Intellectual Property Attorney

Ninth Circuit Court Of Appeals (AGAIN) Finds Video-Sharing Website Not Liable For Copyright Infringement Under DMCA’s Safe Harbor Provision

A three judge panel of the U.S. Court of Appeals for the Ninth Circuit ruled (again) last week that video-sharing website Veoh Networks, Inc. (“Veoh”) is not liable for copyright infringement. Although Veoh’s business was effectively crushed by the tremendous cost of the litigation, the Ninth Circuit’s decision is nevertheless a potentially significant victory for internet service providers — in that it demonstrates that the safe harbor provision of the Digital Millennium Copyright Act (“DMCA”) is a strong safeguard from liability.

The DMCA’s safe harbor provision, 17 U.S.C. § 512(c), shields internet service providers from liability stemming from the alleged infringing conduct of third parties under certain circumstances. We will explore the DMCA in greater depth in future posts. For purposes of this post, it is worth recognizing that the safe harbor provision “limits services providers’ liability ‘for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.” Section 512 sets forth procedures that allow copyright holders to give “notice” of infringement and for internet service providers to “takedown” the infringing content or media. Section 512 also permits users to challenge a “takedown”.

Universal Music Group (UMG) filed the underlying lawsuit in September 2007 claiming that Veoh was liable for vicarious and contributory copyright infringement and for inducement of infringement. UMG alleged that Veoh’s users illegally downloaded videos containing copyright protected songs and that Veoh ignored “red flags” evidencing copyright infringement by its users. In particular, UMG considered steps taken by Veoh to detect and prevent users from uploading copyright protected material to be “too little too late” — in short, inadequate. As a result of its general knowledge of such red flags, UMG claimed Veoh was not entitled to protection under the DMCA’s safe harbor provision.

The district court granted summary judgment in favor of Veoh. A panel of the Ninth Circuit upheld the district court’s decision on December 20, 2011. However, the panel withdrew its opinion and last week issued a superseding opinion, again finding that Veoh was entitled to protection under the DMCA’s safe harbor provision. In particular, the panel held that the allegedly infringing content was stored by Veoh solely at the direction of the user (in the words of the panel: “Veoh has simply established a system whereby software automatically processes user-submitted content and recasts it in a format that is readily accessible to its users”; it is an “automated process” that “is initiated entirely at the volition of Veoh’s users”). The panel held that such conduct falls squarely within the DMCA’s safe harbor provision.

Interestingly, the panel noted “that, until the filing of this lawsuit, UMG ‘had not identified to Veoh any specific infringing video available on Veoh’s system.'” In other words, UMG had not specifically identified which videos infringed its copyright or taken advantage of the “notice” and “takedown” procedures in section 512(c). Indeed, the panel continued, “UMG’s decision to forgo the DMCA notice protocol [e.g., the “notice” and “takedown” procedures] ‘stripped it of the most powerful evidence of a service provider’s knowledge — actual notice of infringement by the copyright holder.'” In essence, UMG was attempting to shift the costs of copyright enforcement from UMG to Veoh by requiring Veoh to enforce copyrights owned by third parties even where Veoh had no genuine or actual knowledge of the specific acts of infringement. Indeed, the panel recognized that Veoh had in other instances “promptly removed infringing material when it became aware of specific instances of infringement.” Thus, the panel was unwilling to shift responsibility to internet service providers like Veoh to affirmatively determine whether each piece of content violates third parties’ copyrights. “Copyright holders know precisely what materials they own, and are thus better able to efficiently identify infringing copies than service providers like Veoh, who cannot readily ascertain what material is copyright and what is not.”

Over the next several weeks, we will be closely examining the DMCA and cases addressing the DMCA. This case is UMG Recordings v. Shelter Capital Partners, D.C. No. 07-cv-05744. A copy of the Ninth Circuit’s opinion is available

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