The waning days of 2008 brought good news to businesses considering supplementing the contents of their websites with user-generated content.
A federal court recently clarified that such websites may be protected from the copyright infringement activities of its users by the Digital
Millennium Copyright Act's (DMCA) safe harbor provisions. See UMG Recordings, Inc. v. Veoh Networks, Inc., No. CV 07-5744 AHM, 2008 WL
5423841 (C.D. Cal. Dec. 29, 2008).
In UMG Recordings, music publisher Universal Music Group (UMG) sued the Michael Eisner-backed video hosting website Veoh, asserting that
Veoh was responsible for its users that illegally uploaded UMG music videos. Veoh's website allows users to store and make videos available for
other users to view through a unique transcoding process that automatically converts different video formats into more widely used video formats.
UMG alleged that Veoh's activities constitute copyright infringement and cannot fall under the safe harbor provisions found in Section 512(c) of
the DMCA.
In ruling on a summary judgment filed by UMG, the U.S. District Court for the Central District of California concluded that the safe harbor
provisions found in Section 512(c) of the DMCA may protect Veoh from the actions of its users. Section 512(c) of the DMCA can immunize a website
or other internet service providers from monetary 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" (emphasis added). The court
interpreted the statute's key language — "by reason of the storage at the direction of a user" — by relying on the statutory language
and the congressional intent behind the safe harbor of the DMCA. UMG's argued that the section 512(c) safe harbor does not apply because
"Veoh's reproduction, distribution, and public performance activities (among others) do not constitute 'storage' nor are they undertaken 'at the
direction of a user.'" The court found UMG's argument unpersuasive. Rather, the court accepted Veoh's interpretation that the broad relevant
language "cover[ed] more than electronic storage lockers" and the remainder of the safe harbor provision presupposed websites making their
content available to other users.
While this single ruling does not resolve the ongoing battle between UMG and Veoh, it does bode well for Veoh and other websites that host
user-generated content. The court has yet to rule on whether the safe harbor is a complete defense to Veoh’s actions because Veoh must also
demonstrate that it has satisfied the remaining requirements of Section 512(c). YouTube and Viacom, who are currently engaged in a similar
copyright infringement lawsuit, will clearly be watching to see how this matter plays out.
The UMG Recordings opinion also provides some clarification for companies considering utilizing user-generated content websites to further
their business objectives, but have shied away because of concerns over the potential for copyright infringement. To the extent that websites
create an environment that falls within the requirements of the DMCA's safe harbor provisions, they may be able to insulate themselves from the
potential infringing activities of its users. If you are considering including content provided by your users or customers on your site, please
let Jackson Walker know if we can be of assistance in working to limit such exposure to your business.
If you have any questions regarding this e-Alert, please contact Jason Reinsch
at 214.953.5914 or jreinsch@jw.com.
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