The beginning of the 2009 has seen an interesting litigation being closed. Universal Music Group (UMG) was suing the video sharing Veoh for copyright infringement. But Veoh claimed to be protected by the DMCA safe harbor act. The safe harbor act does protect service providers against the illegal doing of its users.

UMG claimed that DMCA safe harbor act does only protect for storing bits, not when manipulating bits. Veoh is transcoding the uploaded content in the exchange format. The court decided otherwise. The main argument was that users “signed” term of contract before uploading content. The terms of contract specified that the user agreed not to upload copyright content.

This court decision sets an interesting legal precedent. Will it have any influence on the current battle Viacom versus YouTube?