Universal Sues Video Sites

Let the lawsuits begin.

The simmering legal questions surrounding video sites and their use of copyrighted material hit the courts for the first time late Monday with Universal Music Group (UMG) filing infringement suits against Grouper and Bolt.

Like YouTube, both sites allow users to upload and download videos from their sites.

Sony Pictures Entertainment bought Grouper last summer for $65 million but was not named in the lawsuit.

UMG claims both Bolt and Grouper allow users to post unauthorized copyrighted materials to their video sites.

“User generated sites like Grouper and Bolt … cannot reasonably expect to build their business on the backs of our content and the hard work of our artists and songwriters without permission and without in any way compensating the content creators,” UMG said in a statement.

The lawsuits follow UMG’s licensing deal with YouTube earlier this month.

YouTube, acquired by Google for $1.65 billion on Oct. 9, also has licensing agreements with CBS and Sony BMG Music Entertainment. Prior to the YouTube acquisition, Google cut a licensing deal with Warner Music Group.

“[UMG] is committed to embracing innovative new ways to bring our music and videos to consumers, but ‘innovation’ that breaks the law and runs roughshod over the rights of content creators is not innovation at all,” UMG said in its statement.

Both Bolt and Grouper are expected to seek legal protection from infringement charges through the “safe harbor” provision of the 1998 Digital Millennium Copyright Act (DMCA).

The DMCA offers copyright infringement protection for Internet companies that promptly respond to take-down notices from content owners.

“In the ten years we’ve been in business, we have promptly complied with all requests from the RIAA and other organizations to remove any copyrighted content upon request,” the New York-based Bolt said in an e-mail to internetnews.com.

Bolt also posted a notice on its site stating, “We understand the love you have for your favorite musical artists, but Bolt respects the rights of copyright owners such as Universal Music and their artists, and we ask that you please do so as well by not uploading their videos to Bolt.”

Bolt also said it had not seen a copy of the lawsuit.

Josh Felser, co-founder and CEO of Grouper, said in a statement issued through Sony, “The lawsuit is without merit and we expect to prevail. Our Web site is protected by federal law and we’re vigilant about taking down copyrighted content when we’re properly notified.”

Jim DeLong, a senior fellow at the Progress and Freedom Foundation and director of the Center for the Study of Digital Property, said there are two possible theories behind the lawsuits.

“The first would be that they are not complying with the safe harbor provisions of the DMCA,” he said. “The second would be that under the Grokster decision, they are encouraging infringement.”

In June of 2005, the U.S. Supreme Court ruled the peer-to-peer file-sharing company Grokster violated U.S. copyright law by openly encouraging users to download copyrighted music files.

“We welcome an open dialogue with Universal to resolve our situation amicably and bring Universal Music to our more than 5 million monthly unique users,” Bolt said in its statement.

Bolt said the YouTube-Google merger and the licensing partnerships that grew out of the deal “demonstrate that viable models exist to enable our creative users to enjoy and play with copyrighted content.”

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