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Case Title

UMG Recordings, Inc. et al v. Veoh Networks, Inc. et al

Docket Number

2:07-cv-05744

Court

California Central District Court

Document Title

No. 575 MINUTES (IN CHAMBERS) by Judge A. Howard Matz: ...

Date Filed

09/11/2009
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Case 2:07-cv-05744-AHM-AJW Document 575 Filed 09/11/09 Page 1 of 29 Page ID
#:15972

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

A. HOWARD MATZ, U.S. DISTRICT JUDGE

Present: The
Honorable
Stephen Montes
Deputy Clerk
Attorneys NOT Present for Plaintiffs:

Not Reported
Tape No.
Court Reporter / Recorder
Attorneys NOT Present for Defendants:

Proceedings:

IN CHAMBERS (No Proceedings Held)

On September 4, 2007, Plaintiffs, members of Universal Music Group (collectively
“UMG”), sued Veoh Networks, Inc., a privately held California corporation, for direct,
contributory, and vicarious copyright infringement, and for inducement of copyright
infringement. Veoh operates an internet-based service that allows users to share videos
with others, free of charge, and UMG controls the copyrights to a vast library of sound
recordings and musical compositions. On December 29, 2008, this Court found that
Veoh’s services fall within the scope of the Digital Millennium Copyright Act
(“DMCA”) “safe harbor” codified at 17 U.S.C. § 512(c), because they occur “by reason
of the storage at the direction of a user of material that resides on a system or network
controlled or operated by or for the service provider . . . .” UMG Recordings, Inc. v.
Veoh Networks, Inc., 620 F. Supp. 2d 1081, 1092 (C.D. Cal. 2008). Veoh now moves for
summary judgment that it has satisfied the remaining requirements of section 512(c), and
is therefore not liable for monetary or injunctive relief. The Court circulated a tentative
order to the parties, and held a hearing on September 8, 2009. For the reasons stated
below, the Court now GRANTS Veoh’s motion.

Although UMG strains to demonstrate a genuine issue of material fact as to the
applicability of the section 512(c) safe harbor, for the most part the parties do not dispute
the basic and material facts of this case. Rather, they disagree on the extent to which the
DMCA obligates internet-based services like Veoh, which rely on content contributed by
users, to police their systems to prevent all copyright infringement. This legal question is
at the center of this dispute, and it is therefore the focus of this Order.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

I.

BACKGROUND1

This background section presents a brief (but unredacted) overview of the material

facts.2

A.

Accessing and Contributing Videos

Veoh’s services allow users to view and share videos with anyone who has an
internet connection. Users have uploaded millions of videos to Veoh, and Veoh currently
has over a million videos available for viewing. RSGI ¶¶ 14-15.3 In addition to user-
uploaded videos, Veoh also makes available “partner content” provided by major

1 Unless otherwise stated, the facts below are undisputed. Throughout UMG’s
Statement of Genuine Issues of Material Fact, it purports to “dispute” a fact, but then
states allegations that are consistent with the asserted fact. See, e.g., SGI ¶ 23 (in
response to the assertion that “Veoh does not charge users for its website or software,”
UMG agrees that Veoh does not charge a fee, but states “Otherwise DISPUTED: Veoh
generates revenue by placing advertisements . . . . Veoh’s users allow Veoh to generate
revenue from infringing content.”). The Court will not address these immaterial
“disputes,” which do nothing more than strain the Court’s resources and distract from the
real issues in this litigation.

2 The parties filed several motion papers under seal. But as has occurred
previously in this litigation, they did not identify the facts claimed to be confidential. See
Protective Order at ¶ 24 (Docket No. 150) (“In order to enable the Court to determine
whether there is evidence that the Court should attempt not to disclose . . . all
[confidential] documents [filed with the Court] shall clearly identify the particular aspects
of the documents that contain, refer to, or rely upon such CONFIDENTIAL
INFORMATION. Absent such notification, the Court will be free to incorporate all such
documents and any information contained, referred to, or relied upon therein in its written
and oral rulings. The parties may do so at any time prior to the hearing or trial at which
the material may be used.”).

