(Please listen to Pink Floyd’s ”Money” in the background as you read this post.)

First, let’s focus on the number one billion. That is 1,000,000,000. To YouTube, this is a very special number. It is the number of views YouTube’s website receives every single day. Another reason the number one billion makes YouTube happy is that it also represents its expected revenue in 2010! But there is one thing that the number one billion represents that YouTube isn’t so happy about. Viacom is currently suing the Internet video giant for one billion dollars in damages!

The suit was initiated by Viacom in March 2007, stating that YouTube infringes upon copyrighted works by hosting videos posted by its users. Interestingly, though YouTube has been around since February 2005, Viacom didn’t initiate the lawsuit until a few months after Google purchased the Internet start-up (see Deep Pockets). Even with the enormous amount of copyrighted material that can be found, searched, and indexed on YouTube, most industry insiders believe that Google is shielded from liability by an important provision of the Digital Millennium Copyright Act of 1998 (DMCA).

Section 512(c) of the DMCA “removes liability for copyright infringement from websites that allow users to post content, as long as the site has a mechanism in place whereby the copyright owner can request the removal of infringing content.” Additionally, the site must not receive “a financial benefit directly attributable to the infringing activity.”

YouTube (Google) was thought by many to fit within these terms. The site generates revenue from advertising from activities other than your bootleg music video of “Party in the USA,” and profits made from such advertising are arguably not a “direct” benefit from the copyright infringement because the advertising is placed indiscriminately on all pages, regardless of content. Furthermore, YouTube’s operations seem to fall squarely into the category of a mindless hard drive that allows users to post copyrighted material, and then deletes the material if there is a complaint, right?

Maybe.

Documents that were just released reveal that during the acquisition, Google recognized that the site was “completely sustained by pirated content.” The internal memo also stated that Google should adopt a “play first, deal later” system in which it would intentionally allow copyright infringement (presumably to boost the number of page views and, in turn, advertising revenue) and then deal with the consequences later.

If these documents accurately implicate YouTube (and Google) as an enabler of copyright infringement, Section 512 of the DMCA may not protect them. Although I have my doubts about whether Viacom actually wants to take this suit to trial (they would probably rather settle and perhaps get a piece of the YouTube action), this lawsuit is shaping up to be the next big case in a long series of Internet copyright infringement battles. If this case does go to trial, the copyright textbook editors will have to send out supplements to their recently published editions to include Google’s battle with Viacom right after the discussion of Grokster.

Chris Lantz

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