NEW YORK – Viacom Inc. (NYSE: VIA and VIA.B) today announced it has filed suit against YouTube and Google alleging “massive intentional copyright infringement of Viacom’s entertainment properties.”
Viacom is seeking more than $1 billion in damages, as well as an injunction against Google and YouTube barring further such postings. Its complaint – filed this morning in the U.S. District Court for the Southern District of New York – contends that YouTube now is home to nearly 160,000 unauthorized clips of Viacom programming, which have been viewed more than 1.5 billion times.
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Viacom had been in licensing talks with YouTube until last month, when it issued a “takedown” notice to the online community, claiming its site had more than 100,000 unauthorized pieces of Viacom content from TV shows and movies such as “South Park” and “The Colbert Report.” The companies had been in contact since then, a person familiar with the talks told AdAge.com.
In aa statement today, Viacom described YouTube as “a significant, for-profit organization that has built a lucrative business out of exploiting the devotion of fans to others’ creative works in order to enrich itself and its corporate parent Google.
“Their 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,” the statement said. “In fact, YouTube’s strategy has been to avoid taking proactive steps to curtail the infringement on its site, thus generating significant traffic and revenues for itself while shifting the entire burden – and high cost – of monitoring YouTube onto the victims.”
It concludes, “After a great deal of unproductive negotiation, and remedial efforts by ourselves and other copyright holders, YouTube continues in its unlawful business model. Therefore, we must turn to the courts to prevent Google and YouTube from continuing to steal value from artists and to obtain compensation for the significant damage they have caused.”
The Viacom suit, which follows court challenges by News Corp. and producer Mark Cuban, is the most aggressive action against YouTube so far, according to Bloomberg News.
“Viacom is taking a very strong stance,” James Goss, an analyst at Barrington Research in Chicago, who rates Viacom shares “outperform,” told Bloomberg today. “The issue is control over what you own.” But Youssef Squali, a Jefferies & Co. analyst in New York who rates Google “buy,” and said he doesn’t own the shares, saw the move as a bargaining ploy. “They are trying to twist YouTube’s arm … to extract better economic terms,” Squali said. “They don’t like the economic split.”
Shares of Google, the world’s most-used search engine, fell $11.72 or 2.6 percent to $443.03 at 4 p.m. in Nasdaq trading, Bloomberg said, while Class B shares of Viacom dipped 9 cents to $39.48 in New York Stock Exchange composite trading.
Google said it hadn’t yet received the lawsuit. “YouTube has respected the legal rights,” the Mountain View, Calif.-based company said in a statement, and Google and YouTube “believe the courts will agree.”
Viacom is a global entertainment company reaching audiences via movies, digital media and television. Its brands include MTV, VH1, Nickelodeon, Comedy Central, Neopets and Dream Works. Additional information is available at www.viacom.com.
Google, founded in 1998, is a global provider of Web searches, targeted advertising and other Internet-based services. Additional information is available at investor.google.com.
YouTube, founded in February 2005 and purchased by Google last year for $1.65 billion, is a global online community designed to allow members to watch and share original videos. Additional information is available at www.youtube.com/t/fact_sheet.