3 “RSGI” refers to Veoh’s Reply to Plaintiffs’ Statement of Genuine Issues of
Material Fact (Docket No. 473).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

copyright holders, such as SonyBMG, ABC, CBS, ESPN, Viacom, and Warner
Television. RSGI ¶¶ 15, 18, 76.

Users can access and share videos via the veoh.com website and also via a
standalone software application. The software application became available in
September 2005, and the website became accessible in February or March 2006. RSGI
¶¶ 1-2, 4-5, 77, 84.

A user who wishes to share a video by uploading it to Veoh’s systems must
register at veoh.com by providing a user name, e-mail address, and password. RSGI ¶ 8.
When a user uploads a video, she can provide information to help other users find it for
viewing or downloading, such as a title, descriptive “tags” (keywords), and pre-set
categories such as “children’s music,” “politics,” and “faith & spirituality.” RSGI ¶¶ 9-
10, 81, 83, 88; Papa Decl., Ex. B. After a user submits a video to Veoh’s system, it is
automatically processed and made available to other users. RSGI ¶ 6. This processing
includes the assignment of a “permalink,” or web address, that uniquely identifies each
video. RSGI ¶ 11.

B.

Veoh’s Revenues and Business Model

Veoh does not charge users of its website or software. RSGI ¶ 23. Like many
internet businesses, Veoh’s plan has been to “build or create an audience” and then
“subsequently . . . turn that into a revenue stream” through advertising. RSGI ¶¶ 24, 90,
95-96. Consequently, Veoh’s executives concluded that having a wide range of content
on its system would be important to its success. RSGI ¶¶ 92-94. Thus far, however,
Veoh has not turned a profit. RSGI ¶ 25.

C.

Veoh’s Copyright Policies and Practices

Veoh’s Terms of Use has always contained language prohibiting users from
uploading videos that infringe copyrights and reserving Veoh’s right to remove videos
and terminate repeat infringers. RSGI ¶¶ 29-31. Veoh’s current Copyright Policy sets
forth its DMCA policy and describes how to send Veoh notices of claimed infringement.
RSGI ¶¶ 32-33. In addition, each time users begin to upload a video to the veoh.com
website they are shown a message stating, “Do not upload videos that infringe copyright,

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

are pornographic, obscene, violent, or any other videos that violate Veoh’s Terms of
Use.” RSGI ¶ 34.4

Veoh’s employees do not review user-submitted content before it becomes
available to other users. RSGI ¶ 17. Veoh’s system does, however, allow it to disable
access to inappropriate videos. RSGI ¶ 28. For example, when a copyright holder sends
Veoh a notice of infringement that complies with the DMCA’s notice-and-takedown
provisions, Veoh disables access to the allegedly infringing videos, often the same day
that Veoh receives notice, or within a day or two of notice. RSGI ¶ 36.5 At least since
April 2007, Veoh’s Senior Manager of Copyright Compliance has also investigated less
formal complaints of infringement. RSGI ¶ 37; Simons Decl. ¶ 5.

4 Veoh did not include all of the Copyright Policies it has used since its inception in
its motion papers, so it is unclear whether this language appeared in previous versions
and whether users always received pre-upload warnings.

5 UMG’s SGI “disputes” these facts, but UMG has not established that the dispute
is material. Instead, it makes four assertions that are consistent with Veoh’s asserted fact.
See RSGI ¶ 36 (“1. Veoh’s system is also configured so that Veoh can disable access to
content regardless of whether it has received a specific infringement notice. . . . 2. Veoh
implemented Audible Magic filtering in October 2007 . . . but did not apply the filter to
its backlog of works until the summer of 2008. . . . 3. Veoh’s system allowed Veoh’s
employees to disable access to videos which they knew (or should have known) were
infringing, but Veoh chose to implement a policy which allowed employees to ignore
such videos. . . . 4. Regardless of whether it received notice, Veoh’s system could have
allowed its employees to examine . . . videos ‘recommended’ as ‘similar’ by its
‘recommendation engine.’”).
The Court does sustain UMG’s objection that the declaration of Stacie Simons
does not establish a foundation for statements about Veoh’s practices prior to April 2007.
But facts about those practices are supported by the supplemental declaration of Joseph
Papa. Papa Suppl. Decl. ¶ 6. Papa is Veoh’s V.P. of Engineering. UMG objects that
parts of Papa’s declaration are excludable because Veoh did not cite to them in its
Statement of Undisputed Facts, but Veoh did cite the portion of his declaration
supporting the facts about takedown intervals. See SUF ¶ 36.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

