On September 4, 2007, UMG, without filing any prior DMCA takedown notices [2], sued Veoh for vicarious and contributory copyright infringement.

[10] UMG claimed that Veoh did not qualify for liability protection under the DMCA Safe Harbor Provision for Online Storage (17 USC § 512(c))[11] because Veoh stepped outside the bounds of "storage" as defined by the provision, failed to act despite having knowledge of the infringing materials, and derived a direct financial benefit from infringing activities by their users.

[1] The Circuit held that, barring specific information regarding infringement such as from a DMCA takedown notification, "merely hosting a category of copyrightable content, such as music videos, with the general knowledge that one's services could be used to share infringing material, is insufficient to meet the actual knowledge requirement under § 512(c)(1)(A)(i)", and that "safe harbor would be rendered a dead letter" otherwise [6].

[1] The circuit went further by reinforcing their ruling from Perfect 10, Inc. v. CCBill LLC and A&M Records, Inc. v. Napster, Inc. that the burden of identifying infringing material must fall on the Copyright holder and not the service provider.

[6] Although it was left ambiguous what this additional factor may look like in the original 2011 Ninth Court opinion [13], the 2013 update [6] added a citation agreeing with the Second Circuit's ruling in Viacom v. YouTube that "substantial influence on the activities of users", such as detailed control over content or active involvement in listings on sites such as eBay can constitute "the right and ability to control" infringing materials.

The Ninth Circuit refused to grant Veoh attorney's fees under 17 USC § 505 because it found that the suit was not frivolous or in bad faith, citing Fogerty v. Fantasy.

Ninth Circuit is home to some of the largest copyright owners and Internet service providers, who would benefit from the clarity that comes with having a more consistent definition of actual and red flag knowledge and the right and ability to control for purpose of the DMCA § 512(c) safe harbor.

"Ninth Circuit Puts Lump of Coal in UMG's Stocking, Affirms DMCA Safe Harbors for Veoh".