Viacom’s $1 billion lawsuit against Google over copyright infringement on YouTube is coming to a head, with a court battle likely to ensue sometime this year. For now, the accusations made by both sides have been released. And they pull no punches whatsoever.

Viacom Vs Google can be traced right back to May 2005 before YouTube was under the protective wing of Google. A clip from Paramount Pictures’ Twin Towers was uploaded to the site, and Viacom demanded to know who the uploader was.

In October 2006 YouTube made a deal with Viacom to syndicate content. Then Google bought YouTube for $1.65 billion. February 2007 saw Viacom retract the previous deal and pull everything off the site.

March 2007 saw Viacom sue Google for 63,000 counts of copyright infringement, for which it was seeking $1 billion in damages. Google argues that YouTube is protected under the Safe Harbor provision of the Digital Millennium Copyright Act.

BetaNews has the full timeline with many more twists and turns. But it all builds to this point when Google and Viacom’s documents pertaining to the court case have been released. And they make for interesting reading, to say the least.

Google claims that Viacom wanted it both ways, continuously uploading its content to YouTube while publicly rallying against it. Google claims Viacom uploaded roughed up versions of videos so they looked stolen, hiring marketing agencies to do the dirty work.

Google claims that Viacom even uploaded many of the clips which it is now suing over. And maintains that it is protected by the Digital Millennium Copyright Act as it removes videos suspected of infringing copyrights.

Google also makes the claim that Viacom was interested in acquiring YouTube at one point.

Viacom dismisses the DMCA defense as it insists YouTube is more than just a passive content host and is therefore responsible for what videos were being uploaded to the site.

What’s more, Viacom also accuses YouTube’s founders of at the very least turning a blind eye to copyright infringing clips, suggesting that traffic was sought by any means necessary in order to ensure a quick sale. Viacom also claims Jawed Karim (YouTube co-founder) himself uploaded infringing videos, using email correspondence between the founders as evidence.

In essence, Viacom argues that YouTube was “intentionally built on infringement,” and deserves no leniency in court despite the measures put in place to clean up the site since the lawsuit was issued.

The documents feel very much like each side is attempting to score points from the other. And it’s almost inevitable that the case will now end up in court.

The sides have until April 30 to file opposing arguments to each other’s motions, with a trial then set to take place later this year. And it’ll be a trial whose verdict could set a landmark in terms of copyright owners vs. online video sites.

Let’s say it’s 2005 and online video is in its infancy. If you’re a Chad Hurley, Steve Chen and Jawed Karim, how much would it cost to start up and run a video sharing site with the hopes of flipping it for more than $1.6 billion? As of this week we know, thanks to confidential Profit and loss information released as part of filings that have been made public in the copyright infringement case between Viacom and YouTube.

Based on those filings, we were able to put together some numbers about how much it cost to run YouTube leading up to the Google acquisition. During the first 18 months of YouTube’s operations, from February 2005 when the domain was first purchased through August 2006 when it was desperately seeking acquirers, the fledgling video company spent more than $11.5 million to grow its user base big enough to become attractive to Google.

Most of that money — about $8 million or so — went to paying for infrastructure needed to run the site, with a vast majority of that money going toward the site’s web hosting costs. In the three months from June 2006 through August 2006, the company was spending about $1 million each month on hosting costs alone, and that wasn’t even taking into account data center costs that YouTube was also paying for or ad serving costs as the firm began selling its own advertising.

In addition to web infrastructure costs, YouTube had other operating expenses and personnel costs to contend with. In the first 18 months of its existence, YouTube spent about $3.6 million on employee compensation, travel, facilities, costs and the like. By November 2005, its regular operating expenses were about even with infrastructure costs — at a little more than $130,000 per month, but not long after that, the company’s web hosting bills really started to take off as the video sharing site gained traction.

It wasn’t until December 2005 that YouTube started clocking revenue — a meager $15,000 during that month — and by that point, the company had spent more than $400,000 on operating and infrastructure expenses. But costs began to increase rapidly after that, and topped out at about $2.6 million during August 2006 — just two months before Google’s purchase of the company was made public.

YouTube was never profitable before the Google acquisition — in fact, it pulled in just $5 million in revenues during its first 18 months — but it came close in August 2006, which might have been one reason that Google had an interest in the firm. That month, it posted revenues of $2.5 million. The site did post a gross profit of more than $575,000 during the month if you don’t take into account its monthly operating expenses. Otherwise, with total opex of about $2.6 million, the site fell about $100,000 shy of hitting profitability.

