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Universal not allowed to sue shareholders in Veoh case
By CMU Editorial | Published on Monday 9 February 2009
More from the ongoing lawsuit between the Universal Music Group and YouTube competitor Veoh.
As previously reported, the major is suing the video-sharing site over allegations that it is guilty of copyright infringement for not doing enough to stop content owned by the record company from appearing on its website.
Some see the case as a pre-cursor to the big Viacom v YouTube case, because some of the issues – ie what measures a video sharing service should take to stop unlicensed content from appearing on its website – are the same.
The majors are not suing YouTube, of course, because they reached lucrative licensing deals with the video sharing major before any major legal action got under way.
Anyway, as also previously reported, things are arguably not looking good for Universal in this case, and therefore Viacom in the YouTube case, because an earlier dispute between a porn company and Veoh went the video sharing site’s way.
The courts ruled that, because Veoh has a policy of removing unlicensed content as soon as they are alerted to its presence by content owners (as does YouTube), they are fulfilling their obligations under US copyright law.
Of course a court may be more willing to side with a major entertainment firm than a porn maker, so Universal is proceeding with its case. However, it is not proceeding with its case against Veoh’s investors, though not out of choice. A judge ruled last week that the music firm couldn’t name Veoh’s financial backers in its infringement lawsuit.
Universal’s attempts to sue Veoh’s investors is similar to the majors’ back-in-the-day litigation against those who invested in the original Napster, and is an attempt to [a] ensure the defendant doesn’t just go into liquidation if it loses the case and [b] to put money people off investing in future infringing online ventures.
Of course in the case of the Napster lawsuit, that meant the majors sued one of their counterparts – Bertelsmann’s BMG – who had invested in the original file sharing phenomenon. Bertelsmann denied liability, though subsequently settled out of court with most plaintiffs, meaning the issue of shareholder liability was never really discussed in court.
