Click Here to Share! the Impact of the Veoh Litigations on Viacom v. Youtube

• Publication year: 2008
• Citation: Vol. 10 No. 2008

Phong Dinh⁰

In the high-bandwidth Internet age, video sharing websites such as YouTube and Yahoo! Video are growing in popularity. The ease with which such sharing is accomplished has aided users in illegally uploading copyrighted movies, TV shows, and music. In a recent lawsuit, Viacom and its copyright-owning affiliates sought one billion dollars in damages against YouTube, one of the Web's most popular video-sharing websites, for copyright infringement. In response, YouTube invoked the affirmative defense of the Digital Millennium Copyright Act's safe harbor provisions, codified at § 512. The Act states that a service provider is not liable for hosting copyrighted information on its own system for a prolonged period of time as long the service provider has met the threshold requirements for these provisions and the specific requirements for at least one of the four safe harbors.

Before California district courts' holdings in Io Group, Inc. v. Veoh Networks, Inc. and UMG Recordings, Inc. v. Veoh Networks, Inc., no court had examined the safe harbor defense as applied to video sharing websites. The success of this defense is now more certain after these recent holdings, which employed law consistent with prior applications of the safe harbor provisions. If the District Court for the Southern District of New York applies the Veoh reasoning, which provides similarly situated video-sharing websites a viable defense, the Court should find YouTube free from liability through the safe harbor provision codified at § 512(c). Despite Viacom's arguments in its amended complaints, these recent cases indicate that YouTube likely meets the threshold requirements of the safe harbor provisions. Furthermore, these cases indicate that YouTube specifically falls under the umbrella of § 512(c) protection because it hosts copyrighted information on its system as "storage under the direction of the users." Thus, the Veoh cases strongly suggest that YouTube should succeed in asserting the affirmative safe harbor defense.

A holding in favor of YouTube will correctly guide developments in copyright law toward a more efficient burden-sharing system. It would also support the goals of the Digital Millennium Copyright Act by protecting the rights of copyright holders, service providers, and end users.

I. Introduction

From a video of a dancing dog to a video of a talking toddler, video sharing is the new pen and paper. It is the new instant message, the way people share information and tell stories. These are the scenes repeated thousands of times a day: high-school students gathered around a computer before class, professionals bored at work in front of their computers, grandmas and grandpas sitting in front of their laptops. People of all ages are using the Internet to share a funny moment, an unforgettable scene, or to simply say hello to loved ones. This high-tech sharing is possible because of Internet service providers like YouTube, Yahoo! Video, and Veoh.¹

Though the intended use of these websites is to show homemade videos and amateur films,² some users are taking advantage of these sites to share copyrighted forms of media, such as movies and television shows.³ In response, copyright owners have fought feverishly to protect their rights, resulting in an increase in copyright infringement lawsuits over the last few years.⁴ With copyright lawsuits being filed frequently, courts are constantly presented with the opportunity to shift the law in a way that imposes on service providers a heightened duty to protect copyright owners' intellectual property. When such a shift is imposed on large sites with millions of videos, this heightened duty may be too burdensome and may force providers to limit their services or shut down completely.

Copyright law attempts to balance consumers' rights and freedom of information with the constitutional Founders' desire to protect copyrighted work.⁵ The goal of copyright has always been to foster further innovation.⁶ This means balancing the interests of three important groups: copyright owners, service providers, and consumers.⁷ The Digital Millennium Copyright Act ("DMCA")⁸ was enacted in 1998 in an attempt to balance the rights of each group in this digital age.⁹ While the Act created ways for copyright owners to enforce their rights on the Internet, it also limited such rights.¹⁰ For instance, the DMCA's safe harbor provisions serve to limit enforcement rights of copyright owners and grant service providers some leeway.¹¹ This, in turn, allows consumers to produce new creative works and to maximize creative innovation.¹²

