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Stunned film, music sectors react to Veoh decision

There's no disputing that a federal court's decision to offer safe-harbor protection for sites such as Veoh is a blow to the entertainment industry. But will it bring change?

In the cafes along Sunset Boulevard and the high-rises on Fifth Avenue, executives and lawyers at powerful entertainment conglomerates were talking about Veoh on Tuesday morning.

The rooftop pool of The Standard Hotel in Los Angeles. Greg Sandoval/CNET

They were not joyful discussions. Copyright owners in the film and music sectors were stunned Monday by the news that U.S. District Judge A. Howard Matz ruled that Veoh, an online-video service, is protected by the Digital Millennium Copyright Act's safe-harbor provision and cannot be held liable for acts of copyright infringement committed by users. This was the most significant court victory that the tech sector has won against copyright owners in some time.

Universal Music Group had filed suit against Veoh, but on Friday, the judge tossed the case out. Universal said it will file an appeal soon. While entertainment companies await the appeal, Matz's reading of the DMCA has shaken content producers. Two entertainment attorneys from Los Angeles who asked for anonymity said the ruling "disappointed" many in their industries and absolutely isn't good for Viacom or any other copyright owner. Viacom filed a copyright lawsuit against Google and its YouTube two years ago. Some attorneys believe that Veoh's case is very similar to Viacom's.

Matz's decision isn't binding, but if allowed to stand, it could influence other courts, legal experts said.

What has so spooked the entertainment industry is that Matz would require content creators to play a cat-and-mouse game with those that upload unauthorized copies of films, songs, music videos, and TV shows onto Web sites.

In order to have a piece of content removed from a site such as Veoh or YouTube, they must file what is commonly referred to as take-down notice. If they get one clip pulled, someone could conceivably post the same clip 30 seconds later, and a content owner would have to file yet another notice, says Chris Castle, an attorney and outspoken proponent of artist rights.

"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," Castle wrote on his blog. According to Castle, the ruling legitimizes the "catch me if you can" business models that he claims some companies create to avoid paying licensing fees.

Companies such as YouTube and Veoh have filtering technologies in place that help keep infringing materials off the site, and Fred von Lohmann, senior attorney at the Electronic Frontier Foundation, has always said there isn't any way for such services to determine what content is infringing and what isn't. The copyright owners, according to EFF, are in the best position to do that.

As for the content-filtering technologies, they are totally foolproof. In a story in All Things Digital on Tuesday, the blog reported that Viacom had to pay staff to "work through the night on Sunday" to provide YouTube with "reference files" to help remove unauthorized clips from the Video Music Awards. One would go down, and more would show up.

"This is not the way forward for legitimate companies to come together with sustainable innovation in the digital society," Castle wrote.

That's an important point because despite claims by some on the copyright side, this isn't a situation where YouTube is sitting back while users commit piracy on its site. For two years, the company has implemented filtering technologies and created systems designed to help keep pirated material off of its site. Veoh had its own systems in place.

There's no arguing that YouTube was once more defiant and less interested in appeasing content creators than it is now. For the past couple of years, Google, which bought YouTube in 2006 for $1.65 billion, has wooed the film and music industries, and has signed all but one of the four major record labels and such studios as Disney, Sony Pictures, CBS (publisher of CNET News), and MGM.

Those antipiracy systems were an olive branch welcomed by content producers, but that won't cure all the ills. According to Doug Lichtman, a law professor at the University of California at Los Angeles and an attorney working for Viacom, many of the problems will be solved in the boardroom and not the courtroom.

"The most important antipiracy efforts under way these days aren't cases but (rather) business initiatives like Hulu and Redbox," Lichtman said, "where the content community is struggling to figure out how to give consumers what they want, in forms they want, and at reasonable prices."

If that's the case, though, then why don't Google and Viacom send their attorneys home and cut a business deal whereby everyone makes money? Maybe it will still happen.