throbber
Case 2:07-cv-05744-AHM-AJW Document 575 Filed 09/11/09 Page 1 of 29 Page ID
` #:15972
`
`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.
`
`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.
`
`CV-90 (06/04)
`
`CIVIL MINUTES - GENERAL
`
`Page 1 of 29
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`

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`Case 2:07-cv-05744-AHM-AJW Document 575 Filed 09/11/09 Page 2 of 29 Page ID
` #:15973
`
`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.
`
`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).
`CV-90 (06/04)
`
`CIVIL MINUTES - GENERAL
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`Page 2 of 29
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`

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`Case 2:07-cv-05744-AHM-AJW Document 575 Filed 09/11/09 Page 3 of 29 Page ID
` #:15974
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`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.
`
`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,
`
`CV-90 (06/04)
`
`CIVIL MINUTES - GENERAL
`
`Page 3 of 29
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`

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`Case 2:07-cv-05744-AHM-AJW Document 575 Filed 09/11/09 Page 4 of 29 Page ID
` #:15975
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`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.
`
`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.
`CIVIL MINUTES - GENERAL
`CV-90 (06/04)
`
`Page 4 of 29
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`

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`Case 2:07-cv-05744-AHM-AJW Document 575 Filed 09/11/09 Page 5 of 29 Page ID
` #:15976
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`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.
`
`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.
`CIVIL MINUTES - GENERAL
`CV-90 (06/04)
`Page 5 of 29
`
`

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`Case 2:07-cv-05744-AHM-AJW Document 575 Filed 09/11/09 Page 6 of 29 Page ID
` #:15977
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`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.
`
`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.
`CV-90 (06/04)
`
`CIVIL MINUTES - GENERAL
`
`Page 6 of 29
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`

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` #:15978
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`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.
`
`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.
`CV-90 (06/04)
`
`CIVIL MINUTES - GENERAL
`
`Page 7 of 29
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`

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`Case 2:07-cv-05744-AHM-AJW Document 575 Filed 09/11/09 Page 8 of 29 Page ID
` #:15979
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`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.
`
`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
`
`CV-90 (06/04)
`
`CIVIL MINUTES - GENERAL
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` #:15980
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`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.
`
`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
`
`CV-90 (06/04)
`
`CIVIL MINUTES - GENERAL
`
`Page 9 of 29
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`

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` #:15981
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`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.
`
`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
`
`CV-90 (06/04)
`
`CIVIL MINUTES - GENERAL
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`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.
`
`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
`CIVIL MINUTES - GENERAL
`CV-90 (06/04)
`Page 11 of 29
`
`

`
`Case 2:07-cv-05744-AHM-AJW Document 575 Filed 09/11/09 Page 12 of 29 Page ID
` #:15983
`
`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.
`
`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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