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Viacom suing YouTube for $1 billion

Viacom Inc. has escalated its showdown with Google Inc. and its video-sharing site YouTube.

The entertainment firm said Tuesday that it has filed a federal copyright infringement lawsuit against the site in New York, seeking more than $1 billion in damages. Viacom also is seeking an injunction that would prohibit Google and YouTube from using its clips.

Viacom, led by president and CEO Philippe Dauman, charges that YouTube has engaged in "massive intentional copyright infringement." Its complaint alleges that YouTube has made available about 160,000 unauthorized video clips from Viacom's cable networks, which include MTV, Comedy Central and VH1, and that the clips have been viewed more than 1.5 billion times.

In response to the lawsuit, a Google spokesman said: "We have not received the lawsuit but are confident that YouTube has respected the legal rights of copyright holders and believe the courts will agree. We will certainly not let this suit become a distraction to the continuing growth and strong performance of YouTube."

The suit is the most dramatic development to date in the standoff between Google and leading content companies seeking compensation and copyright protection for material appearing on YouTube. But it also divided experts as to whether the suit merely represents the latest negotiation ploy or could establish a precedent-setting legal standard that could invite additional suits.

Viacom also signaled that it is tired of trying to negotiate arrangements with YouTube, saying there has been "a great deal of unproductive negotiation and remedial efforts by ourselves and other copyright holders."

Google bought YouTube in November for $1.65 billion to further push into the online video space, which industry observers believe has major growth opportunities.

All major media companies have been weighing their options over how to deal with YouTube when it comes to their content that gets posted on the site.

In a takedown order in February, Viacom demanded that YouTube remove more than 100,000 unauthorized video clips. YouTube has said it always complies with such requests by content copyright holders.

Since requesting the removal, Viacom has been seeding its own sites with the withdrawn video and has reported significant increases in traffic, though nowhere near YouTube levels.

In its complaint, Viacom attacked YouTube's business model.

"YouTube's Web site purports to be a forum for users to share their own original 'user generated' video content," Viacom said in its complaint. "In reality, however, a vast amount of that content consists of infringing copies of plaintiffs' copyrighted works."

The company added: "YouTube is 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."

This means that Google and YouTube are taking "the fruit of our efforts without permission and destroying enormous value in the process," Viacom argued. "This is value that rightfully belongs to the writers, directors and talent who create it and companies like Viacom that have invested to make possible this innovation and creativity."

Viacom also charged YouTube with avoiding proactive steps to curtail copyright infringement, thereby "shifting the entire burden — and high cost — of monitoring YouTube onto the victims of its infringement."

Overall, Viacom said YouTube's business strategy is "in stark contrast to the actions of other significant distributors, who have recognized the fair value of entertainment content and have concluded agreements to make content legally available to their customers around the world."

Google shares fell 2.6% on Tuesday to $443.03.

Andrew Wallenstein in Los Angeles contributed to this report.