Veoh Still Perfectly Legal... But Also Still Dead Due To Bogus Copyright Lawsuit

from the why-SOPA-will-be-abused dept

In what should be a clear warning of the problems with laws like SOPA, we have a new ruling in the UMG v. Veoh case -- and how copyright holders will miss no opportunity to kill off perfectly legal services with bogus copyright claims. As you may recall, Veoh was a YouTube-like site, that was sued by Universal Music because some users had uploaded videos with UMG copyrighted music in them (technically Veoh sued for declaratory judgment first, but only in response to a threat letter from UMG, who followed up with an actual suit of its own). Veoh -- in part funded by former Disney CEO Michael Eisner -- had always been very careful to follow the DMCA notice-and-takedown process. However, in the minds of Hollywood, that's simply never enough. As in the Viacom-YouTube suit, UMG seemed to want to claim that Veoh had to wave a magic wand and figure out what was infringing and make it disappear. Thankfully, a court recognized that Veoh was legal under the DMCA. Still, UMG couldn't resist trying to bury the company in legal costs, not just suing the company, but by also suing the company's investors, in some twisted theory of secondary liability.

Either way, despite being declared perfectly legal, the costs of defending against such a ridiculous lawsuit was too much for a startup like Veoh, and it was forced to shut down, living on solely to keep the case going, so that someone was able to defend against UMG's appeal.

Today we get the excellent news that the 9th Circuit has affirmed the lower court's ruling and noted that Veoh, indeed, was perfectly legal. The ruling is pretty thorough and comprehensive and dismisses some of the ridiculous claims we've see here at times. First, it notes that Veoh is clearly protected by the DMCA. Some (including UMG) have argued repeatedly that because Veoh (and others) don't just "store" the content, but process it for display/performance, that this goes beyond the DMCA protections. The court notes that, if this interpretation is accurate, it makes much of the rest of Section 512(c) of the DMCA totally meaningless -- and that doesn't make any sense. Furthermore, it points out that it would be kind of silly to suggest the DMCA only protects storage but never access:
By its terms, § 512(c) presupposes that service providers will provide access to users’ stored material, and we would thus contravene the statute if we held that such access disqualified Veoh from the safe harbor. Section 512(c) codifies a detailed notice and takedown procedure by which copyright holders inform service providers of infringing material accessible through their sites, and service providers then “disable access to” such materials. 17 U.S.C. § 512(c)(1)(A)(iii), (c)(1)(C) & (c)(3)(A)(iii) (emphasis added). This carefully considered protocol, and the statute’s attendant references to “disabl[ing] access” to infringing materials, see id., would be superfluous if we accepted UMG’s constrained reading of the statute. See Greenwood v. CompuCredit Corp., 615 F.3d 1204, 1209 (9th Cir. 2010) (“We must, if possible, interpret a statute such that all its language is given effect, and none of it is rendered superfluous.” (citing TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001))). Indeed, it is not clear how copyright holders could even discover infringing materials on service providers’ sites to notify them as the protocol dictates if § 512(c) did not contemplate that there would be access to the materials.

We do not find persuasive UMG’s effort to reconcile the internal contradictions its reading of the statute creates by positing that Congress must have meant § 512(c) to protect only “web hosting” services. Web hosts “host” websites on their servers, thereby “mak[ing] storage resources available to website operators.” The thrust of UMG’s argument seems to be that web hosts do not undertake the sorts of accessibility facilitating functions that Veoh does, and thus the services they perform “fit within the ordinary meaning of ‘storage,’ ” and thereby “harmoniz[e]” with the notice and takedown procedures. 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...
Next up is the question of whether or not Veoh fell afoul of the DMCA's "red flag" knowledge provisions -- the part that's the key to the Viacom/YouTube lawsuit. The problem here is that, as with Viacom/YouTube, UMG completely fails because Veoh clearly took down any content as soon as it became aware that the specific content was infringing. Of course, part of the problem here is that UMG never sent a takedown (oops). It just let the RIAA send some notices instead. UMG tries to get around this by arguing that because Veoh had a "music category" it must have known it had infringing material (seriously). The court is not impressed and educated UMG to the fact that, you know, not all music online is infringing:
As an initial matter, contrary to UMG’s contentions, there are many music videos that could in fact legally appear on Veoh. “Among the types of videos subject to copyright protection but lawfully available on Veoh’s system were videos with music created by users and videos that Veoh provided pursuant to arrangements it reached with major copyright holders, such as SonyBMG
Then the court points out that Congress' expressed purpose behind the DMCA was to "facilitate making available quickly and conveniently via the Internet . . . movies, music, software, and literary works" and that's "precisely the service Veoh provides." You can almost hear the sarcasm in the ruling in response to UMG's preposterous suggestion that anyone hosting music online must know it's infringing. The court furthermore goes back to the Betamax ruling:
Cases analyzing knowledge in the secondary copyright infringement context also counsel against UMG’s general knowledge approach. In Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), the Supreme Court held that there was “no precedent in the law of copyright for the imposition of” liability based on the theory that the defendant had “sold equipment with constructive knowledge of the fact that their customers may use that equipment to make unauthorized copies of copyrighted material.” Id. at 439. So long as the product was “capable of substantial noninfringing uses,” the Court refused to impute knowledge of infringement....

