Apparently Veoh Isn't Dead Enough For Universal Music; Asks For Rehearing Of Its Bogus Copyright Lawsuit

from the but,-of-course dept

One of the key examples of what happens when you have bad, overly draconian copyright laws that burden companies falsely accused of infringement is Veoh. We’ve talked about them a bunch in the past, but Dmitry Shapiro, who had been CEO of the company, has written up a great (though depressing) first-hand explanation of how bad copyright law kills good companies. He talks about having the vision for an online video service (which he came up with before YouTube existed, though both happened at about the same time), how he built up the product, raised a bunch of money (including from former Disney CEO Michael Eisner), and put together a really good product. On top of that, to help the big entertainment companies feel comfortable, they installed audio filtering technologies — even though such things are not (yet) required by law. And yet, the company was still sued by Universal Music, who insisted that Veoh was a “pirate site.”

Of course, as we’ve noted, Veoh has won every bit of their lawsuits. The latest ruling came in December, where an appeals court, once again, said that Veoh was perfectly legal. It complied with the DMCA and actually went above and beyond what the law required (such as by using those filters). Of course, Veoh is also dead. The costs of the lawsuit really were too much for a young company struggling to build a good product and compete in the marketplace.

As you can imagine the lawsuit dramatically impacted our ability to operate the company. The financial drain of millions of dollars going to litigation took away our power to compete, countless hours of executive’s time was spent in dealing with various responsibilities of litigation, and employee morale was deeply impacted with a constant threat of shutdown. Trying to convince new employees to join the company in spite of this was extremely challenging. To make sure that our money supply was cut off, in an unprecedented move, UMG sued not only the company, but our investors (Michael Eisner, Art Bilger, and Spark Capital) personally. This move raised lot of eyebrows in the legal community, and at one point was thrown out by a judge, only to continue to be appealed and litigated by UMG. This completely choked off all of our financial oxygen, as trying to convince investors to invest with the threat of them personally being sued is insurmountable.

Even after winning the initial lawsuit, UMG just piled on the appeals, and it made it impossible for the company to survive:

With the appeal looming, financing continued to be choked off for us, and in April 2010 we had to sell the company in a fire sale to a small startup. The company that we had built, that was once valued at over $130 Million was gone. Along with it went the livelihoods of over 120 people and their families, $70 million of money entrusted to us by investors, and a big part of me. I had sacrificed so much to live the life of an entrepreneur. My marriage couldn’t stand the strain of this lifestyle and ended in 2009, and while all of this was going on, my father was dying. Instead of spending time with him at his bedside, I was sitting in depositions with lawyers, and stressing over the lawsuit. He died July 13 2009, two months before we won the original judgement on the lawsuit. He would have been proud of me for following through with the fight. I felt so beaten down after this experience, that I couldn’t imagine going back to being an entrepreneur. I was disenchanted, disgusted by the system that would allow these kinds of behaviors to go on, and it is not until recently that I have been able to come up to bat again.

Shapiro posted this to explain why he’s against SOPA/PIPA, but the amazing thing is that the lawsuit is still going on. Even after that ruling in December that totally eviscerated UMG’s arguments and made it abundantly clear that Veoh had been a perfectly legal operation destroyed by a bogus lawsuit, UMG is trying again. Embedded below is the petition that UMG recently filed in the appeals court, asking for an en banc rehearing (appeals courts usually hear cases with a three-judge panel, but parties can later ask for a rehearing with all of the judges in the court — which is an en banc rehearing).

I’m not going to go through the filing in detail. It’s more of the same from UMG. Basically, UMG wants to pretend that the DMCA requires certain actions that it clearly does not. Every judge so far has told UMG this, but it won’t give up. And, more importantly, it won’t give up even though Veoh is long since dead. Considering that UMG and the rest of the legacy recording business keep complaining that they’re not making any money any more, the fact that they’re choosing to keep suing a company they already killed years ago really says something, doesn’t it?

The truth is that UMG is continuing the lawsuit for one reason: because it’s hoping and praying that some court will magically believe UMG’s made up interpretation of copyright law. If that happens, it will make it much easier for UMG to kill other legit sites that it doesn’t like. It will also allow UMG to pretend that Veoh was a “rogue” site that needed to be killed, rather than a successful legitimate business that was killed via a bogus lawsuit.

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Companies: umg, veoh

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Comments on “Apparently Veoh Isn't Dead Enough For Universal Music; Asks For Rehearing Of Its Bogus Copyright Lawsuit”

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94 Comments
PaulT (profile) says:

Re: Re: Re: Turnabout

(citation needed)

Unless you’re trying to say that the reason why Universal’s unfounded lawsuits managed to kill Veoh so quickly is because they were smaller than YouTube in the marketplace, and thus Google somehow need to shoulder all the blame for being so successful. Which would be a fantastic amount of misdirection even for the AC troll contingent.

