Appeals court reinstates Viacom lawsuit against Google's YouTube

Dozens of content providers filed so-called friend-of-the-court briefs supporting the plaintiffs, including the Associated Press, Gannett Co, the National Football League, and the musical acts Garth Brooks, Sting and the Eagles.

Google and YouTube also attracted dozens of supporters in court papers, including eBay Inc, Facebook Inc, Yahoo Inc, Human Rights Watch and Consumers Union.

New York-based Viacom is controlled by Sumner Redstone and owns cable networks such as MTV and Comedy Central as well as the Paramount movie studio.

Google is based in Mountain View, California, and bought YouTube in November 2006 for about $1.65 billion.

Viacom and Google are not always adversaries. On Wednesday, YouTube announced a partnership to offer online rentals of nearly 500 Paramount films, such as "The Godfather."

"WHAT? SOMEONE FROM CNN SEES IT?"

The 2nd Circuit agreed with Stanton that "actual knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement" should keep YouTube from invoking "safe harbor" provisions of the copyright law.

But the appeals court said it was unclear whether YouTube had "red flag awareness" of specific infringement. It said the lower court should consider whether YouTube showed "willful blindness" in letting copyrighted videos remain on its website.

The 2nd Circuit quoted an e-mail exchange on Aug. 9, 2005, six months after YouTube's founding, in which co-founder Chad Hurley urged diligence about removing copyrighted content, but met resistance to taking down a CNN clip of a space shuttle.

"I really don't see what will happen. What? Someone from CNN sees it?" co-founder Steve Chen responded.

"The CNN space shuttle clip, I like," co-founder Jawed Karim added. "We can remove it once we're bigger and better known."

HAIR-TRIGGER

Goldman said the decision could add to the costs of online service providers, even small ones, to keep websites running.

"It is not easy for a well-meaning company to establish it is protected under the safe harbor part of the copyright law, even if its service adds significant social value," he said.

"Even start-up companies will need sophisticated legal counsel from day one," Goldman continued. "It will make start-ups more hair-trigger on taking down news or content, for fear that failure to do so will be held against them by content providers."

The 2nd Circuit normally hears cases in three-judge panels. The third judge on the YouTube case died while the case was pending.

In afternoon trading on the Nasdaq, Google shares fell $2.86 to $632.29, while Viacom rose 81 cents to $47.21.

The cases are Viacom International Inc et al v. YouTube Inc et al, 2nd U.S. Circuit Court of Appeals, No. 10-3270; and The Football Association Premier League Ltd et al v. YouTube Inc in the same court, No. 10-3342.

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