Originally Posted by Titanmen
Major issues regarding liability are based on knowledge and transformation.
VEOH has a group of editors that review and approve all clips before they go live. As well, they specifically ask if the content is adult in nature, but do not ask for any 2257 labeling/documentation. They had "knowledge" of the content, they had "knowledge" that it was specifically adult without any 2257 labeling/documentation.
If they had followed 2257 they would have rejected any content without proper labeling, and/or they would have known who the owner/producers of the clips where. They turned a blind eye and used adult content to get users to their site. That shows knowledge and willfull disregard.
Second issue is transformation of the content. VEOH takes the base file formats and converts it into Flash streaming previews embedded on their website. This shows material transformation of the content. They are no longer mearly a "conduit", they actively transform and broadcast the content.
Knowledge and active transformation of content shows clear liability in this case.
This is just the first case, we've got others in the crosshairs as well!