What will it mean for YouTube if founders Chad Hurley and Steve Chen have, like many of us, entertained themselves by watching pirated videos found on their site?
Viacom will likely argue that YouTube is guilty of contributory copyright infringement if computer records show employees know unauthorized clips from shows, such as Hogan Knows Best or The Hills, are on the site and don't do anything to remove them.
According to legal experts, YouTube's response is likely to go something like this: "How are we supposed to know what's copyright material and what isn't?" The site is a promotional tool for scores of TV networks and movie studios, which often post their own videos.
The case could now become a landmark and answer a major question in online video, said Mark Litvack, an entertainment lawyer with Los Angeles-based Manatt, Phelps & Phillips.
"Who has the obligation of monitoring Web sites for copyright violations," Litvack said. "Is it the copyright owner who must police sites and be required to send takedown notices, or should Web sites be forced to filter for copyright material?"
Employee data easier to get than users'
The two companies are in the discovery phase of their litigation, when each is supposed to turn over relevant information to the other. On Monday night, the two sides announced they had finally agreed that YouTube would mask YouTube's user information, such as usernames and IP addresses, before handing it over to Viacom. Now, a new disagreement looms on the horizon.
The two sides have been sparring over whether Google must give up information on which videos YouTube employees watch and upload to the site, two sources told CNET News this weekend. Google will unlikely succeed at blocking Viacom from obtaining at least some of this information, said Wendy Seltzer, a fellow with Harvard's Berkman Center for Internet and Society.
"It's arguably more relevant to the litigation (than the user records) because it would be part of what Viacom is trying to prove," Seltzer said. "If the records show that YouTube had knowledge, or the records fail to show that knowledge, then that would be relevant to Viacom's case."
From Google's perspective, what's at stake here is YouTube's protection under the Digital Millennium Copyright Act. The DMCA's Safe Harbor provision shields Internet service providers from being held responsible for illegal acts committed by users. But to qualify for the harbor, a company can't have knowledge of copyright violations and must quickly remove infringing material when notified by a copyright owner.
Viacom has maintained that YouTube's pirate treasure isn't buried. The copyright material is impossible to miss, the media conglomerate maintains. The parent company of MTV and Comedy Central will no doubt argue it's inconceivable that YouTube is unaware of the infringing content on its site.
Who can argue that YouTube isn't home to countless clips from feature films and TV shows?
In April, I tooled around YouTube for a half hour and found clips from the last five Academy Award winners in the best picture category, including Million Dollar Baby, No Country For Old Men and a 10-minute clip from the opening of The Departed. As of Tuesday, the clip still appears on the site.
Could YouTube lose DMCA protection?
But just knowing that the videos exist at YouTube may not qualify as infringement. How can YouTube managers be expected to determine which clips are unauthorized?
It's simple to argue that everybody knows The Godfather is owned by Paramount, a Viacom company. But what about the unlimited number of lesser-known works?
How would YouTube determine the ownership of a small independent film or Ecuadorian soap opera?
"This is why the burden of finding (copyright violations) should be on the (copyright owners)," Seltzer said. "We really don't want to put the service providers in the middle. Viacom and rights holders are in the best position to determine what they own."
As for the costs of monitoring YouTube, Seltzer said that whatever it is, "it's just the cost of our intellectual property system...I don't think that copyright owners should be able to outsource the enforcement burden to service providers."
As for what kind of damage to YouTube's case may occur if employees are found to have watched pirated videos, the answer is that it could be very minimal. The judge is likely to look at how much illegal video was viewed by how many employees and ask whether it was bad faith or not, said Seltzer.
What could prove much more damaging, however, is if Viacom uncovers proof that YouTube's employees uploaded unauthorized clips as part of their duties. To those copyright holders, who have wondered for years whether YouTube's workers were violating copyright, this would be a smoking gun.
Direct copyright infringement could undermine YouTube's DMCA claims, according to Litvack.
Here's another scenario that could drastically change the color of the case. What if YouTube finds that Philippe Dauman, Viacom's CEO or Stephen Colbert, host of Viacom's The Colbert Report uploaded clips to YouTube?
YouTube has always said that big media corporations have split personalities when it comes to YouTube. Their marketing departments might beg YouTube to promote their shows or movies one day and the next day the same company's lawyers might demand YouTube pull them down.
If it's determined that Viacom employees uploaded videos, then those clips were authorized and there's no copyright violation, Seltzer said. She added that in such a scenario, YouTube could argue Viacom prevented YouTube from discerning between authorized and unauthorized clips.
"YouTube is going to say that (Viacom's uploading) was an implied license," she said. "YouTube might argue that it couldn't have had red-flag knowledge about (all the other Viacom videos) because it knew to the contrary that the copyright holder wanted some of them posted."
It should be noted here that employees from neither YouTube nor Viacom have ever been accused of uploading clips to video-sharing sites.
At this point, there's no telling who has the upper hand in this case. Nobody knows whether the DMCA covers a user-generated video site like YouTube. Is it really a service provider or an entertainment site wrongfully profiting from the work of copyright owners?
Google's YouTube did get some good news this week. Internet auctioneer eBay fended off a trademark infringement lawsuit filed by Tiffany & Co.
Trademark is different from copyright law but the arguments are surprisingly similar. The jeweler accused eBay of profiting from sales of counterfeit Tiffany goods, but the judge in the case found that it's up to brand owners to police for phony products.
Will the courts determine the same for copyright holders?