• by Wendy Davis  @wendyndavis, September 14, 2009

A federal judge in California has ruled in favor of video-sharing site Veoh in a copyright infringement lawsuit brought by Universal Music Group.

U.S. District Court Judge A. Howard Matz in Los Angeles ruled that the Digital Millennium Copyright Act's safe harbor provisions protected Veoh from liability for hosting pirated clips uploaded by users. "The DMCA does not place the burden of ferreting out infringement on the service provider," Matz wrote in his 29-page order.

Universal sued Veoh for copyright infringement in 2007, alleging that the Michael Eisner-backed site was wrongly hosting music videos by groups like Black Eyed Peas. Comparing Veoh to Napster and Kazaa, Universal alleged that the site was "a massive copyright infringer that has built its business on the back of others' intellectual property."

Veoh argued that it took steps aimed at preventing pirated clips from appearing on the site, including using filtering technology. Veoh also said that it removed clips upon request, as per the DMCA's safe harbor provisions.

The safe harbors generally state that Web companies are not liable for users' copyright infringement as long as sites take down infringing material upon request. But sites can lose that protection if they know about piracy on the site or are "aware of facts or circumstances from which infringing activity is apparent."

Universal argued that Veoh wasn't eligible for the safe harbor because the company's founders, employees and investors knew of widespread infringement, but Matz disagreed. "No doubt it is common knowledge that most Web sites that allow users to contribute material contain infringing items. If such general awareness were enough to raise a 'red flag,' the DMCA safe harbor would not serve its purpose," he wrote.

For Veoh, the decision marked the second major courtroom victory. Last year, Veoh prevailed in a similar copyright lawsuit brought by adult entertainment company Io Group.

Veoh's victory is seen as boding well for Google's YouTube, which faces a similar copyright lawsuit brought by Viacom. But that case is pending in front of a federal judge in New York who isn't required to follow the reasoning of a judge in another jurisdiction.

Universal said it intends to appeal the Veoh ruling immediately. "The ruling today is wrong because it runs counter to established precedent and legislative intent, and to the express language of the DMCA," the company said in a statement. "The balance between copyright holders and technology that Congress sought in enacting the DMCA has been upended by this decision."