March 14, 2013 | By Parker Higgins

Big Win for Safe Harbors in UMG v. Veoh

The Ninth Circuit Court of Appeals has issued an important copyright judgement today, revisiting its December 2011 decision in Universal Music Group (UMG) v. Veoh in light of last year's Second Circuit decision in Viacom v. YouTube. The court largely affirmed that earlier decision, finding once again that Veoh fell squarely within the safe harbor provision of the Digital Millennium Copyright Act (DMCA). It's a good ruling, and it puts yet more weight behind the idea that a robust safe harbor is not just beneficial but necessary for user-generated content sites to thrive on the Internet.

Veoh was a video-sharing platform, much like YouTube or Vimeo, that allowed users to upload and tag videos that other users could then stream or download. As with other platforms, users must first agree to terms of service that prohibit the unauthorized upload of copyrighted materials, and Veoh promised to comply with proper takedown notices from rightsholders. Instead of filing takedown notices, though, UMG simply sued in 2007, claiming that Veoh should have seen "red flags" of infringement and was therefore not entitled to protection from copyright liability. Veoh saw legal victories in 2011 and today. But while these wins are good for the wider Internet, they are likely cold comfort to the company itself: the cost of litigation effectively drove Veoh out of business years ago.

Still, in siding with Veoh, the court rejects two UMG assertions that would have undermined much of the user-generated-content sites that make up the web today. First, the safe harbor provision in question applies to web hosts, a category that UMG incorrectly claims should only include sites that are exclusively in the business of "storage," not in other hosting activities. Here the judges cite our brief to the Court, noting that 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." UMG's theoretical site, then, "would be more aptly described as an online back-up service." As a result, UMG's claims seem to reflect either a misunderstanding of how the web works or an intentional attempt to gut the safe harbor provision to provide much less protection than Congress intended.

Second, in a similar vein, UMG argues that even in the absence of formal DMCA takedown notices, Veoh should have been aware of "red flags" that indicated copyright infringement was taking place on its site. For very good reasons, courts have been reluctant to accept such "red flags" in place of actual takedown notices. For one thing, it can be very difficult for service providers or others to know whether a work is allowed to be on a site. As the court put it:

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.

In some cases, it can be really hard for a service provider to tell whether content is authorized. Recall in 2010, when YouTube announced that Viacom had hired some 18 different marketing agencies to upload content to the site, even "roughing up" clips to make them seem like fan recordings. Any "red flag" standard, then, would have to consider that in some cases even ilicit-seeming uploads of copyrighted content from third parties could actually be authorized.

And in the face of that sort of conduct, UMG's proposal for "red flags" is almost laughable: it suggests that the existence of video tags like "music video" should have been enough to tip Veoh off to infringement. Never mind the possibility of authorized uploaders, or amateurs creating their own music videos — if it's music, Universal wants platforms to assume they need the company's permission.

Ultimately, the Court's rejection of these two arguments help to bring the DMCA safe harbor in line with what Congress intended. As the court states, Congress "was loath to permit the specter of liability to chill innovation that could also serve substantial socially beneficial functions." The resulting flexibility has been critical in contributing to the variety and quality of sites around the web, and we're happy to see the Ninth Circuit uphold it.


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