Some questions of safe harbor rule interpretation in USA

Veoh Networks (Veoh) operates a publicly accessible website that enables users to share videos with other users. Users can view videos uploaded by other users as well as authorized “partner content” made available by major copyright holders such as SonyBMG, ABC and ESPN.

There are two ways to use Veoh’s service: through a standalone software client application launched in late 2005, or through the veoh.com website launched in early 2006 that users access via a standard web browser. Both services are provided free of charge. Veoh generates revenue from advertising displayed along with the videos.

Before a user may share a video through Veoh, he must register at veoh.com by providing an email address, user name and password. Once a user agrees to the “Publisher Terms and Conditions” PTC and Terms of Use, he may upload a video. Each time a user begins to upload a video to Veoh’s website, a message appears stating, “Do not upload videos that infringe copyright, are pornographic, obscene, violent, or any other videos that violate Veoh’s Terms of Use.”

Veoh employs various technologies to automatically prevent copyright infringement on its system. Veoh also began developing an additional filtering method of its own, but in 2007 opted instead to adopt a third-party filtering solution produced by a company called Audible Magic. Approximately nine months after beginning to apply the Audible Magic filter to all newly uploaded videos, Veoh applied the filter to its backlog of previously uploaded videos. This resulted in the removal of more than 60,000 videos, including some incorporating UMG’s works. Veoh has also implemented a policy for terminating users who repeatedly upload infringing material, and has terminated thousands of user accounts.

Despite Veoh’s efforts to prevent copyright infringement on its system, both Veoh and UMG agreed that some of Veoh’s users were able to download unauthorized videos containing songs for which UMG owns the copyright. The parties also agreed that before UMG filed its complaint, the only notices Veoh received regarding alleged infringements of UMG’s works were sent by the Recording Industry Association of America (RIAA). The RIAA notices listed specific videos that were allegedly infringing, and included links to those videos. The notices did not assert rights to all works by the identified artists, and did not mention UMG. Veoh removed the material located at the links identified in the RIAA notices.

In September 2007, UMG filed suit against Veoh for direct, vicarious and contributory copyright infringement, and for inducement of infringement. UMG contended that Veoh’s efforts to prevent copyright infringement on its system were “too little too late” because Veoh did not adopt filtering technology until “after Veoh harbored infringing material for its own benefit,” and initially it ran the filters only on newly uploaded videos.

Although UMG conceded that “storage on computers involves making a copy of the underlying data,” it argued that “nothing in the ordinary definition of “storage” encompasses” the automatic processes undertaken to facilitate public access to useruploaded videos. Facilitation of access, UMG argued, goes beyond “storage.” UMG also contended that these automatic processes are not undertaken “at the direction of the user.”

The court held that the phrase “by reason of the storage at the direction of the user” is broader causal language than UMG contended, “clearly meant to cover more than mere electronic storage lockers.” UMG contended that the court should thus read §512(c)’s “by reason of storage” to mean that infringement must be proximately caused by the storage, rather than caused by the access that the storage facilitates. But it is not clear how copyright holders could even discover infringing materials on service providers’ sites to notify them as the protocol dictates if §512(c) did not contemplate that there would be access to the materials. The reason one has a website is so that others may view it. If the web host only stored information for a single user, it would be more aptly described as an online back-up service.

Veoh did not actively participate in or supervise file uploading, “nor did it preview or select the files before the upload is completed.” Rather, this “automated process” for making files accessible “is initiated entirely at the volition of Veoh’s users”. The court held that Veoh’s general knowledge that it hosted copyrightable material and that its services could be used for infringement is insufficient to constitute a red flag. The court has concluded that Veoh met all the §512(c) requirements.