A legal battle pitting a large media conglomerate and a user-generated content distributor against each other could lead to changes in the way the public engages with the media, according to attorneys familiar with the case.

Viacom launched a civil lawsuit against YouTube in 2007, claiming that the website allowed users to post videos of Viacom television shows and movies without prior authorization and that the site refused to take down the videos once Viacom complained. The media giant argued in court that defendants engaged in, promoted and induced the copyright violations in order to build up traffic, therefore beefing up advertising revenue.

The videos Viacom claims were improperly posted include part or full episodes of SpongeBob SquarePants and The Daily Show. Viacom is seeking damages of approximately $1 billion.

A district court sided with YouTube last year, arguing that YouTube was shielded from liability because of the Digital Millennium Copyright Act. The court also believed that YouTube removed the videos in question once a violation of copyright law became apparent. However, an appeals court in New York is hearing the case.

The case is an uphill climb for the company. At the appellate level, Viacom cannot challenge the facts. For example, it can't argue that YouTube didn't remove the videos in question since the lower court already established the fact. Rather, Viacom can only challenge the lower court's interpretation of the law.

For this specific case, the question is did it know about postings, and did it do anything to stop the postings, said David Gurwin, who chairs the Entertainment and Media Law Group at Pittsburgh-based Buchanan Ingersoll & Rooney.

But another attorney pointed out the broader implications of the case.

I think the big picture question here is who is responsible for policing piracy when new technology develops, said Robyn Crowther, a shareholder with Los Angeles-based Caldwell Leslie & Proctor.

Basis of the Lawsuit

This issues in this case, according to Gurwin, stems from the case of Zeran v. America Online Inc., in 1996, where Kenneth Zeran said AOL didn't take down defamatory information written about him after the Oklahoma City bombings.

The fourth circuit court of appeals ruled that online service providers were not held liable for defamatory material on their systems, based on an interpretation of the Communications Decency Act of 1996. Zeran appealed to the U.S. Supreme Court, but the high-court denied his petition.

However, the appeals ruling didn't apply to copyrighted material. Congress enacted the DMCA in 1998. The law contained a safe harbor provision shielding online-service providers from copyright infringement based on the activity of their users, so long as the material was taken down once the companies were made aware of the infringing material.

However, in the case of MGM Studios v. Grokster in 2005, the Supreme Court ruled unanimously that peer-to-peer file sharing companies could be sued for copyright infringement since they deliberately fostered the infringement.

YouTube explicitly prohibits posting copyrighted material without permission. On the uploading page, users are given a message stating, Important: Do not upload any TV shows, music videos, music concerts, or commercials without permission unless they consist entirely of content created yourself.

But it would be impractical for YouTube to take down all videos immediately that violate copyright laws. According to YouTube, approximately 24 hours of new video is uploaded every minute to the website, meaning that there likely are millions of videos that could be called to question. Therefore, a key part of the decision in the Viacom case will rest on whether YouTube dragged their feet or removed the information quickly.

Most large media companies haven't taken on YouTube in court. Perhaps YouTube satisfactorily responded to requests by the media companies to remove the content. But even if content infringing material exists on the site, a content-owner will sometimes turn a blind eye to it, Gurwin said. For example, a company could realize that the videos help build up a brand, generating more revenue for the content creator.

Some see YouTube as a way to create an audience base, Gurwin said. If a company says it isn't having a major negative effect on profits, a lawsuit won't be brought.

What a Ruling Favoring Either Side Could Mean

Everything on YouTube containing Viacom material won't be prohibited, Gurwin said. Portions of TV shows could be used under fair use provisions of copyright law. Among other exceptions, portions of copyrighted work can be used in small chunks for educational purposes. Furthermore, laws permitting fair usually allow for parodies.

However, Gurwin noted that YouTube may have to find ways to deal with content more deliberately.

Crowther said that if Viacom ultimately wins this case, YouTube could try to set up some sort of automatic filter that could block certain videos from going on the site. However, that could ultimately lead to concerns that YouTube censors materials and could spur further lawsuits.

If YouTube's victory is upheld, both attorneys' don't see a major difference immediately. However, companies could eventually steer their content to other websites.

Big media companies could start to shy away from YouTube, she said.

New York-based Viacom owns a variety of popular cable television channels, including Nickelodeon, MTV, VH1 and Comedy Central. The company also owns Paramount Pictures Studios. YouTube was launched in 2005 and was acquired by Mountain View, Calif.-based Google in November 2006 for $1.85 billion.

The case is Viacom International v. YouTube, 10-03270, U.S. Court of Appeals for the Second Circuit.