December 21, 2011
Ninth Circuit Upholds Safe Harbors In Veoh Case
A while back a federal district court concluded that Internet video service Veoh was entitled to safe harbor protections under the DMCA against charges of copyright infringement made by the Universal Music Group. The Ninth Circuit Court of Appeals affirmed the judgment of the district court in a 49 page opinion. The suit UMG filed against Veoh is very similar to that filed by Viacom against YouTube and Google. The central issue in both is that the video sharing sites are aware of copyrighted materials appearing on their systems and neither is particularly proactive in removing those materials save on takedown notices. Their lax approach, among other reasons, according to plaintiffs, deprives each of the DMCA safe harbor provisions. Google won in the district court much to Viacom’s chagrin. Viacom vowed to appeal.
UMG is a tentacle of the Vivendi entertainment conglomerate and owner of a vast catalog of music and music related videos. Some of these, as the Ninth Circuit states, showed up on Veoh. UMG first argued that Veoh did not fit the definition of a service provider as that status should go to the company that sold Veoh its server space and bandwidth. This argument turned on the phrase “by reason of the storage at the direction of the user.” The Court examined the legislative history of the relevant act and concluded that this interpretation was absurd incorrect:
UMG’s theory fails to account for the reality that web hosts, like Veoh, also store user-submitted materials in order to make those materials accessible to other Internet users. The reason one has a website is so that others may view it.
The argument would make the concept of safe harbors irrelevant, something that makes the statute internally inconsistent.
The second argument UMG advanced was that there were questions of material fact as to whether Veoh had notice of infringing materials on its system. Although UMG did not identify specific instances of copyrighted material available on Veoh, the site should have known it held infringing materials merely because music is copyrighted. Additionally, a Veoh user pointed to infringing material while complaining that his upload was blocked. Other evidence of knowledge is that Veoh purchased Google ad words for some of the named artists on UMG’s roster.
The Court noted that Veoh entered into licensing agreements with other major music companies, including some who shared an artist roster with UMG. The companies were in a better position to know which video was their property rather than Veoh, which was the whole point of the notice and takedown system Congress put in place. As to the third party who complained, that person did not provide a definitive statement as to who owned property rights in a video. The Court minimized the ad word purchase by noting that plenty of companies purchase ad words to other products to drive business to their sites. This does not constitute a form of knowledge under the act that would mitigate the safe harbor protection. UMG raised other specific acts it claimed were general knowledge (the fact that Veoh removed videos under takedown notices implied awareness, for example) which the Court similarly dismissed.
UMG asks us to change course with regard to § 512(c)(1)(A) by adopting a broad conception of the knowledge requirement. We see no principled basis for doing so. We therefore hold that merely hosting a category of copyrightable content, such as music videos, with the general knowledge that one’s services could be used to share infringing material, is insufficient to meet the actual knowledge requirement under § 512(c)(1)(A)(i).
The rest of the opinion devotes itself to discussions of vicarious liability (does not apply given the development of the law to this record) and shareholder liability (no allegations from UMG that showed investors gave material assistance to Veoh to commit acts of infringement).
They must be celebrating this opinion as an early Christmas present in Google headquarters. Though Viacom’s appeal occurs in the Second Circuit, the logic of the Ninth Circuit can’t escape the judges in New York. The opinion is here. [MG]