Veoh Networks, a California-based provider of broadcast-quality video over the Internet, has filed a Federal lawsuit against Universal Music Group. In response to "unreasonable threats" by Universal, the lawsuit seeks a preemptive injunction that would prevent Universal from filing a copyright infringement suit of its own.
According to Veoh, Universal has been promising legal action against the video-sharing Web site, which is taking preemptive action by filing first. In its complaint, Veoh is asking the court to classify it as protected by the safe harbor provision of the Digital Millennium Copyright Act. This exemption, available to service providers that allow users to transmit content through automated online systems, protects them from liability when uploaded content infringes on the rights of third parties. Providers lose this protection if they do not take down infringing content upon receiving a notice from the copyright owner.
Veoh contends that it has not received any such notices from Universal. Former Yahoo senior vice president turned Veoh CEO Steve Mitgang is "prepared to respond when and if UMG provides us with DMCA notice." For the moment, Mitgang is focused on positioning Veoh as a copyright-compliant company by seeking safe harbor under the DMCA.
While Veoh is not seeking damages from Universal, Mitgang has declared a public-relations war, publicly criticizing Universal for being a company whose actions "are designed to stifle innovation, shut down new markets and maintain the status quo."
The issues surrounding this case are reminiscent of Viacom's pending $1 billion suit against Google's YouTube and the recent model-image agency Perfect 10's legal actions against Microsoft, Google and Amazon. All such cases revolve around the allegedly unlawful use of copyrighted material. Web 2.0 companies are accused of direct infringement and facilitating infringement by third parties - which include more than 14 million users in Veoh's case.
In the precedent-setting 2005 case of MGM v. Grokster, U.S. Supreme Court ruled for the copyright holders. Grokster was found liable for inducing copyright infringement in the course of marketing its file-sharing software. However, more recent court decisions have sided with Web 2.0 defendants. Google prevailed against Perfect 10, partially due to claiming DMCA safe harbor protection. Veoh is trying the same strategy.
If the court sides with the plaintiffs in the current Google and Veoh cases, such a decision would substantially change the business and legal environment for the online search, community and sharing properties.