Media conglom seeks reversal in DMCA case

Viacom sought to reverse a lower court ruling in favor of YouTube on Tuesday, arguing before a federal appellate court that the video site’s success was built on unlicensed content from its own copyrighted content such as “The Daily Show” and “South Park.”

Viacom attorney Paul Smith urged a three-judge panel in New York that a lower court ruling should be scrapped, noting that under such a rationale “an Internet provider may put a huge amount of copyright-infringing material on its site and create an enormously profitable business based on that material, even allowing that material out to third parties.”

Smith asserted that YouTube had been “sold for $1.6 billion on our content, and then Google continued to operate it for more than a year on our content.”

At the heart of the matter is the Digital Millennium Copyright Act, which governs the distribution of content on websites that allow individual users to upload content, including movies, TV shows and music that they do not own. In the past, federal judges have granted plenty of latitude to the owners of user-generated digital distribution websites, citing the “safe harbor” provision of the DMCA.

There are plenty of wrinkles in this case, however. Viacom contends that unlicensed, copyrighted content constituted between 75%-80% of YouTube’s traffic at the time of its sale to Google. Viacom filed a $1 billion suit against Google and YouTube in 2007 and is prosecuting the case with English soccer consortium Premier League.

In a three-hour hearing, Google’s litigator Andrew Schapiro, who led the company’s successful effort to win a summary judgment from U.S. District Judge Louis Stanton, contended that the site always responds swiftly to takedown requests, and that a user-based flagging program taken down by YouTube (part of the prosecution’s argument) wouldn’t have worked in any case.

“When something is flagged, it goes into a queue for review,” Schapiro said. “There’s no central registry of copyright to which you can refer.” Schapiro said that, while videos flagged for pornographic content are reviewed using a similar process (“That must be a hell of a job,” cut in judge Jose A. Cabrenes), it was more difficult to ascertain a clip’s corporate provenance.

Schapiro also pointed out that Viacom had allowed all clips of “The Daily Show” shorter than 3.5 minutes to stay up on YouTube during the period in question. “If they weren’t suing us for a billion dollars, it would almost be funny,” he said.

The judges had pointed questions for both parties. “How would you calculate damages?” Smith was asked. Smith admitted that such a calculation would be difficult. “The number could be quite large, or it could be smaller,” Smith said, pointing to YouTube’s sale price to Google as an indicator of the value of the Viacom content.

The suit is being closely watched by an array of industry groups, including the MPAA, which is urging the appellate court to overturn the decision. They argue that Stanton’s interpretation of the “safe harbor” provision was flawed, as he said that “mere knowledge” by a site owner that infringing activity is taking place is “not enough.” Although the initial phase of the case was laden with juicy details about the operations of both companies, Stanton largely stayed away from citing them.

While there already are predictions that the dispute will land in the Supreme Court, just as MGM’s suit against Grokster ended in a landmark 2005 decision, some legal experts believe that the issues are different.

The Grokster suit was cited more than once in court on Tuesday, with Premier attorney Charles Sims asserting that “as with Grokster, this company has set out to build a business on the backs of other people’s property.”

Jack Lerner, a professor at the USC Gould School of Law specializing in intellectual property, doubts that the suit will make it to the high court. “I think that the law is going to continue to go the way it has been going, which is toward preserving a safe harbor for intermediaries,” he said, adding that the high court may not want to weigh in because the statute shows ample evidence of congressional intent and there may not be a split in the appellate courts.

Although he expects the appellate court to uphold Stanton’s decision, they “will surely provide more analysis than the district court did.”That prediction was borne out Tuesday morning, when Judge Debra Ann Livingston questioned Schapiro’s interpretation of DMCA. “Your argument seems to come dangerously close to saying that a takedown notice is the only way to establish specific knowledge,” she said.In his closing statement, Sims reiterated that takedown notices were a tool inadequate to the task of policing as large a distributor as YouTube, but that the company itself had the capability to monitor its content. “When you go back to your chambers, you can type in ‘Let’s Fall in Love’ and YouTube will give you up to fifty recordings of that song (which Viacom owns). They obviously have the means to find it in order to serve it up to you.”

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