The U.S. Court of Appeals for the 9th Circuit ruled on Tuesday that Veoh Networks Inc, which operated a YouTube-like site, is insulated from liability for copyright infringement under the Digital Millennium Copyright Act.

"Copyright holders know precisely what materials they own, and are thus better able to efficiently identify infringing copies than service providers like Veoh, who cannot readily ascertain what material is copyrighted and what is not," Judge Raymond Fisher wrote on behalf of the three-judge panel.

UMG did not immediately respond to requests for comment. UMG's lawyer Steven Marenberg declined to comment on the litigation.

UMG sued Veoh in 2007, accusing the site of not doing enough to stop users from sharing copyrighted music videos. Veoh responded in court filings that it had done everything necessary to qualify for the protections of the act - including disabling the infringing videos and terminating the accounts of thousands of infringing users.

A Los Angeles federal judge agreed with Veoh in 2009 and the 9th Circuit affirmed the lower court's summary judgment.

In another closely watched case, Viacom International Inc VIACOM.UL is pursuing similar claims against YouTube, owned by Google Inc (GOOG.O). A federal judge in New York sided with YouTube in 2010. Viacom's appeal is currently pending before the 2nd Circuit.

Michael Elkin, a lawyer for Veoh, described the decision as important for digital media - providing protection for online businesses that allow third parties to post material on their websites. The safe harbor provisions also ensure investors will back the technology that drives internet commerce, he said. He added that the 9th Circuit decision would strengthen YouTube's position in the case before the 2nd Circuit.

Veoh received notices of infringement from the Recording Industry Association of America and responded by taking down the unauthorized videos, the court opinion said. UMG argued that Veoh therefore had general knowledge it was hosting infringing material.

But that general knowledge is not enough, the 9th Circuit concluded.

"A service provider must be aware of specific infringing material to have the ability to control that infringing activity," the court ruled.

Veoh, whose investors included Disney's Michael Eisner, filed for bankruptcy in 2010. Its assets were eventually sold to Qlipso, which continues to operate the site.

(Reporting by Terry Baynes; editing by Andre Grenon)

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