Viacom Tells Court YouTube Deliberately Violated Copyrights

Viacom Inc. (VIA/B) told an appeals court that Google Inc. (GOOG)’s YouTube willfully violated copyrights by letting users post videos of television shows without authorization.

Both sides made oral arguments today before the U.S. Court of Appeals in Manhattan. YouTube told the court it removed infringing videos from the site when it was notified by copyright owners.

Viacom sued YouTube in 2007, claiming the site’s users were illegally uploading thousands of videos of Viacom programs such as “South Park” and “The Daily Show With Jon Stewart,” as well as movies from its Paramount Pictures studio. The New York- based entertainment company sought $1 billion in damages.

In the appeal, Viacom seeks to overturn a decision in Google’s favor last year by a judge without a trial.

Viacom raised questions of fact “a jury might find relevant” in its court papers, Circuit Judge Jose Cabranes told a lawyer for Mountain View, California-based Google. The three- judge panel said it will announce a decision later.

U.S. District Judge Louis Stanton ruled last year that YouTube was protected from liability by the Digital Millennium Copyright Act because it removed the offending videos when told they had been posted.

“There’s no evidence of a single clip YouTube knew was infringing that it failed to take down,” Andrew Schapiro, a lawyer for YouTube, told the panel today.

Viacom Statement

Viacom said YouTube was aware of the copyright violations when it displayed the videos without authorization.

The lower-court ruling, if not reversed, “will lead to massive exploitation of copyrighted material on the Internet,” Paul Smith, a lawyer for Viacom, said today. “They made substantial amounts of money on someone else’s property.”

The Football Association Premier League Ltd., a British soccer organization, and some music publishers also appealed the lower-court ruling.

Charles Sims, a lawyer for the league, told the court YouTube benefited financially from the unauthorized videos by accompanying them with advertisements for travel to worldwide sports events.

More than 125 briefs supporting either Google or Viacom were filed by parties such as the Associated Press, the Songwriters Guild of America, singers Garth Brooks and Sting, Microsoft Corp. (MSFT), the Consumer Electronics Association, EBay Inc., Facebook Inc. and Yahoo! Inc.

Google Acquisition

Google, operator of the world’s biggest Internet search engine, bought YouTube in 2006 for $1.65 billion. It said in its brief that Viacom was also interested in buying the site. After negotiations over a content partnership broke down and Google made its successful offer, Viacom sent the “takedown” notices required by law when a content provider wants infringing material removed from a site.

Viacom said YouTube offered it a partnership agreement valued at $590 million before talks ended. Viacom also alleged that YouTube refused to deploy filtering technology to identify infringing videos unless Viacom agreed to be a financial partner.

YouTube was founded in 2005 by Chad Hurley, Steve Chen and Jawed Karim, who all previously worked at the Internet payment provider PayPal. YouTube at first displayed mostly homemade videos uploaded for free and viewed by other visitors to the site. YouTube is now an aggregator of audio and video from major entertainment, media and sports companies.

Judges on Panel

Besides Cabranes, the appeals judges were Roger Miner and Debra Ann Livingston.

Google rose $5.14, or 0.88 percent, to $587.55 at 2:20 p.m. New York time in Nasdaq Stock Market trading. Viacom’s B shares climbed 55 cents, or 1.3 percent, to $42.70 in New York Stock Exchange composite trading.

The cases are Viacom International v. YouTube, 10-03270, and the Football Association v. YouTube, 10-03342, U.S. Court of Appeals for the Second Circuit (Manhattan).

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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