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Viacom Loses To YouTube In Landmark Copyright Case

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SAN FRANCISCO — A federal judge handed Google Inc. a major victory Wednesday by rebuffing media company Viacom Inc.'s attempt to collect more than $1 billion in damages for the alleged copyright abuses of Google's popular YouTube service.

The ruling by U.S. District Judge Louis Stanton in New York embraces Google's interpretation of a 12-year-old law that shields Internet services from claims of copyright infringement as long as they promptly remove illegal content when notified of a violation.

That so-called "safe harbor" helped persuade Google to buy YouTube for $1.76 billion in 2006, even though some of the Internet search leader's own executives had earlier branded the video-sharing service as "a 'rogue enabler' of content theft," according to documents unearthed in the copyright infringement case.

Stanton "blessed the current state of play on the Internet," said Eric Goldman, a Santa Clara University associate professor who specializes in high-tech law. The affirmation was cheered by Internet service providers and free-speech groups who believe the Digital Millennium Copyright Act helps give more people an outlet to express themselves.

"Without this decision, user-generated content would dry up and the Internet would cease to be a participatory medium," said David Sohn, a lawyer for the Center for Democracy & Technology."

Viacom, the owner of popular cable channels such as MTV, Comedy Central and Nickelodeon, called Stanton's decision "fundamentally flawed" and vowed to appeal. That virtually ensures a legal brawl that already has dragged on for more than three years will spill into 2011 and perhaps beyond.

"Copyright protection is essential to the survival of creative industries," said Michael Fricklas, Viacom's general counsel. "It is and should be illegal for companies to build their businesses with creative material they have stolen from others."

The bitter battle revolves around Viacom's allegations that YouTube built itself into the Internet's most watched video site by milking unlicensed use of copyright-protected clips stolen from professionally produced show such as Viacom's "The Colbert Report" and "The Daily Show."

The pirated material came from the millions of people who have uploaded clips to YouTube since its 2005 inception. About 24 hours of new video is posted to YouTube every minute.

YouTube's whirlwind success led to the Google sale that generated huge windfalls for the video channel's founders, Chad Hurley, Steve Chen and Jawed Karim.

Citing e-mail exchanges among those founders, Viacom depicted the founders and other YouTube employees as video pirates who were more interested in getting rich quick than adhering to copyright laws.

But Stanton concluded YouTube's actions outweighed the words of the YouTube founders.

In dismissing the lawsuit before a trial, Stanton noted that Viacom had spent several months accumulating about 100,000 videos violating its copyright and then sent a mass takedown notice on Feb. 2, 2007. By the next business day, Stanton said, YouTube had removed virtually all of them.

Stanton said there's no dispute that "when YouTube was given the (takedown) notices, it removed the material."

Since it was sold to Google, YouTube has developed a system that helps flag copyright violations when videos are posted. Viacom argues those copyright detection tools prove YouTube could have done more to keep illegal content off its site.

Kent Walker, Google's general counsel, said the company is confident Stanton's decision will hold up. The 30-page ruling is "thoughtful, thorough and well-considered," Walker said in an interview. He also hailed the decision as "a victory for a new generation of creators and artists eager to showcase their work online," Walker said.

Facebook, eBay Inc. and Yahoo Inc. were among the Internet companies that had backed Google in its battle with Viacom.

The evidence that accumulated before Stanton reached his decision proved embarrassing for both sides.

An early e-mail exchange among Hurley, Chen and Karim showed at least one of them may have knowingly violated copyrights as they posted video clips during the service's early stages.

"Jawed, please stop putting stolen videos on the site," Chen wrote in the July 19, 2005, e-mail. "We're going to have a tough time defending the fact that we're not liable for the copyrighted material on the site because we didn't put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it."

Other documents showed Viacom had hoped to buy YouTube before getting trumped by Google, making it seem as if the media company's later claims of copyright abuse may have been a case of sour grapes.

A July 2006 e-mail from Fricklas, Viacom's top lawyer, even disputed that YouTube was engaged in rampant copyright infringement. "Mostly YouTube behaves," Fricklas wrote.

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