Appeals court reaffirms DMCA defense in Veoh court victory

The 9th Circuit Court of Appeals reaffirmed Tuesday that video hosting site was indeed legal, dismissing Universal’s claims that the site facilitated copyright infringement. The court decision (PDF), which comes four years after Universal sued Veoh and two years after the site’s first court victory, comes too late for Veoh — the company went into bankruptcy in early 2010 and subsequently sold its domain and other assets to Israel-based video startup Qlipso. However, the decision is still notable as a strong win for companies operating under the DMCA’s safe harbor provisions.

Here are some of the major takeaways from the decision:

  • Universal had argued that the DMCA’s safe harbor provisions, which shield site operators from copyright infringement lawsuits as long as they respond to take-down notices, was only meant for web hosting providers and not for companies that convert video files on behalf of an end-user. The court rejected this argument: “We hold that the language and structure of the statute, as well as the legislative intent that motivated its enactment, clarify that (the DMCA) encompasses the access-facilitating processes that automatically occur when a user uploads a video to Veoh.”
  • Universal argued that Veoh must have known about infringement because it had a separate content category for music videos on it site, and in fact advertised some of these music videos via Google Adwords. The court disagreed, noting that Veoh actually had the right to distribute some music videos. But more importantly, it also said that Google ads don’t really prove anything: “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.”
  • Finally, Universal argued that Veoh had knowledge of the infringement on its site, which would run afoul of the safe harbor protections. It pointed to instances of Veoh’s former CEO Dmitry Shapiro acknowledging infringing content on its servers, and an email from Disney (s DIS) to Veoh Investor and former Disney CEO Michael Eisner, in which the Disney complained about its movies being available on Veoh. The court, however, found that knowledge of infringement has to be specific, and that an informal email with vague complaints may actually not be the best way to go if you are a copyright holder: “As a copyright holder … Disney is subject to the notification requirements in (the DMCA) which this informal email failed to meet.”

All of this may not be of much help for Veoh, except for the fact that the site’s investors may possibly get some money back from Universal. However, it could play a big role going forward in the ongoing legal drama between Viacom and YouTube, and it should also help media storage lockers who rely on the DMCA’s safe harbor provision to fend off any possible legal challenges.

Picture courtesy of Flickr user rafaelmarquez.