Veoh: Is continuous monitoring really the law? –updated

We’re going to take a look at this opinion much more closely, but the Veoh decision came down–wrongly and weirdly. Unlike the Viacom case, both the Io claim and the UMG claim did not involve the extensive DMCA notices sent by Viacom. I would think–and I think it’s worth thinking about some more–that would make a huge difference.

I have written at some length over the years about what I called Google’s “notice and shakedown” policy, a pejorative term I borrowed from my friend Rick Carnes. When reading Mary Beth Peters excellent testimony regarding the ominous implications (and possibly unconstitutional underpinnings) of the Google Books “de facto compulsory license”, I suddenly realized that was the description that we were looking for to describe “notice and shakedown”.

Register Peters told the Congress that “we will explain why allowing Google to continue to scan millions of books into the future, on a rolling schedule with no deadline, is tantamount to creating a private compulsory license through the judiciary. This is not to say that a compulsory license or collective license for book digitization projects may or may not be an interesting idea. Rather, our point is that such decisions are the domain of Congress and must be weighed openly and deliberately, and with a clear sense of both the beneficiaries and the public objective.”

One could easily say that the Lenz, and Veoh I and Veoh II cases were also creating a private compulsory license through the judiciary.

Veoh was handed a court ruling last year (Io Group v. Veoh Networks, Inc., No. 06-03926 (N.D. Cal. Aug. 27, 2008) when a federal magistrate in Silicon Valley ruled that the technology company was entitled to protection under the “safe harbor” sections of the Copyright Act from claims of copyright infringement brought by creators. The safe harbor protects an online service provider if the provider doesn’t know or should have known that infringement is occurring, and that it take steps to prevent repeat infringers from using the service.

According to some interpretations of this new law, copyright owners—from multinational corporations to independent songwriters–are required to stand at the ready on a 24/7 basis to police the Internet and identify unauthorized uses of their copyrights. Copyright owners are then required to notify these services of infringements.

One policy question in the Veoh case is who is in a better position to stop online infringement—the online service provider who is operating the service with millions in venture capital financing and access to the public financial markets, or an independent songwriter or a film studio. Should an online service provider be permitted to put their “head in the sand” and permit film clips or music videos to be uploaded because the service has not been notified about a particular digital file among millions of files, even though the service has been notified of infringement of the copyrighted work in the file.

For example, if I wrote a song called “I Love You” that was in a music video and we notified Veoh that the company was not authorized to permit any copies of that work to be uploaded to or downloaded from their system, should we also have to identify every single digital file that contained a copy of that digital work? The Veoh decision says that we—and not Veoh–would have to find each infringing copy among the hundreds of thousands, if not millions, of video clips on Veoh.

The judge’s order in the Io case permits Veoh to avoid having to screen uploaded content for infringing materials because Veoh’s software is designed—by Veoh–to make the uploading process “automated”. This obviously begs the question of whether Veoh has responsibility for putting in place a system that it apparently cannot control. Similar arguments have been made for post-Napster p2ps that use a distributed network designed to avoid a centralized location where responsibility for infringement could be clearly placed on the service provider.

The Io court tells songwriters that they must spend thousands of dollars that they can ill afford to spend trying to track down each infringing copy of their work on Veoh—even if Veoh knows that the songwriter has not authorized any use of their works on Veoh. This seems an extraordinarily harsh and one-sided result.

It is a far cry from the win-win relationships that have produced sustainable innovation for both technology companies and creators from companies like iTunes and Hulu.

While the Io judge claims to be furthering the intent of Congress in passing the notice and takedown rules, it seems hardly likely that Congress ever envisioned an industry based on what is essentially a copyright hack. I find it very hard to believe that a statute that was designed to stop free riding was imagined by Congress to itself become a negative externality. The Io ruling places companies that refuse or fail to obtain licenses at a competitive advantage to companies such as iTunes, Hulu and others that obtain permission before they permit content on their services. The same could easily be said of Pandora–another one of the good guys–in a slightly different context as the company relies on the statutory webcasting license.

It also legitimizes the “catch me if you can” business model of online companies that intentionally avoid licensing. This is not the way forward for legitimate companies to come together with sustainable innovation in the digital society.

As noted previously on MTP, it seems hard to believe that it was the intent of Congress that a company receiving 1 million notices should be able to continue to operate under a de facto compulsory license. While neither Io or UMG sent the statutory notices, plenty of people do.

One thought on “Veoh: Is continuous monitoring really the law? –updated

  1. I am ashamed that our justice system allows formalities and legal semantics to legitimize what I see as little more than a clear case of theft. I am not an artist, lawyer or a publisher and have no incentive to see more strict regualtion against such sites implemented. However, I feind it appaling that we continue to allow content that represents many hours of hard work to be frittered away, legally, with no decent way of compensating the people who created it. While Producers and Studios should undoubtedly be forced to more evenly distribute profits to the people and artists producing the content, this can only happen with a basic ruling that allows an equilibrium of profit sharing from digital purchases.Keep up the good work, but I would think the film and music industry need to unify and propose a standardized remuneration model for talent and producers of content that is digitally distributed. Then you might suceed in getting the legal system and ulitmately taxpayer dollars behind you.

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