Having lost in the first round, on 11 August 2010 Viacom filed papers to appeal its $US1 billion claim against YouTube arguing infringement of its copyrights by YouTube and its owner, Google.

This is a short case note on that first instance decision (a loss by Viacom). We’ll also put into its context the ongoing iiNet case in Australia, as well as background “content sharing” cases such as the Napster and Grokster decisions in the last decade.

Why Viacom lost at first instance

Long led by its majority owner, Sumner Redstone, Viacom is among the world’s largest media conglomerates, along with Disney, Sony, News Corp, Time Warner, Bertelsmann, General Electric and Vivendi’s NBC Universal.

The acquisition of YouTube was contemplated by Viacom executives, and achieved by Google in November 2006. Google banks on bringing YouTube into profit one day having sunk costs of $US1.65 billion for the acquisition, and enormous bandwidth costs ever since.

In addition to those costs Google has had to spend an estimated $US100 million to defend YouTube against Viacom’s copyright claims, not to mention claims by others.

"ussr_poster_wikicommons"In the case that began in 2007, Viacom has alleged that YouTube (and owner, Google) were liable for copyright infringement on the YouTube site, by YouTube allowing copyrighted works belonging to Viacom to be put onto the site.

Viacom has claimed that YouTube was not afforded protection under the Safe Harbor provisions of the U.S. Digital Millennium Copyright Act (“DCMA”).

Simply stated, under the DCMA a provider is protected against liability for direct and secondary infringement, where the provider has insufficient notice or knowledge of the particular infringement.

Under this provision, the service provider is required to have an established system for receiving and dealing with notifications. This is a very important point as we’ll see further. Also, the infringement notifier, amongst other things, must be authorised to act on behalf of the owner of the content.

"T-54-tank_1_wikicommons"In its decision ruling against Viacom, the court took the view that the knowledge had to go beyond a general knowledge (ie by YouTube) of the real likelihood of infringing activity by users. Instead, knowledge of the individual acts of infringement (ie by YouTube users) was required.

It is noteworthy that when Viacom sent Youtube a take-down notice for approximately 100,000 videos, YouTube removed most of them by the next day.

In the U.S. and Australia, the loss by Viacom is likely to have relevance to other online social media sites or file sharing sites, as well as to internet ventures using peer-to-peer software. A footnote for this is that since the 1980s numerous Australian cases involving IT and copyright have drawn from decisions in U.S. IT cases.

Relevance to interpreting the iiNet decisions

A case where it may become relevant is the dispute between iiNet and various content owners. Victory came to iiNet in the first instance decision of Roadshow Films Pty Ltd v iiNet Limited (No. 3) [2010] FCA 24.

That case involves iiNet defending itself against an army of Hollywood content owners, including Disney, Warner Bros, Universal Pictures, as well as AFACT (Australian Federation Against Copyright Theft alleging infringement).

The position of iiNet has been that as an internet service provider, it is only providing internet access, not the system for acts of infringement.

At first instance it was held that although iiNet may have had an awareness of infringements occurring, it did not authorise or condone these acts.

The use of the BitTorrent system to share and copy material by users was held to be the means for carrying out acts of infringement, and iiNet was not found to be authorising infringing actions.

The iiNet case is currently awaiting a full Federal Court appeal decision, and there may yet be a further appeal to the High Court.

Key point of claimed difference

Unless there are surprises in the appeal decisions in the Viacom and iiNet cases, we can posit a key point of claimed difference between these recent decisions (Viacom and iiNet) and previous decisions involving content sharing over the internet. Here we refer to cases such as the 2001 decision, A&M Records, Inc. et al v Napster, Inc., and the 2005 decision, Grokster in Metro-Goldwyn-Mayer Studios Inc et al v Grokster, Ltd et al

In previous decisions the content owners have tended to win.

In Viacom and iiNet so far the access providers have won, and critical there has been their behaviour and intentions as the accused party, and in particular the business purpose of their services, systems or site.

Noric Dilanchian