• by Wendy Davis  @wendyndavis, October 18, 2006

Universal Music Group took aim at video-sharing sites this week, with a copyright infringement lawsuit against Bolt Media and Grouper Networks.

The lawsuit charges the sites with hosting Universal-owned clips, and seeks $150,000 damages for each piece of infringing content.

"User generated sites like Grouper and Bolt, that derive so much of their value from the traffic that our videos, recordings and songs generate, cannot reasonably expect to build their business on the backs of our content and the hard work of our artists and songwriters--without permission and without in any way compensating the content creators," Universal Music said in a statement.

Josh Felser, president of Grouper--acquired by Sony for $65 million six weeks ago--denied that the company violated Universal's copyrights. "This lawsuit is without merit and we certainly expect to win," Felser said.

He added that Grouper complies with the Digital Millennium Copyright Act, which contains a "safe harbor" provision that protects Web hosts from liability if they remove copyrighted material when owners complain. A Bolt Media spokeswoman also stated that the company always takes down any copyrighted clips as soon as it's notified of complaints.

If Bolt and Grouper as a matter of policy remove copyrighted material when record labels ask them to, they likely have a defense to the lawsuit, says Jason Schultz, a staff attorney at the Electronic Frontier Foundation. Schultz says that the DMCA protects Web hosts from lawsuits when they promptly take down copyrighted material upon notification and meet the other "safe harbor" requirements.

But some other legal experts aren't certain that the law would protect Bolt and Grouper. Eric Goldman, a professor at Santa Clara University School of Law, says that the DMCA doesn't directly address whether Web hosts are protected if copyright owners file suit without first complaining to the site. Goldman said that only about 20 courts had so far considered the issue, and that opinion was divided.

The Universal Music lawsuit comes several weeks after CEO Doug Morris publicly threatened to bring a case against video-sharing site YouTube for copyright violations. But Universal and YouTube instead forged a revenue-sharing deal providing that Universal will get a cut of ad revenue generated by its content; that agreement was announced the same day that Google said it would buy YouTube for $1.65 billion. A Bolt spokeswoman said the company still hoped to strike its own deal with Universal.