Veoh uses a number of technologies to automatically prevent copyright
infringement on its system. For example, when Veoh disables access to a video that
infringes a copyright, “hash filtering” software that it introduced in 2006 automatically
disables access to any identical video and blocks any subsequently submitted duplicates.
RSGI ¶ 47.6 In 2006, Veoh began developing another method of filtering potentially
infringing content, but it ultimately adopted a third-party solution from a company called
“Audible Magic.” RSGI ¶ 48; Motion at 8.7 Veoh began testing Audible Magic’s
filtering technology in the summer of 2007. RSGI ¶ 50. Audible Magic’s product works
by taking an audio “fingerprint” from video files and comparing it to a database of
copyrighted content that is provided by copyright holders like UMG. (The record on this
motion does not reveal precisely how this database is compiled and tailored to each
internet service provider that uses it.) This system is meant to filter out content that the
copyright holders have not authorized to appear on Veoh’s system. RSGI ¶ 49. There is
evidence that Audible Magic’s system does not succeed at filtering out all forbidden
videos, RSGI ¶ 65, but in any event UMG faults Veoh for taking too long to implement
it.

Veoh put Audible Magic’s technology into use in October 2007 to filter uploaded
works. RSGI ¶ 51. Beginning then, if a user attempted to upload a video that matched

6 UMG disputes the effectiveness of this mechanism because it can identify only
files that are exactly identical. This contention, and some others raised by UMG, are
based on affidavits by two experts, Ellis Horowitz and Benjamin Edelman. Veoh objects
that these affiants are not qualified as experts and argues that their testimony is irrelevant.
It is unnecessary for the Court to rule on these objections in light of this Order’s
conclusion that the applicability of the section 512(c) safe harbor does not turn on when
Veoh implemented the filtering system that UMG prefers. The other opinions expressed
in the Edelman declaration (i.e., that Veoh distributes music video content because it
draws viewers, and that “Veoh generates advertising revenue from its display of
advertising in connection with the display of UMG’s copyrighted content”) and the
Horowitz declaration (i.e., that Veoh has available more effective filtering technologies
which it has not adopted), also are not material in light of the analysis below.

7 The Court overrules UMG’s objection that this fact is based on hearsay to the
extent that Papa’s testimony purports to describe conduct of other Veoh employees.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

content in Audible Magic’s database of forbidden content, the video never became
available for viewing. RSGI ¶¶ 52-53, 115. Approximately nine months later, Veoh
applied the filter to its backlog of videos, resulting in the removal of more than 60,000
videos, including those incorporating UMG’s works. RSGI ¶¶ 54, 116; Papa Decl. ¶ 15;
Ranahan Decl. ¶ 3, Ex. B.8

Finally, Veoh has implemented a policy for terminating users who repeatedly
upload infringing content, and has terminated thousands of user accounts for repeat
copyright violations. RSGI ¶¶ 30, 43. As discussed below, the parties dispute whether
Veoh’s termination policy is stringent enough to satisfy the DMCA’s requirements. See,
e.g., RSGI ¶¶ 27, 40, 41.

D.

UMG’s Identification of Allegedly Infringing Videos

The parties agree that before UMG filed its complaint in September 2007, the only
notices Veoh received regarding alleged infringements of UMG’s works were sent by the
Recording Industry Association of America (“RIAA”), which acted as UMG’s agent.
RSGI ¶¶ 55-56. The RIAA notices listed specific videos that were allegedly infringing,
links to those videos, and the names of the artists who made the videos. They did not,
however, mention UMG or assert rights to all works by the artists identified in the
notices. RSGI ¶ 71; Batsell Decl., Exs. 23-32. UMG does not dispute that Veoh
removed the material located at the links identified in the RIAA notices. RSGI ¶ 71.

