Viacom loses YouTube suit

Judge rules in favor of Google on $1 bil copyright case

A federal judge handed an important legal victory to Google and YouTube on Wednesday, ruling that the video site was not liable for infringing on Viacom’s copyrights on tens of thousands of uploaded clips of everything from “The Daily Show” to MTV videos.

U.S. District Court Judge Louis Stanton’s decision hinged on the interpretation of the “safe harbor” provision of the Digital Millennium Copyright Act, which protects websites and providers from liability if certain conditions are met. As such, Stanton noted, the burden fell on Viacom to inform YouTube of specific instances of infringement, and when it did, YouTube removed the material.

Viacom vowed to appeal, calling Stanton’s ruling “fundamentally flawed and contrary to the lanuage of the Digital Millennium Copyright Act, the intent of Congress, and the views of the Supreme Court as expressed in its most recent decision.”

“We intend to seek to have these issues before the U.S. Court of Appeals for the Second Circuit as soon as possible,” the company said. “After years of delay, this decision gives us the opportunity to have the Appellate Court address these critical issues on an accelerated basis.”

In a statement posted on its corporate blog, YouTube defended the decision as following “established judicial consensus that online services like YouTube are protected when they work cooperatively with copyright holders to help them manage their rights online.

“This is an important victory not just for us, but also for the billions of people around the world who use the web to communicate and share experiences with each other.”

In his 30-page ruling, Stanton cited congressional reports on the purpose of the Copyright Act and concluded that “mere knowledge” that there is infringing activity on a site “is not enough.”

Stanton wrote that “if a service provider knows … of specific instances of infringement, the provider must promptly remove the infringing material. If not, the burden is on the owner to identify the infringement. General knowledge that infringement is ‘ubiquitous’ does not impose a duty on the service provider to monitor or search its service for infringements.”

Viacom’s $1 billion suit against YouTube, acquired by Google in 2006, claimed that the video site not only was aware that infringing material was being uploaded to its site and failed to “act expeditiously” to stop it, but that it based its business model on the upload of copyrighted clips.

The issues surrounding the decision, however, were far less compelling than the cutthroat P.R. battle that both companies waged in the court of public opinion. In March, Stanton ordered the public release of a trove of documents, including e-mails, depositions and memos, that were gathered during the discovery process and proved embarassing for senior executives of both companies.

Among them were e-mails between the YouTube founders in which they expressed knowledge of infringing activity, and messages between Paramount marketing executives in which they “roughed up” clips and had them posted to YouTube to make them look stolen or leaked.

Stanton did not address such material.

But he said the suit itself showed that the current system of notification, in which a copyright owner notifies a service provider of instances of infringement, and that provider is not liable if it takes down the material, “works efficiently.”

“When Viacom over a period of months accumulated some 100,000 videos and then sent one mass take-down notice on February 2, 2007, by the next business day YouTube had removed virtually all of them,” he wrote.

In deciding the extent to which sites are responsible for policing third party content, Stanton cited a number of precedents in his ruling, including a decision by the Second Circuit Court of Appeals in April that upheld the dismissal of a lawsuit brought by Tiffany against eBay.

The tony retailer charged that the auction site was liable for “contributory trademark infringement” because vendors posted counterfeit Tiffany products on its site. Stanton also rejected arguments that the YouTube case was similar to the Supreme Court’s 2005 decision involving Grokster and a more recent court ruling against Lime Group, in which both file sharing sites were subject to liability for inducing infringement. Stanton noted that that peer-to-peer file-sharing networks are not covered by the Copyright Act’s “safe harbor provisions.”

He also rejected arguments that YouTube was not protected from liability as a storage site for infringing material, and he cited recent district court decisions limiting the liability of video upload site Veoh Networks.

Winston & Strawn’s Michael Elkin, who is representing Veoh, said that the court’s decision extended earlier precedents and is “consistent” with Congress’ intent with the Copyright Act.

If all online providers were held liable for everything posted by a third party, “You would never see companies like eBay and Amazon make investments and grow to be as big as they are,” he said.

Msj Decision

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