Viacom slugs YouTube with $1 billion lawsuit

NEW YORK — Viacom has negotiated with the video-sharing site YouTube for months over what it says is the widespread illegal use of video clips featuring its marquee names, including Jon Stewart, Stephen Colbert and SpongeBob SquarePants.

Now, the media company is taking YouTube to court, claiming in a $1 billion lawsuit filed Tuesday that the wildly popular Web site has been building a business by using digital technology to "willfully infringe copyrights on a huge scale."

The lawsuit could be the first of many salvos from broadcasters and other media companies against YouTube, which was a quirky and fast-growing startup until the deep-pocketed behemoth Google bought the company in November for $1.76 billion.

Or, it could be a negotiating tactic.

Media companies have watched with both fascination and fear as YouTube has mushroomed into a hugely popular online destination, giving everyday users a chance to become amateur broadcasters by uploading video that others can watch.

Viacom and other media owners are far less concerned with the home-movie type of videos than they are with clips from their own shows.

That threatens the viewership and advertising revenues broadcasters want to keep on their regular broadcasting and cable outlets, as well as the novel and legal ways of distributing programs that media companies are experimenting with.

The experiments include selling episodes of "The Daily Show with Jon Stewart" for $1.99 on Apple's iTunes service. They can then be viewed on a computer or an iPod.

YouTube says it cooperates with all copyright holders and removes programming as soon as it is notified. But Viacom counters that approach lets YouTube avoid taking the initiative to curtail copyright infringement and shifts the burden of monitoring the site onto copyright holders.

Alexander Macgillivray, associate general counsel for products and intellectual property at Google, said YouTube was protected under the Digital Millennium Copyright Act (DMCA), which gives Web hosts protection from copyright lawsuits so long as they comply with requests to remove unauthorized material.

"We're saying that the DMCA protects what we're doing," Macgillivray said of the 1998 law. On the other hand, he said, "The DMCA is silent on what we have to do if we don't get a notice" to remove material.

In February, Viacom asked YouTube to remove more than 100,000 videos from the site. In Tuesday's lawsuit filed in a New York federal court, Viacom said it has now "identified more than 150,000 unauthorized clips of their copyrighted programming on YouTube that had been viewed an astounding 1.5 billion times."

A quick search of YouTube's site Tuesday turned up numerous clips from Viacom programs, including segments from Comedy Central's "The Daily Show" and Nickelodeon's "SpongeBob SquarePants" cartoon.

Among major media companies, Viacom is especially at risk because many of its shows are aimed at younger viewers, who are heavy Internet users.

Other media companies have clashed with YouTube, but some, including CBS, have agreed to provide some clips to the site.

Universal Music Group had threatened to sue YouTube, saying it was a hub for pirated music videos, but later reached a licensing deal.

Despite those arrangements, media's relations with YouTube remain testy.

CBS Chief Executive Leslie Moonves told investors last week that its pact with YouTube had provided a big promotional boost for its shows. But he added that many big technology players "don't quite respect the content enough," although that was changing.

NBC has set up a channel to show authorized clips on YouTube, but it recently criticized the site and Google for not doing more to prevent copyright material from being posted online.

While YouTube has yet to generate much revenue, its online traffic has been growing rapidly. According to comScore Media Metrix, YouTube had 133.5 million visitors worldwide in January, up from 9.5 million a year earlier.

Bruce Sunstein, co-founder of intellectual-property law firm Bromberg & Sunstein in Boston, said YouTube was still in the early stages of what was likely to be a "very long working-out of arrangements" with the owners of broadcast copyrights.

"Finding a way of peaceful coexistence is quite a struggle," Sunstein said. "Google's motto is 'Don't be evil,' and you could argue that with YouTube that motto is wearing a little thin."

Viacom spokesman Carl Folta could point to no specific tipping point that precipitated the lawsuit. After months of inconclusive talks, he said, Viacom officials concluded their counterparts at YouTube "just didn't see a reason to act as long as they were making money on our material."

Despite the lengthy negotiations, YouTube never seemed to be closer to instituting an effective system to filter out copyright material or adopt other measures to protect Viacom's rights, Folta said.

"They kept saying, 'It's difficult,' " Folta said. "Well, if it's difficult, hire people. If it's difficult, shut your site down until you get it right."

He said others, including Microsoft and MySpace, took steps to "to show respect for our copyrights."

Sunstein said he expected YouTube and its corporate owners to eventually make peace with broadcasters, unlike the original Napster file-sharing service, which was shut after music companies complained it encouraged piracy.

That doesn't mean other lawsuits won't follow, however. Now that Viacom has thrown the first punch, additional media companies may join the fray, Standard & Poor's analyst Scott Kessler warned in a research note.

A major lawsuit against YouTube had been anticipated because so much of the online video pioneer's success has been driven by easy access to copyright clips shared by users.

American Technology Research analyst Rob Sanderson believes Viacom filed the lawsuit to pressure Google into setting clear ground rules and fees for the usage of copyrighted content.

"This is all about a media company trying to protect its future," Sanderson said. "It's not about them trying to get damages for the past sins of YouTube."

Associated Press reporter Michael Liedtke in San Francisco contributed to this report. Viacom spokesman comments provided by Los Angeles Times. Viacom's count of unauthorized clips provided by Chicago Tribune.