Update: Google, YouTube hit with $1B copyright suit

Viacom claims thousands of unauthorized video clips can be viewed on YouTube

Media company Viacom International Inc. is suing online video provider YouTube Inc. and its parent company, Google Inc., for more than $1 billion, saying the companies are infringing on Viacom's copyrights because almost 160,000 unauthorized video clips are available for viewing on YouTube.

New York-based Viacom also said it is seeking an injunction prohibiting Google and YouTube from further copyright infringement. Google acquired YouTube in November for $1.65 billion.

The 27-page lawsuit, filed in U.S. District Court for the Southern District of New York, alleges that thousands of unauthorized clips of Viacom's programming have been viewed on YouTube more than 1.5 billion times.

In a statement e-mailed by a company spokesman, Google said it hasn't yet received the lawsuit but is "confident that YouTube has respected the legal rights of copyright holders and believe the courts will agree."

"YouTube is great for users and offers real opportunities to rights holders: the opportunity to interact with users; to promote their content to a young and growing audience; and to tap into the online advertising market. We will certainly not let this suit become a distraction to the continuing growth and strong performance of YouTube and its ability to attract more users, more traffic and build a stronger community," the statement said.

Viacom, in its statement said, "YouTube is a significant, for-profit organization that has built a lucrative business out of exploiting the devotion of fans to others' creative works in order to enrich itself and its corporate parent, Google."

"Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws. In fact, YouTube's strategy has been to avoid taking proactive steps to curtail the infringement on its site, thus generating significant traffic and revenues for itself while shifting the entire burden -- and high cost -- of monitoring YouTube onto the victims of its infringement," Viacom stated.

Viacom said it filed the suit "after a great deal of unproductive negotiation" and that "YouTube continues in its unlawful business model." Last month, the company demanded that YouTube remove more than 100,000 of Viacom's video clips from its site.

"There is no question that YouTube and Google are continuing to take the fruit of our efforts without permission and destroying enormous value in the process," Viacom said. "Therefore, we must turn to the courts to prevent Google and YouTube from continuing to steal value from artists and to obtain compensation for the significant damage they have caused."

A Viacom spokesman said the company has no comment beyond the press release and lawsuit.

In the lawsuit, Viacom alleges that "YouTube's brazen disregard of the intellectual property laws fundamentally threatens not just [Viacom], but the economic underpinnings of one of the most important sectors of the United States economy."

The lawsuit also alleges that YouTube "purports to be a forum for users to share their own original 'user generated' video content. In reality, however, a vast amount of that content consists of infringing copies of [Viacom's] copyrighted works, including such popular (and obviously copyrighted) television programming and motion pictures as SpongeBob SquarePants, The Daily Show with Jon Stewart, The Colbert Report, South Park, Ren & Stimpy, MTV Unplugged, An Inconvenient Truth, Mean Girls and many others."

Through its operations, YouTube "knowingly reproduces and publicly performs the copyrighted works uploaded to its site," the lawsuit alleges. "Defendants know and intend that a substantial amount of the content on the YouTube site consists of unlicensed infringing copies of copyrighted works and have done little or nothing to prevent this massive infringement."

While YouTube has a process where copyright holders can identify postings of material that infringes on copyrights so that it can be removed, YouTube makes the process onerous on the copyright holders, the lawsuit alleges.

According to the lawsuit, YouTube "has decided to shift the burden entirely onto copyright owners to monitor the YouTube site on a daily or hourly basis to detect infringing videos and send notices to YouTube demanding that it 'take down' the infringing works."

The problem with that process, the lawsuit continues, is that even after being removed, the infringing video is often uploaded again by another YouTube user and it appears again on the site within hours.

"Defendants have actual knowledge and clear notice of this massive infringement, which is obvious to even the most casual visitor to the site," the lawsuit states. "Indeed, the presence of infringing copyrighted material on YouTube is fully intended by defendants as a critical part of their business plan to drive traffic and increase YouTube's network, market share and enterprise value, as reflected in the recent purchase price of $1.65 billion."

Instead of allowing copyrighted materials to be posted and viewed on its Web site, YouTube "has the right and ability to control the massive infringement on its site" through its Terms of Use, which users must agree to when using the site, the suit alleges. "Through its Terms of Use, YouTube imposes a wide number of content-based restrictions on the types of videos uploaded to the site, and reserves and exercises the unfettered right to block or remove any video which, in its sole discretion, it deems 'inappropriate.' YouTube proactively reviews and removes pornographic videos from its library, but refuses to do the same thing for videos that obviously infringe plaintiffs' copyrights."

"YouTube has failed to employ reasonable measures that could substantially reduce, or eliminate, the massive amount of copyright infringement on the YouTube site from which YouTube directly profits," the lawsuit alleges. "Even though defendants are well aware of the rampant infringement on the YouTube website, and YouTube has the right and ability to control it, YouTube's intentional strategy has been to take no steps to curtail the infringement from which it profits unless notified of specific infringing videos by copyright owners, thereby shifting the entire burden -- and high cost -- of monitoring YouTube's infringement onto the victims of that infringement."

David A. Gurwin, a lawyer who specializes in technology, entertainment and media law for Pittsburgh, Pa.-based Buchanan, Ingersoll & Rooney PC, said that under U.S. copyright law, Viacom won't have to show that it's been harmed by the alleged YouTube infringements.

"It's the ability to control [one's own content], which rests with the copyright owner, and Google appears to be saying 'we know better than you what's in your best interest,'" Gurwin said. Google made a similar argument in the past when the company announced plans to digitize books and make them available online, he said. The company argued that such a move would benefit authors and publishers by disseminating works more widely and would increase market demand because people would read the books online then want to buy them for themselves, he said.

"Frankly, all that may be true, but in my view it's up to the copyright holder to make that decision," Gurwin said.

Google will likely defend itself, Gurwin said, by arguing that it is protected by the 1998 Digital Millennium Copyright Act (DMCA), which provides a framework to regulate copyrights in the world of electronic content. The DMCA gives copyright holders procedures to follow to protect their content when alleged violations occur and provides protections to cover unintentional posting of copyrighted materials. Google and YouTube will likely argue that they provide a service and don't actually post the content in dispute, using the DMCA as "a statutory shield," he said.

Viacom's lawsuit, however, alleges that once YouTube takes the submitted content from its users, it then copies it into its own software formats and places it on its own servers. In that case, Gurwin said, Viacom is "trying to allege that the Safe Harbor provisions under the DMCA don't apply because of their manipulation of the content" after it is received from users.

Viacom's entertainment brands include MTV: Music Television, VH1, CMT: Country Music Television, Logo, Nickelodeon, Nick at Nite, Comedy Central, Spike TV, TV Land, and more than 130 networks around the world, as well as MTV.com, comedycentral.com, VSPOT, TurboNick, Neopets, Xfire and iFilm, BET Networks, Paramount Pictures, DreamWorks and Famous Music.

Copyright © 2007 IDG Communications, Inc.

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