The New York Times’ Saul Hansell has this piece today about what seems to be an impending settlement between Universal Music and online video sharing site Bolt.com. One of the most voiceferous critics of the rise of unauthorized use of copyrighted materials by online video sites, Universal has sued Bolt, Grouper and MySpace for use of the company’s music in user uploaded videos. Universal has even threatened to sue Apple and would have sued YouTube but for a last-minute deal it struck with the top video site on the eve of its acquisition by Google.
Now, it seems, Universal’s litigation strategy is paying off. Bolt has agreed to admit that the uploads were a violation of Universal’s copyrights and will pay millions in back royalties for videos uploaded prior to the settlement.
Clearly the cost of the lawsuit and settlement have broken Bolt’s back — the company has agreed to sell itself to rival GoFish.com for $30 million, presumably in order to foot the legal bills and settlement costs. Bolt CEO Aaron Cohen says that the “deal is economically painful to Bolt shareholders.”
Going forward, both Bolt and GoFish will use fingerprinting technology that scans the audio tracks of the videos uploaded to their sites to identify music by Universal, and other music labels, including Warner Music, with which Bolt and GoFish are working out deals.
Here’s what I’d really like to know: Did Bolt cave because it couldn’t handle the ongoing disruptions of litigation and the mounting legal expenses? Or, did Bolt’s attorneys decide that it wouldn’t win if the case move forward? If Bolt decided that the DMCA—which has take-down provisions that put the onus on Universal Music to request protection of its copyrights—didn’t provide the company with sufficient legal cover, then boy oh boy, expect the copyright infringement lawsuits to start flying.
The DMCA, passed in 1998, creates a safe harbor for online service providers, including ISPs, so that they are not liable for copyright infringement for content that is distributed through their services. If, however, the copyright owner finds out that its ownership rights are being infringed upon, the provider must take down the content.
Theoretically, if Bolt were covered by the DMCA, it is liable for infringement only if it fails to take down requested content. Universal had submitted no take-down requests and therefore Bolt should have been in a fairly cut-and-dried superior legal position. Bolt should never have agreed that it engaged in infringement.
Universal, however, has argued that the 1998 law was intended to cover only true ISPs, which are merely passive conduits that have no control over the content that customers access on the Internet. Video sharing sites are not ISPs and therefore can’t rely on the take-down provisions for legal protection, Universal argues.
If Bolt’s attorneys thought that Universal might win with this argument, then every single video sharing site is vulnerable to lawsuits from all kinds of copyright holders. The DMCA’s take-down provisions, in other words, are no protection at all for YouTube, MySpace, ebaumsworld, Grouper or the dozens of other video sharing sites.
Every TV or film production company and every record company will fire up its legal engines as a result of this settlement, particularly if negotiations that are currently underway (YouTube is said to be negotiating with every major entertainment company) fall apart. If close analysis leads lawyers to believe that the DMCA doesn’t apply to video sharing sites, copyright owners have a much stronger negotiation position in their talks with video sharing companies, and a much stronger legal position if negotiations fail to bear fruit.
Cynthia Brumfield at 7:13 AM|Comments(0)
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