Reversing a ruling from June 2010, the 2nd U.S. Circuit Court of Appeals decided that, in the words of Judge Jose Cabranes, "a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its Web site."

Not 'General Awareness'

Viacom, in conjunction with other media companies such as the English Premier League and several film studios and TV networks, had sued Google in 2007 over the posting of copyright material, including clips from such shows as The Daily Show with Jon Stewart and South Park. The plaintiffs said that nearly 80,000 copyright video clips had been posted over a three-year period.

In the 2010 ruling, a U.S. District Court found that YouTube was not liable simply for having a "general awareness" that some protected videos could have been uploaded to its site, and that it did not need to monitor the postings for such violations.

One of the issues had been if the 1998 Digital Millennium Copyright Act protected YouTube and similar companies from such broad-brush lawsuits. A safe harbor component of that law said that a company is not liable if it is not aware of infringement, although it must eliminate infringement if it becomes aware of the violation.

According to the Act, a company could not "induce, enable, facilitate, or conceal infringement," and that meant no editing, review, or control of submitted material, because it would then have knowledge and become liable for infringements.

'Item-Specific Knowledge'

The appeals court said the lower court correctly interpreted the Digital Millennium Act as requiring knowledge of infringement, but it reinstated the lawsuit because a jury could reasonably find that YouTube had such knowledge. A key difference between the courts is that the appeals court disagreed with the district court's finding that knowledge meant "item-specific knowledge."

YouTube issued a statement that pitched Thursday's decision as a rejection of "Viacom's reading of the law."

The video site contended that, what began as "a wholesale attack on YouTube" by Viacom has now been whittled down to "a dispute over a tiny percentage of videos long ago removed" from the site. It added that "nothing in the decision impacts the way YouTube is operating," and that it would continue to be "a vibrant forum for free expression around the world."

Viacom also saw the appeals court's decision as helping its cause. It said in a statement that "this balanced decision provides a thoughtful way to distinguish legitimate service providers from those that build their businesses on infringement." The company added that the court "delivered a definitive, common sense message to YouTube," namely that "intentionally ignoring theft is not protected by the law."

Google and Viacom are now partnering on content projects, such as YouTube channels for some of Viacom's networks, like the Comedy Channel. Some industry observers are suggesting that Viacom may decide to drop the suit, although Google and other sites receiving posted material could now find themselves open to litigation from other parties, such as studios or newspapers.

Recommended Reading: Search & Destroy: Why You Can't Trust Google Inc. Synopsis: This is the other side of the Google story. In Search & Destroy, Google expert Scott Cleland, shows that the world's most powerful company is not who it pretends to be. Google pretends to be a harmless lamb, but chose a full-size model of a Tyrannosaurus Rex as its mascot. Beware the T-Rex in sheep's clothing.