The site raised about $11.5 million in two rounds of financing before being bought by Google in a deal valued in excess of $1.65 billion in October 2006 — which wasn’t a bad return on investment for YouTube’s investors or founders. Famously, though, YouTube has yet to reach profitability, in part because Google had remained committed to growing its user base after its acquisition.

As reported in Viacom’s filings, Google CEO Eric Schmidt mandated for the company to focus on aggressively growing the site, aiming “to grow playbacks to 1b/day [one billion per day].” That mandate remained in place until early 2008, when Schmidt decided the site should shift its focus to monetization of its video assets. Since then, the company has been increasingly focused on bringing more premium content to the site and increasing the number of videos it can place ads against. That focus means that the online video site might finally become profitable this year, according to some analyst projections.

Related content on GigaOM Pro:

Will Automated Rights Management Take Down Fair Use? (subscription required)

By Scott M. Fulton, III, Betanews

The key issue at the heart of Viacom's case against Google and YouTube, filed in March 2007, concerns whether an Internet service that probably knows that files are traded or shown illicitly or without license there, deserves the "safe harbor" provisions of the Digital Millennium Copyright Act that protect ISPs from liability for their customers' actions. In a summary judgment motion filed yesterday with US District Court in New York and unsealed this morning, Viacom is bidding to have the judge wrap up the case -- an obvious signal that it believes its case is already strong enough.

As US law stands now, a service such as Grokster or the original Napster (not the Best Buy division that today uses that name) is liable when it intentionally establishes its service for the express purpose of trading in illicit files. It's especially liable when it finds some way to advertise itself for that purpose. An Internet Service Provider such as Comcast or Cox is not liable when its service is used for accessing one of these sites, when it doesn't advertise or offer these services explicitly, and when a customer can access them without direct intervention from the ISP. And a video site such as Veoh is not liable when any measure it might take to stop customers from sharing illicit files may also conceivably infringe upon the free speech rights of other customers who may not be trading such files.

Google, the current owner of YouTube, has been arguing the Veoh case in its own defense. But Viacom's argument -- which courts have been wrestling with for over two-and-a-half years and which we now know today -- is that YouTube is a different, special case. It's more like Grokster, it argues, in that it was founded on the principle of gathering an audience around illicit files.

"Defendants are liable under Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., because they operated YouTube with the unlawful objective of profiting from (to use their phrase) 'truckloads' of infringing videos that flooded the site," reads the opening passage of YouTube's founders single-mindedly focused on geometrically increasing the number of YouTube users to maximize its commercial value. They recognized they could achieve that goal only if they cast a blind eye to and did not block the huge number of unauthorized copyrighted works posted on the site. The founders' deliberate decision to build a business based on piracy enabled them to sell their start-up business to Google after 16 months for $1.8 billion. The Supreme Court in Grokster found no legal or societal justification for such intentional copyright infringement."

FOR MORE:

• Viacom and YouTube: Timeline of pertinent events by Tim Conneally

In a talking points document released today (PDF available here), Viacom cites various e-mails from various YouTube and Google executives, including YouTube founders Chad Hurley (CEO) and Steve Chen (CTO). Assuming these excerpts were not taken out of context, which is possible, they indicate that YouTube's founders were clearly building up a high-audience business with illicit files at their core, with the intention of selling out to somebody as soon as possible.

One excerpt has Chen suggesting that YouTube, apparently during its startup phase, "...concentrate all our efforts in building up our numbers as aggressively as we can through whatever tactics, however evil." Another suggestion, by an unnamed YouTube exec in response to an non-excerpted suggestion -- apparently asking, where should be get all this content -- reads, "Steal it! . . . We have to keep in mind that we need to attract traffic. How much traffic will we get from personal videos?"

And one excerpt attributed to Chen suggests that the whole legal process of handling DMCA takedown notices is so long and dragged on, that by the time YouTube should ever comply with one, it would be too late anyway: "But we should just keep that stuff on the site. I really don't see what will happen. What? Someone from CNN sees it? He happens to be someone with power? He happens to want to take it down right away. He get in touch with cnn legal. 2 weeks later, we get a cease & desist letter. We take the video down."

Viacom's argument that Google knows what kind of trafficking goes on via YouTube is substantiated by evidence in the form of e-mails, evidently sent prior to its acquisition of YouTube, from executives objecting to elements of what they perceived to be its business model. One message from Google's then-VP of Content Partnerships David Eun (now with AOL) to CEO Eric Schmidt cautioned, "I think we should beat YouTube . . . but not at all costs. [They are] a video Grokster." And in another excerpt, an unnamed Google executive asks, "Is changing policy [to] profit from illegal downloads how we want to conduct business? Is this Googley?"

