Ninth Circuit clarifies certain aspects of the DMCA safe harbor provisions in favor of online service providers (UMG Recordings, Inc. v. Veoh Networks, Inc.)

by Allen M Lee16. March 2012 11:29

The Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512, among other things, limits the liability of online service providers (OSPs) for copyright infringement under certain conditions.  OSPs are defined as any entity “offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received.”   17 U.S.C. §512(k)(1)(A).  OSPs include sites such as YouTube and Flickr, which make user uploaded content accessible to other people. In enacting the DMCA and limiting OSPs’ liability, Congress’ intent was to ensure that “the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will continue to expand.”  UMG Recordings, Inc. v. Veoh Networks, Inc., 667 F.3d 1022, 2011 U.S. App. Lexis 25168, at *14 (9th Cir. 2011) (citing S. Rep. No. 105-190, at 8 (1998).

To qualify for the safe harbor provisions of the DMCA, OSPs must take certain steps and meet a number of conditions.    A threshold condition is that the OSP must merely store the content at the direction of the user:

 

            (c) Information residing on systems or networks at direction of users. --

(1) In general. -- A service provider shall not be liable for monetary relief,  or, except as provided in subsection (j), for injunctive or other 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 net-work controlled or operated by or for the service provider . . .

17 U.S.C. § 512(c)(1).

In Veoh, plaintiff Universal Music Group (“UMG”), one of the world’s largest music publishing companies, sued video-hosting service Veoh for copyright infringement arising from unauthorized copyrighted content that was uploaded to Veoh’s website by its users.    Veoh argued that it had complied with the safe harbor provisions of the DMCA, including 17 U.S.C. § 512(c)(1).  UMG disagreed, arguing that the DMCA safe harbor provision did not apply to Veoh because Veoh did more than just store the user uploaded videos, but it also performed some automated processes to facilitate public access to the content, such as breaking the video files into smaller 256-kilobyte chunks and converting the video files into other formats such as Flash 7, Flash 8, and MPEG-4 formats.  In essence, UMG’s contention was that the DMCA safe harbor provisions do not apply to where the OSP does anything to the content to make it accessible other than simply storing it.  The district court rejected this argument, and on appeal, the Ninth Circuit affirmed, holding that “the language and structure of the statute, as well as the legislative intent that motivated its enactment, clarify that § 512(c) encompasses the access-facilitating processes that automatically occur when a user uploads a video to Veoh.”  Accordingly, the DMCA safe harbor provisions continue to apply where an OSP undertakes any automatic processes to facilitate public access to user uploaded content.

Veoh’s victory was bitter-sweet however.  On February 12, 2010, Veoh filed for bankruptcy under Chapter 7 on March 19, 2010, with some claiming this was due in part to its legal defense costs.

 

 

Allen M. Lee  Mr. Lee’s practice focuses on trademark, copyright, intellectual property and corporate law.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (408) 249-2735, Email: info@allenmlee.com, Internet: www.allenmlee.com.

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