In 2008, the video-sharing website Veoh.com (Veoh) won two notable decisions under the “safe harbor” provisions of the Digital Millennium Copyright Act (DMCA). Io Group, Inc. v. Veoh Networks, Inc., No. C06-03926 (N.D. Cal., Aug. 27, 2008) (Lloyd, Distr. J.) and UMG Recordings, Inc. v. Veoh Networks, Inc., 2008 WL 5423841 (C.D. Cal., Dec. 29, 2008) (Matz, Distr. J.). 

Launched in 2006, Veoh allows users to “upload” videos to its site, which can then be accessed and shared by others via streaming and/or downloading. In June 2006, Io Group (Io), a provider of adult content, sued Veoh alleging that video clips from its copyrighted content had been made available on Veoh’s website without permission. Then in September 2007, Universal Music Group (UMG) also sued Veoh alleging “massive” copyright infringement on Veoh’s website and likening Veoh’s service to that of Napster, Aimster, etc. In both cases, Veoh asserted the affirmative defense that it qualified for “safe harbor” under § 512(c) of the DMCA. 

Section 512(c) of the DMCA exempts an online service provider from all monetary damages and most equitable relief for infringement of copyright by reason of “the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.” To qualify for such “safe harbor,” however, a service provider must adopt, reasonably implement and inform users of a repeat infringer policy; accommodate, and not interfere with, standard technical measures used by copyright owners to identify or protect copyrighted works; not know of infringement or facts or circumstances from which infringement is apparent; upon knowledge or notice of infringement, act expeditiously to remove or disable access to the subject content; have no right or ability to control the infringing activity, or - if the service provider has such right and ability - receive no direct financial benefit from such activity. 

The Io case turned on whether Veoh was qualified to receive the § 512(c) safe harbor protection. In concluding that Veoh was so qualified, the court found that Veoh had taken steps to reduce, not foster, copyright infringement on its website, including publishing policies and procedures for receiving and handling infringement notices; removing noticed content on the same day of receipt of an infringement notice (or within a few days thereafter); terminating a repeat offender’s account and postings and blocking him or her from opening a new account with the same email address (Veoh asserted that it terminated over 1,000 users for repeat copyright violations since launch); and implementing a form of encryption known as “hashing” for each video file to enable Veoh to terminate access to and prevent uploading of identical files. Other notable findings by the court include those that state Veoh did not lose safe harbor for using an automated process to facilitate user access to uploaded videos; Veoh had no knowledge of infringement since Io never issued infringement notices and none of the identified clips contained Io’s copyright notice; Veoh’s right/ability to control its system (e.g., requirement of user registration, indexing of video files, conducting of spot checks, and the right or ability to terminate user accounts and to remove infringing material, etc.) was not the same as the right or ability to control infringing activity; and, unlike Napster, there was no evidence that Veoh aimed to encourage infringement, failed to police its system to the fullest extent permitted by its architecture or could control what content users could upload before it was uploaded. The court also rejected Io’s suggestion that Veoh be required to either change its operations to prevent infringement from occurring (e.g., pre-screening all incoming videos) or, if that is not possible, reduce and limit its operations to a manageable number of users. According to the court, such suggestion was contrary to the DMCA’s stated goal of facilitating, not squelching, the growth of e-commerce.

In UMG, the court was asked to resolve whether the § 512(c) safe harbor applied to certain functions performed by Veoh’s website software -namely, automated “chunking” of an uploaded video, automated conversion of an uploaded video into Flash format and the streaming and downloading of an uploaded video. It was undisputed that those functions were all directed toward facilitating access to user-stored content. UMG contended, however, that those functions did not constitute “storage.” Veoh opposed by arguing that § 512(c) was meant to cover more than just storage but also the provision of access. In siding with Veoh, the court rejected UMG’s interpretation as unduly limiting the applicability of § 512(c) and contrary to both the statutory language and the legislative history. According to the court, if only storage was covered by the immunity, while providing access could trigger liability without such immunity, service providers would be deterred from their “basic, vital and salutary function¾namely, providing access to information and material for the public.” The court noted that the Io case also applied § 512(c) to automated functions, which was consistent with a number of other cases finding that the safe harbor limits liability for activities involved in facilitating access to user-stored material.

Practice Note: While high-profile litigation like Viacom v. YouTube makes headlines, decisions in lower-profile cases like Io and UMG provide useful and practical guidance regarding appropriate policing efforts that website proprietors who host user-generated content should undertake in order to avail themselves of the safe harbor protection of the DMCA. Conversely, for content providers, these decisions help identify the potentially weak or unpersuasive arguments when challenging a website’s eligibility for DMCA safe harbor protection.