Killing Me Softly With A Song

How Veoh Reconciled with Viacom (But Went Out of Business In the Meantime)

Veoh, or what is left of it, won a recent victory in the Ninth Circuit in UMG Recordings v. Shelter Capital Partners (Veoh), No. 10-55732 ("Veoh"), a significant opinion in the evolving jurisprudence on Digital Millennium Copyright Act (DMCA) safe harbors. In a March 14, 2013 superseding decision, the Ninth Circuit resolved a difference with Second Circuit law as set forth in the April 2012 decision in Viacom Int'l, Inc. v. Youtube, Inc., 676 F.3d 19 (2d Cir. 2012) ("Viacom"). The new opinion therefore puts to rest the current speculation that a circuit split would set safe harbor issues up for Supreme Court review.

Background: A Ninth and Second Circuit Split

Veoh is a video-sharing platform similar to YouTube, featuring videos that are both user-generated and from major content providers like SonyBMG, ABC, and ESPN. Veoh's name may well not be as familiar as YouTube's, since Veoh effectively went out of business in 2010 when a start-up acquired its assets two hours short of a bankruptcy filing. Veoh's troubles included the numerous rounds of litigation from content providers including UMG described here.

In 2009, the lower court dismissed UMG's case, finding Veoh was covered by the DMCA safe harbor under 17 U.S.C. § 512(c) limiting liability 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." The Ninth Circuit affirmed in a December 2011 ruling. While UMG's petition for rehearing was pending, the Viacom decision came down, which disagreed with the Ninth Circuit's ruling specifically on the meaning of "right and ability to control" — a service provider is protected by the 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 Second Circuit also applied a different version of the test for the service provider's knowledge of infringement.

The Ninth Circuit therefore granted UMG's petition and ordered additional briefing in light of Viacom, asking: (1) did the Second Circuit draw the correct distinction between "actual" and "red flag" knowledge?; (2) does a service provider have to be aware of the specific infringing material to have the "right and ability to...