Evidence cited in Viacom's motion for summary judgment tells the story of how Google Video failed to be competitive against YouTube, even though its engineers persisted with efforts to filter out illicit content. One memo cited says Google Video may have been throwing out 90% of its uploads, for containing suspected copyrighted material or for being generally indecent.

"But Google's good intentions and compliance with the law were not paying off," Viacom argues. "YouTube was way ahead of Google Video in the race to build up a user base. Google executives understood that YouTube's success was largely due to what they euphemistically labeled its 'liberal copyright policy' of freely allowing infringing material. Losing the user race to YouTube because of the latter's copyright infringement, Google Video executives engaged in a 'heated debate' in 2006 'about whether we should relax enforcement of our copyright policies in an effort to stimulate traffic growth.' A top senior executive, Peter Chane, Google Video's Business Product Manager, argued point blank that Google Video should 'beat YouTube' by 'calling quits on our copyright compliance standards.' Chane specifically advocated switching Google Video to YouTube's 'reactive DMCA only' policy because 'YouTube gets content when it's hot ([Saturday Night Live's] Lazy Sunday, Stephen Colbert, Lakers wins at the buzzer)' and it '[takes us too long to acquire content directly from the [legitimate] rights holder.'"

It is that statement which Viacom appears to present as a smoking gun: a suggestion from a Google Video executive that it should acquire its competitor solely because its allegedly illegitimate business model is more successful than its own, legally compliant one.

In Google's memorandum in support of summary judgment in its favor, filed after Viacom, its attorneys do not take the tack or rebutting Viacom's scorching citations -- which, if substantiated, could theoretically become the basis for future criminal complaints. Instead, Google reiterates the argument that it's a service provider which, like Veoh, is entitled to safe harbor since it looks the other way, and does not actively seek infringing uploads.

Citing the Veoh finding, Google's attorneys argue, "What matters is that Veoh 'established a system whereby software automatically processes user-submitted content and recasts it in a format that is readily accessible to its users...Inasmuch as this is a means of facilitating user access to material on its Web site,' Veoh did not lose the safe harbor 'through the automated creation of these files.' YouTube is indistinguishable from Veoh in these respects."

YouTube, Google argues, did not have direct knowledge of the circumstances whereby the specific content Viacom claimed was infringed upon (much of it from Paramount) was shared with YouTube users. Since Viacom's arguments must, at some point, focus themselves upon the specific infringing of the content in question, the DMCA protects YouTube on that count as well, Google continues. But all that may be moot, Google points on, by virtue of the fact that under current US law, the alleged infringers must have directly profited from their actions. YouTube gains revenue through advertising.

Writes Google, "A service provider loses safe harbor eligibility only if the plaintiff can show both that the service provider had the right and ability to control the alleged infringements and received a financial benefit directly attributable to those infringements...As with knowledge, the DMCA's control inquiry is specific, not general. The analysis focuses on the service provider's legal and practical control over the particular infringing activity at issue. The statute's text makes that clear: The question is whether the service provider has the right and ability to control "the infringing activity" alleged by the plaintiff and to which a financial benefit is directly attributable."

A number of declarations in support of both motions were filed today. One supporting Google was particularly interesting, because it goes to specifically that last paragraph: It's from the owner of a marketing firm who promoted the works of recording artists who appear on MTV, a Viacom property. He claimed that some of the very works Viacom claimed were infringed upon through unauthorized uploading to YouTube, actually were authorized by none other than MTV itself, as part of the promotion of the artists under his contract.

If Google's interpretation of the law is affirmed, and if this gentleman's claims are proven, then this whole case could become history faster than a judge can even say "summary judgment."

Five years ago, when most BitTorrent sites had only a handful of visitors, ShareConnector was serving eDonkey links to millions of file-sharers every month. This popularity didn’t go unnoticed by the local authorities, who were tipped off by BREIN and started a criminal investigation into the operator of the site, as well as the people behind the site Releases4U.

What followed was more than 5 years of legal battles in both civil and criminal court cases. In the criminal case the operator of ShareConnector came out as the winner in 2007 and was released from all charges.

