What Viacom's loss to YouTube means for Hollywood

By Matthew Belloni

The Google geeks have beaten Hollywood chic. But how much will today’s court ruling against Viacom in its $1 billion copyright battle over YouTube tip the balance of power from professional content creators to online distributors?

In ruling on summary judgment that the Google-owned video-sharing site is protected from liability by a safe-harbor provision in copyright law, U.S. District Court Judge Louis Stanton has sent a clear message:

When user-generated video sites implement reasonable takedown procedures, they are shielded from infringement lawsuits based on the copyrighted content that users upload.

“If a service provider knows of specific instances of infringement, the provider must promptly remove the infringing material,” Stanton wrote in the opinion. “If not, the burden is on the owner to identify the infringement.”

The digital community has heralded the decision as a win for consumers against over-reaching content conglomerates. Maybe, but the real victor here might be the culture of Silicon Valley and its hyper-innovative, fast-and-loose, build-an-audience-and-figure-out-the-details-later mentality. In the emerging legal framework of the Web, old-media traditions like strict copyright protection are being redefined for a more fluid, more casual, more mix-and-mash culture. Rights are still rights, of course, and Hollywood still gets to decide how the content it spends millions of dollars to produce is exploited. But with that great content increasingly comes a great responsibility (many would say a great burden) to work with the various blogs and aggregators and user-generated communities to police infringement, rather than stifling sites like YouTube that consumers clearly have embraced.

“Studios have a tremendous tool in the Digital Millennium Copyright Act that allows them to send a notice and get the relief they desire,” said Kurt Opsahl of the Electronic Frontier Foundation, a digital-rights advocacy group that backed Google in the case. “Whether you are Viacom or a small rights-holder, that tool remains available.”

Several Hollywood studios filed briefs in support of Viacom in the massive litigation, initially filed in New York in 2007. It's no surprise that Viacom general counsel Michael Fricklas (left) today called the decision a disappointment and vowed to appeal.

“YouTube and Google stole hundreds of thousands of video clips from artists and content creators, including Viacom, building a substantial business that was sold for billions of dollars,” Fricklas said in a statement. “We believe that should not be allowed by law or common sense.”

Google’s win probably won't change the way studios interact with YouTube, which has implemented effective takedown procedures and a content-filtering system since grabbing the zeitgeist in 2006 thanks in part to viral videos like “Lazy Sunday” from NBC’s “Saturday Night Live” and clips from Viacom’s “The Daily Show.”

Evidence submitted by Viacom in the litigation showed that early on, top YouTube executives knew that infringing content was available on the site and led to spikes in traffic (YouTube co-founder Steve Chen on copyrighted content: "Steal it!...[W]e need to attract traffic....[T]he only reason our traffic surged was due to a video of this type."). But YouTube now is among the more responsible players when it comes to online video, striking licensing deals with content owners and responding aggressively to notices of infringement.

Still, the court’s ruling could leave the impression that building a web video service in part on the back of copyrighted content is legal as long as you eventually clean up your act. That likely will be an issue addressed in Viacom’s appeal.

Eric Goldman, director of the High Tech Law Institute at Santa Clara University School of Law, said the impact of the case on Hollywood could be felt if user-generated websites refuse to deploy filtering technologies or otherwise go beyond what the DMCA mandates.

“A lot of content owners want service providers to do more than the law requires,” Goldman said. “This opinion rejects those requests.”  

To that end, the ruling also could renew Hollywood calls to reform copyright law at its source. 

“Congress might decide to get involved here,” Opsahl said. “And I would not be surprised if the new IP czar weighed in on the issue.”

Fricklas, who has spearheaded the costly YouTube litigation, sounded an upbeat note despite the defeat.

“We always knew that the critical underlying issue would need to be addressed by courts at the appellate levels,” he wrote. “Today’s decision accelerates our opportunity to do so.”