The YouTube/Viacom $1 billion copyright infringement lawsuit has been bumping along for so long now that many consumers probably suspect the whole thing is about to wrap up. Not so; in fact, the case is only just beginning. On Friday, YouTube at last submitted its reply to Viacom's complaint, and while 90 percent of the document consists of the words "Defendants deny the allegations of paragraph xx," the introduction is a hot one. In it, YouTube claims that its service is exactly what Congress intended to shield when it passed the Digital Millennium Copyright Act in 1998, and it goes on to charge that Viacom's lawsuit "threatens the way hundreds of millions of people legitimately exchange information, news, entertainment, and political and artistic expression."

Viacom charges that YouTube profited for years (before being acquired by Google) from hosting large amounts of its content on the service. The Daily Show and The Colbert Report used to be YouTube staples, and even though the site has taken down specific clips when notified by the copyright holder, Viacom sees a willful pattern of making money and growing the site on the back of its content.

YouTube has always argued that the DMCA's "safe harbor" provisions protect it from this sort of lawsuit. Those rules enable various "service providers" to avoid liability in copyright cases so long as they respond properly to DMCA takedown notices. In the new filing, YouTube goes a bit further with this rhetoric. Not only is it protected by the safe harbor rules, but it is exactly the type of service that Congress meant to cover. "YouTube fulfills Congress's vision for the DMCA," says the filing.

For those used to thinking of the DMCA only as the source of overly-aggressive DRM anticircumvention rules, it might come as a surprise to find YouTube claiming that "there is not a question that Congress made the correct policy choice" with the DMCA. The safe harbors in that law and in the Communications Decency Act have likely prevented thousands of costly and damaging copyright and libel lawsuits against network operators, and have functioned as a spur to innovation.

What's interesting about this particular case is that we have a large copyright owner (Viacom) seeking to attack a broad reading of the DMCA, at least in this particular area, while the opposite is usually true. In our own conversations with Viacom execs, they have repeatedly made clear that YouTube, in their view, does not actually qualify as a DMCA "service provider" and is not entitled to safe harbor protection.

YouTube says that such a claim threatens to undermine the best part of the DMCA by chipping away at the certainty companies like YouTube have had so far had when posting user content. Because the lawsuit seeks "to make carriers and hosting providers liable for Internet communications," YouTube charges that Viacom could affect the way that millions of people communicate online.

If sites like YouTube or even Ars Technica—which allows "user-generated content" in the form of forum posts—can face liability for copyright infringement in user-provided material, such services could go out of business or might implement so many restrictions they are no longer be useful.

This is certainly an extreme scenario, and one that YouTube is trotting out in defense of its own position, but it does raise awareness of the importance of safe harbor rules in a general sense. At the end of the complaint, YouTube announces the twelve defenses it plans to use in the case, and they include (not surprisingly) a DMCA safe harbor claim, a fair use claim, and a claim of copyright misuse on the part of Viacom.

Given the ridiculously high stakes in the case, one might expect the parties to simply settle and move on, but in this case both sides appear ready to fight to the bitter end. While Viacom cannot seek punitive damages in the case, it remains intent on collecting huge statutory damages that don't require it to show any actual losses.

We've already outlined some of the ways that Viacom can work to fight piracy of its content, and it's doing a solid job by putting all past Daily Show content online with easy streaming and searching, for instance. But even as it moves quickly into the brave new streaming future, Viacom would like to deal a smackdown to the upstart copyright philistines over at YouTube... and picking up one beeeeeellliion dollars can't hurt, either.

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