The Ninth Circuit recently measured the scope of a safe harbor for service providers accused of copyright infringement, holding that it's broad enough to protect operators of filesharing websites. In UMG Recordings, Inc. v. Shelter Capital Partners LLC, the Ninth Circuit interpreted and clarified the part of the Digital Millenium Copyright Act that created the safe harbor, 17 U.S.C. § 512(c).
UMG offered three reasons for denying to Veoh Networks safe harbor protection. First, UMG argued that the automatic copying of uploaded files to enable access fell outside the plain meaning of "infringement of copyright by reason of the storage [of material] at the direction of a user." (emphasis added). The Ninth Circuit disagreed, holding that the service provider safe harbor encompasses the access-facilitating processes that automatically occur when a user uploads a video to Veoh Networks.
Second, UMG insisted that Veoh Networks had actual knowledge of infringement or was aware of facts from which infringing activity was apparent, in violation of specific provisions of the safe harbor. Again, the Ninth Circuit rebuffed UMG's argument, holding that a service provider must have specific knowledge of particular infringing activity to have actual knowledge. It is not enough that a service provider has general knowledge that its services could be used to share infringing material. With respect to the facts from which infringing activity was allegedly apparent, the Ninth Circuit held that the red flags were insufficient because a service provider has no duty to determine whether stored materials are actually infringing.
Finally, UMG argued that Veoh Networks was ineligible for the safe harbor because it received financial benefit directly attributable to the infringing activity, which it had the right and ability to control. The Ninth Circuit affirmed the District Court and held that the "right and ability to control" under the safe harbor requires control over specific infringing activity the service provider knows about.
With this opinion, the Ninth Circuit has reassured the operators of filesharing websites that the safe harbor in the Digital Millenium Copyright Act is real.