Last week came with a bombshell for the tech industry as the United States Court of Appeals for the Second Circuit in New York ruled that the $1 billion lawsuit that Viacom (VIA) filed against Google's (GOOG) YouTube in 2007 had merits. In vacating the initial 2010 ruling of a New York Federal judge, which stated that YouTube was protected from copyright claims by the "Safe Harbor" clause of the Digital Millennium Copyright Act, the Appeals Court stated, “a reasonable jury could conclude that YouTube had knowledge or awareness” of copyright infringement “at least with respect to a handful of specific clips.”
Could Cost Google Big
The lawsuit filed by Viacom in 2007 was seen at the time as a classic David vs. Goliath story. Sort of. Typically, the old guard represents Goliath while the fiesty, spirited newcomer is David. Google and YouTube certainly sold this battle that way.
“This is a victory for the Internet and for the people who use it,” Kent Walker, Google’s general counsel, had said in an interview after the 2010 ruling. “The decision will let a whole new generation of creators and artists share their work online.”
But even in 2007, that perception clearly had some flaws. Now, Google has a market cap over eight times larger than that of Viacom. What's more, the initial inroads into online content carved out by YouTube have led to a revolution that threatens to seriously undercut the profitability of traditional content creators like Viacom.
As such, Viacom's lawsuit still clearly represents a battle between the old guard and the new blood, but one where the new blood is clearly in the stronger position. The $1 billion in damages being sought by Viacom is a massive sum, but one that Google could clearly afford to pay.
Ruling Drags Up Old Argument
The nature of the ruling was up for debate as both sides jockeyed in the press to make their positions clear, with YouTube insisting that the practices in question are ancient history.
“The Second Circuit has upheld the longstanding interpretation of the D.M.C.A. and rejected Viacom’s reading of the law. All that is left of the Viacom lawsuit that began as a wholesale attack on YouTube is a dispute over a tiny percentage of videos long ago removed from YouTube,” the company said in a statement. “Nothing in this decision impacts the way YouTube is operating. YouTube will continue to be a vibrant forum for free expression around the world.”
Some, though, see this lawsuit as being destined to be a footnote to history as the move away from traditional media outlets like Viacom continues. James McQuivey, an analyst for Forrester Research, stated that “the law and the courts are swiftly becoming irrelevant because they can’t keep up with the digital economy. For a digital copyright lawsuit to take five years to come to no conclusion at all — by which time the fundamentals of the market have changed completely and any precedent that might eventually be set could set us back to the stone age — shows that the ‘winner’ of any lawsuit is no winner at all.”
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