Viacom sues 'GooTube' for $1 billion

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http://money.cnn.com/2007/03/13/news...ex.htm?cnn=yes

NEW YORK (CNNMoney.com) -- Viacom sued Google and its online video subsidiary YouTube for $1 billion Tuesday, the first big lawsuit against the online video site and its parent for copyright infringement.

In the lawsuit filed Tuesday in the U.S. District Court for the Southern District of New York, Viacom (Charts), owner of MTV and Comedy Central, said that "almost 160,000 unauthorized clips of Viacom's programming have been available on YouTube and that these clips had been viewed more than 1.5 billion times."


YouTube co-founders Steven Chen and Chad Hurley have to deal with their first major lawsuit for copyright infringement. Viacom is suing YouTube and its parent company Google for more than $1 billion.
In addition to damages, Viacom said it wants an injunction prohibiting Google and YouTube from further copyright infringement.

A spokesman for Google said the company had yet to see the lawsuit but that Google feels "confident that YouTube has respected the legal rights of copyright holders and believe the courts will agree."

Viacom first demanded that YouTube take down videos from shows on Viacom-owned networks that were posted on the site without Viacom's consent. Google bought YouTube for nearly $1.7 billion last year.

Viacom is the first major media firm to sue Google and YouTube for copyright infringement. Other media companies, including GE-owned NBC Universal, CBS, and Universal Music Group, have decided to partner with YouTube, the world's most popular online video site. But Viacom said that it decided to sue Google and YouTube "after a great deal of unproductive negotiation."

"Obviously, they couldn't come to an agreement. Viacom must have felt its back was against the wall and had to pull the trigger and file a lawsuit," said Barry Cohen, partner in the intellectual property practice with Thorp Reed & Armstrong LLP, a law firm based in Pittsburgh.

Google CEO hits back on YouTube purchase
While other media firms, notably CBS, say they see promotional value in having snippets of their programs posted on YouTube, Viacom has led the charge against YouTube since it feels entitled to advertising revenues tied to viewing of its programming. YouTube typically serves over 100 million video streams a day.

"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," Viacom said in a statement Tuesday.

Industry analysts predicted that other media companies might also decide to sue Google and YouTube.

"Every copyright holder has to be seen to defend their rights or otherwise they risk surrendering them altogether," said Brian Wieser, senior vice president at Magna Global, a media buying firm based in New York. "So even where there are minor infractions, if you are not defending a trademark or other copyrighted content, you risk losing those rights. It's too important."

Time to kiss and make up with YouTube
Since Google currently has more than $11 billion in cash on its balance sheet, that also makes it a bigger target for media companies.

"If Google and YouTube don't demonstrate that (they're) taking concerns that media companies like Viacom have by implementing filtering technology and being willing to negotiate fair pricing for distribution and ad revenue sharing, then other media companies will pile on with lawsuits," said James McQuivey, principal analyst for television and media technology with Forrester Research.

But intellectual property lawyer Cohen said he wasn't sure if other media companies would be eager to sue Google and YouTube, which some jokingly refer to as "GooTube." He pointed out that since several media firms have already partnered with Google and YouTube, they may find that it is wiser to embrace "GooTube" rather than take an antagonistic stance against the online video kingpin.

"You're not going to stop technology. You're not going to stop advancement," Cohen said. "Everyone will keep intense eye on this case but you still have to do business with Google and YouTube since they are the 800 pound gorilla."

YouTube's massive reach, particularly with younger consumers, presents a unique problem for media firms. Even though media giants obviously would like to receive revenue from videos posted on video-sharing sites such as YouTube, getting a video seen on YouTube can lead to increased exposure.

For example, many credit YouTube with the recent resurgence in popularity of NBC's "Saturday Night Live" since the SNL skit "Lazy Sunday" from 2005 became a smash hit on YouTube after it was posted there.

"Marketing people love YouTube and legal people hate it and inside media companies marketing people are actively working with them while legal companies are actively thinking of suing," said Magna's Wieser.

Shares of Google sank about 1 percent in morning trading on Nasdaq Tuesday morning while Viacom's stock rose nearly 1.5 percent on the New York Stock Exchange.