Viacom gets another shot in court against YouTube

NEW YORK--Viacom got another chance to argue this morning that YouTube is a copyright violator and should be required to compensate the entertainment company more than $1 billion.

In one of the most important court cases facing Web entertainment, Viacom, parent company of MTV, Paramount Pictures, and Comedy Central, argued before the Second Circuit Court of Appeals court in Manhattan that YouTube managers possessed specific knowledge that pirated clips of TV shows and films were posted to the video-sharing service during its first few years in existence.

YouTube has always said the Digital Millennium Copyright Act's safe-harbor provision protects Internet service providers against liability for copyright violations committed by users. Round 1 in the fight went to Google, however. A U.S. district judge last year granted summary judgment in favor of the search company, and Viacom appealed.

Legal experts have said the outcome of the suit will likely help determine who profits most from content distributed online: content creators or distributors.

Paul Smith, the attorney representing Viacom, told the three-judge panel that YouTube's leadership purposely ignored copyright violations and that YouTube's business model was dependent on rampant piracy. Google hammered away at Viacom's arguments and assertions by repeating one simple theme.

There is no way for YouTube to determine what is infringing material without the copyright owner's input, said Andrew Schapiro, the lawyer representing Google. He stood before the three-judge panel and did not deny that Google leaders had some suspicions that some clips were likely infringing, but he said the law only required YouTube to remove content that it knew for certain was pirated.

Under copyright law, the job of positively identifying pirated content belongs to the copyright holder, Schapiro told the court.

The long-running case started in 2007, when Viacom filed a $1 billion copyright suit against YouTube and Google. Viacom alleged that YouTube illegally profited by enabling and encouraging users to post unauthorized video clips to the site. The entertainment conglomerate also alleged that YouTube had "red flag" knowledge of the piracy and the means to prevent it but chose not to do so.

Viacom was only one of the copyright owners represented in court today. Charles Sims also argued before the court on behalf of a group of copyright owners that includes a professional European soccer league.

Sims and Smith told the court not to be fooled by YouTube's excuses about why managers there couldn't tell what is pirated material and what was uploaded by copyright holders. Sims pointed to e-mails from YouTube managers who asked employees to remove content belonging to a sports league he was about to meet because it could prove embarrassing, and according to Sims, the material was taken down.

Sims noted that YouTube has successfully prevented pornography from appearing on the site. The lawyer said Google could have relied on available filtering technology that would have enabled YouTube to remove content and keep it down. For a while, copyright owners complained that as soon as they sent Google a take-down notice and the clip was removed, a flood of new copies of the same material went right back up. Subsequent to Viacom's lawsuit, YouTube built a filtering system.

Smith tried to show the court how YouTube always intended to build an empire on infringing material. He said Google leaders offered Viacom $500 million to license the company's content, and when they couldn't, they looked the other way on mass copyright infringement. Surprisingly, Smith drew comparisons between YouTube and Grokster, the file-sharing service that was part of the MGM vs. Grokster case, a landmark copyright decision.

Many legal analysts have said YouTube is much different than Grokster because YouTube has many noninfringing uses, and Grokster was accused of being mostly used to share infringing material. But Smith said it doesn't matter what Grokster or YouTube were used for because the Supreme Court found in its Grokster decision "that if a company comes to the marketplace with the intent to infringe, then that's liability," Smith said. "Grokster fits perfectly."

Not much appeared to phase Schapiro. For most of the questions posed to him by the judges, the attorney always went back to the requirements of the law. He noted that sweeping the site of porn is easy because it needs only be seen to determine whether it violates the site's terms of service and doesn't the require the company to learn anything about the clip's source. He argued that the law doesn't require Google or YouTube to create a filtering system favored by copyright owners or to take pains to find who owns any clip.

The law only requires Google to remove pirated material, once it is alerted by the owners. That's what the company has done, Schapiro said.

Google's attorney drew his ace in the hole: he told the court that Viacom acknowledged that employees uploaded numerous clips to YouTube for marketing purposes and that later, the company struggled to distinguish between clips uploaded by employees and those posted without permission.

"If they couldn't tell what belonged to them," Schapiro told the court, "how could we?"

Smith attacked that assertion as well. He said YouTube managers knew which usernames Viacom used to post the clips it wanted on YouTube.

It was Schapiro, however, who drew on precedent and previous decisions. He told the judges of the appeals court that every judge who had ruled on the primary issues of the case--likely referring to Universal Music vs. Veoh and Judge Louis Stanton, who provided the lower court's decision in this case--had found that it was the responsibility of copyright owners, not Internet services like YouTube, to flag pirated materials.

Updated, 12:15 p.m. with more context and images.