A federal judge delivered a swift and potentially fatal blow Wednesday to Viacom Inc.'s $1-billion copyright infringement lawsuit against Google Inc.'s YouTube online video site.
The case, filed in March 2007, has pitted powerful Hollywood studios against equally formidable technology giants. Last month, Walt Disney Co., NBC Universal and Warner Bros. filed a brief backing Viacom. A few weeks later, EBay Inc., Facebook Inc., IAC/InterActiveCorp and Yahoo Inc. filed their own brief supporting Google, which bought YouTube in 2006 for $1.8 billion.
In its suit, Viacom alleged that YouTube had a responsibility to immediately remove all pirated content from its site. YouTube contended that it has only the duty to take down specific videos identified by copyright holders. The case has been viewed as framing the debate over the terms under which content can be distributed over the Internet, and who is responsible for policing piracy.
U.S. District Judge Louis L. Stanton, in his decision to grant Google's request for summary judgment, sided with YouTube, finding the company was within the law. When "YouTube was given notices, it removed the material," Stanton wrote in his 30-page decision. "It is thus protected from liability" under a provision in the Digital Millennium Copyright Act.
Viacom, in a statement, vowed to take the case to the federal circuit court.
"We are disappointed with the judge's ruling, but confident we will win on appeal," said Michael Fricklas, Viacom executive vice president and general counsel. "Copyright protection is essential to the survival of creative industries. It is and should be illegal for companies to build their businesses with creative material they have stolen from others."
Although there may be loud boos in Hollywood, Silicon Valley was breathing sighs of relief at having dodged a potential catastrophe, for now.
"If the decision had gone the other way, that would have likely been very damaging" to a whole host of technology companies that depend on the activities of its users, not just Google, said Jennifer Urban, co-director of UC Berkeley Boalt Hall's Samuelson Law, Technology & Public Policy Clinic.
"This is a big victory for Internet users," said Jeffrey Cole, director of USC's Center for the Digital Future. "This was a case of Viacom trying to flex its muscle and the courts wouldn't go along. Any other decision by the judge would have been a stifling of free expression. This is a great victory for self-expression and the growth of the Internet."
Online video is a popular and fast-growing business. The digital media research firm EMarketer estimated that advertising revenue generated by online video would increase 48% this year to $1.5 billion. The firm also predicted that more than 147million people will watch online videos this year, up from 121 million viewers in 2008.
When the suit was filed, media executives feared that online piracy would cripple their businesses just as it did to those of the music industry.
"The real problem with the lawsuit is that it fit the conditions of the market three years ago, but the market has changed," said James McQuivey, media analyst with Forrester Research.
"Since then, YouTube has become the friend of the media business — and not because of the lawsuit, but because of the changing market," said McQuivey. "YouTube has been actively trying to build a video-on-demand service and stream TV shows legally, and they have partnered with music companies to show music videos."
Stanton's ruling to grant Google's request on summary judgment does not dismiss the lawsuit, but it does put a significant dent in Viacom's chances of prevailing on appeal, said Jack Lerner, a professor of copyright law at USC.
"There is a very good chance that the circuit court will affirm what Judge Stanton did here," Lerner said.