March 26, 2009
Intellectual Property, Internet & E-Commerce, Telecommunications Alerts

DMCA Safe Harbor Protections Applied to ISP's Video Software
by Cyrus Wadia

A Los Angeles federal district court has held that an Internet service provider's (ISP) video conversion and access software fell within the scope of the Digital Millenium Copyright Act's (DMCA) "safe harbor" protection against monetary liability for copyright infringement. 
UMG Recordings, Inc. v. Veoh Networks, Inc., 2008 WL 5423841 (C.D. Cal.) is a copyright infringement lawsuit brought by Universal Music Group (UMG) against Veoh Networks, Inc.  Veoh operates an internet-based service that permits its users to share videos free of charge via four software functions:
  • automatically converting customers' shared videos into Flash format copies;
  • automatically breaking down the shared videos into smaller sized "chunks";
  • allowing users to access shared videos via streaming; and
  • allowing users to access shared videos via downloading copies to Veoh's "VeohTV" software. 

UMG claimed in a motion for partial summary judgment that some of its copyrighted materials were made available online by Veoh, and that Veoh was not entitled to the DMCA's safe harbor protections under Section 512(c), which precludes monetary liability on a "service provider ... for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider."  UMG claimed that the four software functions did not qualify for safe harbor protection because they were not "storage" and were not undertaken "at the direction of a user."  Rather, UMG argued that these functions took place after the initial storage of the uploaded files by Veoh's customers and arguably were functions beyond what the DMCA was meant to protect.

A Northern District federal court had decided in an unrelated case earlier last year that the safe harbor shielded Veoh from liability for the first software function -- converting customers' vieos into flash format copies.  Io Group, Inc. v. Veoh Networks, Inc., 2008 WL 4065872 (N.D. Cal. Aug. 27, 2008).  So, this case focused on the other three software functions.
In finding that the three software functions did not necessarily disqualify Veoh from coverage under the DMCA's safe harbor provision, the court here focused not on the actual technology but on the purpose of the technology.  The court noted that the software's "narrowly directed" purpose was to facilitate access to user-stored material.  It agreed with Veoh that it "is not disqualified [from the safe harbor] because of its automated processing of user uploaded material so that other users are able to view and access such material."  In other words, the safe harbor "presupposes that the service provider will be providing access to the user's material."  The court agreed, stating that the purpose of the DMCA would not be fulfilled by restricting the safe harbor in the manner suggested by UMG, as the statute extended to functions beyond storage in the language "infringement of copyright by reason of  the storage at the direction of a user." 
The court further noted that the co-operative "notice and take-down" process under the DMCA between copyright owners and ISPs "would be pointless if service providers who provide access to material stored on their systems at the direction of users were precluded from limiting their potential liability merely because their services enabled users to access such works.  The threat of such liability would create an enormous disincentive to provide access thereby limiting the 'variety and quality of services on the Internet.'"  *9.  The court therefore denied UMG's motion for partial summary judgment under the direct, contributory, vicarious, and inducement of copyright infringement theories.
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