Yesterday, Federal Judge Howard R. Lloyd dismissed a copyright infringement lawsuit against video sharing site Veoh, granting it "safe harbor" under the Digital Millennium Copyright Act.

In June 2006, adult entertainment company IO Group preemptively sued Veoh for hosting ten of its videos that averaged 20 minutes in length. Due to the unique conditions surrounding the suit, IO may have inadvertently set a legal precedent for future DMCA safe harbor cases.

Without first alerting Veoh that it was violating copyrights, IO filed an infringement suit in the Northern District of California. However, due to a policy change within Veoh, all adult-themed videos, including those belonging to IO, were removed before the suit could even begin.

Nevertheless, IO continued with the suit, and Veoh sought refuge under DMCA's safe harbor provisions. In order to qualify for protection, the service provider must: have no knowledge of, or receive no benefit from the infringing activity; have a copyright policy which is readily available to users; and have a method in place for dealing with copyright issues.

Lloyd found that Veoh adhered to all of these requisites.

"In sum, there is no evidence raising a genuine issue of material fact that Veoh was aware of, but deliberately chose to ignore, 'red flags' of infringement or that Veoh fails to act expeditiously to remove or disable access to infringing material upon obtaining knowledge or awareness of infringing activity," the judge wrote.

IO contested that one of the "red flags" of the contents' illegality was that it was of a much higher quality that most user-generated content, and that at one point in one of the videos, IO's trademark appeared onscreen.

In his ruling, Lloyd said, "Although one of the works did contain plaintiff's trademark several minutes into the clip, there is no evidence from which it can be inferred that Veoh was aware of, but chose to ignore, it. Nor is this court convinced that the professionally created nature of submitted content constitutes a per se 'red flag' of infringement sufficient to impute the requisite level of knowledge or awareness to Veoh. Indeed, with the video equipment available to the general public today, there may be little, if any, distinction between 'professional' and amateur productions."

IO also claimed that if Veoh could not prevent copyrighted material from making it onto the site, it should either hire a staff large enough to pre-screen uploads, or shut down entirely. Veoh presented records showing that it received thousands of uploads a day.

In response, Lloyd said, "No reasonable juror could conclude that a comprehensive review of every file would be feasible...The plaintiff's suggestion that Veoh must be required to reduce or limit its business operations [to filter content] is contrary to one of the stated goals of the DMCA. The DMCA was intended to facilitate growth of electronic commerce, not squelch it."

Further, no evidence could be proved that Veoh hadn't provided every possible means within reason to police itself and its content. Indeed, the site funded by Michael Eisner, Tom Freston (ex-Viacom/MTV), and Jonathan Dolgen (ex-CEO of Viacom) is a purveyor of strong standards and practices for online video sites.

In the end, IO was only entitled to an injunction, which was rendered moot before the suit even occurred because of Veoh's policy change regarding adult content.