Viacom Hits Google with $1 Billion Lawsuit over YouTube Copyright Infringement

Viacom Inc., producer of The Daily Show and parent of Paramount Pictures, is suing Google for $1 billion for "rampant [copyright] infringement" on its YouTube video sharing site. In November, Google purchased YouTube -- which drew 133.5 million visitors in January against 9.5 million a year ago -- for $1.65 billion. Viacom claims that YouTube, which posted 160,000 Viacom clips that have been viewed a collective 1.5 billion times, "willfully infringe[d] copyrights on a huge scale" and had "brazen disregard" for intellectual property laws. Google lawyer Alexander Macgillivray says YouTube's actions are covered by the 1998 Digital Millennium Copyright Act, which protects online service providers from copyright liability provided they promptly comply with requests to take down material. YouTube has fielded similar complaints before: CBS Corp. complained of copyright infringement before agreeing to voluntarily provide clips; and Vivendi's Universal Music Group threatened a lawsuit before reaching a licensing agreement with the site. Viacom is the first big media company to carry through on its threat of a substantial lawsuit, and some analysts believe it is a ploy to enhance its negotiating position. Macgillivray: "Lawsuits are generally not very good negotiating tactics with us." Google shares shed 2.6% to close at $443.03; Viacom's Class B shares lost $0.09 to close at $39.48.

Sources: Information Week, Bloomberg, Business Week
Commentary: Pumped Up On Joost, Viacom Sues Google • Viacom's Lawsuit Could Mean YouTube's End Game • Viacom Suing Google For $1 Billion? Yawn.
Stocks/ETFs to watch: Viacom, Inc. (VIA.B), Google Inc. (GOOG). ETFs: First Trust IPOX-100 Index (FPX), Consumer Discretionary SPDR (XLY), First Trust Dow Jones Internet Index (FDN), iShares S&P Global Technology (IXN)

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.