The long-running siege battle waged against startup music website Veoh by the Universal Music Group (UMG) has resulted in another decision by the 9th Circuit, holding again that Veoh’s service rests snugly under the protections of the DMCA.
UMG sued Veoh (and oddly enough, its investors and management) back in early 2012 for allegedly infringing on the music conglomerate’s copyrights because its service potentially allowed users to share infringing songs with one another (key word: potentially). The lawsuit sparked considerable controversy in the tech and legal communities, with many commentators (including myself), interpreting the attack on Veoh as a bad faith use of the legal system to squeeze out startup competition.
The California district court properly threw out the lawsuit, which was immediately appealed to the 9th Circuit by UMG — the 9th Circuit also ruled in Veoh’s favor.
Then came the 2nd Circuit decision in Viacom v. YouTube that the DMCA’s actual knowledge requirement addresses whether the provider subjectively knew of the infringement while red flag knowledge hinges on whether the infringement would be objectively obvious (meaning, actual knowledge of infringement or red flag knowledge kills DMCA protection).
Then 9th Circuit decided to reevaluate its opinion in light of the 2nd Circuit decision, ultimately finding that under the more stringent 2nd Circuit standing.
Hopefully, Veoh still has enough resources to continue running its business after this epic legal onslaught. Personally, I feel that attorneys’ fees should be granted to the winner of these types of cases in order to discourage organizations like the UMG from pursuing “novel” legal theories as a means of creating an economic barrier to entry against its competition.