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Los Angeles — Universal Music Group’s recent copyright infringement suits against two video-sharing Web sites have fueled speculation that Hollywood could be facing a repeat of the costly and lengthy litigation war against the once-popular music Web sites Napster and Grokster. But the court battles won’t be the same this time. Copyright lawyers on both sides said they face different arguments in a decidedly gray area of the law. Unlike the cases against Napster and Grokster, lawyers for several video-sharing Web sites have a stronger defense in arguing that their clients post a significant amount of legitimate content, especially after signing deals such as this month’s $1.65 billion purchase of YouTube Inc. by Google Inc. Also, several of the sites regularly remove videos that infringe on someone’s copyright-something that was missing from the former music file-sharing sites. As in the cases involving Napster and Grokster, lawyers for musical recording, television and movie production studios argue that the Web sites make money from content they know infringes copyrights. But this time, their case is bolstered by the U.S. Supreme Court’s ruling in MGM v. Grokster, 545 U.S. 913 (2005), which found that Grokster induced infringement through its marketing practices. They also claim that video-sharing sites are liable for direct infringement because they are greatly involved in editing their content. Napster and Grokster, in contrast, were found liable for secondary copyright infringement claims while their users were considered the direct infringers. To avert a potential legal morass, search engines, musical recording studios and major TV networks scrambled in the past few months to sign deals with video-sharing sites, particularly YouTube. But earlier this month, Universal Music filed two suits against two Internet providers of space for digital file sharing, Bolt Inc. and Grouper Network Inc. Other suits have been filed against YouTube and Veoh Networks Inc.”This is still a gray area and un-chartered waters,” said Alex Liao, a solo practitioner and licensed patent attorney in San Jose, Calif. “And when in a gray area, there’s always people who want to pursue it. There’s always a risk or potential of lawsuits.” Deals not suit-proof On Oct. 9, Google turned heads on Wall Street by announcing its stock purchase of San Bruno, Calif.-based YouTube, which boasts more than 100 million video views per day. YouTube also recently cut deals with CBS Corp., Universal Music, Sony BMG Music Entertainment, Warner Music Group Corp. and NBC. Earlier this month, Yahoo Inc. signed a similar deal for CBS news clips. And last year, News Corp., the parent company of Fox Interactive, bought the parent company of social networking site MySpace for $580 million. The deals are anticipated to prevent widespread lawsuits and shutdowns like the ones that followed Napster. “These companies have learned from Napster and Grokster and designed their company systems both technologically and legally in light of those mistakes previously made,” said Jason Schultz, staff attorney at the Electronic Frontier Foundation, a nonprofit civil rights group, in San Francisco. Still, he admitted, “it’s not black and white for sure.” But Kristin Achterhof, a partner in the Chicago office of Katten Muchin Rosenman, said that partnerships only go so far because they fail to eliminate all infringing material. As a result, lawsuits are inevitably going to be filed-and as more major music houses and movie production companies get involved in deals, “the plaintiffs in the cases that are anticipated will be bigger or more of a substantial threat,” Achterhof said. As in the case against Napster and Grokster, the main issue involving video-sharing sites is whether they comply with the complex “safe harbor” provisions of the Digital Millennium Copyright Act of 1998 (DMCA), which limits liability against Internet service providers. Unlike Napster and Grokster, many video-sharing sites have one of the strongest safe harbors under their belt: removing infringing material from their Web sites. Many have DMCA policies that, if enforced, could prove they sought to prevent infringing works on their site. In the case of YouTube, the video-sharing site this month removed from its site nearly 30,000 clips of TV shows, music videos and movies considered to be infringing on 23 Japanese stations and entertainment companies. The Japan Society for Rights of Authors, Composers and Publishers, which had complained about the infringement, is considering asking YouTube to initiate a screening process to prevent future copyrighted materials from showing up on its site. YouTube has announced new technology that would catch some copyrighted content. “If they have a policy and act according to the policy, and have taken down stuff when people complain, they’re shielded of copyright infringement liability,” said Randy Broberg, a partner in the Del Mar Heights, Calif., office of Los Angeles-based Allen Matkins Leck Gamble Mallory & Natsis. The DMCA defense showed up earlier this month in the only known copyright infringement suit filed against YouTube. In the suit, the owner of a Los Angeles news service alleges that his footage of the 1992 Los Angeles riots illegally ended up on YouTube. Robert Tur v. YouTube Inc., No. 2:2006cv04436 (C.D. Calif.). “We feel confident in our defense that YouTube qualifies for safe harbor under the DMCA and shouldn’t be tarred with the same brush that people try to tar services like Napster and Grokster,” said Kenneth Steinthal, a partner in the Redwood Shores, Calif., office of New York’s Weil, Gotshal & Manges, who represents YouTube. “YouTube goes beyond the requirements to help content owners identify and immediately take down any user generated content.” Francis Pizzulli, a solo practitioner in Santa Monica, Calif., who represents the plaintiff in the case, did not return calls seeking comment. Another line of defense that Napster couldn’t use is that several video-sharing Web sites have legitimate uses in that they post large amounts of content that is not in violation of copyright laws-an argument bolstered by the recent spate of deals with content providers. “In Grokster, and somewhat in Napster, part of the argument was that the entire business model is predicated on illegal activity,” Schultz said. “That argument is now less potent against companies like YouTube and Google Video because they’ve struck these deals that have legitimized much of the content.” Bar is getting higher But video-sharing Web sites still face challenges in court. “The bar is getting higher as to what is acceptable conduct for content or service providers,” Achterhof said.She said that courts are going to ask whether YouTube or other sites induce users to commit copyright infringement under the U.S. Supreme Court standard set by MGM v. Grokster, 545 U.S. 913 (2005). In that case, the Supreme Court found that Grokster induced infringement through its marketing practices. Video-sharing sites also could lose safe-harbor provisions if they are caught having too much editorial control over their content, Broberg said. He said if site owners put up a “Top 10″ list or “editor’s picks” on their site, or even if they state on their site that they won’t post infringing material, they run the risk of not complying under the DMCA safe harbor because they became involved in editing the content. “One of the big legal questions is: If you exercise that discretion and control, are you being a more active participant in the content process?” said James Nguyen, a partner and co-chairman of the entertainment and media industry team at the Los Angeles office of Foley & Lardner. Such activity could lead to claims of direct infringement, such as the one filed by Io Group Inc., a San Francisco-based adult entertainment company, against Veoh Networks in June. Io Group Inc. v. Veoh Networks Inc., No. 5:06cv03926 (N.D. Calif.). The suit alleges direct copyright infringement because the Web site changed the formats to the submitted videos, said Gill Sperlein, Io Group’s general counsel. “The main argument is that the sites are engaged in direct infringement,” he said. “And that sets it apart from other high-profile Internet cases.” In court papers filed last month, Veoh Networks denied the allegations. Many of the same arguments for infringement showed up in Universal Music’s recent suits, which compared Bolt and Grouper to Napster by “engaging in the mass infringement of Plaintiffs’ copyrighted works.” Universal Music alleges that Bolt and Grouper re-format the infringing works to make them easier to watch, indexes songs and videos under keyword searches, and filters content into categories like “most viewed” and “top favorites,” the suit says. Grouper said the suit has no merit, according to an e-mail statement attributed to Josh Fesler, co-founder and chief executive of Grouper. “Our Web site is protected by federal law and we’re vigilant about taking down copyrighted content when we’re properly notified.” Aaron Cohen, chief executive of New York-based Bolt, said his company removes infringing content.

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