Veoh ruling adds clarity to US 'safe harbor'

The Ninth Circuit Court of Appeals in the US has issued a clarifying judgment in the action brought by Universal Music Group (UMG) against Veoh. The case explores issues similar to Viacom vs. Youtube and gives further clarity to how the doctrine of "safe harbor" protection from copyright claims under section 512 of the Digital Millennium Copyright Act will be applied.

The clarification follows on from the December 2011 judgment the court gave, where it said that Veoh was protected from copyright liability, and broadly brings the Veoh decision into line with the Second Circuit’s more recent decision in YouTube.

UMG  had pushed three main arguments against Veoh’s right to qualify for safe harbor: 

1.  The appellant argued that the functions performed automatically by Veoh's software didn't fall within the plain meaning of "infringement of copyright by reason of the storage [of material] at the direction of a user." Universal had promoted the theory that the DMCA should be interpreted narrowly to apply to web hosting services, rather than more general services that including hosting capabilities. 

For the Ninth Circuit, Judge Raymond Fisher disagreed :

"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. As amici note, these access activities define web hosting - if the web host only stored information for a single user, it would be more aptly described as an online back-up service." 

See no evil, hear no evil .....

2.  UMG also challenged the contention that Veoh was never made aware of infringing material on its network. One reason why the music giant was unsuccessful in the lawsuit at the District level was because Veoh was able to show that it had removed materials after receiving takedown notices; However Universal also pointed to other ways Veoh could had gained knowledge of infringements on the website. 

Judge Fisher noted there are music videos that could legally appear on Veoh and that it's the responsibility of the copyright holder to let the ISP know of what's not legal. 

Safe? With all those rocks?

"Requiring specific knowledge of particular infringing activity makes good sense in the context of the DMCA, which Congress enacted to foster cooperation among copyright holders and service providers in dealing with infringement on the Internet. 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 copyrighted and what is not". 

The ruling continues:

"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 requirements....We reach the same conclusion with regard to the [DMCA provision's] inquiry into whether a service provider is 'aware of facts or circumstances from which infringing activity is apparent...'. We hold that Veoh's general knowledge that it hosted copyrightable material and that its services could be used for infringement is insufficient to constitute a red flag." 

Judge Fisher added that a service provider cannot "wilfully bury its head in the sand" -- known as wilful blindness - but saw no evidence of this 

3.  Finally, Universal Music challenged whether Veoh qualified for safe harbor under the provision that entitles an ISP only if it "does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity. Here Judge Fisher seems to put the Ninth Circuit in line with the Second Circuit and the YouTube case: 

"We agree with the Second Circuit and hold that, in order to have the 'right and ability to control such activity' the service provider must 'exert substantial influence on the activities of users.' 'Substantial influence' may include, as the Second Circuit suggested, high levels of control over activities of users, as in Cybernet. Or it may include purposeful conduct as in Grokster" and Veoh's interactions with users didn't rise to that level, the judge said.

https://www.eff.org/deeplinks/2013/03/win-safe-harbors-umg-v-veoh and 
http://www.hollywoodreporter.com/thr-esq/appeals-court-hands-veoh-win-428588