Last month BitTorrent site isoHunt lost its appeal against the MPAA and since then several rightsholders have used this verdict to their advantage in other copyright infringement cases. Google has also been targeted with the ruling in its case against Viacom, and has now asked the court to change its opinion. The Internet giant explains that the verdict against the BitTorrent site is overly broad and endangers the existence of innovative businesses.

Canada-based BitTorrent search engine isoHunt suffered another defeat against the MPAA last month. The Ninth Circuit panel upheld the decision of a lower court, ruling that the website does not qualify for safe harbor protection under the DMCA.

The panel ruled that because isoHunt owner Gary Fung had knowledge about specific pirated works and because he profited directly from these, the site lost its safe harbor for all infringing activity carried out through the site.

The Court’s opinion read as follows, emphasis added:

We have no difficulty concluding that where the § 512(c)(1)(B) safe harbor requirements are not met, the service provider loses protection with regard to any infringing activity using the service.

We therefore hold that because Fung does not meet the requirements of § 512(c)(1)(B), he is outside of the § 512(c) safe harbor with respect to all infringement activity on the sites that are the subject of this suit.

This conclusion has raised concerns with many Internet companies including Google. In a brief filed at the Appeals Court this week Google explains that if the passage above is interpreted broadly, virtually all online service providers are at risk of losing their DMCA safe harbor.

Such a misreading could “make it more difficult for Internet companies to offer innovative services to their law-abiding users”, Google writes in its brief.

“There is a danger that this passage could be misconstrued to stand for a broader proposition that we do not believe the panel intended: that any time an online service provider is found to have exercised ‘substantial influence’ over any user-submitted content on its service—no matter what that finding was based on— it thereby loses its DMCA safe harbor protections for all user-submitted content on the entire service.”

As an example, Google writes about a ‘hypothetical’ video-hosting service with millions of videos, that may lose its safe harbor because it ran ads on a single user-submitted video which was known to be infringing.

While Google understands that safe harbor would be lost for that particular video, generalizing this finding for all other videos on the site goes too far.

“It would make no sense to thereby disqualify the service provider from DMCA protection across the board—even for countless other videos whose posting it did not control or from which it earned no benefit,” Google counters.

This hypothetical example by Google isn’t too far from reality. The company explains that Viacom is already citing the isoHunt ruling in its ongoing dispute with YouTube. Viacom told the court that the isoHunt case makes it clear that YouTube could lose its safe harbor for “all clips in suit.”

In a similar vein, the MPAA recently used the isoHunt case to argue that file-hosting service Hotfile is liable for all users who shared pirated files.

Google tells the Court that this can’t be how Congress envisioned the DMCA would work while asking for a revision of the verdict. While Google believes isoHunt did go too far, it wants the ruling to clarify that safe harbor would only be at stake when a provider engages in widespread inducement of infringement, and when it earns direct financial benefits from that infringing activity.

Google is not the only outfit jumping in on the isoHunt case. The Electronic Frontier Foundation (EFF) also submitted a brief to the Court. The EFF backs isoHunt’s request for a jury trial, pointing out that in its current form the ruling creates a chilling effect on online services.

“It has created new legal uncertainty for online service providers and their customers, undermining over a decade of legislation and jurisprudence designed to help reduce that uncertainty,” EFF writes.

Similar to Google, the EFF is particularly worried about the part where “red flag” knowledge about isolated infringements could make providers liable for all unauthorized activity carried out on the service.

“Most important, the Panel Opinion adopts a ‘loose causation theory’ that disconnects the scope of inducement liability from the defendants’ acts—raising the troubling possibility that a single inducing act (such as a message to one customer) could open the floodgates to liability for third-party infringement entirely unrelated to that act,” the EFF explains.

It is now up the Appeals Court to decide whether the case will continue. In the meantime, copyright holders will use the ruling to further their interests in court.

Update: YouTube just scored another victory in its case against Viacom, with the court concluding that YouTube’s is protected by the DMCA’s safe harbor.