Appeals Court May Revisit Pro-Veoh Copyright Ruling

by Wendy Davis, Jun 11, 2012, 5:11 PM

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A recent ruling against YouTube in a copyright lawsuit might end up benefiting Universal Music Group in its long-running lawsuit against the video-sharing company Veoh.

In an order filed late last week, the 9th Circuit Court of Appeals indicated that it is considering granting Universal's request to reconsider a prior landmark ruling in favor of Veoh.

The legal dispute dates to 2007, when Universal sued Veoh for copyright infringement based on clips uploaded by users. While the case was pending, Veoh declared bankruptcy and was absorbed by Qlipso Media Networks, but the litigation continued.

Last December, in a decision hailed as a major milestone for user-generated content, the 9th Circuit ruled in favor of Veoh.

The appellate court said at the time that the site was protected from liability by the Digital Millennium Copyright Act's "safe harbor" provisions, which generally provide that Web sites aren't responsible for infringement by users -- as long as the sites remove pirated material upon request.

But those safe harbors have some exceptions.

One applies when companies know, or should know, about infringement on their sites. Another applies when companies have the ability to control infringement yet fail to do so. Universal argued that Veoh fell within those exceptions.

A three-judge panel of the 9th Circuit rejected Universal's arguments in December, ruling that sites with user-generated content only lose the safe-harbor defense if they have “specific knowledge” that a particular clip is infringing copyright, as opposed to general knowledge that some users post infringing material.

Universal then asked for the case to be reconsidered by the entire 9th Circuit.

While that motion was pending, a different court -- the 2nd Circuit Court of Appeals -- issued a ruling against YouTube in a similar lawsuit brought by Viacom. The 2nd Circuit held that sites like YouTube can lose the safe-harbor protection if they're "wilfully blind" to infringement -- even without knowledge about specific pirated clips. 

That court also indicated that sites with user-generated content can lose the safe harbors if they have the power to control infringement and don't exercise it. The appellate court sent the YouTube-Viacom matter back to the trial judge for further hearings.

Universal subsequently filed papers calling the 9th Circuit's attention to the YouTube ruling. Universal argued that the decision supported its bid for reconsideration.

Last Thursday, the 9th Circuit took the rare step of asking Universal and Veoh to file additional legal arguments specifically addressing the YouTube ruling. The court could still affirm its earlier opinion, but the fact that the judges are entertaining further argument seems to indicate they're considering making it easier for content owners to successfully sue sites that allow users to post material.

Some copyright holders would welcome such a ruling, but sites that rely on user-generated content could have to revise their business models.

"It's extremely unusual for an appellate court to request additional briefing for an opinion they already issued," law professor Eric Goldman, director of the High Tech Law Institiute at Santa Clara University, says in an email to Online Media Daily. "It's hard to see how this is good news for Veoh, YouTube or any other UGC sites."

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