Viacom Courted YouTube Before Suing, But Site’s Founders Admitted Infringing

The video-sharing site cited a string of recent favorable court decisions on similar services’ immunity under the Digital Millennium Copyright Act as long as they respond to takedown notices, including a win for now-shuttered video site Veoh (CD Oct 2 p16). YouTube also reached back to the Supreme Court’s 2005 Grokster peer-to-peer decision setting up the inducement standard: “YouTube is worlds away from the type of illegitimate site deliberately designed to encourage infringement” that the court faulted. Viacom unearthed e-mails from YouTube founders showing they were aware of copyrighted content on the site and had tossed around ways to “avoid the copyright bastards,” as one exchange put it.

Infringement seemed far from the minds of Viacom’s MTV Networks employees reviewing a possible YouTube acquisition in July 2006, four months before Google’s acquisition. According to a confidential presentation named “Project Beagle Review,” YouTube would be a “transformative acquisition” that would make MTV Networks the leader in user-generated content and a “must-have” with advertisers. Under a section on risks, the reviewers don’t mention unauthorized content on the site. “Consumption of ‘branded’ content on YT is relatively low,” more so than on the much smaller video site iFilm that Viacom purchased earlier. “There are no movie trailers in the top 30, nor are there any clips from popular TV shows.” The presentation also called YouTube “very advertiser-friendly” because of its “strong guidelines surrounding offensive content.” A followup e-mail days after the presentation indicated it was effective with higher-ups.

Viacom employees sometimes used their personal accounts to upload clips to YouTube to increase their sense of grassroots buzz or make them appear “leaked” or “hijacked,” according to other documents. The confusion was so great the MPAA asked whether scenes from Mission Impossible 3 were leaked on YouTube, to which Viacom’s Paramount Pictures answered they were “brought online this week as part of normal online publicity” before the film’s release. Paramount asked employees to upload “different versions of our viral slug video” for an upcoming movie: “We are staying away from ’studio’ marketing … THIS MUST BE VIRAL AND NOT DIRECTLY CONNECTED TO US!” Just before the acquisition review was submitted, another employee said they were uploading videos to a “fake grassroots account” that had drawn the suspicion of YouTube employees, referred to as “bastards” for calling the covert Viacom employee.

Viacom “hired no fewer than 18 different marketing agencies” to upload content to YouTube, had employees upload clips from computers at Kinko’s so they wouldn’t trace to Viacom, and routinely left up user-submitted copyrighted clips -- decisions approved by top MTV Networks and Comedy Central executives, YouTube General Counsel Zahavah Levine said in a blog post. Viacom had to return “sheepishly” to ask for videos it originally uploaded to be reinstated after Viacom requested their takedown, she said.

Levine said Viacom “misconstrues isolated lines from a handful of e-mails” by YouTube founders showing their participation in illicit uploading -- actions not important enough for Viacom to not try “repeatedly” to acquire YouTube. YouTube’s memorandum of law said the company “since its early days” deterred users from unauthorized uploads, through warnings about infringement during the upload process to terminating accounts of “suspected” repeat infringers. It offered copyright owners an easy removal tool months before Viacom’s acquisition interest, the filing said.

Months of content-partnership talks between YouTube and Viacom were interrupted by Google’s purchase of the video site, after which Viacom used “strong arm” tactics to get a better deal. The media company spent months searching for its unauthorized videos on YouTube but filed a single massive takedown notice to cause “one dramatic event (as opposed to drips),” said a Viacom document. Though YouTube removed nearly all of them in a day, YouTube’s traffic stayed up and Viacom’s sites didn’t enjoy any bump, leading it to file suit, YouTube said.

The DMCA doesn’t punish providers for “general awareness of infringement” -- to be liable they must know about the “specific infringing activity” alleged by a copyright owner, the filing said. Section 512 of the DMCA refers to a provider expeditiously removing “the material” -- a particular file -- once it learns of the illicit content. The law also sets a strict standard for what counts as a “red flag” for infringement -- it must be “blatant” and “obvious,” a judgment that service providers struggle with because they don’t know about copyright owners’ licensing agreements, promotional efforts or fair-use possibilities, the filing said. Viacom itself has bungled the list of unauthorized clips a few times: Three years after the suit was filed, the company “continues to assert claims of infringement against clips that Viacom or its agents uploaded to YouTube."

What Happened to Eric Schmidt’s E-mails?

Google offered Viacom $590 million in license fees to put the programmer’s material on YouTube, Viacom’s motion for summary judgment said. The offer also called for Google to block from uploading to the site Viacom-owned videos not covered by the license, the motion said. The negotiations broke down, and no license was negotiated, it said.

Viacom’s motion is trove of what it calls “smoking gun” e-mails and memos from YouTube’s early days, before Google bought the video site. E-mails between YouTube founders Steve Chen, Chad Hurley and Jawed Karim discuss how to “avoid the copyright bastards” while YouTube was saving its “meal money for some lawsuits!” The e-mails show that “the founders’ contempt for copyright was so strong that they uploaded infringing videos themselves,” Viacom said in its motion. An e-mail from Chen said, “We're going to have a tough time defending the fact that we're not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it."

E-mails also lay out how YouTube introduced and then abandoned a system for users to flag copyrighted material, Viacom said in its motion. In an e-mail excerpted in Viacom’s filing, Hurley wrote: “Can we remove the flagging link for ‘copyrighted’ today … it’s actually better if we don’t have the link there at all because then the copyright holder is responsible for serving us notice of the material and not the users.” That e-mail “constituted a willful decision to blind YouTube to notice of copyright infringement and to shift the entire burden to copyright owners,” Viacom said.

The e-mails dried up after Google became involved with YouTube, Viacom’s motion said. “Almost none of these key internal documents were produced by Google or YouTube, which claim they were all lost,” Viacom said. Karim, who left YouTube in 2006, provided the e-mails, Viacom said. “Similarly unusual are the document destruction practices followed by Google’s CEO Eric Schmidt."

Schmidt could produce only 19 documents responsive to Viacom’s discovery requests, even though he was deeply involved in the YouTube acquisition, Viacom said. “The absence of emails and documents is explained by a practice litigation-conscious in the extreme,” it said. Schmidt testified that it has been his practice for 30 years not to keep any e-mails unless specifically asked, Viacom said.

"Similar bizarre practices surfaced when senior executives testified about these key documents,” Viacom said. “When Mr. Hurley was shown the email chains preserved by Mr. Karim, he developed serial amnesia.” Google Co-Founder Larry Page also “essentially disclaimed memory on any topic relevant to this litigation, even including for example whether he was in favor of Google’s acquisition of YouTube, even though it was Google’s largest corporate transaction to date and viewed as transformative to its business,” Viacom said. “Given Defendants’ wholesale failures to preserve relevant documents or recall key salient facts, the surviving documents speak all the more loudly as undisputed facts that warrant summary judgement.”