May 2007

Intellectual Property Law Bulletin

The Intellectual Property Bulletin is published by the Intellectual Property Practice Group at Arthur, Chapman, Kettering, Smetak & Pikala, P.A. to keep our clients informed of the ever-changing complexities of intellectual property and business law.

We discussed in our January Intellectual Property Bulletin the possible copyright-infringement and business implications of Google’s October 2006 acquisition of YouTube. At that time, there was a tremendous amount of speculation within the internet and legal sectors whether Google’s "deep pockets" would expose it to lawsuits over YouTube’s alleged copyright infringement. Global entertainment mega-company Viacom, whose holdings include Paramount Pictures and cable networks MTV and Comedy Central, definitively ended the speculation when it filed a copyright-infringement lawsuit against Google and YouTube in federal court in New York in March 2007.

Viacom’s suit against Google and its subsidiary YouTube is, in its most simplistic form, a copyright-infringement action brought under the Copyright Act of 1976. But the importance of the matter, at least in Viacom’s view, is nothing short of preserving "the economic underpinnings of one of the most important sectors to the United States economy." According to Viacom, it has identified more than 150,000 unauthorized postings of its movies and television programming such as The Daily Show with Jon Stewart, South Park, The Colbert Report, and SpongeBob SquarePants which have been viewed 1.5 billion times. YouTube and Google, in Viacom’s view, knowingly and deliberately engage, promote, induce, and profit from the massive numbers of infringement.

Viacom finds fault with virtually every aspect of YouTube’s business practices. For example, Viacom complains that YouTube demonstrates an ability to effectively remove some offensive content like pornography from its web site but fails to remove copyright-infringing content. While Viacom certainly disagrees with YouTube’s selective removal practices, they make sense to Viacom who sees YouTube’s entire business model as built on displaying and profiting from copyrighted material through increased user traffic, advertising revenue, and site valuation. YouTube’s improper practices, in Viacom’s view, amount to six counts of direct and contributory copyright infringement and "at least one billion dollars."

Google seems confident and unfazed (at least publicly) by Viacom’s suit. Google’s public persona may appear unruffled because it reportedly escrowed money to fund legal fees prior to acquiring YouTube in October 2006 on the likelihood YouTube, at some point, would be sued. Google, which remains the world’s number one search engine, has actually been increasing its market-share lead over its competitors as well as its revenue.

YouTube is no stranger to copyright-infringement claims. Prior to Viacom filing suit, YouTube was already defending another federal copyright-infringement lawsuit. In July 2006, the journalist who filmed Reginald Denny’s beating during the 1992 Los Angeles riots sued YouTube after his copyrighted video was uploaded and viewed on YouTube over 1,000 times. The journalist asked the court to award him $150,000 in damages for each viewing because YouTube’s actions and those of its users impacted his ability to license his video.

Google and YouTube recently answered Viacom’s complaint and, as expected focused their defense on their compliance with the Digital Millennium Copyright Act ("DMCA"). The DMCA is a 1998 federal law that has turned into the primary legal standard defining copyright law in the digital age. Whether or not YouTube has complied with the DMCA’s "safe harbor" provisions will not only be the deciding factor in its Viacom lawsuit, but will also determine whether Google was foolish or wise in acquiring YouTube at all.

LAW & LITIGATION SEMINARS

You are invited to attend our annual Law & Litigation Seminars on June 14, 2007 in Minneapolis, MN and June 28, 2007 in Northbrook, IL.  Tom Forker and Chris Newkirk will present "What’s Hot in Business Litigation?"  They will discuss the latest trends in business and intellectual property litigation, including the impact on litigation under the revised federal rules on electronic discovery.

For more information about the seminar and its other topics and how to register, click here.

The Intellectual Property Litigation Practice Group at Arthur Chapman is available to assist with your IP litigation needs. Please contact Tom Forker or Chris Newkirk with any IP related issues. Our IP team is also available to conduct seminars at your office to assist your team to evaluate and address any IP related claims. We look forward to working with you in the near future.