Viacom Sues YouTube for $1 Billion
MTV owner Viacom Inc. sued the popular video-sharing site YouTube and its corporate parent, Google Inc., on Tuesday, seeking more than $1 billion in damages on claims of widespread copyright infringement.
Viacom claims that YouTube has displayed nearly 160,000 unauthorized video clips from its cable networks, which also include Comedy Central, VH1 and Nickelodeon.
The lawsuit, filed in U.S. District Court in New York, marks a sharp escalation of long-simmering tensions between Viacom and YouTube and represents the biggest confrontation to date between a major media company and the hugely popular video-sharing site, which Google bought in November for $1.76 billion.
YouTube's soaring popularity has been a cause of fascination but also fear among the owners of traditional media outlets, who worry that YouTube's displaying of user-uploaded clips from their programs -- without compensation -- will lure away viewers and ad dollars from cable and broadcast TV.
Viacom is especially at risk because many of its shows, which include "The Daily Show with Jon Stewart," "The Colbert Report" and "South Park" are aimed at younger audiences who also are heavy Internet users.
The lawsuit came nearly six weeks after Viacom demanded that YouTube remove more than 100,000 unauthorized clips after several months of talks over licensing arrangements broke down. YouTube agreed at the time to comply and said it cooperates with all copyright holders to remove programming as soon as they're notified.
But since then, Viacom has identified more than 50,000 additional unauthorized clips, Viacom spokesman Jeremy Zweig said.
In a statement, Viacom lashed out at YouTube's business practices, saying it 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 YouTube's 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."
Viacom said YouTube has avoided taking the initiative to curtail copyright infringement on its site, instead shifting the burden and costs of monitoring the video-sharing site for unauthorized clips onto the "victims of its infringement."
In a statement, Google said it believed the courts will agree "that YouTube has respected the legal rights of copyright holders."
"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," Google said.
Other media companies have also clashed with YouTube over copyrights, but some, including CBS Corp. and General Electric Co.'s NBC Universal, have reached deals with the video-sharing site to license their material. CBS Corp. used to be part of Viacom but has since split off into a separate company.
Universal Music Group, a unit of France's Vivendi SA, had threatened to sue YouTube, saying it was a hub for pirated music videos, but later reached a licensing deal with the company.
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."
Besides damages, Viacom is also seeking an injunction prohibiting Google and YouTube from using its clips.
While YouTube has yet to generate much revenue, its online traffic has been growing rapidly. According to comScore Media Metrix, YouTube attracted 133.5 million visitors worldwide in January, up from 9.5 million a year earlier.
Google shares dropped $9.25, or 2.0 percent, to $445.50 in midday trading Tuesday on the Nasdaq Stock Market, while Viacom's Class B shares rose 47 cents, or 1.2 percent, to $40.04 on the New York Stock Exchange.