Consumers and service providers, however, are at great risk for having their rights and interests severely limited. In this recent lawsuit seeking damages of one billion dollars, Viacom and its affiliates—the owners of thousands of copyrighted movies, television shows and songs—sued YouTube, Inc. in the District Court for the Southern District of New York.¹³ Viacom alleges YouTube committed willful copyright infringement by allowing users to share copyrighted videos.¹⁴ YouTube's principal defense is the DMCA's safe harbor provisions.¹⁵ These provisions protect service providers, such as YouTube, from infringement claims when they simply provide a file-sharing database.¹⁶ Currently, the parties are in discovery. If YouTube is successful in asserting its protection under the safe harbor, then Viacom can only receive injunctive relief.¹⁷ Consequently, Viacom would not be able to recover any of the one billion dollars in alleged damages.¹⁸ The outcome of this case is not only important because YouTube is the most popular video-sharing website on the Internet,¹⁹ but also because the outcome of this case may indicate the publishing companies' likelihood of success in future litigation against video-sharing websites. Most importantly, this decision will help determine the breadth and power of the DMCA's safe harbor provisions.

Until recently, various courts interpreted the safe harbor provisions with divergent holdings; these variations made it difficult to predict Viacom's probability of succeeding.²⁰ Cases from the district courts of California, in particular Io Group, Inc. v. Veoh Networks, Inc.²¹ and UMG Recordings, Inc. v. Veoh Networks, Inc.,²² indicate a shift in the law toward an interpretation of the DMCA's safe harbor provision that will enhance protection for video-sharing service providers.²³ These holdings are the first steps toward a copyright system that will be able to more efficiently balance the competing interests of the copyright owner, service provider, and consumer. Though the Io Group and UMG decisions are not controlling in the Southern District of New York, they provide persuasive reasoning given the striking similarities between the two service providers, Veoh and YouTube. If the YouTube court follows the reasoning behind the Io Group and UMG decisions, then it should find that YouTube qualifies for the DMCA's safe harbor provisions. Additionally, a decision in favor of YouTube would further the legislative goals of the DMCA and would effectively allocate burdens between service providers and copyright holders.

Part I of this Recent Development examines the structure of the Veoh website and explores the basic facts behind the Veoh litigation. Part II looks at the DMCA, its safe harbor provisions, and the application of each in the Veoh holdings. This Part also analyzes the courts' conclusions of law and prior applications of the DMCA's safe harbor provisions. Part III describes the similarities between the YouTube and Veoh websites as well as the ensuing litigation with Viacom. In Part IV, this Recent Development considers the DMCA safe harbor provisions as applied in Viacom Int'l Inc. v. YouTube, Inc.²⁴ Part IV also briefly attempts to determine the merits of these arguments and predicts that the court, if it chooses to follow recent holdings, will find that YouTube qualifies for the DMCA's safe harbor provisions. In Part V, this Recent Development argues that finding for YouTube will correctly balance burdens between service providers and copyright holders. Placing any additional burden on the video-sharing service providers, as Viacom suggests, would be inconsistent with the goals of the DMCA.

II. The Veoh Website and Ensuing Litigation

Veoh Networks Inc., operates a website²⁵ where users can view uploaded videos.²⁶ The videos cover a wide variety of genres, from homemade comedies to amateur films.²⁷ Veoh dubs its website the "Internet Television Network."²⁸ Thousands of videos have been uploaded since the website's launch in February 2006.²⁹ The simplicity of the uploading process allows many users to illegally upload copyrighted contents, including full movies and TV shows.³⁰

Consequently, Io Group sued Veoh for copyright infringement in the Northern District of California.³¹ Io Group produces, markets, and distributes adult entertainment products.³² The company claimed that Veoh knowingly allowed the sharing of Io Group's registered and copyrighted videos.³³ Similarly, Universal Music Group ("UMG"), holders of numerous music copyrights, sued Veoh for direct, contributory, vicarious and inducement of copyright infringement in the Central District of California in 2008.³⁴ In UMG, it was alleged that users had shared and downloaded videos containing UMG copyrighted songs and that neither Veoh nor its users obtained authorization.³⁵ Veoh argued that even where infringement was found, it was not liable for damages because it qualified for the safe harbor defense of the DMCA.³⁶

III. The Digital Millennium Copyright Act and Its Use in the Veoh Litigation

A. The DMCA and Its Safe Harbor Provisions

The DMCA was enacted in 1998 in response to the rapid expansion of the Internet.³⁷ The Act was created to "to advance two mutually supportive goals: the protection of intellectual property rights in today's digital environment and the promotion of continued...