How Veoh's demise could impact copyright law

By Eriq Gardner

We were as shocked as everyone to hear Veoh is laying off employees and heading towards bankruptcy. Just a few years ago, the company seemed poised to challenge Google's YouTube as the go-to video-sharing website, having attracted major funding, including tens of millions of dollars from Time Warner, Goldman Sachs and former Disney chairman Michael Eisner, who sat on the company's board.

Perhaps more importantly, Veoh emerged as an underground hero among many copyfighters after beating Universal Music Group in court in the biggest signal yet that the DMCA provides a copyright infringement "safe harbor" to tech companies so long as strong take-down measures are in place. (YouTube is still battling on this front against Viacom.)

Hollywood reenactment of Prop 8 hearings (video)

By Eriq Gardner

Lawyers for media companies were disappointed with last month's ruling by the U.S. Supreme Court that barred TV cameras from filming federal court proceedings relating to the constitutionality of Proposition 8, the 2008 California ballot initiative that defined marriage as between a man and a woman.

Leave it to Hollywood to find a way around the ban.

Happy New Year, Viacom vs YouTube: Colbert, 'South Park' guys dragged into case

By Eriq Gardner

Will Viacom's massive copyright infringement case against YouTube finally get to trial in 2010?

Don't bet on it.

The discovery portion of the three-year-old case recently ended, but not before some theatrics that raise questions about whether we'll ever get a clear answer on Google's potential liability for hosting infringing content on the video-sharing site.

At a recent gathering of comics, Comedy Central host Stephen Colbert described being interrogated in an "insane" deposition process. "I can tell you the lawyers would say, 'Are you asking Stephen the person or Stephen the character [from the Colbert Report]?'"

At least Colbert made both his personalities available to be deposed.

In a recent letter to the court, even after discovery supposedly ended, Google lawyer Andrew Schapiro begged the judge to compel "South Park" creators Matt Stone and Trey Parker to turn over documents. Schapiro described months of unsuccessful efforts to coordinate with Stone and Parker. The judge ultimately ordered the two to comply with the request. A representative for Stone and Parker promised the two will do so, but we'll believe the notorious pranksters when we see the goods.

Google has been trying to show that Viacom employees were among many who uploaded content to YouTube. Recently, in an effort to get past this issue, Viacom withdrew about 250 "accused clips" from its claims. The judge allowed Viacom to do so, prompting the defense to request a hearing, and a response from Viacom, complaining about the complaints.

We feel some sympathy for New York District Judge Louis Stanton as he presides over this case.

Over the past year, many copyright observers have raised doubts to us about whether Judge Stanton has his court in order. The case involves two well-heeled companies — Viacom and Google — and some court watchers question whether the judge has been too lenient in allowing these litigants to drag out the case. 

Next comes what will likely be lengthy motions for summary judgment. 

Record labels sue Vimeo, claim social network encourages infringement

By Eriq Gardner

Get ready for the next major lawsuit in the ongoing copyright wars.

Capitol Records, Caroline Records and Virgin Records America have filed a massive copyright infringement complaint against Vimeo, a social networking website for filmmakers owned by Barry Diller's IAC/InterActiveCorp. The well-financed website claims two million members, many of whom pay a yearly $59.95 membership fee. There's lots of professional-quality footage on Vimeo's website, but how legit is this content?

The plaintiffs contend that Vimeo actively induces its users to infringe copyrights on sound recordings. According to the complaint, Vimeo holds itself out as a site "about original videos, not original music," but "but actively encourages its users to post audiovisual works that feature, contain, or even consist entirely of preexisting musical works, including Plaintiffs' Recordings."

The labels quote one Vimeo staff member who allegedly advised users: "You can use the music, there are ton's [sic] of videos on here with music."

These days, it's become popular for copyright defendants to claim "safe harbor" from liability by implementing strong take-down policies. It's possible that Vimeo will also try to assert DMCA 512(c) safe harbor, as Veoh and Google's YouTube have recently done when faced with lawsuits. 

But reading the complaint, it's easy to see how this case could take another turn.

Many of the works featured on Vimeo are animation, photographs, drawings and mash-ups done by young, innovative filmmakers. Perhaps most controversial is the hot genre of viral video called "lip dubs" where performers lip sync to music. We found this video on Vimeo of Boston University students lip dubbing to the old Jackson 5 hit "I Want You Back," as an example.

Over the past year or so, some (like the EFF) have argued that genres like mash-ups constitute a non-commercial transformative fair use of copyright. In the complaint, the labels argue that the music is not incidental, but rather provides a focal point for the content. The plaintiffs compare these videos to "television programs or independent films, with recordings synchronized with the dialog or the visual material."