The parties have submitted a lengthy history of Veoh’s efforts to get UMG to
identify specific infringing video files. To make a long story short, Veoh has maintained
that UMG must identify specific works by providing links to videos, or other identifying
information. UMG disagrees, but ultimately produced a list of approximately 7,800
allegedly infringing video files. See RSGI ¶¶ 57-59, 74. Throughout discovery, UMG
revised its list of allegedly infringing videos, sometimes adding and sometimes removing

8 UMG points out that the Audible Magic technology was available beginning
some time in 2005, and that other websites implemented it before Veoh did. SGI ¶¶ 107-
12. Veoh objects that UMG improperly relies on statements in various news articles and
third party websites, but it does not disagree that other sites implemented the Audible
Magic technology before it did.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

files. See RSGI ¶¶ 61, 72-74. Of the videos eventually identified by UMG, Veoh had
already removed the vast majority because they had been identified by the RIAA notices,
by the Audible Magic filter, or by other means. RSGI ¶¶ 62-68, 75. But even the
Audible Magic filter had failed to identify as infringing hundreds of these allegedly
infringing videos. RSGI ¶ 65.9

E.

Prior Finding in Io Group that Veoh is Entitled to the Section 512(c)
Safe Harbor

This Order is not the first time a federal district court has addressed whether Veoh
qualifies for the safe harbor under section 512(c). On August 27, 2008, Magistrate Judge
Howard R. Lloyd, sitting in the Northern District of California, wrote that

the court does not find that the DMCA was intended to have Veoh shoulder the
entire burden of policing third-party copyrights on its website (at the cost of losing
its business if it cannot). Rather, the issue is whether Veoh takes appropriate steps
to deal with copyright infringement that takes place. The record presented
demonstrates that, 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 sum, Veoh has
met its burden in establishing its entitlement to safe harbor for the alleged
infringements here.

Io Group, Inc. v. Veoh Networks, Inc., 586 F. Supp. 2d 1132, 1155 (N.D. Cal. 2008).10

II.

SUMMARY JUDGMENT STANDARDS

Federal Rule of Civil Procedure 56(c) provides for summary judgment when “the

9 UMG claims that copyrighted material identified in UMG’s complaint was not
removed for months. Veoh responds that no link was provided for the material. RSGI ¶
124.

10 Veoh cited Io Group extensively in its opening brief. UMG did not mention it at
all in its Opposition.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

pleadings, the discovery and disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that the movant is entitled to
judgment as a matter of law.” The moving party bears the initial burden of demonstrating
the absence of a “genuine issue of material fact for trial.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 256 (1986). A fact is material if it could affect the outcome of the suit
under the governing substantive law. Id. at 248. The burden then shifts to the
nonmoving party to establish, beyond the pleadings, that there is a genuine issue for trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

“When the party moving for summary judgment would bear the burden of proof at
trial, it must come forward with evidence which would entitle it to a directed verdict if
the evidence went uncontroverted at trial. In such a case, the moving party has the initial
burden of establishing the absence of a genuine issue of fact on each issue material to its
case.” C.A.R. Transp. Brokerage Co., Inc. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th
Cir. 2000) (citations omitted). In contrast, when the non-moving party bears the burden
of proving the claim or defense, the moving party can meet its burden by pointing out the
absence of evidence from the non-moving party. The moving party need not disprove the
other party’s case. See Celotex, 477 U.S. at 325. Thus, “[s]ummary judgment for a
defendant is appropriate when the plaintiff ‘fails to make a showing sufficient to establish
the existence of an element essential to [his] case, and on which [he] will bear the burden
of proof at trial.’” Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795, 805-06 (1999)
(citing Celotex, 477 U.S. at 322).

When the moving party meets its burden, the “opposing party may not rely merely
on allegations or denials in its own pleading; rather, its response must—by affidavits or
as otherwise provided in this rule—set out specific facts showing a genuine issue for
trial.” Fed. R. Civ. P. 56(e). Summary judgment will be entered against the opposing
party if that party does not present such specific facts. Id. Only admissible evidence may
be considered in deciding a motion for summary judgment. Id.; Beyene v. Coleman Sec.
Servs., Inc., 854 F.2d 1179, 1181 (9th Cir. 1988).

