May 2007
Is Google Getting Out of It’s Depth?
There were raised eyebrows when Google decided to buy video-sharing website YouTube for $1.65bn (£883m) back in October 2006 with many commentators calling it a gamble. Despite YouTube’s ever-increasing popularity providing a platform for exhibitionists and would-be film directors, a considerable amount of the sites content was copyrighted material. American broadcaster Robert Tur had already got the litigation ball rolling by the time the merger had taken place when he sued YouTube for copyright infringement back in July 2006. YouTube had broadcast a number of news stories including the infamous footage of Reginald Denny being badly beaten during the LA riots. Meanwhile the larger media organisations such as NBC and Viacom were keeping a close eye on YouTube as an increasing number of their programs were uploaded onto the site. At this stage YouTube’s lack of capital meant that the lawyers kept their daggers drawn. When cash cow Google swooped in with its multi-million pound deal it seemed inevitable what was going to happen. Even Google had braced themselves for the ensuing litigation putting aside $200 million as part of the deal. In hindsight it seems this amount was slightly optimistic. No sooner had the deal been done when Viacom, the owners of Nickelodeon and MTV, announced it was sueing the internet giant for $1 billion for breach of copyright. They were soon followed by NBC and most recently the Premier League has pitched in with its own claim. All this potentially makes the Google/YouTube merger one of the worst business decisions in history. Or is it?
Google claim to have a watertight case relying on the so-called “safe harbour” defence. This protection was introduced in the US by the Digital Millennium Copyright Act 1998. A similar protection exists under European law and is known as the “mere conduit” defence. The safeguard allows search engines, web hosts and internet services providers (ISPs) to avoid liability for copyright infringement committed by third parties where they do not initiate the transmission and do not select or modify the information contained in the transmission i.e. they are a “mere conduit” between those who wish to share information some of which may include copyright infringement. They are not obliged to remove infringing material unless they are notified of it by the rights holders, in which event they must then act expediently to do so. The logic behind this immunity is that ISPs are not like the traditional shops selling pirated videos under the counter they have to control a global traffic of information and it is simply not possible to check whether every piece of information they receive is from the authorised person. The reason Napster was shut down was because it had failed to adopt and implement a policy providing for termination of users who violated copyright laws. Google and YouTube both have implemented policies with the terms and conditions on the YouTube website clearly requiring users to own all of the IP rights in their submissions.
However companies like Viacom in taking legal action against YouTube have argued that the video sharing website deliberately “avoid taking proactive steps to curtail the infringement on its site" and further that "(t)heir 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". Meanwhile the Premier League have gone for a different angle argueing that Google bought YouTube in the knowledge that the site was filled with unlawful material and in doing so "endorsed and directed YouTube's infringing conduct since becoming its corporate parent". Google/YouTube have hit back denying that they deliberately allow pirated material to be posted on their website and have relied on the very principles of democracy calling on the courts to protect “the way hundreds of millions of people legitimately exchange information, news, entertainment, and political and artistic expression".
Briffa’s Opinion
This case seems to be too close
to call and in the unlikely event that it does reach trial then this
will be a good opportunity for a much needed judicial interpretation
of the “safe harbour” defence.
If the various claimants can show that Google/YouTube are actively
encouraging copyright infringement then they may be able overcome
the “safe harbour” immunity. It may come down to a question
of the difference between actual and constructive notice, where Google/YouTube
will find it difficult to argue that they are not aware that shows
like Jon Stewart's "The Daily Show" and Nickelodeon's "SpongeBob
SquarePants" are copyright protected.
However it is unlikely that this case will provide the judicial clarification that this area of the law so desperately needs. The difference between Google/YouTube and Napster is that the latter was a deliberate attempt to undermine corporate America while the former are the toast of the information age with significant brand appeal and a very healthy share price. It is in all sides interests to reach an agreement.