Sunday, May 8, 2011

Oral Argument in UMG v. Veoh and Columbia Pictures v. Fung

On May 6, 2011, I attended the Ninth Circuit Court of Appeals’ oral argument in two copyright cases, UMG v. Veoh and Columbia Pictures v. Fung, in a packed courtroom.  The cases were set for argument on the same day before the same three-judge panel.  However, the facts of the cases, and the trial court rulings, were quite different.  Links to audio recordings of the arguments are here and here; a summary of my notes of the hearing is below.

UMG Recordings v. Veoh is about UMG's claim that Veoh's user-generated content (UGC) web site contains copies of UMG's copyrighted music, and that Veoh should be secondarily liable when its users post allegedly infringing music on the Veoh site.  The trial court had granted summary judgment to Veoh on the grounds that it was immune from suit since it complied with the “safe harbor” notice-and-takedown procedures of the Digital Millennium Copyright Act, 17 U.S.C. § 512(c).  The case raises many of the same issues as the Viacom v. YouTube case presently pending in the Second Circuit Court of Appeals, where the trial court also granted summary judgment to YouTube's video service, which is similar in many respects to Veoh's service. 

EFF has case pages about the Veoh and YouTube cases, which includes the briefs (and EFF’s amicus brief supporting Veoh, that I co-authored); my previous posts about YouTube and § 512 are here, here, and here.  As noted below, the Veoh case also spawned two related appeals.

Columbia Pictures and other movie studios sued Fung over Fung’s web sites, including, which linked to bit torrent files.  Since many of those files were of popular copyrighted movies, Columbia and other movie studios sued Fung and Isohunt for secondary copyright liability.  The trial court granted summary judgment for the studios, and Fung appealed.  The parties’ briefs are here, here, and here.

The Judges hearing the appeals were Judges Harry Pregerson, Raymond C. Fisher, and Marsha Berzon.  Judges Fisher and Berzon were the most active questioners.

Veoh Appeals
The oral arguments in Veoh tracked many of the differing arguments about the scope of the § 512 safe harbor that the content industries and that Internet-based companies have made in the past.  The former seek to narrow the safe harbor, and the latter seek broader protection.

Steve Marenberg of Irell & Manella argued first for UMG.  He expressed the content industries’ usual position that the trial court’s ruling would upend the balance between copyright owners and Internet service providers, so as to harm not only content owners but also “lawful” Internet services like iTunes.  Judge Fisher asked Marenberg if, under the DMCA, the copyright owner can send a takedown notice to an ISP asking for infringing content to be removed.  Marenberg replied that as a practical matter, they couldn’t: there is too much infringing content on the web, at dynamically changing locations.  Judge Fisher said that the panel had to deal with the language of the statute Congress wrote, and asked whether the 9th Circuit’s precedent in Perfect 10 v. ccBill put the burden on copyright owners to enforce takedowns.  Marenberg contended that ccBill’s language to that effect only dealt with the adequacy of takedown notices that were actually sent, not to the overall burden.

The discussion then turned to two or three other issues, primarily the meaning of (1) “by reason of the storage at the direction of a user” in § 512(c)(1), and (2) “control” in § 512(c)(1)(B)’s provision that an ISP is eligible for the safe harbor only if the ISP “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.”  (To make this post flow more smoothly, I’ll go through both issues with both sides’ arguments; arguing for Veoh on the main appeal was Michael Elkin of Winston & Strawn.) 

Marenberg argued that “by reason of the storage at the direction of a user” was very narrow, and limited to “backshop” Internet infrastructure operations, including transmission.  In particular, he denied that “storage” included being able to download stored material.  (My view of this argument by the content industries is that they view the Internet as solely a black hole that can only swallow information.)  Judges Fisher and Berzon seemed skeptical of this argument, as had the trial court; Judge Berzon wanted to know what § 512(c) would ever apply to if Marenberg was right.  In response, Elkin pointed out that three different subsections of § 512(c) used the word “access,” meaning that viewing and/or downloading is clearly contemplated (see § 512(c)(a)(A)(iii), (c)(1)(C), and (c)(3)(A)(iii)).  Judge Berzon asked Elkin if there was a distinction between web sites that merely enhanced stored content to make the downloading experience more efficient, versus a web site that had its own software or distribution system; he gave examples of several cases that recognized different forms of downloading as both being “storage.”

On the “control” issue, Marenberg argued that § 512(c)(1)(B) merely codifed common law vicarious liability.  Judges Fisher and Berzon had problems with that interpretation.  Judge Fisher said that under vicarious liability principles, most commercial web sites would satisfy the “financial benefit” provision, and since in response to a takedown notice they could remove the content, that would satisfy Marenberg’s interpretation of the control provision.  Both Judges Fisher and Berzon told Marenberg that under his interpretation, the safe harbor would therefore go away: Judge Berzon told Marenberg his view of the statute “kind of blown the whole thing up.”  Elkin later responded that the DMCA rule is not the common law standard and that § 512(m) made it clear that an ISP has no duty to monitor its site for infringements.  If “control” means more than the ability to comply with takedown notices, then Veoh had no such control. 

Elkin had begun his argument by stating that the purpose of the DMCA was to facilitate the robust development of Internet commerce, education, and information in the digital age, and resulted in successful companies like eBay, Amazon, Google and Facebook.  Elkin stated that Veoh was a responsible company of the kind Congress had in mind when it created the DMCA: it complied with all takedown requests, used filtering to detect infringements, and cooperated with content owners.  He blamed UMG for never providing a list of allegedly infringing videos until a year into the litigation, which were taken down promptly.

