Veoh's use of the Pre-1972 Recordings in violation of UMG's rights under New York law is part of Veoh's strategy to become one of the Internet's most popular and valuable 'video sharing' websites, and to thereby attract advertising dollars and tens of millions of dollars of venture capital investment and increase the value of its services...the harm that Veoh causes to UMG, including in the new, developing, and crucial Internet market, is enormous.
Veoh's website is later described as "where thousands of audiovisual works copied by Veoh are available for immediate viewing, downloading, and other forms of so called 'sharing.'"
Many of the audiovisual works on Veoh's website embody the Pre-1972 Recordings...that are synchronized with commercial works such as television programs, documentaries, and other expensive, professionally-made videos. The Pre-1072 Recordings that are embodied in the audiovisual works on Veoh's website are integral to those audiovisual works and to their appeal and popularity.
Veoh refuses to employ simple safeguards available to it and used by various of its competitors to avoid unlawful copying and distribution of works owned by others...
So, in sum: the alleged infringement arises out of Pre-1972 recordings synced to videos (whether such synchronization was authorized is not alleged), and Veoh is doing nothing to stop it. As the complaint alleges, "Defendants' conduct is...a classic attempt to 'reap where they have not sown'..."
In fact, the complaint uses such buzz words as "encourage, induce, and enable members" -- indicating a contributory infringement theory under state law. Thus, it appears that plaintiff is positioning this case to be the State's parallel to federal jurisprudence on P2P contributory infringement. (Grokster.) However, without 17 USC 101 et seq., Plaintiff is relying on common law copyright infringement and misappropriation, and unjust enrichment.
And being outside the scope of the federal Copyright Law, they may have valid claims for punitive/exemplary damages, in addition to profits and injunctive relief.
But, it is curious that Plaintiff's make allegations regarding Veoh's failure to apply safe-guards. Whereas defendants might have refuge in the Copyright Act's "safe-harbor" provisions (DMCA), is the same protection available under state copyright law? And if not, what leverage does that provide digital content producers in their claims against ISPs, at least with respect to pre-1972 recordings?