Court sides with YouTube for second time in major Viacom copyright case

A New York court has again rejected claims that YouTube(s goog) should be held accountable for unauthorized videos that appeared on the site during its early years of operation.

In the latest twist in a long and closely-watched copyright case brought by Viacom, U.S. District Judge Louis Stanton granted summary judgment to YouTube after finding executives at the video site did not have “red flag” knowledge that made them liable for content uploaded by users.

The ruling comes one year after the Second Court of Appeals reversed Stanton’s earlier decision in 2012 to dismiss the case, and ordered the judge to revisit his ruling in light of emails that suggested the YouTube founders had knowledge of copyright infringement. In his new decision, issued on Thursday Stanton rejected Viacom’s legal theory as “extravagant” and stated that “its foundation is an anachronistic […] concept.”

On its surface, the case turned on whether YouTube had to pay damages to Viacom for thousands of unauthorized clips of shows like South Park and Seinfeld that appeared on the site. But on a deeper level, the case is significant because it is helping to determine what digital technology companies must do to protect copyright.

Under a law known as the DMCA, online services like YouTube are not responsible for the copyright infringement of their users. The law, which was crafted to ensure that new digital platforms didn’t get smothered by copyright claims, grants “safe harbors” to sites provided they provide a way for owners to take down their content, and so long as the site is not complicit in users’ copyright violations.

Viacom and the entertainment industry, which believes that YouTube have unfairly profited from copyrighted content, had hoped to shrink the scope of the “safe harbors” by drawing attention to the DMCA’s so-called “red flag” provision — a part of the law that means a site is liable if those controlling it are willfully blind to copyright violations.

In deciding to reinstate the case, the appeals court agreed that YouTube was not responsible for most of the clips for which Viacom was claiming over $1 billion dollars. However, it said the potentially incriminating emails required the lower court to examine if YouTube knew or should have known about specific pieces of infringing content.

In the new decision Stanton said Viacom, in its legal arguments, had conceded that it was unable to identify specific examples of specific copyright clips of which the YouTube founders should have been aware. He added that Viacom had tried to solve the situation by claiming that it was YouTube’s responsibility to show they did not know, but that this was a misinterpretation of the law.

Viacom is entitled to appeal Stanton’s decision a second time but its safe harbors argument may be running out of steam. In a similar case involving defunct video service, Veoh, a California appeals court emphatically concluded that the safe harbors applied.