Viacom Files Landmark Copyright Case Against Google, YouTube

The case that will likely determine the future of the online video sharing industry at least, and the Internet media economy at most, has been filed. Viacom, one of the world's largest media rights holders, has sued Google in federal court in New York, seeking $1 billion in damages for an estimated 1.5 billion separate infringements of copyright.

Viacom's legal team released a four-paragraph statement this morning, which is best read in its entirety:

YouTube is a significant, for-profit organization that has built a lucrative business out of exploiting the devotion of fans to others' creative works in order to enrich itself and its corporate parent Google. Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws. In fact, YouTube's strategy has been to avoid taking proactive steps to curtail the infringement on its site, thus generating significant traffic and revenues for itself while shifting the entire burden - and high cost - of monitoring YouTube onto the victims of its infringement.

This behavior stands in stark contrast to the actions of other significant distributors, who have recognized the fair value of entertainment content and have concluded agreements to make content legally available to their customers around the world.

There is no question that YouTube and Google are continuing to take the fruit of our efforts without permission and destroying enormous value in the process. This is value that rightfully belongs to the writers, directors and talent who create it and companies like Viacom that have invested to make possible this innovation and creativity.

After a great deal of unproductive negotiation, and remedial efforts by ourselves and other copyright holders, YouTube continues in its unlawful business model. Therefore, we must turn to the courts to prevent Google and YouTube from continuing to steal value from artists and to obtain compensation for the significant damage they have caused.

While YouTube and Viacom had reached some kind of tentative agreement last October, which originally was reported to be culminating in a kind of rights management system for copyright holders, that agreement appeared to be quickly unraveling last month.

In its statement, Viacom's grievances against YouTube, and the probable causes for their deal having fallen apart, are made stunningly clear. The first paragraph alleges that YouTube would not have played an active, participatory role in the rights management process, beyond providing rights holders with some of the tools for them to do the job themselves. YouTube videos are posted mainly by individuals, and a tremendous amount of that content is comprised of recorded video excerpts of others' copyrighted material.

While some have been willing to live with that fact under the premise that any kind of awareness of that material counts as promotion -- and free promotion at that -- Viacom, a company that's in the business of distributing such content over its own systems, perceives any distribution of its material outside of its own control as contrary to its own rights to use that material as it solely intends.

The second paragraph alludes to services that have "recognized the fair value of entertainment content," though it mentions no one by name. In recent months, Napster has completed its transition from a decentralized content replication service to a fair market brand. Last month, the company reached a preliminary deal with startup Joost, whose creators' last P2P effort is known as Skype.

And last November, Viacom's Paramount Pictures unit announced a partnership with BitTorrent, which just one year before had been the target of a full-on legal assault by rights holders who accused the system's creators of willfully devising BitTorrent to thwart the aims of copyright protection.

BitTorrent's Bram Cohen had long maintained he did not create his P2P multiplexing system will ill intent, though in the interest of maintaining his business and against his own earlier claims of non-feasibility, he agreed to implement a rights control system for BitTorrent. Since YouTube is not nearly as technologically complex, it will be difficult for Google to argue that a similarly agreeable rights management system isn't feasible.



Even if Viacom's case against Google ends in settlement -- which at this early stage appears impossible -- its outcome is likely to set both legal and technological precedent that other players in the digital space may find themselves forced to follow. More importantly, it could change the chemistry of video sharing services everywhere, even before the case reaches a conclusion.

How so? To protect themselves from a similar legal assault, competitive services may choose to adopt more restrictive uploading policies, and start policing their uploads more carefully. The task of policing every upload personally, to ensure that it doesn't include material that appears to belong to someone else by law, would be unfathomable for most companies. But a technological means to prevent somebody's second-hand copy of some sitcom recorded on tape from being replicated throughout the Web, is even more out of reach.

Inevitably, there will be smaller players in the video sharing business who will today be reconsidering whether their current business model -- if there is one -- is worth the risk.

But the impact goes further: To whom does "second-hand" video belong? Certainly, the grainy reproductions of stuff taped from broadcast TV, though digital in its delivery, shouldn't really count as "high resolution." The US Supreme Court has upheld individuals' rights to tape video and audio over the public airwaves, and has unofficially permitted those rights to pertain to cable and satellite services as well, so far as those tapes aren't redistributed to any broad extent.

Giving a copy of a tape of last week's Battlestar Galactica could legally be frowned upon, if there weren't millions of individuals already doing it. Sharing over the Internet would qualify as distribution en masse. But if you were to try to write a law to regulate it, where would you begin? Why would one million people making one copy each be legal, and one person making one million copies not be?

The legal quandary does not stop there. Up to now, P2P services have been able to defend themselves to a limited extent on the theory that they have no centralized repository of files, and thus no responsibility for the content that flows through them. If the new version of the Boucher Bill is passed, conceivably, P2P services would be protected by law from copyright infringement claims on the theory that they weren't expressly created for that purpose. The exception would be when services advertise themselves to their users for their infringement abilities, as was the situation in MGM v. Grokster.

If Viacom's goals with its YouTube lawsuit are reached, the only type of video sharing service of which you'd ever want to be the proprietor, is one that has no centralized repository of files - a P2P service, assuming Boucher passes. Otherwise, the only legal protection you might have as a proprietor against multi-billion dollar lawsuits from the content industry is one of two possibilities:

1) you implement a highly restrictive DRM scheme to protect content available for download, which is something extremely few users say they actually want or would accept, and which could go against the whole purpose of the video sharing business model; 2) you try to use the Boucher argument as a defense: that you didn't create your sharing system to explicitly thwart copyright. And that will be extremely hard to prove not just for psychological reasons, but for technical ones as well: You would not have created your sharing system in the first place; if it's like YouTube, it uses the Web, which pre-existed before you came along.