MrWilson says:

Re: Re: Re:2 Re:

Why are you asking this again here when three hours earlier others already responded to the question just a few comments above this?

But since you apparently don’t feel like reading those: The original Veoh company went under and sold everything, including the website, the domain name, and the brand to another company. That new company is not Veoh.

“Is the site still up?” doesn’t answer the question, “is the original company still in existence?”

Loki says:

Re: Re:

It’s UMG. It’s irrelevant if the possibility of success is just a sliver. Until they keep have exhausted every possible avenue to get this ruling overturned, they will never stop, because failure here gives the next “Veoh” to come along (and they will come along eventually) a strong precedent to work with, making it that much harder for UMG (or others) to force out of business (or more costly to buy out/buy into and ruin from the inside).

Al Bert (profile) says:

Re: Re: Re: Re:

Right, precedents only work in favor of the industry that has a (actual) profit margin which allows them to have a sufficiently large expendable income with which they can pursue any trivial goal indefinitely. I don’t know how many other real industries could get away with what the entertainment industry spends on legal abuse. They either have actual costs that dilute their returns or they’re subject to more financial oversight.

Christopher Weigel (profile) says:

I suspect UMG may not be trying for “some court will magically believe UMG’s made up interpretation of copyright law” so much as they’re hoping that Veoh will run out of money to continue the legal fight.

Under such a circumstance, I’m sure UMG will be more than happy to provide a “generous” settlement offer of “if you admit guilt, we’ll let you die in peace”.

It’s much like any other corporation fighting with a smaller entity – they’re just swamping the other person down in pointless appeals/paperwork in the hopes of draining their resources. Because, y’know, fair fights are for sissies/paupers.

E. Zachary Knight (profile) says:

Re: Re:

Pretty much. The hope that a court will side with them is just icing on the cake. Of course at this point, even the hope of a settlement is moot as Veoh has all the legal right to reject any settlement that involves admitting guilt as several courts have ruled that they have no such guilt. While UMG has the financial power, Veoh has the legal power. I think the latter is far more threatening at this point.

Beta (profile) says:

Re: Re: Re:

Um… walk me through this, would you? Yes, Veoh (or perhaps I should say Shapiro) has the legal right to reject any settlement offer that involves… well, anything. Either party in any suit can reject any settlement offer. As for the “legal power” that you say Veoh has, what exactly is it and how is it threatening?

E. Zachary Knight (profile) says:

Re: Re: Re: Re:

Veoh has a number of legal rulings all siding with it that it was not infringing. That gives it power over UMG. If UMG comes to it requesting a settlement in exchange for admitting liability, they can flat out say “No” while giving a very strong reasoning why. Without those rulings the ability to say no would be severely weakened. While they still retain the right to say no regardless of the rulings, it would be far harder for UMG to pressure Veoh into such a settlement.

Anonymous Coward says:

Re: Re:

I suspect UMG may not be trying for “some court will magically believe UMG’s made up interpretation of copyright law” so much as they’re hoping that Veoh will run out of money to continue the legal fight.

I disagree – with both statements.

It’s pretty obvious to me that UMG doesn’t care about Veoh at this point.

Think about it – why on earth would they sue the *investors*? What they *really* want is to send a not-so-subtle message to everybody else that they will tolerate absolutely no competition.

You want to start up a legal music sharing site? Fuck you. We’ll sue you into the ground and then shit on your grave. We have a multi-million-dollar war chest we will use to obliterate you and anyone that dares to challenge us.

*THAT* is what UMG is doing here.

Jason (profile) says:

Countersue

Veoh should countersue UMG for as much money as YouTube has made.

UMG in my opinion infringed on Veoh’s right to start up a new technology company.

And it should actually be treble damages. I would love to see a jury award them billions of dollars from UMG.

This would be exactly fitting with how the RIAA has treated its customers, in asking for enormous judgments.

There needs to be justice here. Its amazingly sad to see UMG able to destroy a company with allegations that they cannot prove. They need to pay a hefty price for their unwarranted persecution of a small startup company and its investors.

Loki says:

Re: This completely choked off all of our financial oxygen, as trying to convince investors to invest with the threat of them personally being sued is insurmountable.

It was also meant to work for a very limited time.
It was also meant to cover a very limited scope.
It was also meant to people to specifically seek out its protections (meaning you actually had to register it, not gain it by default) and potentially have it denied.

I could care less about the benefits when they’ve eliminated almost all the checks and balances.

