A federal appellate court said that Veoh Networks is not liable for copyright infringement on its site despite Universal Music Group’s claim that the video-sharing service was aware that users were frequently posting pirated music on the platform.

The decision by the 9th Circuit Court of Appeals bolsters protections for sites that host user-generated content, even as record labels and movie studios lament that the operators are merely looking the other way and even profiting from infringing content. A three judge panel upheld an earlier decision by U.S. District Judge Howard Matz that granted Veoh summary judgment.

In an opinion written by Judge Raymond C. Fisher, the appellate court said that Veoh fell within the “safe harbor” of the Digital Millennium Copyright Act, which protects sites and Internet providers from infringement liability for the “storage” of user generated content, as long as a series of guidelines are met. They include not having “actual knowledge” that the stored material is infringing and, when informed that it is, acting fast to remove it.  It also requires that sites not receive a financial benefit directly derived from the infringing material if they have the ability to control it.

Fisher wrote that “merely hosting a category of copyrightable content, such as music videos, with the general knowledge that one’s services could be used to share infringing material, is insufficient” to claim that the site owners had “actual knowledge.” He also wrote that Veoh fell short of having the “substantial influence” over its users as to lose its immunity from infringement liability.

Although Veoh had the ability to remove material and did implement filtering systems, Fisher wrote, it did not rise to the level of a site’s “substantial influence on the activities of users” that the 2nd Circuit Court of Appeals last year said was a threshold for determining liability.

Last year, the 2nd Circuit determined that a jury should decide whether YouTube had such a “right and ability to control” its users so as to be liable to Viacom for infringing content. The litigation in Viacom’s $1 billion suit is ongoing.

Representing Veoh was Winston & Strawn’s Michael Elkin, who noted in a statement that “UMG’s attempt to send the case back to trial failed, even though the 9th Circuit adopted the more stringent standards set out by the 2nd Circuit in Viacom vs. YouTube.”

The 9th Circuit also sent back to Matz the question of whether Veoh is entitled to attorney’s fees.