'Exploiting the infringing potential'
The suit opens by outlining the distribution changes enabled by digital media and goes on to note that "some entities, rather than taking the lawful path of building businesses that respect intellectual-property rights on the Internet, have sought their fortunes by brazenly exploiting the infringing potential of digital technology." It said YouTube, which Google acquired last year for $1.65 billion, is one such entity, as the company profits by selling advertising to its massive audience, many of whom, claims Viacom, are attracted to the site by Viacom's content.
"YouTube is a significant, for-profit organization that has built a lucrative business out of exploiting the devotion of fans to others' creative works in order to enrich itself and its corporate parent, Google," said a Viacom statement, issued in concert with the lawsuit. "Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws. In fact, YouTube's strategy has been to avoid taking proactive steps to curtail the infringement on its site, thus generating significant traffic and revenues for itself while shifting the entire burden -- and high cost -- of monitoring YouTube onto the victims of its infringement."
According to a person familiar with Viacom's situation, the companies had been in contact since the February takedown notice.
Google has 30 days to respond but a judge can extend that deadline, a practice that is quite common. Depending on Google's response, hearings likely would begin this summer.
A Google spokesperson said: "We have not received the lawsuit but are confident that YouTube has respected the legal rights of copyright holders and believe the courts will agree."
The lawsuit states that while YouTube's mission is to let users share original user-generated videos, in reality much of that content is copyright-infringing video. Viacom cites such programs as "SpongeBob SquarePants," "The Daily Show With Jon Stewart," "The Colbert Report," "South Park," "Ren & Stimpy," "MTV Unplugged," "An Inconvenient Truth" and "Mean Girls."
The suit quotes YouTube CEO Chad Hurley, from a February New York Times story, saying that YouTube would use filtering technology "to identify and possibly remove copyrighted material" only after YouTube obtains a license from the copyright owner. "Those who refuse to be coerced are subjected to continuing infringement," read the suit.
It also charges that YouTube features, such as its embedding and sharing technologies, keep copyright owners from finding their copyrighted videos by searching the YouTube site. Additionally, the suit said YouTube recently limited search results to 1,000 clips, further hindering Viacom's attempt to uncover infringement.
Viacom is also seeking an injunction to prevent further copyright infringement and gives examples of companies that are licensed distribution channels -- Apple's iTunes and Joost, a new internet TV startup.
YouTube has, however, inked a series of licensing deals, ranging from the National Basketball Association to Sundance Channel to the BBC. It has a deal with CBS that includes material from several of the network's shows but so far lacks a major content distribution deal with a major U.S. TV media company.
According to Viacom, the number of views its unauthorized clips have gotten keeps growing: The lawsuit cites almost 160,000 unauthorized clips of Viacom's programming have been available on YouTube and that these clips had been viewed more than 1.5 billion times. That beats early February figures, given when Viacom issued a takedown notice to YouTube, that claimed the site housed 100,000 unauthorized pieces of Viacom content -- representing 1.2 billion video streams.
Since that takedown notice, YouTube's traffic has continued to grow, according to Hitwise. Viacom has also claimed significant jumps in traffic, which CEO Philippe Dauman said validates the company's strategy with YouTube. MTV.com, for example, said it experienced record unique visitors and video streams in the first two months of 2006.