YouTube case in appellate court Tuesday

The first act in Viacom’s suit against YouTube was all about private emails, faulty memories and some genuine corporate embarrassment.

The second act promises to offer more legal weight than juicy details, with big legal guns to argue before a federal appellate court in New York on Tuesday.

The case could define the rules of the road for the Internet because it centers on where YouTube’s liability lies when users post infringing material, massive amounts of it, on its site. The “safe harbor” provision of the 1998 Digital Millennium Copyright Act, written many years before YouTube was born, shields Internet service providers, website operators and others from liability for infringement by their users when they meet certain conditions, like promptly responding to takedown notices sent by content creators.

In a new book that’s been circulating among media lobbyists, “Free Ride: How Digital Parasites Are Destroying the Culture Business, and How the Culture Business Can Fight Back,” journalist Robert Levine writes, “The suit could go to the Supreme Court, and its outcome will define the future of the Digital Millennium Copyright Act, and perhaps the Internet itself.”

Hyperbole? Certainly not when you look at all of the amicus briefs filed by disparate groups with much at stake in the case, from other Internet firms like Yahoo and Facebook to the members of the Eagles. The response in studio and guild ranks to U.S. District Court Judge Louis Stanton’s June 2010 summary judgment decision in favor of YouTube was one of dismay.

Viacom, which filed its suit in 2007, had argued that YouTube not only was aware that users were uploading tens of thousands of copyrighted clips to its site but built its business model around it. But Stanton ruled that YouTube’s prompt removal of clips when it got a takedown notice was sufficient. “Mere knowledge” of infringing activity on a site is “not enough,” he ruled.”General knowledge that infringement is ubiquitous does not impose a duty on a service provider to monitor or search its service for infringements,” he wrote.

Especially irritating to Viacom and other media congloms: When Stanton delivered this victory to YouTube and corporate parent Google, he said the current system of takedown notices “works efficiently.”

They’ve argued that Stanton all but ignored the meaning of the Supreme Court’s 2005 Grokster decision, which held that there was liability for “inducing” infringement on the Internet.

In an amicus brief, the MPAA and the Independent Film and Television Alliance argue that a provision of the DMCA that safe harbor requires action not just from “actual knowledge” but “awareness” of it from “facts and circumstances” that make such activity “apparent.”

Stanton “extended safe harbor protection as a matter of law not withstanding the existence of factual questions about appellees’ inducement of infringement during YouTube’s early years. The decision not only misconstrues the (Digital Millennium Copyright Act) but provides a road map for culpable service providers to build their businesses based on the infringement of others’ copyrighted works.”

The argument from YouTube and other Internet firms is that they could not possibly hold responsibility for the flood of material posted to their sites. Otherwise, there won’t be the next YouTube or Facebook: It’d stifle innovation if sites are forced to spend all their time policing users. “Plaintiffs have not identified a single clip-in-suit that YouTube knew was infringing but failed to promptly take down,” YouTube wrote in its appellate brief. “Instead, plaintiffs offer various theories about why generalized awareness that unidentified infringing material may be somewhere on YouTube should be disqualifying.”

YouTube is joined by many digital rights groups like Public Knowledge, which echo arguments that even sites that try to police content have no way of knowing if it is an authorized or unauthorized use, raising First Amendment and fair use concerns. In their amici brief, Public Knowledge tries to pour cold water on a technology that has satisfied studios, the filtering of content to spot copyrighted material. “Automated filters cannot reliably determine when and whether specific content is infringing,” the org says.

The irony is that Viacom’s suit, filed in 2007, is about what took place at YouTube in the past; the company deployed the filtering technology in 2008, so studio concerns have shifted to what Stanton’s decision means to other sites present and future. It may very well be about much more than the $1 billion Viacom originally sought. There’s little doubt at the stakes. Google says it spent $100 million just in the first act; Viacom has famed legal eagle Ted Olson to argue its case. Yet even such extensive resources don’t mitigate the unpredictability, or the chance that the appellate court will choose sides rather than render some common ground.

As Levine says, “The idea of YouTube being responsible for everything on its server would be a disaster for the Internet business, and the idea of them being responsible for nothing would be a disaster for the entertainment business.”

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