It'll be interesting to see if a court sees these kinds of videos as transformative or just another form of content requiring proper license. 

Vimeo could have the financial backing to vigorously defend the case. On the plaintiffs' side are lawyers from Mitchell Silberberg & Knupp, including Christine Lepera and Russell Frackman, who we interviewed last week concerning his representation of the record industry against Napster. 

The labels seek maximum statutory damages in the amount of $150,000 for each copyrighted work infringed. That could be tons of dough—and music to the ailing industry's ears.

Veoh seeks $3 mil in attorneys fees from Universal Music

By Eriq Gardner

In the past 15 months, Veoh has won important court rulings against Io Group and Universal Music Group defending copyright infringement charges based on its video-sharing website.

Veoh's victories have upheld the legal theory that section 512(c) of the Digital Millennium Copyright Act gives "safe harbor" to websites who enact strong take-down measures.

Now Veoh may be in the process of giving copyright holders another reason to shudder. 

The company is going after UMG for nearly $3 million in attorney's fees incurred after October 2008, about the time that Veoh emerged victorious against adult entertainment company Io. According to a court filing submitted last month and just released, Veoh says that the Io ruling should have given UMG a strong hint:

"The sad truth of this case is that if UMG had simply sent Veoh take-down notices, Veoh would have responded as it does with all such notices...and disabled access to the material. This case would have been put to rest, saving this Court's and the parties' precious resources. Instead, UMG decided simply not to participate in the notice and takedown provisions of the DMCA. Remarkably, even after UMG filed suit, and Veoh offered to immediately take down any allegedly infringing videos identified by UMG, UMG refused, claiming it was Veoh's burden to try to figure out what alleged UMG rights might be infringed."

Judge Howard Matz will consider this motion at a hearing scheduled for December 21. The forthcoming ruling on this issue might have implications for other copyright holders. For example, Google is also claiming 512(c) safe harbor in defending Youtube from copyright infringement charges by Viacom and others. Similar to Veoh, Google has told copyright holders that it will comply with takedown requests.

No telling how much Google is spending on its own legal defense, but we're betting its far more than $3 million.

Summit sues anonymous pirates for posting 'New Moon' online

By Eriq Gardner

Summit Entertainment is certainly pleased that "The Twilight Saga: New Moon" is approaching the $500 million mark in global boxoffice. But the film has also become a hot commodity in piracy circles.

On Thanksgiving eve, lawyers for the studio filed a lawsuit against unidentified individuals who allegedly uploaded the film to YouTube (UPDATED: Summit tells us the uploaded footage was a portion of the film used in promotional spots). Summit also requested that a California district court issue a subpoena to YouTube for information relating to the identification of those allegedly responsible for uploading the movie. Here's a copy.

Soon after the video was posted, Summit informed the video-sharing website of the presence of "New Moon" on its servers. The movie was taken down.

In the past, YouTube has complied with subpoenas related to user uploads. For example, in 2007, after a court issued a subpoena, YouTube helped Fox identify two individuals who had uploaded entire episodes of the show "24." It's unclear whether YouTube will fight Summit's latest request for information. The company hasn't responded to our request for comment.

In addition to breaking boxoffice records, last week "New Moon" also became the most pirated movie on BitTorrent. The studio is represented in the case by Dennis Wilson at Keats McFarland & Wilson.

The future of embedded video will (or will not) be televised

By Eriq Gardner

Rupert Murdoch's News Corporation has decided to crack down on Fox News clips appearing on the Internet, recently sending out more than 150 takedown notices to YouTube. The efforts caused the temporary shutdown of News1News' YouTube channel, which provides clips of Sean Hannity, Glenn Beck, Bill O'Reilly and the rest of the Fox News gang to a number of web outlets, including Huffington Post.

There are a couple of ways to read this new development.

At first, Fox News' DMCA claims seemed to be targeted at the liberal blogosphere as a way to prevent left wingers from ridiculing the channel's personalities. But Fox News later sent takedown demands and subsequently caused the shutdown of some right-leaning YouTube channels too, such as GlennbeckClipsDaily and ConservativeNation.

We wonder whether the crackdown on Fox News clips is the first phase of Murdoch's stated threats to scrub Google and its affiliates of News Corp. properties. Murdoch's plans have generated curiosity and heated discussion, including from lawyers debating whether his intentions fly under "fair use" analysis.

But there's another way to read what's going on.

In the past couple of years, many rights-holders have wondered whether embedded clips threaten their businesses. In May 2008, Fox, CBS and NBC took down RedLasso, a then-popular web service that let users search its database of recorded television for clips to post online. (After signing licensing deals, the company recently relaunched a more modest version.) 

