- The Washington Times - Monday, September 1, 2008

In a copyright infringement case that raises similar issues as the $1 billion lawsuit against YouTube Inc., a judge last week ruled in favor of Veoh Networks Inc., saying that federal law protects online service providers that remove copyrighted material after being notified and block repeat offenders.

A federal court in San Jose dismissed a lawsuit brought by an adult entertainment company called Io Group Inc. against Veoh, a San Diego startup, for clips of its videos that had been uploaded to the site.

Io sued in 2006 after finding clips of its adult films on Veoh.com, which subsequently decided to bar adult content. Rather than notify the video site of the purportedly infringing material, Io filed suit.

The case is significant in its conclusion that video-sharing companies are not fully responsible for the copyright violations of their users so long as they take reasonable steps to prevent it.

“The ruling should be required reading for the executives of every ‘Web 2.0’ business that relies on ‘user-generated content,’” said Fred von Lohmann, a senior staff attorney with the Electronic Frontier Foundation, on the organization’s blog.

The Digital Millennium Copyright Act (DMCA) includes a “safe harbor” provision that limits liability for qualifying companies. To qualify, a service provider must act quickly to remove any infringing material when notified by the copyright owner and must not receive a financial benefit from such material.

Mr. von Lohmann credited Veoh’s victory to “its scrupulous attention to DMCA safe harbors.” The company responds to take-down notices on a same-day-basis, lists clear policies against copyright infringement, terminates repeat offenders and has an agent registered with the U.S. Copyright Office to receive complaints, he added.

Questions about the liability of companies that enable users to share content with each other were vaulted into the spotlight by music-sharing company Napster Inc. But Judge Harold Lloyd made it clear that Veoh’s conduct is unlike that of Napster, which was found in 2001 to have not only enabled but contributed to copyright violations.

“Napster existed solely to provide the site and facilities for copyright infringement … there is no suggestion that Veoh aims to encourage copyright infringement on its system,” he wrote in his opinion.

The decision would certainly appear to bolster the arguments of Google-owned YouTube, which is being sued by media giant Viacom Inc., for copyright infringement. That case, filed in spring 2007, is pending in federal court in New York.

Earlier this summer, a judge ordered YouTube to hand over a wealth of user data, including IP addresses, user names and a list of every video he or she has watched on the service, to Viacom. Google later agreed to turn over anonymous user data.

In response to the Veoh ruling, YouTube chief counsel Zahavah Levine issued a statement: “It is great to see the Court confirm that the DMCA protects services like YouTube that follow the law and respect copyrights.”

Mr. von Lohmann noted that DMCA compliance work costs time and money, “But, as the Veoh decision demonstrates, the payoff can be enormous, since copyright is almost certainly the biggest liability risk these sites face.”

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