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...
From there, the court makes a key point that we've discussed plenty of times: the only one who really knows if the material is infringing is the copyright holder:
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.
I feel like that quote needs to be stamped on the foreheads of copyright holders who keep trying to make everyone else become copyright cops for them. No one else knows if the work is authorized or not.

The court goes on to note that this was Congress' clear intent. Otherwise it wouldn't have made it clear that bogus DMCA notices can be ignored. That is, notices that don't provide the specific info don't make service providers liable. UMG (and Viacom) seek to flip that on its head, by arguing that if you know that something somewhere on your site may be infringing, you lose safe harbors and are suddenly liable. That's crazy and makes no sense... as the court clearly understands.
Congress made a considered policy determination that the “DMCA notification procedures [would] place the burden of policing copyright infringement — identifying the potentially infringing material and adequately documenting infringement — squarely on the owners." of the copyright.
The court notes that it sees "no principled basis" for changing Congress' intent here.
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 requirement
The court goes on to remind UMG that it also doesn't own all rights to every artist signed to the label. UMG had argued that because Veoh ads popped up on searches for UMG artists, that Veoh knew it was infringing. But the court notes that's crazy.
UMG argues that Veoh’s purchase of certain search terms through the Google AdWords program demonstrates knowledge of infringing activity because some of the terms purchased, such as “50 Cent,” “Avril Lavigne” and “Britney Spears,” are the names of UMG artists. However, artists are not always in exclusive relationships with recording companies, so just because UMG owns the copyrights for some Britney Spears songs does not mean it owns the copyright for all Britney Spears songs. Indeed, 50 Cent, Avril Lavigne and Britney Spears are also affiliated with Sony- BMG, which gave Veoh permission to stream its videos by these artists. Furthermore, even if Veoh had not had such permission, we recognize that companies sometimes purchase search terms they believe will lead potential customers to their websites even if the terms do not describe goods or services the company actually provides. For example, a sunglass company might buy the search terms “sunscreen” or “vacation” because it believed that people interested in such searches would often also be interested in sunglasses. Accordingly, Veoh’s search term purchases do little to demonstrate that it knew it hosted infringing material.
From there, the court quickly dispatched each of UMG's nuttier attempts to show "red flag" knowledge (an email from a Disney CEO complaining to Eisner, some news articles mentioning that infringing content is on the site and a user complaining that Veoh wouldn't let him upload infringing content by noting that he's seen lots of other infringing content). None of those rise to the level under the DMCA that would show Veoh had red flag knowledge of specific infringing content that would remove safe harbors.

In fact, the court states again that specific (not general) knowledge of infringement is necessary, and that was clearly what Congress intended.
First, Congress explicitly stated in three different reports that the DMCA was intended to “protect qualifying service providers from liability for all monetary relief for direct, vicarious and contributory infringement.” .... Under UMG’s interpretation, however, every service provider subject to vicarious liability would be automatically excluded from safe harbor protection. Second, Congress made clear that it intended to provide safe harbor protection not by altering the common law vicarious liability standards, but rather by carving out permanent safe harbors to that liability for Internet service providers even while the common law standards continue to evolve.
Finally, the court also soundly rejects UMG's attempt to bring Veoh's investors into the lawsuit for vicarious and contributory infringement, as well as inducement. The problem here is that since Veoh was protected by the DMCA there was no infringement that its investors could be guilty of secondarily helping to proceed:
It is well-established that “[s]econdary liability for copyright infringement does not exist in the absence of direct infringement . . . .”
Finally, Veoh itself had appealed the rejection of its request for attorneys fees. Here, Veoh wins a partial victory as the court says that the lower court needs to go back and review some (though not all) of that part of the ruling.

Either way, this should be a huge warning sign for why SOPA/PIPA would be a disaster. Just look at the status of Veoh today. It's out of business due to a totally bogus DMCA claim that forced it into court. At least under the DMCA, it was able to keep its site up. SOPA/PIPA set up a system whereby sites don't just have to defend themselves in court after they've already been shut down, but they can't even keep their business going at all while the process is ongoing. Given situations like Veoh and the Dajaz1 takedown, it should be quite obvious that copyright holders have a long history of killing off perfectly legal services by abusing copyright law. Giving them more ability to do so should insult basic common sense.

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  1. identicon
    Anonymous Coward, 20 Dec 2011 @ 1:35pm

    Re: Re: Re:

    The new Internet! We'll call it, Television 2.0!

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