Viacom Hits Up Google, YouTube for $1 Billion

SpongeBob has YouTube soaked in hot water.  

A little more than a month after Viacom demanded that YouTube remove all content obtained from Viacom-owned cable networks such as Nickelodeon and Comedy Central, the media conglomerate sued the site and parent company Google Tuesday for more than $1 billion, claiming they are guilty of "massive intentional copyright infringement of Viacom's entertainment properties."

The lawsuit also seeks an injunction barring Google and YouTube from any further copyright violations, claiming that almost 160,000 clips have already been illegally posted on YouTube, where they've been viewed more than 1.5 billion times.

According to a 27-page complaint filed in a Manhattan federal court, YouTube failed to take "reasonable precautions" to block the rampant posting of copyrighted material and instead deliberately amassed clips from popular series such as The Daily Show and SpongeBob SquarePants to draw traffic to the site.

Per court documents, Viacom is looking to have YouTube slapped with a maximum $150,000 penalty for every bootlegged clip.

"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," Viacom said in a statement.

"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."

Last month, Viacom said it would be supplying rival video-sharing site Joost with content, with the Wall Street Journal speculating that Viacom would probably be getting at least two-thirds of the advertising revenue Joost earns in exchange for making snippets of The Colbert Report and other sound-bite-happy faves available online.

Viacom's holdings include MTV, VH1, Nickelodeon, Nick at Nite, Comedy Central, BET, Spike and Paramount Pictures.

Viacom spokesman Carl Folta told the Los Angeles Times that, unlike YouTube, video sites run by Microsoft Inc. and News Corp. took steps to show "respect for our copyrights."

News Corp., for instance, licenses software from a third-party company to detect potentially copyright-infringing videos on MySpace.

YouTube "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 Viacom decided to sue after negotiations and other attempts to put a stop to the illegal postings failed.

Google, which snatched up YouTube last year for $1.65 billion, said in a statement Tuesday that it had not yet been served with Viacom's lawsuit but that it had the utmost confidence that YouTube has been respecting copyright laws and that "the courts will agree."

"We will certainly not let this suit become a distraction to the continuing growth and strong performance of YouTube and its ability to attract more users, more traffic and build a stronger community."

Washington, D.C.-based attorney Sheldon Klein, who specializes in intellectual-property matters, told PC World's Website it's unlikely that YouTube will be shut down, because plenty of on-the-level activity occurs on the site in addition to the alleged illegal activity Viacom is alleging.

However, Klein said, Google may be liable if Viacom can prove that it and YouTube did not do everything in their power to prevent users from uploading copyrighted videos, especially after Viacom requested last month that YouTube comply with the Digital Millennium Copyright Act and remove more than 100,000 unauthorized clips from the site.

A YouTube search at press time found that multiple Daily Show and Colbert Report clips were still available for viewing.