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Viacom Files $1-billion Suit Over Youtube

March 14, 2007|Dawn C. Chmielewski, Meg James and Thomas S. Mulligan | Times Staff Writers

With a $1-billion lawsuit, Viacom Inc. is aiming to upend Google Inc.'s plan to change the way people watch TV and movies.

Viacom, which owns MTV Networks and Paramount Pictures, sued Google in federal court Tuesday, accusing the Internet company of "brazenly exploiting" the power of the Web to make easy money off Hollywood's hard work.

Google's YouTube video-sharing service has "deliberately chosen not to take reasonable precautions" to stop users from posting unauthorized clips of shows including "SpongeBob SquarePants" and "South Park" and movies such as "An Inconvenient Truth," the suit says. "YouTube profits handsomely from the presence of the infringing works on its site."

Viacom isn't the only old-media company with that opinion. Several book publishers and news agencies have sued Google for alleged copyright infringement, though none has Viacom's deep pockets or fighting instincts.

Until recently, Viacom was one of several companies struggling to reach deals that would allow them to share in the YouTube advertising revenue that their shows generate. NBC Universal recently sent a letter warning that Google should better protect copyrighted material.

"Everybody recognizes litigation is not a particularly desirable business outcome," NBC Universal General Counsel Richard Cotton said in an interview before the Viacom suit was filed. "What you have is everybody going the last mile to try to find a constructive business solution. But I guess what I would say is this is the last mile."

Viacom's lawsuit, filed in U.S. District Court in New York, seeks at least $1 billion in damages for alleged copyright law violations. A Viacom spokesman called that "a very conservative estimate." Under copyright law, Viacom could win $150,000 per "willful" infringement, meaning that penalties on the more than 150,000 alleged violations would approach $23 billion.

Google attorney Glenn Brown said the company was confident about its case.

"More importantly, we're proud to continue giving creators a place to post and discuss their videos, whether it be a family's home video or a company like the BBC or any of the other big professional media companies to partner with us to host their content," he said.

The Mountain View, Calif., company has become both friend and foe of TV networks, newspapers and other traditional media companies. They crave the traffic Google can direct to their websites but fret that it's making so much money off their material.

"Google has said its mission is to be able to provide quick access to all of the world's information," said Forrester Research analyst Josh Bernoff. "Much of the world's information is copyrighted. So unless there is a resolution to this question, they can't succeed."

It was clear Google was in for a fight when it bought YouTube in November for $1.6 billion. TV networks, movie studios and record labels were already complaining about the website's failure to block pirated videos.

YouTube launched in December 2005 with videos of a founder's cat. People began to flock to the site's karaoke bits and online confessionals, then figured out that they could share and watch snippets from thousands of TV shows, music videos and movies. The site became perhaps the Web's largest collection of buzz-worthy TV highlights.

The site's traffic rocketed to more than 34 million U.S. visitors in February, up from 4 million a year earlier, according to Web research firm ComScore Networks. Networks and producers were happy to be along for the ride, until it became part of an emerging Internet behemoth.

"When YouTube was a fun start-up that wasn't monetizing the content, I was fine with it," said Ben Silverman, executive producer behind such popular shows as "The Office" on NBC and "Ugly Betty" on ABC. "But the moment they sold themselves for $1.6 billion and became a service that was making money off other people's content, the game changed."

Viacom contends that since YouTube has successfully screened pornography from the videos its users contribute, it should be able to police the site for copyrighted material. When Viacom asked Google to take action, "they kept saying, 'It's difficult,' " Viacom spokesman Carl Folta said. "If it's difficult, shut your site down until you get it right."

At NBC, executives have struggled to decide how to deal with YouTube. A year ago, the "Lazy Sunday" skit -- a satirical rap about cupcakes and the "Chronicles of Narnia" -- found its way onto YouTube and reintroduced NBC's "Saturday Night Live" franchise to millions of young viewers.

The leak triggered conflicting impulses within NBC. It wanted to use the emerging technology but couldn't let what it saw as copyright infringement go unchallenged.

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