January 5, 2009 | By Fred von Lohmann

UMG v. Veoh: Another Victory for Web 2.0

Over the holidays, video hosting site Veoh won another victory under the DMCA safe harbors, this time against Universal Music Group (UMG). The ruling should put to rest the argument that transcoding and other activities necessary for making content accessible on the web are not covered by the DMCA's Section 512(c) safe harbor for storing material on behalf of users (i.e., hosting user-generated content). This is good news not just for Veoh, but also for YouTube and every other site that hosts material uploaded by users.

Like many other companies that host content on behalf of users, Veoh has been bedeviled by copyright lawsuits. The copyright owners make the same argument in each of these suits: the hosting service should be liable for every infringing bit uploaded by naughty users and responsible for the full cost of policing for infringement. Fortunately, Congress enacted the DMCA's safe harbor provisions back in 1998 to protect service providers from exactly these risks, offering immunity from copyright damages to those who implement a notice-and-takedown system. In August 2008, Veoh won a big victory against adult video purveyor Io Group, relying on these provisions.

Veoh's latest victory was against UMG, which sued Veoh because Veoh users allegedly uploaded UMG music videos without authorization. The issue before the court was whether the DMCA safe harbor for hosting only covers the actual act of storing bits on a server, or whether it also covers related activities, such as:

  1. automatically transcoding video files uploaded by users into Flash format;
  2. automatically creating copies of uploaded video files that are comprised of smaller “chunks” of the original file;
  3. allowing users to access uploaded videos via streaming;
  4. allowing users to access uploaded videos by downloading whole video files.

Relying on the statutory language, as well as the legislative history, the court concluded that all of these activities are covered by the DMCA Section 512(c) safe harbor. Lots of online service providers will greet this ruling with relief. If the court had accepted UMG's arguments, every web host would lose the safe harbor as soon as it made web pages available to the public. The ruling should also help YouTube in its ongoing battle with Viacom, which also turns on the continuing strength of the DMCA safe harbors.

But the Veoh ruling also points out a surprising irony: while YouTube and Viacom are fighting their interminable litigation trench war, many interesting DMCA legal questions are being resolved in smaller, faster-moving cases involving companies like Veoh. At this rate, the highly-anticipated Viacom v. YouTube lawsuit may end up a footnote in the legal fights that define the rules governing user-generated content.


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