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How Veoh Networks Battled Universal over File-Sharing
The nation's major record labels have never been shy about enforcing their copyrights in court. And over the last decade, music industry lawsuits targeting individual consumers accused of illegal file sharing stirred controversy and criticism in certain quarters. At the same time, efforts by these copyright holders to wring hefty settlements out of Silicon Valley tech start-ups via litigation ' or, in some cases, to snuff them out altogether ' has gotten less attention.
Universal Music Group (UMG), for example, has filed copyright suits against and won settlements from such Internet-based companies as iMeem, Multiply, Grouper Network (now Cackle), Bolt, mp3.com and MySpace. Facing statutory damages awards of up to $150,000 per infringed work, virtually all the defendants named in these suits chose to pay large settlements rather than take their chances in court. (MySpace reportedly agreed to a settlement of nearly $100 million to end a UMG suit in 2007.)
In most instances, the settlement money came from venture capital originally meant to build up the businesses. For some companies, the short-lived Bolt.com, for one, settlement was a financial disaster that helped pave the way for bankruptcy. Ten years after A&M Records Inc. v. Napster, 239 F.3d 1004 (9th Cir. 2001), it's hard to think of a suit in which an Internet company beat a big copyright holder. In fact, most such companies won't even fight.
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