Schmidt made the comments to about 300 people here at the National Association of Broadcasters conference during a one-on-one interview with John Seigenthaler, a former reporter with NBC's Nightly News.
The new system, which Schmidt called Claim Your Content, will automatically identify copyright material so that it can be removed, Schmidt said.
"We are very close to turning this on," Schmidt said.
The filtering system was supposed to have launched last year at YouTube, whichin October 2006. Delays in rolling it out have angered movie and television executives. Executives at NBC and Viacom have on preventing YouTube users from uploading clips from hit shows and movies.
Network executives accused Google of stalling so YouTube could reap the big traffic that professionally-created shows generate. Viacom filed a $1 billion lawsuit against Google last month and accused Google ofinfringement.
"Ah Viacom," Schmidt said. "You're either doing business with them or being sued by them...we chose the former, but ended up the latter."
Schmidt took the opportunity to poke fun at Microsoft's assertion that Google's pending acquisition of . Other companies, including Yahoo and AT&T have also asked regulators to review the transaction closely.
Seigenthaler asked Schmidt what he thought of Microsoft's concerns and Schmidt responded as if he hadn't heard previously about them.
"Microsoft?" Schmidt said.
When Seigenthaler said Microsoft also expressed concern about Google's size and the safety of privacy on the Web, Schmidt played to the crowd and responded once again: "Microsoft?"
"The specific complaints Microsoft has made are clearly false," a more serious Schmidt said. "I think a more likely scenario is that they are making those arguments because they are a competitor of ours."
Earlier Seigenthaler noted that many in the crowd were in radio and television and many may fear that Google has its sights set on their advertising market.
Google said Sunday that it will begin selling advertisements on all of the radio stations owned by Clear Channel Communications, the nation's largest station owner.
Google has been working to extend its reach into traditional media ad sales, but Schmidt denied that Google is a threat to radio, television or newspapers. He noted that ad revenues for TV and radio have been relatively flat and implored the audience to realize that they need to bring in new advertisers. His message of course is that Google can help them do that.
"Google is new phenomenon that isn't going to replace radio or TV," he said. "It seems to me that Google has an ad business that can add to the success of radio and TV."