UMG Recordings, Inc., et al. v. Veoh Networks Inc., et al., CV 07-5744 AHM (AJWx) (C.D. Cal. 2009)

We’ve discussed UMG Recordings v. Veoh three times over the past year or so.  In early January, Judge Matz of the Central District of California denied UMG’s motion for partial summary judgment finding Veoh was shielded from liability by the DMCA’s safe harbor provisions while executing four particular software functions. In February, the Court dismissed with leave to amend UMG’s secondary infringement claims against Veoh’s investors. In May, the Court again addressed the issue of secondary liability claims against Veoh investors, this time dismissing the claims with prejudice. We return once again.

On Friday, the Court addressed UMG’s remaining arguments for why Veoh was not entitled to safe harbor under the DMCA:

A defendant qualifies for safe harbor under section 512(c) of the Copyright Act if it is a “service provider” that meets the requirements set forth in sections 512(c) and 512(i). UMG does not dispute that Veoh is a “service provider” pursuant to section 512(k)(1)(B). It contends that there are genuine issues of material fact as to (1) whether Veoh expeditiously removed infringing material when it acquired actual knowledge of such material or awareness of facts from which infringing activity was apparent; (2) whether Veoh had the right and ability to control allegedly infringing activity from which it received a direct financial benefit; and (3) whether Veoh adopted and reasonably implemented a policy of terminating repeat infringers[.]

1. On whether Veoh expeditiously removed infringing material when it aquired actual knowledge or awareness

In light of the principles articulated in CCBill that the burden is on the copyright holder to provide notice of allegedly infringing material, and that it takes willful ignorance of readily apparent infringement to find a “red flag,” Veoh has provided substantial evidence that it fulfilled the requirements of section 512(c)(1)(A). UMG has provided no material evidence to the contrary.

2. On whether Veoh had the right and ability to control allegedly infringing activity from which it received a direct financial benefit

A service provider may seek the section 512(c) safe harbor only if it “does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.” 17 U.S.C. § 512(c)(1)(B). The parties’ dispute over this requirement boils down to another mixed question of fact and law: did Veoh have the “right and ability to control” the allegedly infringing activity given that (a) the allegedly infringing material resided on Veoh’s system; (b) Veoh had the ability to remove such material; (c) Veoh could have implemented, and did implement, filtering systems; and (d) Veoh could have searched for potentially infringing content? The text of the statute and the case law on this element of the safe harbor compel the Court to conclude that Veoh did not have the requisite “right
and ability to control.”

3. On whether Veoh adopted and reasonably implemented a policy of terminating repeat infringers

A service provider is eligible for safe harbor only if it “has adopted and reasonably implemented . . . a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers.” 17 U.S.C. § 512(i) (emphasis added). UMG contends that Veoh’s policy is inadequate because it does not automatically terminate users who upload videos that are blocked by the Audible Magic filter. As discussed below, this argument is unpersuasive because however beneficial the Audible Magic technology is in helping to identify infringing material, it does not meet the standard of reliability and verifiability required by the Ninth Circuit in order to justify terminating a user’s account.

The Court granted Veoh summary judgment finding that it was entitled to safe harbor under 17 U.S.C. 512(c).

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