Viacom v. YouTube: All Over But the Shouting

With the release last week of both parties’ motions for summary judgment in Viacom’s $1 billion copyright infringement lawsuit against YouTube and Google, it’s evident that the case has become the legal equivalent of the Battle of Stalingrad: a bitter and bloody fight to the death that grows increasingly tangential to the strategic outcome of the war the longer it drags on.

When the Wehrmacht invaded the Soviet Union in 1941, Stalingrad wasn’t even part of the initial battle plan. The German high command wanted to bypass the heavily defended city, deeming its capture an unnecessary diversion from a more critical objective (seizing the Russian oil fields around the Black Sea).

Once committed, however, Hitler refused to cut his losses and move on, even after his army was cut off and surrounded by the Soviets. The main battle lines moved on, sweeping back and forth across hundreds of miles of Russian steppe. But the fighting at Stalingrad dragged on for six more brutal months, through the grim Russian winter, long past the point where the city’s capture held strategic value, while killing an estimated 1 million men on each side (and nearly that many civilians).

Thankfully, no one has yet been killed in the Battle of YouTube. But the longer it drags on the less relevant it grows to the future of online video, both legally and strategically. (For a very different view of the case, see my colleague Bobbie Johnson’s take.)

Many of the legal questions raised by the case, especially those involving the safe harbor provisions of the DMCA, while unsettled when Viacom filed the suit in February 2007, have since been asked and answered in other cases. To note just a few:

  • In March 2007, the Ninth Circuit ruled in Perfect 10 v. CCBill that “[T]he DMCA notification procedures place the burden of policing copyright infringement — identifying the potentially infringing material and adequately documenting infringement — squarely on the owners of the copyright” owner, not on those of the service provider, as Viacom would have it.
  • In August 2008, a federal district court ruled in Io Group v. Veoh, that the automatic and automated transcoding of uploaded videos does not disqualify a service provider from the DMCA safe harbor, again as Viacom would have it, by making them active participants in any infringement because the process still happens at the exclusive direction of the user.
  • In September 2009, a different federal court ruled in UMG v. Veoh that a “general awareness of infringement,” as Viacom seeks to establish of YouTube through its emails, does not confer liability on a service provider.

While it’s possible that the court in Viacom v. Google could reach different conclusions, the odds that Viacom will get a favorable ruling on those points went way down after those decisions were handed down.

On a strategic level, moreover, Viacom is no longer even asking the court to change anything about the way YouTube currently operates:

[W]e do not ask the Court to address potential liability for post-May 2008 infringement in this motion and, if Viacom’s summary judgment motion is granted, do not intend to do so at trial.

Why not? Because May 2008 is when YouTube implemented its Content ID filtering system, mooting most of Viacom’s legal complaints.

So why go on? Presumably, in the hope that establishing YouTube’s liability prior to its implementing the filter will give Viacom leverage to demand that other UGC sites also adopt filters.

In UMG v. Veoh, however, the court made it clear that the DMCA confers no obligation on a service provider “to implement filtering technology at all, let alone technology from the copyright holder’s preferred vendor or on the copyright holder’s desired timeline.” So it could be a long wait for filtering even if Viacom wins.

Lawyers (of which I’m not one) of course may quibble about legal the significance of the various cases cited here. But it’s hard to see how any plausible legal outcome at this point could really advance Viacom’s strategic business interests.

Question of the week

Should Viacom cut its losses and settle, or is there a case for fighting on?
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Paul Sweeting

Principal Concurrent Media Strategies

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3 Comments Subscribers to comment
  1. I find it particularly interesting that Viacom is setting aside all post-filtering activity. I know that’s not what’s at stake in the case, but it’s good to see that there’s now a somewhat happy compromise between content owners and YouTube. That seems like a better precedent than a years-too-late court ruling.

  2. michaelfricklas Tuesday, March 23, 2010

    Paul, I am having a hard time figure out what you are saying. Set aside the specific facts of this case – if you have a UGC site and are filtering but say “I know a lot about copyright infringement on my site, and I have processes to reduce it, but I’m not going to do anything about it UNLESS you agree to a license” – should that be protected? Why is that different from bandits saying unless you pay me I’m going to keep robbing the train? The DMCA says that if you have knowledge, you’re not entitled to the safe harbor. Grokster says that if you have knowledge and intent, the DMCA does not even apply.

    In contrast, in Veoh, Judge Matz found that Veoh didn’t have knowledge. There was no evidence of intentional theft. Veoh filtered for everyone – license or not. In any event, Veoh’s a trial court in a different circuit, so it’s not binding.

    If someone beats you over the head, and you get the police, and then they stop, do you think that’s the end of it? Of course not – there is still the wrongful act and you are entitled to compensation. This case is about compensation now, as well as establishing the point that YT needs to keep on filtering and others do, too.

    It’s also about the point that copyright theft is serious and illegal, and shouldn’t be deployed for commercial profit.

    1. Michael,
      With respect, and with deference to your superior legal credentials, I think your comments actually illustrate the point I was trying to make: this is a costly battle that has become divorced from whatever strategic advantage might have been gained from it, particularly for Viacom.

      The points you raise, regardless of how well-taken, are essentially theological. The important strategic questions, it seems to me, ought to be whether there’s a plausible legal outcome here that is likely to materially improve the leverage that Viacom and other media companies have when negotiating deal points with YouTube and other, future user-generated video distributors, and whether the value of that increased leverage can ultimately justify the cost of achieving it. That’s particularly critical if those costs are reckoned not just in terms of the direct legal costs but also in terms of management’s time and attention and, most of all, of the opportunity cost of not doing something more productive. That’s not, fundamentally, an argument about the value of copyright per se, or its enforceability online under the DMCA. It’s an argument about economic costs and benefits.

      My argument rests on whether the most likely answers to those questions have changed between the time Viacom filed its lawsuit and now. I would submit they have, in major part—though not exclusively—because of how the law has evolved in the meantime. Granted, Veoh is not legally binding on the court in Viacom’s case, but neither is the court likely to ignore it completely. Nor is YouTube likely to be the last user-generated video site Viacom will need to deal with. So even a contrary ruling in your case won’t make Veoh go away. In any event, Veoh along with other cases, would appear to have increased the odds of a less-than optimal legal outcome for Viacom, which, again it seems to me, would change the cost/benefit analysis.

      Ultimately, as your own comments imply, this is an argument about a deal. The fact that YouTube refuses to filter content unless Viacom agrees to a license is simply a deal point (albeit a pretty tough one). It’s possible the court will change the legal framework for the negotiation in such a way as to benefit Viacom. But there’s also a fair chance it won’t. Meanwhile, I would argue, News Corp. and NBC Universal have achieved more in terms of Google’s willingness to deal by launching Hulu in competition with YouTube. The media companies, in my estimation, have more to gain strategically from the fact that Google spent $1.8 billion to acquire YouTube and thus far has been unable to produce a return for its shareholders than from the fact that it may not have adhered strictly to the requirements of the Section 512 safe harbor.

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