A Win for New Media: Google Defeats $1 Billion Viacom Lawsuit Over YouTube

New media: 1. Old media: Nil.

Internet giant Google (GOOG) won a dramatic legal victory Wednesday after a federal judge threw out Viacom's (VIA) landmark, $1 billion copyright infringement lawsuit against YouTube, which Google bought in 2006.

In a precedent-setting decision (ruling embedded below), U.S. Circuit Judge Louis L. Stanton agreed with Google's argument that YouTube is protected by the "safe harbor" provisions of the 1998 Digital Millennium Copyright Act.

Media giant Viacom, which owns MTV, Comedy Central and Paramount Pictures, has vowed to appeal. It called the decision "fundamentally flawed and contrary to the language of the Digital Millennium Copyright Act, the intent of Congress and the views of the Supreme Court."

Testing the Limits of Safe Harbor Protection

The basic issue in the bitter, three-year case was whether YouTube knowingly encouraged copyrighted videos to be posted on the site. That would violate the "safe harbor" provision of the DMCA that protects websites if they promptly remove infringing content.

YouTube and Google executives may have been aware that people were uploading infringing content to the site, but Judge Stanton found that "general knowledge that infringement is 'ubiquitous' does not impose a duty on the service provider to monitor or search its service for infringements." Stanton followed existing precedent which places the burden of identifying infringement on the copyright owner, in this case Viacom.

Viacom argued that a large part of YouTube's explosive growth was based on unauthorized videos of the company's shows, including South Park and The Daily Show. Viacom said that YouTube and Google executives knew the site contained infringing content and benefited financially from it.

Google maintained that YouTube was covered by the DMCA against copyright claims because the site promptly takes down infringing content once it is notified. According to federal law, DMCA safe harbor protection applies if a "service provider" -- in this case YouTube -- "responds expeditiously to remove, or disable access to, the material that is claimed to be infringing."

"The present case shows that the DMCA notification regime works efficiently," Judge Stanton writes. "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."

Bitter Blow, Sweet Vindication

The decision is a bitter blow for Viacom, which spent three years and millions of dollars pursuing YouTube. In court filings, Viacom says, "Google willfully and knowingly chose to continue YouTube's illegal practices."

On the other hand, the verdict is a sweet vindication for those who argued that YouTube could withstand a copyright onslaught. When Google bought the video site in 2006, the conventional wisdom held that YouTube could very likely be sued out of existence. Even YouTube's executives were worried about litigation. In an email produced by Viacom, YouTube co-founder Chad Hurley advises his colleagues: "Save your meal money for some lawsuits!

In the end, the case came down to a Tale of Two YouTubes, in the words of tech law expert Eric Goldman. Viacom focused on YouTube's early days, when everyone agreed it was awash in illegal content, while Google emphasized the site's recent history, during which time -- even Viacom acknowledged -- the site has strictly complied with the DMCA.

Google quickly trumpeted the verdict. "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," Kent Walker, Google's vice president and general counsel writes in a company blog post.

Viacom says it will "seek to have these issues before the U.S. Court of Appeals for the Second Circuit as soon as possible."

Here's Judge Stanton's order: