UMG Recordings, Inc. v. Shelter Capital Partners Ltd. Liab. Co. - 718 F.3d 1006 (9th Cir. 2013)

Rule:

Under 17 U.S.C.S. § 512(c)(1)(A), a service provider can receive safe harbor protection only if it (i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing; (ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material.

Facts:

Veoh Networks, Inc. (“Veoh”) was the operator of a publicly accessible website enabling users to share videos with other users. Although Veoh has implemented various procedures to prevent copyright infringement through its system, users of Veoh's service have in the past been able, without authorization from the Universal Music Group (UMG) to download videos containing songs for which UMG owned the copyright. UMG responded by filing suit against Veoh for direct and secondary copyright infringement. The district court granted summary judgment to Veoh after determining that it was protected by the Digital Millennium Copyright Act (DMCA) "safe harbor” limiting service providers' liability for "infringement of copyright by reason of the storage at the direction of a user of material that resided on a system or network controlled or operated by or for the service provider." UMG appealed. 

Issue:

Was Veoh protected by the Digital Millennium Copyright Act safe harbor under 17 U.S.C.S. § 512(c), thereby justifying the grant of summary judgment in its favor? 

Answer:

Yes.

Conclusion:

The court affirmed the district court’s decision, holding that Veoh was protected by the Digital Millennium Copyright Act safe harbor under 17 U.S.C.S. § 512(c), which limited the provider's liability for infringement of copyright. The functions automatically performed by the provider's software when a user uploaded a video fell within the meaning of "by reason of the storage at the direction of a user" under § 512(c)(1). Moreover, the court held that UMG did not create a genuine issue of material fact as to whether Veoh had either actual or red flag knowledge, and Veoh did not have the necessary right and ability to control infringing activity and thus remained eligible for safe harbor protection.