CNET: 'Did Viacom find smoking gun in YouTube case?'

Greg Sandoval has the scoop:

Lawyers working on a $1 billion copyright lawsuit filed by Viacom against Google's YouTube may have uncovered evidence that employees of the video site were among those who uploaded unauthorized content to YouTube.

In addition, internal YouTube e-mails indicate that YouTube managers knew and discussed the existence of unauthorized content on the site with employees but chose not to remove the material, three sources with knowledge of the case told CNET.

The e-mails, according to the sources who asked for anonymity because of the ongoing litigation, surfaced during an exchange of information between the two sides of the legal dispute. They are one of the cornerstones of Viacom's case, as well as that of a separate class action lawsuit filed against Google and YouTube by a group of content owners, the sources said. The group includes a European soccer league and a music-publishing company.

CNET did not post the actual internal YouTube emails, so we don't know exactly what the employees knew. But this sounds like potentially powerful evidence for the plaintiffs in the copyright lawsuits brought by Viacom, the English Premier League, and Bourne Music Publishers against YouTube. YouTube claims that it is protected by the safe harbor found in 17 USC § 512(c), but the plaintiffs argue that YouTube falls outside the safe harbor because, among other things, it had either "actual" or "red flag" knowledge of infringing activity on its site. See id. § 512(c)(1)(A)(i),(ii). The battle will be over whether such evidence (and we only have a tiny sliver) shows YouTube's knowledge of specific infringements, or just more generally that it knew that there was infringing activity on its site, in which case it would be less likely to lose the safe harbor. Also, if YouTube employees themselves uploaded infringing videos while acting within the scope of their employment, such activity would not be covered by the safe harbor, which only applies to "infringement of copyright by reason of the storage at the direction of a user," id. § 512(c)(1), not by the service provider itself.

YouTube's response, according to CNET:

The characterizations of the supposed evidence, made in violation of a court order, are wrong, misleading, or lack important context and notably come on the heels of a series of significant setbacks for the plaintiffs.... The evidence will show that we go above and beyond our legal obligations to protect the rights of content owners.

Interestingly, CNET also obtained a portion of the deposition of Google CEO Eric Schmidt, who testified that he believed that YouTube was "worth $600 million to $700 million" at the time Google bought it for $1.65 billion in 2006. Schmidt said Google was willing to pay a $1 billion "premium for moving quickly and making sure that we could participate in the user success in YouTube."