NEW YORK (AP) - A federal appeals court revived a 5-year-old copyright case against YouTube on Thursday, finding that a jury might conclude that the online video service knew it was infringing rights when it allowed the distribution of videos of popular television shows and other programs.
The 2nd U.S. Circuit Court of Appeals in Manhattan decided the case after hearing lawyers several months ago debate whether the 1998 Digital Millennium Copyright Act shields a company like YouTube from broad copyright claims. Google Inc. paid $1.76 billion for YouTube in 2006, just months after the video service was launched in December 2005.
The appeals decision pertained to several lawsuits filed against YouTube, including one in which Viacom Inc. claimed YouTube committed "rampant copyright infringement" and others in which The Football Association Premier League Ltd. and various film studios, television networks, music publishers and sports leagues joined to challenge YouTube's practices.
A lower court judge had ruled that YouTube was protected from copyright infringement claims by the safe harbor provision of the Digital Millennium Copyright Act. That provision protects a company from liability if it doesn't have actual knowledge of copyright infringement. Once notified, the company must eliminate the infringement quickly.
The appeals court noted that Viacom cited evidence that YouTube employees in the company's early days conducted website surveys estimating that up to 80 percent of all YouTube streams contained copyright material and that a financial adviser to Google estimated that only 10 percent of its content was authorized.
"These approximations suggest that the defendants were conscious that significant quantities of material on the YouTube website were infringing," according to the decision by two judges on a three-judge panel. The third judge has since died.
The appeals court also cited evidence that YouTube founder Jawed Karim prepared a report in March 2006 stating that episodes and clips of well-known shows including "Family Guy," "South Park," "The Daily Show" and others, including some Viacom programs, were on YouTube and although the company was not legally required to monitor content, it complies with requests to take down copyrighted content and would "benefit from preemptively removing content that is blatantly illegal and likely to attract criticism."
Yet, the court noted, there were instances when it appeared to delay taking down copyrighted content, such as when a YouTube co-founder responded to an internal email by insisting that a CNN space shuttle clip could remain up for at least another two weeks because it would take the cable news network that long to get a cease-and-desist order.
The appeals panel also found that a legal doctrine known as "willful blindness" could be applied in some circumstances regarding the Digital Millennium Copyright Act and left it to the lower court judge to determine whether YouTube executives made a "deliberate effort to avoid guilty knowledge."
The plaintiffs said YouTube committed copyright infringement based on the display and reproduction of approximately 79,000 audiovisual clips appearing on its website between 2005 and 2008.
In a statement, YouTube portrayed the 2nd Circuit decision as a victory, saying the court "rejected Viacom's reading of the law."
It added: "All that is left of the Viacom lawsuit that began as a wholesale attack on YouTube is a dispute over a tiny percentage of videos long ago removed from YouTube. Nothing in this decision impacts the way YouTube is operating. YouTube will continue to be a vibrant forum for free expression around the world."
Viacom said in a statement that it was pleased as well.
"This balanced decision provides a thoughtful way to distinguish legitimate service providers from those that build their businesses on infringement," it said. "The Court delivered a definitive, common sense message to YouTube - intentionally ignoring theft is not protected by the law. We are confident we will prevail when the merits of our case are heard."
The appeals panel said the lower court judge correctly concluded that the safe harbor provision requires knowledge or awareness of specific infringing activity.
But it said it must reinstate the lawsuit that the judge had tossed out because a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website. It said the lower court erred when it interpreted the "right and ability to control" provision of the safe harbor provision required "item-specific" knowledge.
The New York-based Viacom owns popular cable channels such as MTV, Comedy Central and Nickelodeon. Google is based in Mountain View, Calif.
YouTube has since developed a software program that identifies copyright violations when videos are posted, so much of the litigation relates to whether Viacom should be compensated for what occurred before the program was put in place.
Associated Press Writer Michael Liedtke in San Francisco contributed to this report.