YouTube Beats Viacom

A federal judge in New York sided with Google Inc. in a $1 billion copyright lawsuit filed by media company Viacom Inc. over YouTube videos, saying the service promptly removed illegal materials as required under federal law.

Wednesday’s ruling by U.S. District Judge Louis Stanton in the closely watched case further affirmed the protections offered to online service providers under the Digital Millennium Copyright Act. The 1998 law offers immunity when service providers promptly remove illegal materials submitted by users once they are notified of a violation.

That safe harbor had helped persuade Google to buy YouTube for $1.76 billion in 2006, even though some of its own executives had earlier branded the video-sharing service as “a ‘rogue enabler’ of content theft,” according to internal documents unearthed in the case.

Although it’s a major victory for Google and other Internet service providers, Wednesday’s decision won’t end a legal brawl that has already dragged on for more than three years. Viacom vowed to keep the case alive in appeals court, a process likely to last another year or two.

The bitter dispute revolves around Viacom’s allegations that YouTube built itself into the Internet’s most popular video site by milking unlicensed use of copyright-protected clips stolen from Viacom cable channels such as MTV, Comedy Central and Nickelodeon.

YouTube’s whirlwind success led to the Google sale that generated huge windfalls for the video channel’s founders, Chad Hurley, Steve Chen and Jawed Karim.

Citing e-mail exchanges among those founders, Viacom depicted the founders and other YouTube employees as video pirates who were more interested in getting rich quick than adhering to copyright laws.

But Stanton concluded YouTube’s actions outweighed the words of the YouTube founders.

“The judge has blessed the current state of play on the Internet,” said Eric Goldman, a Santa Clara University associate professor who specializes in high-tech law.

In dismissing the lawsuit before a trial, Stanton noted that Viacom had spent several months accumulating about 100,000 videos violating its copyright and then sent a mass takedown notice on Feb. 2, 2007. By the next business day, Stanton said, YouTube had removed virtually all of them.

Stanton said there’s no dispute that “when YouTube was given the (takedown) notices, it removed the material.”

Calling Stanton’s reasoning “fundamentally flawed,” Viacom said it was looking forward to challenging the decision in appeals court.

Kent Walker, Google’s general counsel, said the company is confident Stanton’s decision will hold up. The 30-page ruling is “thoughtful, thorough and well-considered,” Walker said in an interview.

Google maintains that more than just its own money is at stake in the case. If Viacom were to prevail, Google and other Internet service providers argue it would create unreasonable burdens that would stifle free expression on the Web.

Wednesday’s decision “is a victory for a new generation of creators and artists eager to showcase their work online,” Walker said.

Facebook, eBay Inc. and Yahoo Inc. were among the Internet companies that had backed Google in its dispute with Viacom.