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UMG v. Veoh
by Pio Szamel ­– Edited by Jacob Rogers

UMG Recordings, Inc. v Veoh Networks, Inc., Nos. 09–55902, 09–56777, 10–55732 (9th Cir. Mar. 14, 2013)
Slip opinion

The Ninth Circuit affirmed the Federal District Court for the Central District of California, which had granted summary judgment finding that the streaming-video host Veoh was protected by the safe harbor provisions of the Digital Millenium Copyright Act (“DMCA”) and dismissed additional infringement claims against Veoh’s investors.

On March 14, the Ninth Circuit handed down a much-delayed opinion in UMG v Veoh, rejecting Universal Music Group’s contentions that the streaming-video host Veoh was not protected by the DMCA’s safe harbor provision for online hosting providers, 17 U.S.C. §512(c). While UMG had argued that Veoh was outside the scope of the DMCA because it went beyond simple “storage at the direction of a user” by transcoding videos into common streaming formats and facilitating access to them, the court found that enabling access in this way is an essential part of web-hosting. UMG at 24-25. It also affirmed that the safe-harbor exception for actual or red-flag knowledge of infringement, 17 U.S.C. § 512(c)(1)(A), requires knowledge of specific infringing or likely infringing content, not just suspicious categories of content. Id. at 31-34.  Finally it found that Veoh did not have the “right and ability to control” infringing activity, as required by another exception to the safe harbor provisions, 17 U.S.C. § 512(c)(1)(B), rejecting Viacom’s contention that this exception should be interpreted in line with the common law definition of vicarious liability. Id. at 40, 42.

The Electronic Frontier Foundation, which had filed an amicus brief in support of Veoh, hails the decision as a victory for hosts of user-generated content, while TechCrunch provides a primer on the state of DMCA safe-harbor law in its wake. The Copyright Alliance, a content industry trade group, argues that the 9th Circuit opinion still leaves open a few possible lines of attack against hosting providers.

This case has been winding its way through the courts for the better part of a decade, since 2007, and the Ninth Circuit’s initial ruling on these issues, in favor of Veoh, came down in 2011. In 2012, the court agreed to reconsider its ruling in light of the Second Circuit’s blockbuster opinion in Youtube v. Viacom. This month’s final victory is a pyrrhic one for Veoh, as the original company went bankrupt in 2010, in part because of the mounting legal costs.

In the case, the Ninth Circuit largely ended up following the Second Circuit’s lead, leaving the two leading courts for media litigation in agreement on the applicability of DMCA safe harbors to streaming-video hosting providers and on the proper interpretation of the safe harbor exceptions for actual and red-flag knowledge of infringement and situations in which hosting providers financially benefit from and have the “right and ability to control” infringing activity. As the Copyright Alliance notes, the Ninth Circuit’s only significant departure from its own previous opinion was on this last “right and ability to control” issue, as it adopted the Second Circuit’s language that “in order to have the ‘right and ability to control,’ the service provider must ‘exert[] substantial influence on the activities of users’” beyond merely the ability to review and remove content. Id. at 49 (brackets in original) (quoting Viacom Intern., Inc. v. YouTube, Inc., 676 F.3d 19 (2nd Cir. 2012)).

The last part of the Ninth Circuit’s opinion is devoted to UMG’s attempt to sue investors in Veoh for vicarious infringement, contributory infringement, and inducement of infringement. The court expressed concern about the possibility that investors in a service might face liability even as the service itself is protected by DMCA safe harbors, calling such a result “anomalous.” Id. at 51. However it declined to address this issue directly in this case, affirming the district court’s dismissal of the claims on the basis that UMG did not allege that the investors concerned actually acted in concert to control Veoh’s activities, only that they happened to constitute a controlling majority of its board. Id. at 52-55.

Pio Szamel is a 1L at Harvard Law School.

Posted On Apr - 1 - 2013 Comments Off

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