• by Wendy Davis  @wendyndavis, May 13, 2009

Former Disney chief Michael Eisner and other investors in the video-sharing site Veoh are off the hook for good in a lawsuit brought by Universal Music Group.

U.S. District Court Judge Howard Matz in Los Angeles had earlier dismissed the case against the investors, but the move was "without prejudice," which left Universal free to tweak its copyright infringement complaint and refile it.

Universal re-drafted its complaint, prompting the investors to again ask Matz to throw out the case against them. Last week, Matz quietly granted the investors' motion and dismissed the case "with prejudice," meaning that Universal can no longer attempt to hold Eisner's The Tornante Company and other Veoh backers liable.

Matz rejected Universal's argument that the investors should have proactively tried to prevent copyright infringement on the site. In a 15-page opinion, Matz wrote that Universal had not proven that the financial backers had an obligation "to preempt the possibility of infringement by requiring the operating company they are funding to implement automatic or manual filtering systems that reject or remove copyrighted content."

Universal sued Veoh for copyright infringement in 2007, alleging that the site "built its business on the back of others' intellectual property" by enabling users to view and share pirated clips. Last year, Universal also sued Veoh's investors, including Tornante, Shelter Capital and Spark Capital.

Veoh argues that it is not required to pre-screen users' clips to make sure they don't infringe copyright. The company contends that the Digital Millennium Copyright Act's "safe harbor" provisions immunize it from liability as long as it takes down infringing material upon owners' complaints. In January, Matz ruled that Veoh is eligible for safe harbor protection, but has not yet decided whether the site will prevail on the claim.