The court ruled that the authorities failed to provide any evidence to prove ShareConnector was involved in copyright infringement nor enough to prove that it was criminal in nature. In addition, the judge ruled that the initial arrests were unlawful as the evidence provided by BREIN was insufficient.

After this decision ShareConnector came back online. However, this comeback was short lived as local anti-piracy outfit BREIN initiated a civil lawsuit, trying to prevent the operator from keeping the site up and running. This lawsuit was won by BREIN but the ShareConnector operator decided to appeal the ruling.

This week a court announced the verdict of the appeal and it came out negative once again. Although the court ruled that the operator of ShareConnector wasn’t guilty of copyright infringement, it said the site must remain closed for good. The judge ruled that sites that offer hash links (like .torrent links) are facilitating copyright infringement, an unlawful behavior.

The outcome of the case is disappointing to aDI, the operator of the site, who further said that it didn’t surprise him. He had hoped, however, that the ruling in the appeal would be in line with recent cases in Spain where P2P indexing sites were deemed legal.

“The results are just what I expected, so nothing surprising here considering all the similar recent cases with just about the same conclusion we see here. The trend has been set by those ignorant old judges that fail to see the logic, contradicting the rulings from Spain,” said aDi in a response to the verdict.

“Unfortunately this is not Spain, the Dutch legal system is dysfunctional, lacking logic and professionalism. Why does it take more than five years and so many criminal trials to prove a simple fact? How come all the pathetic private organizations whose main interest is money and not the artists, get away with lies and deceptions spreading their propaganda in the media?,” he added.

What remains for the ShareConnector operator is the appeal of the criminal case that will be heard in April. In 2007 he was released from all charges, but after two years the Department of Justice filed the appeal. The charges in this case are membership of a criminal organization and (assisting in) the distribution of copyrighted material. The additional charges of copyright infringement were dropped last week.

In the upcoming trial Dr. Johan Pouwelse will appear as an expert witness on behalf of the defendant. Since downloading copyrighted films and music is not illegal in The Netherlands, he is expected to testify that there are various ways for eDonkey users to disable the upload feature. Whatever the outcome of the criminal trial, ShareConnector will never return.

Article from: TorrentFreak, check out our new blog at FreakBits.

Hollywood (the movie studios, the record labels, etc.) sure does have a knack for causing its own problems. You’ll recall that it’s en vogue to call copyright infringers “pirates,” which is an insult to legitimate pirates like William Kidd and Henry Morgan. Just because you can fire up uTorrent doesn’t mean you can take on a Spanish Armada. But, whatever, it’s simply easier for Hollywood and its acolytes to call you kids “pirates” than it is to have an adult discussion about the subject.

The word is nothing but trouble. Using it is akin to calling someone “Hitler” or a “Nazi” in a debate: it’s basically an intellectual shortcut to a ready-made conclusion. Those guys? Bad. Us? We’re good.

Or in fancier verbiage:

To say that X is a pirate is a metaphoric heuristic, intended to persuade a policymaker that the in-depth analysis can be skipped and the desired result immediately attained… Claims of piracy are rhetorical nonsense.

Said by “noted copyright scholar” William Patry.

Now, had Hollywood, when the likes of Napster and Kazaa first came out, taken the time to explain the difference between wholesale theft and copyright infringement, rather than rushing to sue everybody, throwing around meaningless terms like “piracy” and “stealing,” well, this is the consequence.

Show me one 16-year-old who has a problem with downloading Lady Whatshername and I’ll finish this stupid sentence.

By Tim Conneally, Betanews

This week, documents from Viacom's billion dollar lawsuit against YouTube for copyright infringement were published, and the three-year-long-and-counting lawsuit has again been brought to the public's attention. In case you haven't been following the case, here's a quick timeline of the major events that led up to the lawsuit, and those that occurred since the original complaint was filed:

May 24, 2005- Viacom subpoenas YouTube for information about a user who uploaded clips from Paramount Pictures' "Twin Towers."

June 2005- Viacom's board of directors approves a plan to spin off assets, which become known as the new Viacom, Inc. That new company is given control of Paramount, while the core company reforms as CBS Corp.

January 2006- 20th Century Fox sues YouTube to have content from Fox TV shows such as The Simpsons and 24 removed from YouTube.

June 2006- YouTube and NBC partner to create NBC channel on YouTube for Internet exclusives, clips, and trailers.

July 2006- Viacom and NBC Universal back journalist Robert Tur in his suit against YouTube for illegally posting his videos of the 1992 L.A. riots. The legal brief said, "YouTube incorrectly contends that the DMCA permits it to avoid any responsibility for the content on its commercial website and completely shift the burden to content owners to discover and notify it of infringements."

