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
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
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
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
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
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.