Less noticed has been a New York court case between ASCAP and YouTube. In May, YouTube was ordered to pay $1.6 million plus future payments to account for the public performance of music on the video-sharing website. But that didn't end the case. 

After ASCAP started targeting websites and bloggers who embed clips, YouTube agreed to pick up the legal fight on downstream embedded uses of YouTube videos. Currently, both sides are before the Copyright Royalty Board arguing how much YouTube should be charged to allow its users to embed videos. 

The decision, as well as crackdowns by Murdoch and others, could end up impacting the future of embedded video clips online. 

Documents could show Prince going crazy over YouTube video

By Eriq Gardner

We may be about to learn exactly what goes through Prince's head as he trolls YouTube and spots a toddler dancing to his song "Let's Go Crazy."

U.S. District Judge Jeremy Fogel has overruled an objection and ordered Universal Music to turn over dozens of communications with Prince on matters relating to alleged copyright infringements on YouTube. The ruling comes in the discovery portion of a lawsuit filed by Stephanie Lenz against Universal for sending a meritless takedown request. 

In 2007, at the supposed urging of Prince, Universal fired off a letter demanding the video-sharing website remove a 29-second clip of Lenz' son dancing to a Prince song. In a larger effort to show media companies it was serious about fighting copyright infringement, YouTube complied.

Lenz fought back with a lawsuit and got Judge Fogel to issue an attention-grabbing decision that copyright holders must consider "fair use" before sending takedown notices. Lenz has continued to seek damages against Universal, and to win, she'll need to show Universal knowingly misrepresented material or activity as infringing the DMCA. She therefore wants to hear conversations between Prince and Universal.

Universal attempted an interesting roadblock. The company admitted it is not Prince's attorney but that its in-house counsel were involved tangentially in the conversations, so the material should be protected by attorney-client privilege, common-interest privilege, and the work-product doctrine. 

"The fact that the communications are related to information provided to or by attorneys who work for Universal does not in itself make the communications privileged," writes Judge Fogel in his ruling, adding the company waived work product doctrine protection because it didn't raise the objection in a timely fashion.

'Twilight' fans told to stop making Rob Pattinson t-shirts

By Eriq Gardner

When most people think of the intellectual property fights with user-generated content websites, they think of cases like Viacom v. YouTube. Assuming that slow-moving case ever gets to trial, a court will determine what kinds of legal obligations the video sharing website has in policing its network for copyright infringement. 

Here's an interesting new case to watch:

Summit Entertainment filed a lawsuit last week in California district court against print-on-demand merchandising outlet Zazzle.com. The site allows users to upload images and place them on t-shirts, coffee mugs, mouse pads and other items.

According to the complaint, Zazzle's users are stealing "tens of thousands" of trademarked images from its highly successful "Twilight" series, putting them on merchandise, and thus interfering with Summit's exclusive licensing arrangements.

In November, 2008, Summit sent Zazzle a cease-and-desist letter. The studio alleges that Zazzle continues to market and sell these items and that the defendant's conduct constitutes "willful" infringement. Summit seeks an injunction, an accounting, actual damages and punitive damages.

We'll have to wait to see whether Zazzle tries to shift legal responsibility to its users. The website makes its users sign an agreement agreeing not to invade intellectual property rights, threatening to cancel the accounts of those in violation. Interestingly, Zazzle claims that users assign them the rights of images uploaded to the website.

No word, though, on whether the company takes active steps to monitor for infringement, but the website does provide an e-mail address for IP owners to send complaints of misuse.

Eric Schmidt deposition reveals why it was OK to overpay for YouTube

By Eriq Gardner

Google CEO Eric Schmidt gets a lot of credit for being a financial genius. But he doesn't seem like the shrewdest negotiator.

CNET got ahold of a deposition transcript from last May in Viacom's litigation against YouTube for copyright infringement. In it, Schmidt reveals he told Google's board that YouTube was worth $600-700 million, but that he asked the board to approve an acquisition price of $1.65 billion anyway.

Why the billion-dollar premium? Here's part of Schmidt's answer:

"In the deal dynamics, the price, remember is not set by my judgment or by financial model or discounted cash flow. It's set by what people are willing to pay. And we ultimately concluded that $1.65 billion included a premium for moving quickly and making sure that we could participate in the user success in YouTube."

That seems like an awfully high price to pay for the premium of moving quickly.

Just for fun, let's compare it to Disney's $4 billion acquisition of Marvel. 

In an S-4 statement, Marvel says it never convinced Disney to up its original offer significantly. Instead, the companies went back and forth about what actions Marvel's board would be permitted to take if it were to receive a superior offer from a third party.

Two different acquisitions and two different strategies for dealing with competitive offers. Disney haggles over deal protection terms whereas Google just prefers to overpay.