Io Group v. Veoh Networks: Website Finds Safe Harbor from Copyright Infringement Damages for User-Provided Videos

Copyright Patent

Io Group, Inc. v. Veoh Networks, Inc.

N.D. Cal., August 27, 2008, No. C06-03926 HRL
Slip Opinion
(hosted by Electronic Frontier Foundation)

Last week, a federal judge in San Jose, U.S. District Judge Howard Lloyd, ruled that Veoh Networks, Inc. (“Veoh”), is not liable for copyright infringement for material that was uploaded to its site. Veho provides software and a website that enables the sharing of user-provided video content over the Internet.

The case arises from a complaint filed by Io Group, Inc. ("Io"), a company that holds and owns a number of registered copyrights for a variety of adult entertainment products. Between June 1 and June 22, 2006, Io alleged that it discovered clips from ten of its copyrighted films had been uploaded and viewed on without its authorization. None of the clips contained copyright notices, except one work that displayed a “Titan Media” trademark several minutes into the clip; Io conducts business under that name.

Veoh’s first notice of the claimed infringement was Io’s filing of the instant lawsuit on June 23, 2006. Independently, Veoh had already decided that it would no longer permit adult content on its website. By the time this suit was filed, access to all adult content on Veoh’s website – including any content allegedly infringing Io’s copyrights – had been terminated.

Io sought summary judgment on liability for direct, contributory and vicarious copyright infringement. The court ruled that, even assuming that plaintiff’s infringement claims pass summary judgment muster, Veoh was eligible for safe harbor protection from damages; furthermore the court found the limited injunctive relief provided under the DMCA was moot.

Commentators have noted the potentially far-reaching effects of this decision, especially for the ongoing YouTube-Viacom infringement litigation. See the L.A. Times, CNet, Wired, Silicon Alley Insider, Techdirt, TechCrunch.

Bruce Boyden of Prawfsblawg notes, most commentators have focused the holding that Veoh's automated reformatting of uploaded materials does not create copies for which Veoh is responsible. Boyden also notes the similarities to the Second Circuit’s recent Cablevision case, calling the cases “good precedent for ISPs who process uploaded content. . . . .”

While the DMCA “safe harbor” provision does not immunize online service providers from liability, it provides copyright owners with only limited injunctive relief. Under the circumstances presented, the court found it only necessary to address Veoh’s motion as to the applicability of the safe harbor under DMCA section 512(c). Veoh contended that it qualified for “safe harbor” because it did not “actively participate or supervise the uploading of files. . . . Instead, video files are uploaded through an automated process which is initiated entirely at the volition of Veoh’s users.” The company added that the evidence “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 Web site.”

Additionally, the court discussed the “duty to police” within the context of the DMCA and the right and ability to control infringing activity. The implicit requirement to police the system comes up in the context of vicarious liability, which is not immunized under the DMCA safe harbor. The test for vicarious liability has two prongs, (1) the "right and ability to supervise the infringing activity" and (2) a "direct financial interest" in those activities. The court's discussion of policing reached only the first prong, noting that while Veoh may be able to “affect” the infringing activity, the number of submissions render the site unable to control what content is uploaded before it’s placed on the site by users.

Because the court found that Veoh qualified for safe harbor under Section 512(c), the only relief available was limited injunctive relief under Section 512(j). However, Veoh independently removed all adult content before it ever received notice of any claimed infringement. Thus, any injunctive relief to which Io would be entitled was moot. The court declined to address Veoh’s liability for copyright infringement, as any finding would be merely advisory; accordingly the court did not reach the issues raised in plaintiff’s motion for summary judgment.