On Aug. 27, U.S. District Judge Howard Lloyd ruled that online video-sharing service Veoh isn't liable for copyright infringement for material uploaded to its Web site by users, dismissing a lawsuit brought by adult entertainment production company Io Group.

The decision holds important ramifications for the music industry and perhaps signals what a New York court may decide in Viacom's high-stakes copyright-infringement lawsuit against YouTube.

Io relied on the landmark 2005 U.S. Supreme Court Grokster decision that established that file-sharing services can held liable for user behavior. In its defense, Veoh asserted a position that YouTube has also staked in the Viacom case: that section 512(c) of the DMCA provides "safe harbor" from liability to any Web service provider that responds to a copyright holder's request to remove infringing material.

In his decision, Lloyd said that the DMCA does indeed provide such protection, spelling out what he sees as the difference between Veoh and earlier services. "Unlike Napster, there is no suggestion that Veoh aims to encourage copyright infringement on its system," he wrote.