Robert (profile) says:

Need proof

There has to be a way to acquire the real data, the financial records (both legal and otherwise), the actual sales, the memos depicting cost-cutting decisions with dates on them, the profits, the shares given to artists, etc…

We need the damn data (not a few examples) to back up all of this and make it widely known that companies like UMG are full of it and out to destroy competition.

Why is it their actions are not considered a breach of anti-trust laws?

There MUST be a way to bring those companies into litigation, the CEO’s themselves, cease all their holdings, all the documents, have loads of volunteers going through them, and it MUST be public. It must companies like UMG are abusing the law, breaking the law, and not being punished.

They punished Microsoft for anti-competitive behaviour, the broke-up Standard Oil and AT&T, and yet they won’t touch the entertainment industry (yes I know, strong tie$$$ with democrats).

Something has to be done. At what point will the public at large stand up and demand criminal proceedings? We know the banking industry deserves it but it won’t happen because they have high positions in the current US administration. But what about Hollywood? Yes they have the DOJ, but isn’t there anyone in the administration with integrity?

And what will it take to wake the masses up to get off their asses, stop watching American Idol or House Swapping or whatever crap is only TV, and do something to help themselves for once?

It has to be huge, we know apathy is strong in the populous, and we also know people don’t want to risk being sprayed with a water canon or pepper spray or sound canon or rubber bullets for trying to right what is wrong in the government. What will it take to make them risk it?

When we have that answer, then we can punish the banks, the media conglomerates (studios/labels, etc..), and the ‘defense’ industries.

Maybe have we wake up the masses we can accomplish some real change.

Anonymous Coward says:

how many times have the entertainment industries gone down this same path of losing court cases time after time, but appealing continuously until they find that one judge that can be influenced enough to agree with them?

and SOPA etc are the types of legislation that these industries want Congress to bring in that will only make things worse, not better. the kind of legislation that helps those legacy industries destroy new businesses in order to save themselves because they will not adapt to the new age. what the hell is wrong with people?

Anonymous Coward says:

You just don’t get it Mike, if they called off the lawsuit just because the company they are suing is bankrupt and had to sell off their assets they’d be tacitly admitting the lawsuit was a vindictive attempt to drive Veoh out of business. You see, the only way to show that it wasn’t just a vindictive sham is to press forward with as many appeals as the law can stand.

Anonymous Coward says:

“The truth is that UMG is continuing the lawsuit for one reason: because it’s hoping and praying that some court will magically believe UMG’s made up interpretation of copyright law. If that happens, it will make it much easier for UMG to kill other legit sites that it doesn’t like. It will also allow UMG to pretend that Veoh was a “rogue” site that needed to be killed, rather than a successful legitimate business that was killed via a bogus lawsuit.”

Exactly, and what better way to win a lawsuit than by suing a company you know has no money for lawyers. They hoping that if Veoh doesn’t bother to defend themselves, or doesn’t put much money into doing so, they can convince the judges to swallow their bullshit. Though with an en banc I feel like the chances are slim that that enough of the judges will swallow their horseshit.

CN says:

Re: What we need are judges that know assholes when they see them...

This is why we need loser pays.

Sounds good in principle, but what happens when the little guy should win, but the big guy in the wrong can afford much better lawyers than the little guy? Little guy loses, and has to pay the big guy’s expensive lawyers, among other things.

What we need are judges that know assholes when they see them, and punish them accordingly.

Mr Big Content says:

And There's Your PROOF That Piracy Kills Jobs And Destroys Businesses!

It was piracy that made UMG sue Veoh. As a result of that suit,

The company that we had built, that was once valued at over $130 Million was gone. Along with it went the livelihoods of over 120 people and their families, $70 million of money entrusted to us by investors…

That’s $130 million of value, along with 120 jobs, and $70 million of real money, killed by piracy! How much more proof do you need of how damaging piracy can be?

Vote for stronger anti-piracy laws NOW!

DogBreath says:

Re: We disagree with your opinion

and while they’re at the trough, they might as well be charged with tertiary (3), quaternary (4), quinary (5), senary (6), septenary (7), octonary (8), nonary (9), denary (10), and duodenary (12) infringement.

Hey, if they’re going to throw the book, they should at least make sure to include all the chapters.

NOTE: If you are ever charged with the 11th type, you’ll learn that it’s name is a State Secret. So when you find out what you have been charged with under said law and try to defend yourself in open court, you and your lawyers automatically have violated the National Espionage Act because someone from a foreign country would learn about it.

Boo Boo says:

kicked in the balls

This is all one way traffic – Big content and music on a roll from Veoh to MegaUpload and all the others in between.
But , maybe , just maybe these guys will get kicked hard in the balls by a power greater than themselves.
They clearly believe that current legislation ( like DMCA ) do not apply to them,its time they were told its doe’s and to shut the fuck up and deal with it.
In the meantime boycott their products.

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