Viacom Inc., producer of The Daily Show, filed a $1 billion(Rs4,400 crore) lawsuit against YouTube and its owner Google Inc. that would eliminate some of the most popular programming on the Internet’s biggest video-sharing site.
The complaint, filed in federal court in New York, alleges “massive intentional” copyright infringement, New York-based Viacom said on 13 March 2007 in a statement.
Viacom, which had been in licensing talks with YouTube, escalated the dispute after failing to reach an agreement over the posting of almost 1,60,000 clips of shows such as South Park and The Colbert Report. The suit, which follows court challenges by News Corp. and producer Mark Cuban, is the most aggressive action so far against the video site.
“Viacom is taking a very strong stance,” said James Goss, an analyst at Barrington Research in Chicago who rates Viacom shares “outperform.” “The issue is control over what you own. With the lawsuit, they want to draw a line in the sand.”
Shares of Mountain View, California-based Google, the most- used search engine, fell $11.72, or 2.6 percent, to $443.03 at 4 pm New York time in Nasdaq Stock Market trading. Class B shares of Viacom, owner of MTV Networks and Nickelodeon, declined 9 cents to $39.48 in New York Stock Exchange composite trading.
YouTube showed “brazen disregard” for copyright laws, Viacom said in the complaint, and has “deliberately chosen not to take reasonable precautions to deter the rampant infringement on its site.” The videos were viewed more than 1.5 billion times, Viacom said.
“We’re confident about our legal position and we won’t let this case distract us,” said Alexander Macgillivray, Google’s associate general counsel for products and intellectual property. Google removes unauthorized clips when notified and is giving content owners more ways to identify infringing material, he said.
YouTube, bought by Google for $1.65 billion last year, agreed in February to remove more than 1,00,000 Viacom clips after the companies failed to agree on payments for use of the shows, Viacom said at the time.
More than 133 million people visited YouTube in January, 14 times more than a year earlier, according to Reston, Virginia- based Web-use tracker ComScore Networks Inc.
“Lawsuits are generally not very good negotiating tactics with us,” Google’s Macgillivray said.
Viacom’s suit is “highly unlikely” to go to trial, said Tom Selz, a copyright lawyer with Frankfurt, Kurnit, Klein & Selz in New York. “This is a more of a ‘Hey, take us seriously.”’
The suit was filed after Google Chief Executive Officer Eric Schmidt said media companies will have no choice but to put their TV shows and movies on video sites such as YouTube.
“The growth of YouTube, the growth of online, is so fundamental that these companies are going to be forced to work with and in the Internet,” Schmidt said in an interview aired last weekend on “Conversations With Judy Woodruff.”
Broadcasters disagree on whether the benefits of added viewers on YouTube outweigh the potential loss of revenue. Google argues that YouTube delivers a younger audience and lets networks tap the online ad market.
CBS Corp., the TV network owner that split off from Viacom at the beginning of last year, has called YouTube a “huge promotional vehicle” and has an agreement to show clips on the site. YouTube also has deals with NBC Universal Inc. and The British Broadcasting Corp.
Time Warner Inc., the world’s biggest media company, said it is in talks with YouTube about placing material on the site.
“We are hopeful that we can work together toward a solution that will effectively identify and filter out unauthorized material and license copyrighted work for an appropriate revenue share,” spokesman Keith Cocozza said.
This month, YouTube was ordered by a federal judge in Dallas to identify a user who posted films such as the new horror movie The Host, distributed by Cuban’s company. In January, News Corp.’s Twentieth Century Fox subpoenaed YouTube to identify the person who was uploading pirated copies of the television shows 24 and The Simpsons.
Cuban, the billionaire owner of the Dallas Mavericks basketball team, said last year that Google would be “crazy” to buy YouTube because of the potential for copyright lawsuits.