Io v. Veoh Comments–a Terrific 512(c) Defense-Side Win

By Eric Goldman

IO Group v. Veoh Networks, Inc., 5:2006cv03926 (N.D. Cal. Aug. 27, 2008)

We spend so much time thinking about and debating 17 USC 512(c) that it’s easy to lose sight of how few cases really interpret the statute. As a result, a clean and thorough opinion like this one makes a significant contribution to the precedent and teaches us a lot.

There are two architectural features of this ruling that make it particularly defense-favorable. First, the question of whether 512 trumps secondary liability or secondary liability trumps 512 is one of the most important frontiers in online copyright law because the statute is inherently ambiguous on this key point, and the cases have been erratic on this topic. Here, the court doesn’t dwell on the issue and instead assumes (without any real discussion) that 512 trumps secondary liability. As a result, the court dismisses the case without ever reaching the plaintiff’s prima facie case; meaning that even if the plaintiff could establish a prima facie secondary infringement, Veoh still wins. If the court in Viacom v. YouTube reaches the same conclusion, then YouTube will win.

Second, Veoh took a number of steps to suppress user-caused copyright infringement, including some steps that were not required to satisfy 512(c). The court recognizes that it’s impossible to eliminate user-committed copyright infringement but instead rewards Veoh for trying so hard. As the court says, “far from encouraging copyright infringement, Veoh has a strong DMCA policy, takes active steps to limit incidents of infringement on its website and works diligently to keep unauthorized works off its website.” In this respect, the opinion reminded me of the Tiffany v. eBay ruling, where that court also lauded eBay for going beyond what the law required and excusing the infringement that slipped through the cracks. I think these two opinions put a huge exclamation mark to reject the notion that courts will only tolerate passive conduits (who do nothing to police their network) or perfect editorial control, with no middle ground for courts to excuse omissions by good faith actors. As with my first point, if the Viacom court adopts this philosophy, then YouTube will win.

A few other noteworthy aspects of this ruling:

* a website’s failure to prevent terminated users from re-registering under alternative credentials does not preclude 512(c)

* 512(c) is not lost even if employees spot-check user submissions after publication and make minor edits to the metadata

* 512(c) still applies even if the website automatically extracts some metadata (in this case, some still previews of the video) and uses that metadata for promotional purposes. 512(c) even applied to the screenshots.

* The court rejects Io’s argument that Veoh should change its business operations to do a better job of infringement suppression. The court recaps Io’s argument as:

plaintiff contends that, if Veoh cannot prevent infringement on its site given the current volume of its business, then Veoh should be required to either hire more employees or to decrease its operations and limit its business to a manageable number of users (whatever that number might be). Its not-so-subtle suggestion is that, if Veoh cannot prevent infringement from ever occurring, then it should not be allowed to exist.

This change-your-business argument is popular among copyright plaintiffs, but the court emphatically rejects it:

Declining to change business operations is not the same as declining to exercise a right and ability to control infringing activity…Moreover, as discussed above, the DMCA does not require service providers to deal with infringers in a particular way…Further, plaintiff’s suggestion that Veoh must be required to reduce or limit its business operations is contrary to one of the stated goals of the DMCA. The DMCA was intended to facilitate the growth of electronic commerce, not squelch it.

While this ruling is very good news for the defense, there are plenty of reasons why it may not portend a similar result in the Viacom v. YouTube lawsuit, including:

* different courts (9th Cir. v. 2d Cir.). In particular, the Veoh court makes numerous references to Ninth Circuit precedent, and the Viacom court could simply say that Second Circuit law is different

* Io did not send any 512(c)(3) notices before suing. Viacom did. This is significant because the Io judge had little reason to be sympathetic to Io if they didn’t take advantage of the non-litigation recourse mechanism specified in the statute. Then again, the Viacom court could simply expect Viacom to continue using the 512(c)(3) mechanism as well rather than looking for a court-imposed workaround.

* The Io court notes that the user-uploaded videos did not have a copyright notice in them. I’m sure Viacom can find examples where its copyright notice was included in the uploaded videos.

* Io is a pornographer. Their copyrights are as good as anyone else’s, but courts might feel less sympathy towards pornographers.

* Veoh had gotten out of the porn business, and this mooted the injunction. However, Viacom could get an injunction against YouTube with significant bite. Most people misassume that 512(c) eliminates all liability for user-caused copyright infringement, but it only eliminates damages and limits the scope of injunctive relief in 512(j)–but a court can still issue an injunction. 512(j) is, as far as I know, not been litigated, and frankly I don’t understand all of its provisions. But the bottom line is that an injunction is possible in the Viacom lawsuit even if 512(c) applies, and the Io ruling doesn’t shed any light on that possibility.

Despite all this, YouTube has to be heartened by this ruling.

One final point: this is such a nice clean discussion about 512(c) that it may be a useful pedagogical tool. As a result, I am considering adding it to my Cyberspace Law reader in the future.

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