Monster YouTube-Viacom Copyright Battle Is Back

Remember the epic $1 billion copy-fight that pitted Viacom (NYSE: VIA), the English Premier League and a gang of others against Google/YouTube? (NSDQ: GOOG) Well, it’s back (sort of). The sides are appearing before an appeals court today to open old wounds and learn whether they will get to fight some more. Here is what you need to know.

What is this fight all about, again?

The dispute dates from the free-wheeling early days of YouTube when people uploaded videos of cats on skateboards and grainy clips of The Daily Show and South Park. Viacom took issue with the latter and filed a $1 billion copyright suit against YouTube and its new owner, Google, in 2007. Months later, a group of plaintiffs led by the English Premier Suit filed a related class action suit. The parties demanded huge sums of money, saying that YouTube owed them for each copyrighted video that appeared on the site.

The lawsuit is not about what YouTube is doing right now. For years, the company has provided content owners with filtering technology that alerts them if one of their copyrighted videos appears on the site without permission. The owner can then either ask for the video be removed or else add advertising to it and keep it on the site. Viacom is happy with this system but wants to be compensated for unauthorized videos shown in 2007 and 2008 before the filter was in place.

What happened last year?

In June of 2010 a federal judge granted summary judgment to YouTube, meaning the cases were dismissed without a trial. The judge concluded that YouTube was protected by a shield in the copyright law known as a “safe harbor.” These safe harbors were created in 1998 to ensure that those who provided an Internet service (like hosts or ISPs) were not automatically liable for the misdeeds of third parties. Thanks to the safe harbor, YouTube was not liable for the Viacom clips on its site.

The run-up to the case featured the two main parties airing each others’ dirty laundry. Viacom released an email in which one YouTube co-founder urged another to “stop stealing” videos. Meanwhile, Google produced evidence showing that some of the allegedly copyright-infringing clips had actually been uploaded by Viacom’s own marketers.

Since the 2010 ruling, several plaintiffs, including representatives for parts of the music industry, have decided to remove themselves from the case.

What’s happening today?

The parties will have about 45 minutes between 10 am and noon to argue before a three-judge panel of the US Second Circuit Court of Appeals. Lawyers for Viacom and the Football League will make separate arguments. The panel is unlikely to make any decisions on the spot and will probably issue a ruling in coming weeks saying whether or not the case should be reinstated.

What do Viacom and the other plaintiffs want?

Viacom wants the panel to declare that the judge made an error when he stated that the safe harbor protection applies to YouTube. According to lawyers from Jenner & Block, YouTube forfeited its right to the safe harbor because it did not make an honest effort to stop the clips from being uploaded and instead focused on growing its online video business at the expense of content owners.

Viacom is also hoping that the influential Second Circuit will provide a precedent that curtails the scope of safe harbors in general. It believes that the 1998 law has become too expansive by shielding companies that are no longer simply hosts or content carriers, but full-blown media companies that should not have the same safe harbor protection.

What does YouTube want?

YouTube wants the panel to affirm the lower court ruling and put an end to the long-running litigation. A source close to Google said that the safe harbor law has always been clear and that Viacom has engaged in “attempted negotiations through litigation” in an effort to extract a pay-out, unlike other major studios which simply embraced the filtering technology. The source said that lawyers for other parties in the litigation, such as the Premier League and the French Tennis Federation, have been riding Viacom’s courtroom coattails in an effort to get paid off as well.

YouTube claims that the litigation has been a futile endeavor that has already cost north of $100 million — money that would be better spent developing content and new business plans.

What’s the outcome going to be?

After losing at summary judgment, Viacom faces an uphill fight. If the panel rejects the appeal, its odds will be even longer still.

In the bigger picture, the copyright landscape has changed considerably since someone first uploaded a Jon Stewart clip on YouTube. The ongoing litigation is starting to feel dated in an era where YouTube is a legitimate and successful business, and most copyright owners are pre-occupied with perceived threats from other types of digital technology.