After Elkin argued, three other attorneys argued for Veoh.  At that point I realized that there were two additional appeals being heard at the same time as the main appeal on the merits.  Another appeal was Veoh’s appeal of the trial court’s denial of Veoh’s request that UMG pay Veoh’s attorney’s fees.  Thomas Lane argued briefly for Veoh on that issue.  Lane said that Veoh made a good faith settlement offer under Federal Rule 68 of $100,000, and UMG responded that there weren’t enough zeroes.  Lane argued that Veoh’s subsequent victory made a fee award mandatory.

The third appeal involved UMG’s attempt to sue Veoh’s investors, for secondary liability just for investing in Veoh.  The district court had dismissed UMG’s complaint against the investors, and UMG appealed.  However, Marenberg only briefly mentioned that appeal in his initial argument.  Robert Badal of WilmerHale argued first for one group of investors.  He defended the district court’s decision as a correct rule about corporate governance.  In this case, Veoh’s investors did not assist in any direct infringement.

After Badal argued, a fourth attorney stood up, Glen Kulik, who represented a different group of investors.  People seemed surprised that Kulik was arguing, and Judge Berzon asked “who is this guy now?”  Kulik assured the court he wasn’t merely going to repeat Badal’s arguments.  What Kulik said was perhaps the most entertaining part of the day.

Kulik first addressed UMG’s argument that since the lawsuit had forced Veoh into the equivalent of bankruptcy, Veoh’s investors shouldn’t walk away “untroubled.”  Kulik pointed out that the investors lost tens of millions of dollars because UMG, the self-described “biggest and baddest guy on the block,” had forced Veoh out of business.  Next, Kulik said that the whole case involved policy concerns about the Internet itself.  He said that UMG doesn’t like the Internet, since it provides competition.  Before the Internet, UMG and other music companies had a monopoly on new music and videos.  With the Internet, new artists can market themselves and don’t need UMG, posing a big threat to UMG.  So UMG sued Veoh – a legitimate company with legitimate investors – but didn’t sue its management or directors individually for contributing to Veoh’s alleged infringement.  Rather, UMG sued the investors, to try to chill the flow of capital to Internet start-ups to stop future competitors.  He called UMG’s investor suit a “major threat to investment in this country.”  This prompted Judge Pregerson to ask if the case was dealing with “economic warfare”; Kulik responded that the case dealt with competing considerations between Internet commerce and copyright holders.

In sum, at least Judges Fisher and Berzon didn’t seem inclined to narrow § 512.  Obviously, we’ll have to wait for the opinion.

Columbia Pictures v. Fung

In this appeal, Ira Rothken argued for Fung and Isohunt; Paul Smith of Jenner & Block argued for Columbia and the other studio plaintiffs.

Most of this argument dealt with causation requirements for inducement.  Rothken said that the trial court found Isohunt liable for inducing infringement based on 15 messages sent in 2003, even though the alleged infringements they caused didn’t happen until 2007, and only 0.3% of the traffic to Isohunt’s site went to those messages.  In other words, Rothken argued that the Supreme Court’s Grokster decision only imposed liability for inducement based on “resulting acts of infringement,” and if Isohunt’s inducing messages were so far removed in time from any infringement, and if hardly anyone read them anyway, any infringement was not “resulting” from, or caused by, Isohunt.  Judge Fisher pointed out that Isohunt’s site prominently displayed links to obviously copyrighted works, such as “top 10 movies,” and asked why this wasn’t obvious solicitation of infringement.  As Judge Berzon put it, the system encouraged infringement.  In trying to get a summary judgment reversed, Rothken pointed out ways that causation was still lacking.

Paul Smith argued for a broad ruling on both inducement and causation.  He argued that the causation element is satisfied if someone intentionally created a service or device to facilitate infringement, and in fact people used it for that purpose.  He said that causation is simply the use of the site for infringing activity.  Judge Berzon responded that “we have this amicus brief from Google which is very nervous about that.”  Smith responded that Google wanted the 9th Circuit to overrule Grokster (which of course it can’t do).  Judge Berzon repeatedly asked Smith if a public communication was required for inducement; Smith claimed that Grokster had no such requirement. 

Rothken and Smith both briefly argued about whether Isohunt was entitled to the DMCA safe harbor and about the scope of the injunction.

This argument probably went better for Isohunt than I had expected, but Isohunt appears to have an uphill battle.

UPDATE:  Here's a post about these arguments from Techdirt.


  1. When do you think the opinion will come out for UMG v. Veoh?

  2. The opinion will probably take between 2-6 months. It won't take any less time, it might take more time. This panel of Judges heard arguments all week long, and this was on Friday, so they have a lot of work to do.

  3. OK, I will be awaiting it. Thank you for the response.

  4. great post Michael and enjoy reading your commentary. I'm hoping to write a bit about the DMCA safe harbor developments you mention. andy mirsky (I blog at

  5. Michael: Good summary of the oral argument in Veoh; just wrote a post about the decision and its possible impact on the Viacom appeal still pending in the 2d Circuit; my post is here:

    Also good amicus brief to the 9th Circuit; don't think UMG helped itself much when it never sent take down notices or even identified the videos it felt were infringing until Veoh moved to compel that information. As others have said, the Lord helps those who help themselves.