit, this ruling could prove to be influential in the Viacom v. YouTube case pending in the Second Circuit, which involves similar facts and legal issues.