Universal be not proud

by Walter Olson on March 21, 2012

Veoh, like YouTube, pioneered the idea of enabling users to self-post video to the Internet. Then Universal, the entertainment company and owner of many copyrights, began a particularly aggressive campaign of litigation against it. Though Veoh Networks won a judicial decision in its favor, Universal appealed, having also taken the unusual step of suing three Veoh investors personally. In December the Ninth Circuit reaffirmed Veoh’s victory, but in the mean time Veoh had declared bankruptcy. Company founder Dmitry Shapiro recalls:

As you can imagine the lawsuit dramatically impacted our ability to operate the company. The financial drain of millions of dollars going to litigation took away our power to compete, countless hours of executive’s time was spent in dealing with various responsibilities of litigation, and employee morale was deeply impacted with a constant threat of shutdown. Trying to convince new employees to join the company in spite of this was extremely challenging.

By the end, “The company that we had built, that was once valued at over $130 million was gone,” writes Shapiro. Ron Coleman writes:

Under the American Rule, the cost of maintaining a meritorious defense to relentless litigation is prohibitive and what fee-shifting is available favors is applied with sickening asymmetry, virtually always favoring the party to which legal fees mean the least.

According to Eric Goldman, “This case’s real result is that Veoh is legal, but Veoh is dead – killed by rightsowner lawfare that bled it dry.” Mike Masnick points out that Universal is still pursuing its action.

{ 8 comments }

1 Magicl1 03.21.12 at 11:30 am

Go over to Techdirt.com – they have extensive articles about this very subject.

2 Rob McMillin 03.21.12 at 3:23 pm

In addition to this sort of legal knavery, we have the politically-minded use of copyright as a means to enforce censorship. That is, both the state and copyright holders have a desire to prevent people posting things to the Internet. Judging by the nefarious tactics — such as the signed-into-“law”-at-midnight-without-Senate-approval ACTA — we see employed on almost a daily basis by the malefactors in the **AA organizations, they will stop at nothing to get this. Worse, the political hierarchy of both parties supports this, though the Republicans slightly less owing to their nonexistent fealty to Hollywood.

3 Grant Gould 03.21.12 at 3:47 pm

The process is the punishment. Saves the time and trouble of a verdict.

4 smart dude 03.21.12 at 8:35 pm

If the Republicans had any brains, they would economically assault the corrupt underpinnings of their sworn enemy, the Hollywood Left: the legendary fake accounting practices, the outrageous tax fraud used by stars and executives, and the kind of gross abuse of the legal system by Universal.

5 Bill H 03.21.12 at 10:06 pm

The process is the punishment. Saves the time and trouble of a verdict.

In the meantime, a viable, LEGAL company is dead, tens of millons wasted on a lawsuit that shouldn’t have happened. The company that brought suit lost not just once, but twice- but they’re still persuing the company they hounded out of business.

Rob, you’re absolutely right- both sides of the aisle are d***less wonders. They’re absolutely unable/unwilling to admit to a problem- any problem- that literally destroys wealth and initiative.

I came down on the side of “loser pays” long ago. That would put a smoking halt to crap like this.

.

6 Steve 03.22.12 at 4:08 am

the legendary fake accounting practices, the outrageous tax fraud used by stars and executives,

as if this were a pimple compared to the planet that is the same as done by republican bankers and business executives.

7 John Thacker 03.22.12 at 7:51 am

Steve,

Are Democratic Party bankers (like Goldman Sachs) any better? Don’t forget than in 2008, Obama got a lot more finance and banker money than McCain.

8 smart dude 03.23.12 at 2:06 am

The dirty Wall Street money, like the dirty Hollywood money, goes to the democrat party by and large.

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