Viacom's Suit Won't Snuff Out YouTube
When Viacom sued Google for massive copyright infringement Mar. 13, there was an element of history repeating itself. In this instance it was Sumner Redstone's Viacom and a cadre of lawyers going after a massively popular service—in this case Google's YouTube—that lets customers share their favorite video clips. Observers couldn't help but draw parallels to the Recording Industry Association of America (RIAA) and its legal battle against an earlier generation of entertainment-sharing services, Napster and Grokster, used by millions to share their own beloved form of entertainment, digital music.
Napster eventually shut down, bankrupted by legal bills and multimillion-dollar settlements with copyright owners, and Grokster also went offline after the U.S. Supreme Court ruled it could be held liable for copyright infringements committed by its users (see BusinessWeek.com, 6/28/05, "A Supreme Slap at Grokster & Co."). But for anyone fretting that YouTube may be headed for anything resembling the same fate as the peer-to-peer file-sharing services, the message is simple: Google is no Napster.
For starters, Google (GOOG) is standing on legal ground that's far more solid than its predecessors, legal experts say. Viacom says 160,000 clips of its shows and other content have been unlawfully uploaded to YouTube. Like the RIAA, Viacom (VIA) maintains that a service is responsible for copyright violations committed by its users. In the lawsuit, filed in U.S. District Court in New York, Viacom argues that YouTube is responsible because its business is designed around the illegal activity. "YouTube has built an infringement-driven business by exploiting the popularity of Plaintiff's copyrighted works (and the works of other copyright owners) to draw millions of users to its website," reads the suit.
This argument is similar to the one the RIAA made—that the peer-to-peer networks knew illegal files were driving their traffic. Their business proposition relied on that traffic so they were encouraging, or at least turning a blind eye to, that illegal activity and were, thus, liable.
However, unlike the file-sharing sites, a significant portion of YouTube's content is legitimate—home videos, shorts made by would-be TV stars, blogs, and copyrighted content deliberately uploaded by the owners for publicity purposes. Thus, it would be more difficult to prove that YouTube's business model is truly built around the presence of copyrighted clips. "When you go to YouTube your takeaway is that YouTube is really a place for you, the individual, to publish your own videos," says Gregory Rutchik, founding lawyer for the Arts & Technology Law group, a San Francisco-based copyright and trademark litigation firm.
More important, Google can argue that it has been following the letter of the law, namely provisions of the 1998 Digital Millennium Copyright Act, that shield sites from unintended copyright infringement—provided that the copyrighted clips are removed once they are notified of their existence. "People who follow the law are allowed to stay in business even if they are not paying content owners," maintains Fred von Lohmann, a staff attorney with the Electronic Frontier Foundation, a nonprofit law firm specializing in cases involving violations of Internet freedoms.
YouTube regularly removes material in response to DMCA "take-down" requests. Case in point: In February, Google removed 100,000 clips cited by Viacom as infringing on its copyright (see BusinessWeek.com, 2/2/07, "Viacom's High-Stakes Duel with Google"). "YouTube has become even more popular since we took down Viacom's material," Google General Counsel Kent Walker said in a statement.
"We think that's a testament to the draw of the user-generated content on YouTube."
What's more, unlike Napster and other file-sharing sites, YouTube isn't just some small startup. Backing by Google, which acquired the site in October for $1.65 billion in stock, will help YouTube withstand a legal battle of great length (see BusinessWeek.com, 10/10/06, "YouTube's New Deep Pockets"). Even after the search goliath's shares took a 2.5% hit following the lawsuit, Google was valued at nearly $138 billion. That means YouTube will have considerably more resources to fight extinction than Napster did. It may even have more resources than Viacom itself. Even if Viacom were to win the more than $1 billion it is seeking in damages—which legal experts agree is a huge and unlikely if—it is not enough to crush Google.
Perhaps the greatest difference between the RIAA's case and Viacom's is that Viacom doesn't want to stop YouTube from operating. If it did, says Rutchik, Viacom would have asked the courts to shut Google down to ensure that its copyrighted material was not uploaded, or in some cases slightly changed and re-uploaded after being removed. Instead, Viacom asked for damages, a "declaration that defendants' conduct willfully infringes Plaintiffs' copyrights," and an injunction requiring YouTube and Google to, in essence, adopt better technology to prevent or limit their copyrighted material from uploading.
One reason for this could be that Viacom, owner of youth brand MTV Networks as well as Comedy Central, may not want to anger its key demographic in the same way that the RIAA did when it began to sue users of peer-to-peer sites. Another reason, says Rutchik, is that the whole suit is simply a negotiating tactic to make Google more willing to pay Viacom for its content. "No one pays any money or does much of anything unless they are staring down the barrel of a gun," says Rutchik. "This litigation sets the clock moving."
Google has 30 days to file a response. Rutchik guesses that there will be some legal posturing from both sides, but ultimately they will return to the negotiating table and work out a compromise rather than risk losing outright before a judge.
Negotiating tactic or not, there are other possible consequences to Viacom's legal action aside from whatever happens with Google or YouTube. The case could give other startup sharing sites pause and, as a result, "chill innovation," says EFF's von Lohmann. And that's an ending few want.