September 2006- YouTube signs content deal with Warner to host the company's music videos.

October 9, 2006- CBS and YouTube announce a strategic content and advertising partnership.

October 2006- Viacom and YouTube reach a content syndication agreement.

October 20, 2006- Google Buys YouTube for $1.65 Billion.

December 2006- Viacom reportedly walks away from negotiations with NBC Universal, CBS Corp., and Fox Interactive about creating a TV-centric YouTube competitor site.

February 2007- Viacom retracts its content agreement with Google, pulls everything off the site.

February 2007- YouTube's pending content deal with CBS halts.

March 2007- Viacom Sues Google for over 63,000 separate counts of copyright infringement seeking $1 billion in damages. YouTube protects itself with the "Safe Harbor" provision of the Digital Millennium Copyright Act.

March 2007- Viacom General Counsel Michael Fricklas in a Washington Post op-ed says that YouTube was not just a passive content host, and that it is fully aware of what it does. "If the public knows what's there, then YouTube's management surely does. YouTube's own terms of use give it clear rights, notably the right to take anything down."

May 2007- Google signs YouTube content deal with record label EMI.

May 2007- British Premier League files class action suit against YouTube for copyright infringement, says Google "knowingly misappropriated and exploited this valuable property," when it allowed users to post footage from its football games.

June 2007- YouTube introduces Content ID to help content owners identify if their content is being used, gives them the option to remove unauthorized content, or monetize it.

July 2007- Google CEO Eric Schmidt says Viacom was "built from lawsuits."

August 2007- Google asks Comedy Central personalities Jon Stewart and Stephen Colbert to testify against Viacom in copyright hearings. Comedy Central is a Viacom property.

October 2007- Viacom joins MySpace, Microsoft, Veoh, and Dailymotion in signing the "Copyright Principles for User Generated Content Services," hoping it will become a sort of "television code" of online copyright protection.

March 2008- Viacom President and CEO Phillippe Dauman says "We've already achieved a number of things with this lawsuit. It took a long time, but because of our actions, YouTube has moved in the right direction. They're where they should have been all along."

May 2008- Google claims Viacom's suit threatens the way hundreds of millions of people legitimately exchange information, news, entertainment and political and artistic expression," claims it could have a chilling effect on all Internet communications.

June 2008- New York District Court rules that Google has to turn over user IDs and IP addresses to Viacom. Angry users upload nearly 5,000 "Viacom Sucks" videos to YouTube. Google is later allowed to make this data anonymous.

July 2008- Movie studio Lionsgate partners with YouTube for a branded channel with ad-supported official content from the studio.

October 2008- The McCain/Palin presidential campaign asked YouTube to stop taking down campaign videos that incorporated clips of news broadcasts. YouTube said that it was doing so at the request of broadcasters who objected to the use of their copyrighted footage.

April 2009- Content owners discus "TV Anywhere" plan to tie Web-based video content into cable subscription fees. Viacom CEO Dauman says, "People are used to paying for video subscriptions," sees it as a good idea.

June 2009- "TV Everywhere" network scheme launches.

July 2009- Some claims from the Premier League's 2007 suit against YouTube are dismissed, but claims for "statutory damages for works not registered in the US" are allowed.

September 2009- Google gives individual copyright holders access to the Insight metrics of YouTube videos that contain their intellectual property according to Content ID.

October 2009- Viacom presents "smoking gun" evidence for its case: internal e-mails from YouTube staff that show "actual knowledge" that copyright infringement was taking place on the video sharing site.

November 2009- Google announces YouTube Direct, a system where media outlets can directly communicate with users and arrange rebroadcasting rights on a one-to-one basis.

March 2010- Some of Viacom's "smoking gun" documents go public, company claims "YouTube was intentionally built on infringement."

Viacom:
Viacom Statement  —  YouTube was intentionally built on infringement and there are countless internal YouTube communications demonstrating that YouTube's founders and its employees intended to profit from that infringement.  By their own admission, the site contained “truckloads” …

Google has accused Viacom of secretly uploading videos to YouTube in an effort to support its copyright infringement claims against Mountain View....

The power of collaboration within unified communications

VirnetX is hoping to scoop up a brace of lawsuit wins against Microsoft, after it filed a second patent infringement claim against the company yesterday....

