By Eric Bitzegaio

Viacom has slammed YouTube’s parent company, Google, with a suit seeking over $1 billion in damage and injunctive relief the copyright infringement provisions of the Copyright Act.ⁱ Viacom claims Google directly infringed on their copyrights by publicly displaying, publicly performing, and reproducing copyrighted works without authorization. Furthermore, Viacom alleges that Google is liable for inducing infringement, contributory infringement, and vicarious infringement as a consequence of its behavior and business model with respect to user-uploaded content.ⁱⁱ

Relying largely on the $1.65 billion acquisition price paid by Google to acquire YouTube as an indicator of the site’s value, Viacom has argued that Google is profiting on the backs of media companies who create copyrighted content, which is then uploaded to YouTube royalty-free by individual users. Further raising Viacom’s ire was the recent addition of a feature which displays YouTube video thumbnails to users of Google’s web search engine, which, “thereby participating in, inducing, contributing to, and profiting from” copyright infringement perpetuated by YouTube users.ⁱⁱⁱ In addition, it is YouTube “publicly performing” the copyrighted works when it streams them over the internet to users’ home computers for viewing.

Users attracted hence to the YouTube website are then subjected to advertisements, from which Google nets revenue. Google thusly profits from infringement of Viacom’s copyrights. Furthermore, according to Viacom, Google has clear notice of the massive infringement that takes place on YouTube. To wit, a search of Viacom’s trademarks will turn up many infringing hits.

However, the realities of running a website as large and complicated as YouTube are more complex than Viacom suggests. Although it may be easy to find infringing content on YouTube, even to a casual user, what Google might do about the problem, short of drastically altering their business model (e.g. not allowing users to upload videos). Although certain clips may obviously be infringing to a person looking at the site, it is simply not feasible to review each and every video uploaded: there are nearly 80 million videos, with new content being uploaded every day. In short, while it may be readily apparent that there is some copyright infringement occurring on YouTube, it may not be readily apparent that any particular video on the site is infringing—the information Google would need to effectively police the site for infringement.

However, Viacom protests that Google manages to police its videos for pornographic content, but does not do the same for copyrighted content. Google’s defends that while pornographic content is both immediately apparent and unacceptable in any case, all content posted to YouTube is necessarily copyrighted—the issue is whether such use of copyrighted material is infringing, or was it uploaded by the copyright owner herself, or covered by fair use doctrine, etc.

Google has offered a number of defenses,^iv notably among them that they are protected by safe harbors within the Digital Millennium Copyright Act,^v fair use, failure to mitigate on the part of the plaintiffs, and that licenses were granted barring the action. Most interesting may be the application of the DMCA safe harbor provisions, considering that Google responds to DMCA takedown notices and removes material alleged to be infringing. 512(c) will likely be the primary section on which Google relies, as it creates liability exceptions with respect to user-directed storage of material on a system or network. For this exception to apply, Google must have no actual knowledge of infringing material, be unaware of facts or circumstances from which infringing activity is apparent, and promptly remove material if served by a takedown notice. Furthermore, Google may not receive a financial benefit directly attributable to the infringing activity, if it has the right and ability to control that activity.

The primary battlefield in this case, if previous file-sharing cases are to be any guide (e.g. Grokster^vi ), will be Google’s “apparent” if not “actual” knowledge of infringing activity and Google’s ability to control such activity. Hanging in the background will no doubt be the question of whether Google made a good faith effort to limit infringing activity. While Google certainly has not encouraged infringement as brazenly as Grokster did, there is no doubt that there is substantial infringing material on YouTube. Perhaps the most important result that will likely come from this case is whether a business model based on massive reserves of user-generated content is viable, or whether the policing costs necessary to avoid liability are too severe to make such a venture worthwhile.

Although discovery is expected to go on for some time, Google appears to have won the first battle: the Southern District of New York has denied Viacom the right to seek punitive damages. Following Second Circuit precedent, the court held that punitive damages are not available under any action predicated on the Copyright Act, regardless of whatever other damages are being sought.^vii

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ⁱ Miguel Helft & Geraldine Fabrikant, Viacom Sues Google Over Video Clips on Its Sharing Web Site, N.Y. TIMES, March 14, 2007, at C1.
ⁱⁱ See Complaint for Declaratory and Injunctive Relief and Damages, Viacom Int’l Inc. v. YouTube, Inc., No. 1:07CV02103 (S.D.N.Y. March 13, 2007).
ⁱⁱⁱ Id.A
^iv See Defendants’ Answer and Demand for Jury Trial, Viacom Int’l Inc. v. YouTube, Inc., No. 1:07-cv-02103 (S.D.N.Y. April 30, 2007).
^v Digital Millennium Copyright Act, 17 U.S.C. § 512 (1998).
^vi 545 U.S. 913 (2005).
^vii See Viacom Int’l Inc. v. YouTube, Inc., No. 07 civ. 2103, 2008 WL 629951, at *3 (S.D.N.Y. March 7, 2008).