Thursday, March 15, 2007

Is Viacom v YouTube That Big a Deal?

Interesting observation by Eric Goldman on CNet yesterday. While the Viacom lawsuit spells trouble for YouTube, it's worth keeping in mind that Google and YouTube are still separate entities and that the issue of video sharing is ancillary to Google's primary business. As Goldman put it on CNet:
"Google has plenty of legal albatrosses," said Eric Goldman, assistant professor at Santa Clara University School of Law and director of the High Tech Law Institute. "This doesn't even register compared to the other problems they face," such as the litigation over trademarks used in paid search in the U.S. and other countries, and over copyright related to images and Google News in the U.S. and Europe, as well as copyright lawsuits over its book-scanning and digitization efforts.

"Some of those implicate Google's core business much more squarely than this lawsuit does," Goldman said. "I can't even track all the patent cases they are involved in, but each one has the potential to be a much more serious risk to their business than this one does."
This leads to two points. First, even though $1 billion may be a shocking number, a loss for Google wouldn't really change all that much. As is, the YouTube purchase price of $1.6 billion set aside around $200 million for copyright lawsuits, some of which is presumably still available to pay damages here. Plus Google has billions in cash available. If YouTube gets shut down (with it's paltry income of $15 million last year), it's not like that will cause any real harm to Google. Also, it does not appear that Google Video is the subject of this suit, further decreasing the effect of an adverse outcome.

Second, that Google has already gone to court to litigate issues far more important to its business than this and has won, suggests that Google is not averse to litigation. Their legal team is no joke and the services they offer are built in a way very attuned to the state of the law (eg. how Book Search mirrors the requirements for fair use), making a Google victory all the more likely. It would seem that Google is very comfortable handling cases of this nature.

That YouTube is not central to Google's current business (though perhaps important in the future), makes it unclear as to whether it's worth it for Google to go all the way with the case. It certainly has the talent and funds to go for it, and to risk the loss, and would provide it with a way to stick it to the old media. But while YouTube, as in video sharing, may not be central to Google's business, the DMCA's safeharbor provisions are central to Google's business, section 512(c) in particular. Viacom is certainly testing the limits and validity of the DMCA with this lawsuit and Google has a huge interest in making sure that the safeharbors are found to be valid, that they apply to Google and its subsidiaries, and that they apply to these kinds of online behaviors. Settling this case could weaken Google's ability to rely on the DMCA, but losing the case would be even worse. If they think they can win on the DMCA issue, I would expect Google to take the case all the way. If not, a settlement is on the way.
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