Viacom Appeals 'Flawed' $1 Billion YouTube Verdict

When Viacom (VIA) lost its $1 billion copyright infringement lawsuit against Google-owned (GOOG) YouTube in a landmark legal decision earlier this year, there was little doubt the massive media conglomerate would appeal. And so it has.

Viacom, which owns MTV, Comedy Central and Paramount Pictures, formally appealed the decision on Wednesday with a two-page notice filed in the 2nd U.S. Circuit Court of Appeals in Mahattan.

"We expected Viacom's appeal," says Eric Goldman, Director of the High Tech Law Institute at Santa Clara University School of Law. "Viacom and Google have both invested too much in this case to give up easily."

In June, a federal judge threw out Viacom's closely watched $1 billion copyright infringement lawsuit against YouTube, which Google bought in 2006.

Viacom: Ruling "Fundamentally Flawed"

"We believe this ruling by the lower court is fundamentally flawed," Viacom said in a statement after the ruling. "After years of delay, this decision gives us the opportunity to have the Appellate Court address these issues on an accelerated basis."

Viacom had argued that YouTube's built its massive audience partly on the back of unauthorized videos of the media giant's TV shows, including the popular South Park and The Daily Show. Viacom produced emails showing that YouTube executives knew the site contained infringing content and worried about being sued as a result.

U.S. Circuit Judge Louis L. Stanton ruled that Google was correct in arguing that YouTube is protected by the "safe harbor" provisions of the 1998 Digital Millennium Copyright Act.

Following precedent, Stanton ruled that even if YouTube executives had "general" knowledge that infringing content was on the site, it was still the responsibility of the copyright owner, in this case Viacom, to ask YouTube to take the material down. When Viacom did so, YouTube responded promptly, giving it safe harbor protection.

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

Short But Sweet Enough?

Goldman notes that because Judge Stanton's 30-page decision -- for a 3-year, $1 billion case -- was "very short and not very detailed, that leaves a lot of room for an appeals court to interpret the opinion and find holes in it."

For example, Judge Stanton didn't address several pieces of evidence Viacom submitted that seemed to show that YouTube's founders had direct and specific knowledge of infringing videos -- like episodes of The Daily Show -- that they knew were going viral and boosting YouTube's traffic.

"I think the rather cursory nature of the district court's opinion will signal to the court of appeals that the order does not present a thorough analysis of the facts and the law, and that the panel will need to do so on its own," says Ben Sheffner, a lawyer at NBC Universal and prominent copyright blogger who called the verdict "disappointing."

At one point, YouTube co-founder Chad Hurley emailed his colleagues: "Save your meal money for some lawsuits!" according to Viacom's filing.

"I would anticipate Viacom will argue that the judge didn't address key facts asserted by Viacom in its briefs," says Goldman. "Judge Stanton's opinion was a vote that YouTube was legitimate, irrespective of how it got there. If the appeals court agrees with this premise, then Viacom doesn't have very good odds of success."

Jack Lerner, a professor at the University of Southern California Law School who specializes in copyright law, predicts Viacom's appeal will be rejected because Judge Stanton's verdict rested on one of the fundamental tenets of digital copyright law: "The language of the DMCA itself is really quite clear: it's not the service provider's responsibility to police the network."