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Veoh Gets a Major Win in Court, and YouTube is Cheering

Are video sharing sites responsible if their members post copyrighted materials? Not if they're taken reasonable precautions to stop the infringement, a California court found yesterda.

The Second Federal Court awarded video site Veoh a major victory in a lawsuit filed by Universal Music Group (UMG). The music label alleged in a 2007 suit that Veoh was supporting and inducing copyright infringement. (Click here to download the court's decision.)

"The underlying issue was that they were alleging that there were infringing Universal videos on the site posted by our users," says Joshua Metzger, Veoh's senior vice president, corporate development and general counsel.

At issue was the intent of the Digital Millennium Copyright Act and how much responsibility video sharing sites need to bear for the infringing posts of its members. UMG supported the interpretation that video sharing sites should proactively police themselves and remove potentially infringing material. Veoh's stance is that copyright holders need to request the removal of infringing content, and that the site will them remove the videos promptly.

Veoh didn't know which videos UMG was alleging were infringing until the discovery phase of the trial, says Metzger. When presented with the list, the site removed all the infringing material, he says.

YouTube's Day in Court
While many in the industry have had their eyes on a $1 billion copyright suit brought by Viacom against YouTube and parent company Google in New York court, the Veoh/UMG judgment is likely to carry more weight since other courts will look to it when deciding similar claims.

"Veoh's policies are very similar to YouTube's," said Fred von Lohmann, senior attorney for the Electronic Freedom Foundation, in an interview with CNET News. "The judge gave Veoh a clean bill of health. I think the court in New York is going to take this ruling very seriously. The facts are very, very close."

In his decision, U.S. District Judge A. Howard Martz dismissed UMG's suit, finding that Veoh was covered by the DMCA's Safe Harbor provision.

"The issue is whether Veoh takes appropriate steps to deal with copyright infringement that takes place," wrote Martz in his decision. "The record presented demonstrates that, far from encouraging copyright infringement, Veoh has a strong DMCA policy, takes active steps to limit incidents of infringement on its Web site, and works diligently to keep unauthorized works off its Web site. In sum, Veoh has met its burden in establishing its entitlement to safe harbor for the alleged infringements here."

While the ruling was strongly in favor of Veoh, the judge noted that once video sharing sites are made aware of copyright-violating material, they need to act on it and remove the infringement.

This may not be the end of the matter, as UMG has stated that it will file an appeal.

"The ruling today is wrong because it runs counter to established precedent and legislative intent, and to the express language of the DMCA," said a written statement from UMG. "Because of this and our commitment to protecting the rights of our artists and songwriters who deserve to be compensated for the use of their music, we will appeal this ruling immediately. The balance between copyright holders and technology that Congress sought in enacting the DMCA has been upended by this decision."

Setting a Precedent
The Veoh/UMG decision should have far-reaching effects in the still new area of online video, and help establish a precedent for how to deal with copyrighted material.

"I think what it does is it gives signposts to companies that are looking to either develop or already have an online video presence," says Metzger. "You can say, 'If I operate my company like Veoh I can operate as a solid corporate citizen and operate without being sued."

The decision will go along way in allowing Web 2.0 video companies to flourish, by avoiding an overly restrictive and cost-prohibitive interpretation of the DMCA's intent.

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