Ninth Circuit Court of Appeals Makes Landmark Ruling In Copyright Case

In an important victory to website owners, appellate circuit affirms that UGC site is eligible for statutory safe harbor from copyright liability.

The Ninth Circuit Court of Appeals has handed down an important ruling today that addresses copyright liability for internet service providers who host infringing works. The appellate circuit has ruled against Universal Music Group and affirmed that video-sharing website, Veoh, is shielded by the safe harbor provisions of the Digital Millennium Copyright Act.

UMG sued Veoh in 2007 for copyright infringement arising from users who uploaded the label's music videos.

Two years later, a federal judge dismissed the allegations that Veoh was "engaging [in] high-tech theft in the name of 'sharing,' finding instead that the online company had responded "expeditiously" when informed of the existence of infringing material on its servers.

Veoh eventually went under, partly due to the legal expense of fighting this lawsuit, but found enough financial backing to defend itself when UMG decided to press an appeal up to the Ninth Circuit.

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UMG made several arguments on appeal, including that the DMCA safe harbors didn't apply to any service that "displays" or "distributes" copyrighted material instead of just "storing" it. 

The Ninth Circuit finds that to be unpersuasive. "The reason one has a website is so that others may view it," writes Justice Raymond Fisher in a unanimous decision. "As amici note, these access activities define web hosting -- if the web host only stored information for a single user, it would be more aptly described as an online back-up service."

Perhaps most importantly, the Ninth Circuit addresses the "knowledge" standard by which ISPs must address copyright infringing materials on their website.

UMG, like many rights-holders, believes that general awareness of copyright infringements is enough to trigger an obligation for ISPs like Veoh to make active clean-up efforts. The music label argued for a standard known as "red flag" awareness where facts or circumstances from which infringing activity is apparent must be addressed before an ISP gets statutory safe harbor from liability.

But the Ninth Circuit today agrees that the onus is on copyright holders to first identify specific infringing video. In this case, UMG ignored DMCA notice protocol by failing to send takedown notices. As a result, the copyright infringing works on Veoh can't be held against the company, the justices rule.

In reaching the decision, the appellate judges offer several reasons for coming to this conclusion. The justices note that "there are many music videos that could in fact legally appear on Veoh," and that Congress intended to facilitate the sharing of movies, music, software, and literary works on the Internet. The Ninth Circuit then references the decision in Sony Corp. of America v. Universal City Studios, which helped legitimize the VCR, and finds that so long as the product was "capable of substantial non-infringing uses, the Supreme Court "refused to impute knowledge of infringement."

In other words, the Internet's many great non-infringing uses are exactly why it's the copyright holder's responsibility to speak up, lest they chill innovation. 

The Ninth Circuit adopts much of the language that Veoh, and other tech companies like Google, have urged courts to use in addressing this matter. "Copyright holders know precisely what materials they own, and are thus better able to efficiently identify infringing copies that service providers like Veoh, who cannot readily ascertain what material is copyrighted and what is not," writes Judge Fisher.

Many of the same issues are currently being debated at the Second Circuit in Viacom vs. YouTube. A ruling on that appeal is expected soon. If the Second Circuit disagrees with the Ninth Circuit, it would likely set up one of the biggest copyright cases ever before the U.S. Supreme Court.

Here's today's decision in full:


Twitter: @eriqgardner