“[I]n ruling on a motion for summary judgment, the nonmoving party’s evidence
‘is to be believed, and all justifiable inferences are to be drawn in [that party’s] favor.’”
Hunt v. Cromartie, 526 U.S. 541, 552 (1999) (quoting Anderson, 477 U.S. at 255). But
the non-moving party must come forward with more than “the mere existence of a

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

scintilla of evidence.” Anderson, 477 U.S. at 252. Thus, “[w]here the record taken as a
whole could not lead a rational trier of fact to find for the nonmoving party, there is no
genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986) (citation omitted).

III. ELEMENTS OF THE SECTION 512(c) SAFE HARBOR

A defendant qualifies for safe harbor under section 512(c) of the Copyright Act if
it is a “service provider” that meets the requirements set forth in sections 512(c) and
512(i). UMG does not dispute that Veoh is a “service provider” pursuant to section
512(k)(1)(B). It contends that there are genuine issues of material fact as to (1) whether
Veoh expeditiously removed infringing material when it acquired actual knowledge of
such material or awareness of facts from which infringing activity was apparent; (2)
whether Veoh had the right and ability to control allegedly infringing activity from which
it received a direct financial benefit; and (3) whether Veoh adopted and reasonably
implemented a policy of terminating repeat infringers

The elements of sections 512(c) and (i) that UMG contends Veoh did not satisfy
are underlined below:

(1)

In general. — A service provider shall not be liable for monetary relief, or, except
as provided in subsection (j), for injunctive or other equitable relief, for
infringement of copyright by reason of the storage at the direction of a user of
material that resides on a system or network controlled or operated by or for the
service provider, if the service provider —

(A)



(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

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

remove, or disable access to, the material;

(B) does not receive a financial benefit directly attributable to the infringing
activity, in a case in which the service provider has the right and ability to
control such activity; and

(C) upon notification of claimed infringement as described in paragraph (3),
responds expeditiously to remove, or disable access to, the material that is
claimed to be infringing or to be the subject of infringing activity.

(2) Designated agent. — The limitations on liability established in this subsection
apply to a service provider only if the service provider has designated an agent to
receive notifications of claimed infringement described in paragraph (3), by
making available through its service, including on its website in a location
accessible to the public, and by providing to the Copyright Office, substantially the
following [contact] information:

* * *

(3) Elements of notification. —

(A) To be effective under this subsection, a notification of claimed infringement
must be a written communication provided to the designated agent of a
service provider that includes substantially the following . . . . [describes
requirements].

17 U.S.C. § 512(c) (emphasis added).

Under section 512(i), a service provider is eligible for the section 512(c) safe
harbor only if it:

(A) has adopted and reasonably implemented, and informs subscribers and
account holders of the service provider’s system or network of, a policy that
provides for the termination in appropriate circumstances of subscribers and
account holders of the service provider’s system or network who are repeat

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

infringers; and

(B)

accommodates and does not interfere with standard technical measures.

17 U.S.C. § 512(i) (emphasis added).

Veoh addresses all of the required elements of eligibility for the section 512(c) safe
harbor in its Motion for Summary Judgment, but for the sake of brevity the Court will
discuss only the elements challenged by UMG. As to the unchallenged elements, the
Court finds that Veoh has shown that there are no genuine issues of material fact and that
it satisfies those prerequisites for limiting its liability.

IV.

SECTION 512(c)(1)(A): KNOWLEDGE OF INFRINGEMENT AND
EXPEDITIOUS REMOVAL OF MATERIAL

Section 512(c)(1)(A) requires that (i) the service provider “not have actual
knowledge that the material or an activity using the material on the system or network is
infringing”; and (ii) in the absence of actual knowledge, the service provider “is not
aware of facts or circumstances from which infringing activity is apparent.” If the service
provider did acquire actual or apparent knowledge, it must show that it (iii) “act[ed]
expeditiously to remove or disable access to the [infringing] material.” UMG contends
that Veoh had knowledge of infringing material that it did not act expeditiously to
remove. But Veoh has shown that when it did acquire knowledge of allegedly infringing
material — whether from DMCA notices, informal notices, or other means — it
expeditiously removed such material, and UMG has failed to rebut that showing. Thus,
Veoh has met its burden of proving compliance with section 512(c).11

11 There is no dispositive decision on the burden of proof, but Veoh conceded at the
hearing that it carries the ultimate burden. David Nimmer’s authoritative treatise charts
the following paths on the burdens of proof and persuasion:

