With respect to contributory liability, the Ninth Circuit agreed with the district court that
the plaintiffs had not alleged sufficiently that the investors gave material assistance in helping
Veoh or its users accomplish infringement. The plaintiffs acknowledged that funding alone
could not satisfy the material assistance requirement, but argued that the investors also directed
the spending of the funding on basic operations including hardware, software and employees,
which the plaintiffs argued formed the site and facilities for Veoh’s direct infringement,
analogizing to the Bertelsmann case. The court distinguished the Bertelsmann case, however, on
the ground that the investor was Napster’s only available source of funding and thus held
significant power and control over Napster’s operations. In this case, by contrast, there were
multiple investors, and none of them could individually control Veoh.^3026
The plaintiffs attempted to circumvent this distinction by arguing that the three investors
together took control of Veoh’s operations by obtaining three of Veoh’s five board seats. The
court noted that, even assuming that such joint control, not typically an element of contributory
infringement, could satisfy the material assistance requirement, the complaint nowhere alleged
that the investors agreed to work in concert. Although the complaint alleged that he investors
sought and obtained board seats as a condition of their investments, the court noted that three
investors individually acquiring one seat apiece was not the same as agreeing to operate as a
unified entity to obtain and leverage majority control. Unless the three independent investors
were on some level working in concert, then none of them actually had sufficient control over
the board to direct Veoh in the way the plaintiffs contended. The court found this missing
allegation to be critical because finding secondary liability without it would allow plaintiffs to
sue any collection of directors making up 51% of the board on the theory that they constituted a
majority, and therefore together controlled the company. In view of the missing allegations, the
court affirmed the dismissal of the plaintiffs’ contributory infringement claim.^3027
Based on the same missing allegations, the court also affirmed the district court’s
dismissal of the plaintiffs’ vicarious liability and inducement of infringement claims. The court
noted that the plaintiffs’ arguments that the investors distributed Veoh’s services and had the
right and ability to supervise the infringing users were premised on the same unalleged
contention that the investors agreed to act in concert, and thus together they held a majority of
seats on the board and maintained operational control over the company. Accordingly, the court
affirmed the dismissal of the complaint against the investors.^3028
- Class Actions
In The Football Association Premier League Limited v. YouTube, Inc.,^3029 the court
denied a motion for certification of a class action against YouTube and Google for infringements
on YouTube of copyrighted material owned by The Football Association Premier League and a
number of music publishers. The putative class consisted of “every person and entity in the
(^3026) Id. at 1046.
(^3027) Id. at 1047.
(^3028) Id.
(^3029) 2013 U.S. Dist. LEXIS 69401 (S.D.N.Y. May 15, 2013).