UMG Loses at Trial in Infringment Suit Against Veoh

The Universal Music Group (UMG) sued Internet video provider Veoh in September, 2007, for direct, contributory, and vicarious copyright infringement and for inducement of copyright infringement. The case turned on whether Veoh was eligible to invoke the safe harbor provisions of the Digital Millennium Copyright Act.  Veoh's business model is similar to YouTube's, where users with accounts upload video for world-wide viewing.  The users who upload video usually describe each with keywords and other meta-data allowing others to search and view clips.  Veoh also adds advertising to the page where the video is viewed.  Universal's complaint was that Veoh offerings included UMG copyrights and that by its activities in displaying video, that Veoh was ineligible for the DMCA safe harbor provisions.

The Court resolved the issues in a grant of summary judgment to Veoh.  A reading of the Civil Notes, as the Court calls its document, suggests that UMG's arguments are heavy handed and unreasonable.  One of the arguments, for example, is that Veoh generate revenue from the advertisements in places on a page which may include infringing content.  The Court disposed of this in a footnote.  It called the dispute "immaterial" which distracted from the real issues in the litigation.  From the rest of the opinion it is clear UMG wanted a ruling that suggested that any advertising paired with any infringing video would automatically destroy the safe harbor for Veoh.  

Another argument concerns the implementation of a filtering system.  UMG said that Veoh could have implemented a filtering system long before it did and could have used it better to identify infringing clips after implementation.  The Court noted that the DMCA does not require sites such as Veoh to implement a filtering system, let alone one within the plaintiff's time frame and expectations.  If anything, the Court emphasized the specific requirements that UMG identify specifically which content on Veoh infringed its copyrights with enough information for Veoh to remove them.  When that happened, Veoh complied with the statutory requirements.

UMG was not happy with Veoh's suspension policy for repeat offenders.  It said Veoh did not suspend a user account when that person uploaded multiple infringing videos at one time.  Veoh treated this as a single incident and sent a warning.  The Court noted that the text of the statute the legislative history was loose.  As such, Veoh acted reasonably under the statute.

My favorite argument, though, is the one that Veoh had actual knowledge of copyright infringement by simply hosting videos with music.  Here's the Court's treatment:

UMG first asserts that Veoh had actual knowledge of infringement because it “knew that it was hosting an entire category of content—music—that was subject to copyright protection.” If merely hosting user-contributed material capable of copyright protection were enough to impute actual knowledge to a service provider, the section 512(c) safe harbor would be a dead letter because vast portions of content on the internet are eligible for copyright protection. UMG’s theory would also make the DMCA’s  notice-and-takedown provisions completely superfluous because any service provider that hosted copyrighted material would be disqualified from the section 512(c) safe harbor regardless of whether the copyright holder gave notice or whether the service provider otherwise acquired actual or constructive knowledge of specific infringements.

The Court noted that UMG's favored filtering system implemented by Veoh did not identify 221,842 of 244,205 items labeled as music videos as unauthorized.  It also noted that Veoh had licensing agreements with other music labels such as SonyBMG who properly licensed materials with artists that also distributed music through UMG.  UMG did not make this distinction when it gave Veoh an artists list as a notice of infringement.  The Court said the burden was on copyright holders to police its content and not the site.

UMG indicates that it will appeal the Court's lengthy decision as against the law as written and a misinterpretation of the legislative history.  It seems more a case where a litigant had a specific point of view of the scope and details of a law and got the wrong decision.  UMG seemed to cherry-pick legislative statements in its favor when the larger context indicated that was not a reasonable interpretation.  Another lesson of the court's opinion is that when quoting a passage in a congressional report, make sure the language supports a provision of the statute that wasn't heavily revised before enacted.  I'll give UMG's lawyers credit for trying, but they should have known better.

Most of the press on the case has focused on the fact that the case is so similar to Viacom's suit again YouTube.  As a district court opinion from a different circuit, it has no precedential value whatsoever in the YouTube case.  At the same time, the judge's reasoning is detailed against many of the same arguments that Viacom has raised in the press against YouTube and Google.  Veoh has never turned a profit.  Google should buy them or at least subsidize their legal fees if this case helps them.  

The opinion is here.  [MG]