Offloading malware protection to the cloud

• Supervise the implementation of ACTA
• Consider further "elaboration" or "development" of the agreement
• Address "disputes that may arise regarding the interpretation or application" of ACTA
• Consider any other matter that may affect the operation of this agreement.

• Establish ad hoc or standing committees, working groups, experts groups, or task forces to carry out various activities.
• Seek the advice of non-government persons or groups
• make recommendations regarding the implementation of ACTA,
• provide guidelines for implementing the agreement
• identify and monitor techniques of piracy and counterfeiting
• assist non-parties in assessing the benefits of accession,
• share information on best practices
• support international organizations
• take other such actions as the parties may decide.

With the release of court filings in the three-year old copyright infringement suit between Viacom and YouTube, we’ve seen the video share site argue that it is not liable for infringing videos uploaded to its site, as it claims protection under the safe harbor provision of the Digital Milennium Copyright Act (DMCA).

But in Viacom’s filing for a partial summary judgment, it makes the case that the site’s founders — and later executives of acquirer Google — turned a blind eye to copyrighted material in an effort to drastically grow the site’s user base. And since YouTube’s founders were aware of infringement and chose to do nothing about it, Viacom argues that the company is liable under the Supreme Court’s Grokster decision, which found that a site operating with the intent of infringing should not be protected by the DMCA.

Using internal emails that were passed between YouTube founders Chad Hurley, Steve Chen, and Jawed Karim, Viacom paints the picture of YouTube as a young company whose leaders were willing to grow its user base at any cost. For instance, the filing states that Chen urged his associates in one email to “concentrate all of our efforts in building up our numbers as aggressively as we can through whatever tactics, however evil.” The comment notably contrasts with future purchaser Google’s “don’t be evil” mantra — but more importantly, that attitude set the stage for a number of decisions that the YouTube founders made to grow at the expense of rights holders that it was infringing on.

YouTube didn’t always ignore the sensitive copyright issue. At one point during the summer of 2005, for instance, the site’s founders removed “some of the most obvious infringing video from YouTube to give the impression of copyright compliance,” the Viacom filing claims. However, they also chose to leave a good deal of infringing content up, believing that enabling users to search for less high-profile content was worth the risk. According to the filing, Chen wrote in an email, “That way, the perception is that we are concerned about this type of material and we’re actively monitoring it. [But the] actual removal of this content will be in varying degrees. That way . . . you can find truckloads of . . . copyrighted content . . . [if] you [are] actively searching for it.”

And at one point, YouTube founder Jawed Karim even uploaded infringing content to the site himself, which drew some criticism from Chen. In an email, Chen acknowledged, “We’re going to have a tough time defending the fact that we’re not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it.”

But for the most part, Viacom argues that the founders mainly did nothing about the copyright issue, even though internally they knew it was driving a large portion of their traffic. In an email exchange between the founders, Chen estimated that 80 percent of the site’s traffic was driven by pirated videos, and opposed taking them down proactively because, “if you remove the potential copyright infringements . . . site traffic and virality will drop to maybe 20% of what it is.”

While Viacom tries to make the case that YouTube’s founders knew the extent of the infringement taking place and chose to do nothing about it, it argues that Google was also well aware of the site’s infringement issues at purchase. As part of Google’s due diligence into YouTube, financial advisor Credit Suisse analyzed the site’s content and estimated that more than 60 percent of video views appeared on premium content, but YouTube only had a license for about 10 percent of those videos, according to Viacom.

Furthermore, Viacom claims that Google not only acquired YouTube despite those problems, but it chose initially to take the same approach as YouTube’s founders by ignoring copyright issues. Rather than screen videos prior to putting them on the site, as Google had done with its own video site, Google Video, it allowed YouTube to continue operating without any pre-emptive enforcement policies in place.

All this, Viacom argues, suggests that YouTube and Google should not be protected by the DMCA. Like Grokster, the company argues, “Google and YouTube were not just innocent and unwitting accomplices to infringement perpetrated by YouTube users. Defendants operated YouTube with the unlawful objective of using infringing material to explosively build their user base and become the dominant video website on the Internet.”

