Claiming That Downloading Is Fair Use Seems Destined To Fail... Badly

Universal Music Told, Once Again, It Can't Sue Veoh's Investors For Veoh's Actions

from the good-news dept

Tue, May 19th 2009 6:50pm — Mike Masnick

Back in February, Universal Music got slapped down for its highly questionable attempt to sue the investors in Veoh for the actions performed by the company itself. We've never quite understood why the major record labels have tried, repeatedly, to sue the investors of sites and services they don't like. It's hard to see how that's justified, because if those investors are found liable, it would create a huge liability for any investor. Investors don't have day-to-day control over a company, and trying to make them liable for the actions of the company makes no sense. However, not only was Universal shot down in this attempt, but it tried to refile the lawsuit against the investors... and was shot down yet again. The judge noted that Universal Music presented no evidence as to why the investors should somehow be responsible for the actions of the company and tossed out the lawsuits against them again. Hopefully this wakes up EMI, who recently sued the investors in a small startup as well.

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Filed Under: investors, liability
Companies: universal music, veoh

11 Comments

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Elaine, 19 May 2009 @ 7:29pm

Simple answer
They are suing investors for the same reason Willy Sutton was reported to rob banks:

That's where the money is.
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KnowItAll, 19 May 2009 @ 8:08pm

Wrong, there are suing just to annoy investors so that they not investing in similar business models again and (in the long run) pull the money out of the current business.

I did that once as I had problems with a Company who was based on investment capital and it worked. They where much nicer to me after that.
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Jason, 19 May 2009 @ 9:30pm

Re:
I hope it comes back to bite you, and maybe then you choke on it, too.
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Bettawrekonize, 19 May 2009 @ 9:53pm

Re:
The government needs to stop this nonsense.
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Anonymous Coward, 19 May 2009 @ 9:54pm

Re:
"there are suing just to annoy investors so that they not investing in similar business models again and (in the long run) pull the money out of the current business."

That was my suspicion. It's just a distraction/deterrent even if they know they'll lose. This is why it should be stopped.
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Lawrence D'Oliveiro, 19 May 2009 @ 10:06pm

Re: Suing the Investors
KnowItAll wrote:

[They] are suing just to annoy investors so that they not investing in similar business models again ...

Fine. So what message does it send when they lose these lawsuits? That investment in businesses like these is in fact fine.
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Anonymous Coward, 19 May 2009 @ 10:20pm

Re: Re: Suing the Investors
"Fine. So what message does it send when they lose these lawsuits? That investment in businesses like these is in fact fine."

I don't really think they intend the outcome to make a point or send a message, just the fact that investors can be sued. Most people don't want to deal with lawsuits against them even if they know they'll win.
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Lawrence D'Oliveiro, 19 May 2009 @ 11:50pm

Re: Suing the Investors

I don't really think they intend the outcome to make a point or send a message, just the fact that investors can be sued.

No they can’t. That’s the message that keeps coming through here, in case you hadn’t noticed.
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Michael Kohne, 20 May 2009 @ 3:17am

Universal's investors...
You'd think Universal's investors would be beating the living snot out of the board to make this stop. If by some miracle this suit went through, they'd be liable for any illegal things that Universal did, and who the heck knows what nefarious activities have happened there over the years?
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Anonymous Coward, 20 May 2009 @ 8:28am

Hmmm, the SEC goes after investors with Bernie Madoff to recover profits from an illegal swindle, maybe this one isn't so far off if they determine that the company was in fact breaking the law.

Yeah, that is quite a stretch. I would have said leap, but no one can jump that far.
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Michael Kohne, 20 May 2009 @ 1:15pm

Comparison to Madoff inappropriate
Madoff was running a fund - not a business. He was (supposed to be) investing in stocks, bonds, whatever. It's an entirely different thing.
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