Viacom’s YouTube Suit Back in Play

Court Says Jury Could Find Video Site Knew About Infringement

Viacom’s five-year-old, billion-dollar lawsuit against YouTube has been given new life by a federal appeals court — in a ruling that could change how Internet sites must comply with digital copyright law.

The 2nd U.S. Circuit Court of Appeals last week said a “reasonable jury” could find that Google’s video-sharing site knew certain pirated content was being illegally shared by users, overturning a lower court that had granted YouTube blanket immunity under the Digital Millennium Copyright Act.

The 2nd Circuit said it was clarifying “the contours” of the DMCA, a 1998 law which exempts online service providers from liability if they remove unauthorized content after being notified by a copyright holder.

The court affirmed that sites like YouTube are protected under the DMCA if they do not have “actual knowledge” of infringing material. However, “we are persuaded that the plaintiffs may have raised a material issue of fact regarding YouTube’s knowledge or awareness of specific instances of infringement,” Circuit Judge José Cabranes wrote in the decision, citing email messages from YouTube executives in the case.

The 2nd Circuit’s interpretation that DMCA protections are void if a website has a general subjective belief — as opposed to the higher standard of objective knowledge — infringement is occurring could provide “a new way to attack YouTube and others on this part of the statute,” Hillel Parness, an intellectual property attorney with Robins, Kaplan, Miller & Ciresi in New York, said. Parness is not affiliated with the Viacom- YouTube dispute.

The appeals court also said the U.S. District Court for the Southern District of New York, in granting YouTube summary judgment protection under the DMCA in June 2010, should have considered “willful blindness.” The DMCA doesn’t mention willful blindness, which in this context would refer to deliberately ignoring evidence of specific infringing activity, but the 2nd Circuit said the standard should apply.

YouTube and the other Internet sites relying on the DMCA’s notice-and-takedown process “were operating with the comfort they could do whatever they wanted, and just had to wait for the [takedown] notices to come in,” Parness said. “This ruling … could throw a lot of those assumptions into doubt.”

Viacom said, “The court delivered a definitive, common-sense message — intentionally ignoring theft is not protected by the law.”

But YouTube, as well as public-interest groups, emphasized that the 2nd Circuit affirmed the basic principles of the DMCA.

“The Second Circuit has upheld the longstanding interpretation of the DMCA and rejected Viacom’s reading of the law,” YouTube said in a statement. “All that is left of the Viacom lawsuit that began as a wholesale attack on YouTube is a dispute over a tiny percentage of videos long ago removed from YouTube.”

Viacom filed suit against YouTube in 2007, alleging YouTube engaged in massive, deliberate copyright infringement to boost traffic. Other plaintiffs in the case include the Football Association Premier League Ltd. and other copyright holders. All told, YouTube is accused of illegally allowing 79,000 videos on the site between 2005 and 2008.

The case will return to the U.S. District Court in New York for further review of the legal points the appeals court raised about the application of the DMCA. The parties also may settle out of court.

“If you’re thinking about final resolution, there’s no victory here for either side,” Parness said. “Certainly it’s a victory for Viacom and copyright owners, because the case will continue — before, the case was dead.”