• 5,666,293: Downloading operating system software through a broadcast channel
• 5,635,979: Dynamically programmable digital entertainment terminal using downloaded software to control broadband data operations
• 5,608,447: Full service network
• 6,367,078: Electronic program-guide system with sideways-surfing capability
• 7,561,214: Two-dimensional navigation of multiplexed channels in a digital video distribution system
• 6,055,077: Multimedia distribution system using fiber optic lines
• 5,864,415: Fiber optic network with wavelength-division-multiplexed transmission to customer premises
• 6,381,748: Apparatus and methods for network access using a set-top box and television

Court documents in the $1 billion lawsuit between Viacom and YouTube were unsealed today, finally shedding some light on key questions: did Viacom have "smoking gun" evidence that YouTube was deliberately profiting from 62,637 Viacom clips that were watched more than 507 million times on the site? Was Google aware of the copyright infringement problems when it purchased YouTube in 2006? Were YouTube's own founders involved in uploading unauthorized materials?

On all three counts, Viacom says yes—and it offers up a host of e-mails to prove it:

Read the comments on this post

Court documents in the $1 billion lawsuit between Viacom and YouTube were unsealed today, finally shedding some light on key questions: did Viacom have "smoking gun" evidence that YouTube was deliberately profiting from 62,637 Viacom clips that were watched more than 507 million times on the site? Was Google aware of the copyright infringement problems when it purchased YouTube in 2006? Were YouTube's own founders involved in uploading unauthorized materials?

On all three counts, Viacom says yes—and it offers up a host of e-mails to prove it:

Read the comments on this post

With the release of court filings in the three-year old copyright infringement suit between Viacom and YouTube, we’ve seen the video share site argue that it is not liable for infringing videos uploaded to its site, as it claims protection under the safe harbor provision of the Digital Milennium Copyright Act (DMCA).

But in Viacom’s filing for a partial summary judgment, it makes the case that the site’s founders — and later executives of acquirer Google — turned a blind eye to copyrighted material in an effort to drastically grow the site’s user base. And since YouTube’s founders were aware of infringement and chose to do nothing about it, Viacom argues that the company is liable under the Supreme Court’s Grokster decision, which found that a site operating with the intent of infringing should not be protected by the DMCA.

Using internal emails that were passed between YouTube founders Chad Hurley, Steve Chen, and Jawed Karim, Viacom paints the picture of YouTube as a young company whose leaders were willing to grow its user base at any cost. For instance, the filing states that Chen urged his associates in one email to “concentrate all of our efforts in building up our numbers as aggressively as we can through whatever tactics, however evil.” The comment notably contrasts with future purchaser Google’s “don’t be evil” mantra — but more importantly, that attitude set the stage for a number of decisions that the YouTube founders made to grow at the expense of rights holders that it was infringing on.

YouTube didn’t always ignore the sensitive copyright issue. At one point during the summer of 2005, for instance, the site’s founders removed “some of the most obvious infringing video from YouTube to give the impression of copyright compliance,” the Viacom filing claims. However, they also chose to leave a good deal of infringing content up, believing that enabling users to search for less high-profile content was worth the risk. According to the filing, Chen wrote in an email, “That way, the perception is that we are concerned about this type of material and we’re actively monitoring it. [But the] actual removal of this content will be in varying degrees. That way . . . you can find truckloads of . . . copyrighted content . . . [if] you [are] actively searching for it.”

And at one point, YouTube founder Jawed Karim even uploaded infringing content to the site himself, which drew some criticism from Chen. In an email, Chen acknowledged, “We’re going to have a tough time defending the fact that we’re not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it.”

But for the most part, Viacom argues that the founders mainly did nothing about the copyright issue, even though internally they knew it was driving a large portion of their traffic. In an email exchange between the founders, Chen estimated that 80 percent of the site’s traffic was driven by pirated videos, and opposed taking them down proactively because, “if you remove the potential copyright infringements . . . site traffic and virality will drop to maybe 20% of what it is.”

While Viacom tries to make the case that YouTube’s founders knew the extent of the infringement taking place and chose to do nothing about it, it argues that Google was also well aware of the site’s infringement issues at purchase. As part of Google’s due diligence into YouTube, financial advisor Credit Suisse analyzed the site’s content and estimated that more than 60 percent of video views appeared on premium content, but YouTube only had a license for about 10 percent of those videos, according to Viacom.

Furthermore, Viacom claims that Google not only acquired YouTube despite those problems, but it chose initially to take the same approach as YouTube’s founders by ignoring copyright issues. Rather than screen videos prior to putting them on the site, as Google had done with its own video site, Google Video, it allowed YouTube to continue operating without any pre-emptive enforcement policies in place.

All this, Viacom argues, suggests that YouTube and Google should not be protected by the DMCA. Like Grokster, the company argues, “Google and YouTube were not just innocent and unwitting accomplices to infringement perpetrated by YouTube users. Defendants operated YouTube with the unlawful objective of using infringing material to explosively build their user base and become the dominant video website on the Internet.”

