A federal judge in Los Angeles has ruled against Universal Music Group in a copyright lawsuit against online video site operator Veoh Networks Inc., although Universal says it will appeal.

U.S. District Judge Howard Matz on Friday dismissed the 2007 suit in which Universal accused Veoh of supporting and inducing copyright infringement.

Matz ruled that Veoh was taking reasonable steps to prevent and take down infringing videos uploaded by its users and that gave it protection from copyright suits in federal law.

Veoh CEO Dmitry Shapiro called the decision "a great victory." The company noted that with the ruling, it expects to become profitable within the next two quarters.

The lawsuit cost "many millions of dollars" to defend, money that would now be reinvested in the business, he said.

"We've been dragging a giant boulder on a chain. This frees us," Shapiro said. "This lawsuit was simply Universal's attempt to prevent innovation and shut down the company."

Privately held Veoh was founded in 2004 and to date has raised $70 million from such investors as Shelter Capital Partners, Michael Eisner, Goldman Sachs, Time Warner Inc., Intel Corp. and Adobe Systems Inc.

Universal, a unit of France's Vivendi SA, said it will appeal the decision to the 9th U.S. Circuit Court of Appeals, saying it runs counter to precedent and the intent of the Digital Millennium Copyright Act enacted in 1998.