As well as being home to the world’s largest film and music companies, the US is the intellectual, entrepreneurial and technical leader of the digital age. There is an inherent tension between the media and IT industries, for it is the IT service providers, software companies and website owners whose services and infrastructure facilitate copyright infringement of their users. Herein lies the nub for the US Congress: how do you ensure that the US remains at the forefront of the digital economy, while at the same time protecting the lucrative media industry?

The “happy” medium between copyright owners and IT service providers was the Digital Millennium Copyright Act (“DMCA”), which as we have discussed before here and here, seeks to recognise the legitimate interests and concerns of both industries. The DMCA mandates a process for content owners to notify service providers when their content is being infringed. In return for complying with the DMCA, service providers can rely on the “safe harbor” provisions as a defence to claims of copyright infringement conducted by their users.

In a recent US decision, UMG Recordings v Shelter Capital Partners (trading as “Veoh”), UMG failed to convince the Court that Veoh was not entitled to rely on the safe harbor provisions.

Veoh operates a video sharing website, similar to YouTube. UMG claimed Veoh had engaged in direct, vicarious, and contributory copyright infringement because UMG’s content was available from the Veoh site without UMG’s authorisation. UMG’s main arguments were that Veoh was not entitled to the rely on the safe harbor provisions because Veoh:

  • had actual, or constructive knowledge, that users were infringing UMG’s copyright content; and
  • was receiving a financial benefit “directly attributable to…infringing activity” that it had “the right and ability to control.”

UMG adduced a broad range of evidence that it claimed proved that Veoh had actual or constructive knowledge that users were infringing its copyright content, including:

  • Veoh failed to search for all content from a particular artist upon receiving a takedown notice;
  • Veoh purchased Google Adwords search terms for the content of artists that Veoh did not have a licence to;
  • newspaper articles suggesting that copyright materials were regularly available from Veoh’s site, and that Veoh was “among the least aggressive video sharing sites in fighting copyrighted content”; and
  • Veoh’s general knowledge that from “time to time material belonging to someone else ends up on service providers’ websites.”

The Court found a number of major problems with UMG’s submissions. As the Court observed, Congress “made a considered policy determination” that the onus was on copyright owners to identify their material which they claim was being infringed, rather than any positive obligation on service providers to identify possible copyright infringement. This decision of Congress was recognition of the fact that placing the onus on service providers to identify possible infringements would undermine the viability of their businesses.

The Court also rejected UMG’s submissions that “ability to control” was analogous to the common law concept of vicarious liability. Following UMG’s reasoning, a service provider would lose safe harbor immunity merely because they had the ability to engage in the very acts required by the DMCA i.e. locating infringing material and terminating users’ access.

By finding decisively for Veoh, the Court has rejected a narrow construction of the safe harbor provisions in the DMCA. It could be said that, by doing this, the Court was simply giving effect to the compromise the DMCA represents to both copyright owners and service providers.