YouTube may add to Google's copyright worries

When YouTube was a mere video-sharing start-up, of course, it didn't have the kind of bulging bank account that tends to attract lawsuits from copyright holders irked that their content is appearing on a commercial Web site to which anyone can contribute.

That could change now that YouTube is slated to become an arm of Google, which is already defending its share of lawsuits over intellectual property from book publishers, journalists, photographers--and a few plaintiffs with weak claims who are nevertheless hoping to get rich quick.

For their part, executives involved in the deal are downplaying concerns over litigation. Chad Hurley, co-founder and CEO of YouTube, said during a conference call: "We've always respected rights-holders' rights. What this deal allows us to do is focus on that much more than we ever could before and build the system so copyright holders can benefit."

But YouTube's--and therefore Google's--potential legal liability depends on how the courts interpret an area of copyright law that remains surprisingly unsettled. In addition, the U.S. Supreme Court's decision in the Grokster file-sharing lawsuit has raised more questions about who's liable and who's not.

"I think it's pretty murky," said Jessica Litman, who teaches copyright law at the University of Michigan. "There hasn't been much litigation on the scope of (copyright law's) safe harbor."

Questions unanswered by the law
Central to the question of legal liability is the wording of a densely worded section--Section 512--of the Digital Millennium Copyright Act of 1998. It was drafted by Congress in the days when Web site hosting was a more static affair, and doesn't clearly address a situation such as YouTube's. Section 512 was also, famously, invoked by Napster in its own unsuccessful legal defense.

Section 512 essentially lets hosting companies off the hook for legal liability, as long as they respond promptly to formal notifications from copyright owners and remove any infringing material. YouTube does this through a formal posted policy, and prohibits uploads of unauthorized videos more than 10 minutes in length.

But Section 512 also has four additional requirements that must all be met for plaintiffs to benefit from the so-called safe harbor. First, the copyrighted material must "reside" on the hosting service. Second, the material must be stored "at the direction of a user." Third, the hosting service must not be "aware of facts or circumstances from which infringing activity is apparent." Fourth, the hosting service must not "receive a financial benefit directly attributable to the infringing activity."

If YouTube places more ads alongside video content, that would chip away at the shield of Section 512. So would any evidence that YouTube's executives turn a blind eye toward piracy. Copyright holders could also claim that YouTube modifies the video in ways that Section 512 does not anticipate or protect.

Mark Cuban, an entrepreneur and irreverent blogger, has written: "Would Google be crazy to buy Youtube. No doubt about it. Moronic would be an understatement of a lifetime."

Cuban says he doesn't think the DMCA safe harbor will apply when it's tested in court and points to YouTube's recent string of licensing deals. "The copyright s*** is going to hit the lawsuit fan," he wrote. "Personally, I think the site that has this handled first is going to be in a great position to leapfrog those who dont. They can be out enabling great user created content and building traffic while everyone else is fighting lawsuits."

Other analysts have also been negative, citing legal concerns.

YouTube, which did not respond to requests for comment on Monday, was sued in July by a journalist and helicopter pilot, Robert Tur, who says video he shot of the beating of trucker Reginald Denny during the 1992 Los Angeles riots was posted on YouTube without his permission and viewed more than 1,000 times. After learning of the lawsuit, YouTube deleted the video clip.

Earlier this year, a skit from "Saturday Night Live," called "Lazy Sunday" drew large audiences to YouTube's site and generated lots of media attention before the company pulled the clip at the request of NBC.

Google Chief Executive Eric Schmidt said on Monday: "Most people believe this is just the beginning of an Internet video revolution. There are many ways in which video will be uploaded, monentized and copyright-respected."

"I think they will see a lot more lawsuits if they don't change the policy from what YouTube is doing because there's a lot of copyrighted content up there now," said Jack Lerner, a fellow at the Samuelson Clinic at the University of California at Berkeley.

Google's deep pockets "alone will cause a lot of lawsuits," Lerner said. "Whether or not those end up being successful and really hurting Google's implementation of YouTube remains to be seen, and whether they'll have any legs remains to be seen, but...many, many people think that YouTube hasn't been bought yet until now for that very reason."

CNET News.com's Tom Krazit contributed to this report.