3-12B Nimmer on Copyright § 12B.04 n.41(2009): “A word is in order here on burdens
of persuasion. Given that all of Section 512’s limitations of liability constitute
affirmative defenses, the service provider must prove its eligibility. See H. Rep.
(DMCA), p.26. But a service provider who offers competent testimony that it lacked
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

In Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007) (“CCBill”), the
Ninth Circuit provided clear guidance on how to apply the knowledge elements of the
section 512(c) safe harbor. The Court will recount the reasoning of CCBill in some
detail, as it guides the section 512(c) analysis in this case.

In CCBill, Perfect 10 argued that notices it sent to CCBill provided CCBill with
actual knowledge of infringement. The Ninth Circuit held that even though the notices

actual knowledge shifts the burden of proof to the plaintiff to negate those claims. That
last proof usually represents an insuperable hurdle for the plaintiff.”

Id. at § 12B.04 n.43: “It would seem that the structure of OCILLA effectively prevents an
owner from ‘lying in the weeds’ by failing to provide notice, and then belatedly claiming
that vast damages have accrued in the interim. For having failed to serve a notification of
claimed infringement, the owner will lose the case as a whole, unless it can meet the high
burdens of demonstrating either a ‘red flag’ or actual knowledge.”

Id. at § 12B.04: “What happens when a notification is out of compliance with the above
norms to a substantial degree and is not cured? In that case, the statute explicitly
provides that ‘a notification from a copyright owner or from a person authorized to act on
behalf of the copyright owner . . . shall not be considered . . . in determining whether a
service provider has actual knowledge or is aware of facts or circumstances from which
infringing activity is apparent.’ In other words, the copyright owner in that case must
still demonstrate the service provider’s actual knowledge, or the existence of a ‘red flag,’
based on evidence entirely independent of the matters contained in the defective
notification.

A

number of questions arise in this regard. What happens if notification is defective in
that it was sent to the corporate office instead of to the statutorily designated agent, but
staff at headquarters reviewed the notification and understood the allegation of
infringement—does the ISP then bear the requisite degree of knowledge to forfeit its
defense under Section 512? Under the language of the statute, the answer is negative.
For, as just mentioned, the copyright owner bears the burden of demonstrating knowledge
independently of the failed notification. To the extent that no other proof exists, the
proprietor’s attempt to defeat the defense fails.”
CIVIL MINUTES - GENERAL
CV-90 (06/04)

Page 12 of 29



Case 2:07-cv-05744-AHM-AJW Document 575 Filed 09/11/09 Page 13 of 29 Page ID
#:15984

O

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL
Date September 11, 2009
Case No. CV 07-5744 AHM (AJWx)
Title
UMG RECORDINGS, INC., et al. v. VEOH NETWORKS INC., et al.

identified allegedly infringing pictures and even contained links to the materials, they
were inadequate for several reasons, including that they required CCBill to cobble
together adequate notice by searching a spreadsheet for ownership information and then
combing through thousands of pages of images to find internet links. Id. at 1112-13. The
Ninth Circuit concluded that “[t]he DMCA notification procedures place the burden of
policing copyright infringement—identifying the potentially infringing material and
adequately documenting infringement—squarely on the owners of the copyright. We
decline to shift a substantial burden from the copyright owner to the provider.” Id. at
1113. See also Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090, 1107 (W.D.
Wash. 2004) (plaintiff’s “decision to forego the DMCA notice provisions . . . stripped it
of the most powerful evidence of a service provider’s knowledge—actual notice of
infringement from the copyright holder”).

CCBill reached a similar conclusion as to the requirement in section
512(c)(1)(A)(ii) that the service provider remove material when it is “aware of facts or
circumstances from which infringing activity is apparent.” Perfect 10 contended that
CCBill was aware of several “red flags,” including that it provided services to websites
with such “come hither” names as “illegal.net” and “stolencelebritypictures.com.” The
Ninth Circuit found that the names of the sites alone did not signal apparent infringement,
and stated that “[w]e do not place the burden of determining whether photographs are
actually illegal on a service provider.” Id. at 1114. CCBill teaches that if investigation of
“fac

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