Judge: YouTube Plays Fair, Owes Viacom Nothing

If the lengthy YouTube vs. Viacom (NYSE:VIA) court battle were a heavyweight fight, a federal judge’s ruling would signify a TKO for the video broadcasting site over the parent company of MTV and Paramount . Since Google (NASDAQ:GOOG) purchased YouTube in 2006, the $1 billion case has become representative of the fight between traditional television and Internet TV, and the Internet has prevailed once again.

The New York appeals court ruling followed a revival of the case last year, when Viacom’s position found a sympathetic ear with the judge. Accusations that YouTube employees were happy their users broadcast copyrighted material were confirmed when the company complied with subpoenas for email exchanges. In fact, YouTube’s people seemed to welcome the transfer of protected material, leading to speculation that Viacom had a fighter’s chance in the suit.

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That hope ended yesterday for Viacom, which owns MTV, Paramount Pictures and Comedy Central, among other brands. While “South Park” and “The Daily Show” were key sticking points in the case, none of the shows were mentioned by name in the seized YouTube emails (nor was MTV). YouTube’s win was likely based on this lack of direct references…

The ruling confirms that Internet users act independently of site administrators, who have no control when and how videos are uploaded to portals like YouTube. As long as moderators take down content when notified of its copyrighted content, no legal action can be taken. The Digital Millennium Copyright Act (DMCA) puts the burden on the owners of copyrights. The appearance of YouTube’s emails as exhibits in the case opened the door again to the company (and thus Google)’s vulnerability. Yet the judge held that YouTube could maintain its right to DMCA protection.

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Viacom plans to appeal the ruling again, saying it has not finished fighting for the rights of its artists, though few analysts believe future rulings will go in favor of Viacom. It is estimated that several hundred million dollars have already been spent on both sides in legal fees. If the battle continues for several more years, Google and Viacom may end up spending the billion dollars that was on the line. Google stock was up nearly 3 percent as of midday Friday.

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