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Court filings in the three-year old copyright infringement suit between Viacom and YouTube have finally been made public, which should make some interesting reading and take over the rest of my afternoon. But in the meantime, YouTube Chief Counsel Zahavah Levine has written a pretty damning post on the YouTube blog, condemning Viacom for having its employees pose as normal users to upload promotional content to the video-sharing site.

Asking for a summary judgment in the case, YouTube argues that it should be protected by safe harbor provisions in the Digital Millennium Copyright Act (DMCA), which state that Internet hosts should not be found liable for content that is uploaded to their sites, so long as they respond to takedown notices issued by copyright owners within a reasonable period of time. In the blog post, Levine writes that the DMCA “recognizes that content owners, not service providers like YouTube, are in the best position to know whether a specific video is authorized to be on an Internet hosting service.”

Viacom might believe otherwise, arguing that YouTube should have done a better job of keeping copyrighted material off the site. But Levine argues that even if YouTube were tasked with doing so, Viacom’s actions would have made policing its content impossible. YouTube accuses Viacom of uploading its own content, and doing so in a way that made it difficult for YouTube to distinguish between its employees and common users. If true, the accusation is pretty damning. Levine writes:

The results were so effective, Levin writes, that Viacom couldn’t tell if a piece of content was uploaded by its employees or not, which resulted in Viacom demanding that some clips be taken down — and then later asking for them to be reinstated. “Given Viacom’s own actions,” Levine writes, “there is no way YouTube could ever have known which Viacom content was and was not authorized to be on the site.”

Related content on GigaOM Pro:

Will Automated Rights Management Take Down Fair Use? (subscription required)

UK ISP O2, the “leading provider of mobile phones and broadband” in that country, has condemned the approach to illegal P2P taken by law firm ACS:Law in which it’s been ending thousands of “settlement letters” to suspected file-sharers.

It prefers a “win-win” approach to the problem that involves “encouraging the development of new business models that offer customers the content they want, how they want it, for a fair price.”

Even the British Phonographic Industry (BPI), hardly an advocate of developing new business models to combat illegal file-sharing, has criticized ACS:Law, though it prefers a “three-strikes” graduated response system instead.

ACS:Law announced an initial plan to target some 15,000 alleged illegal file-sharers across the UK last December as part of a “revolutionary business model that “generates revenue for rights holders and effectively decreases copyright infringement in a measurable and sustainable way” unlike what it says are “costly and ineffective” anti-piracy measures used by other companies.

After careful review it later decided to drop a number of those cases, limiting their lawsuits only to those it deemed “viable” or “beneficial to its clients.”

Soon thereafter Which?, the largest consumer body in the UK with over 650,000 members, reported it had received letters from more than 150 people claiming to have been wrongly accused, with even more now choosing to come forward after hearing they’re not alone.

Some of the P2P lawsuits were handed over by Davenport Lyons, the law firm which in many ways pioneered the controversial strategy. It’s worth noting that two of the law firm’s partners at the time, David Gore and Brian Miller, will soon face the Solicitors Disciplinary Tribunal over complaints they engaged in “bullying” and “excessive” conduct while acting on behalf of client copyright holders.

However, ACS:Law seems immune to any criticisms.

“Neither we nor our clients threaten or bully anyone,” said Andrew Crossley of ACS: Law. “We send out letters of claim to account holders of internet connections where those internet connections have been identified as being utilized for illegal file-sharing of our clients’ copyrighted works.”

Crossley emphasized that the real crime is not overzealous lawyers, but rather the fact that his clients are losing money to illegal P2P.

“My clients are losing money because of copyright infringement and they are equally upset that their copyright is being stolen,” he said. .

That may be so, but suing people en masse will never solve the problem. Crossley, apparently unaware of the failed history of the RIAA pursuing a similar approach for almost a decade, even chastises the BPI for not doing the same.

“I think the BPI is letting its members down. I think they are scared of alienating their customers,” he said. “My clients don’t have the same fear. They take the view that the people they target aren’t their customers because they are stealing from them.”

If that’s what his clients truly believe then their sadly mistaken. How many of you have downloaded a movie and then saw it later at the theater? How many of you have downloaded and album and then purchased it to support the band?

Furthermore, potential loses are not theft. One can’t suggest that simply because a person illegally downloaded a piece of content they would have otherwise purchased it.

Stay tuned.

jared@zeropaid.com