Court records show YouTube founders views on copyright, reveal Viacom wanted to buy YouTube

Court records illuminate Viacom-YouTube battle

SAN FRANCISCO — YouTube co-founder Steve Chen once warned a fellow co-founder to stop posting pirated videos on their Web site, according to court documents unsealed Thursday as part of a 3-year-old copyright lawsuit against the online video leader.

That bit of intrigue was among the confidential information that had been kept under wraps since Viacom Inc. sued YouTube for alleged copyright infringement of “The Colbert Report, “The Daily Show” and other shows in a federal court in New York.

The newly released evidence also revealed that Viacom wanted to buy YouTube before getting beat out by Google Inc., which acquired the site for $1.76 billion in 2006.

Viacom, the owner of Paramount Pictures and cable TV channels that include Comedy Central, sued YouTube in 2007 seeking more than $1 billion in damages.

The media company alleges that YouTube allowed copyright-protected clips to appear on its Web site in its early days to attract a bigger audience. YouTube maintains it has always obeyed the Internet’s copyright laws, which generally protect service providers from copyright claims as long as they didn’t post the infringing material themselves and promptly remove it when notified about a violation.

An e-mail exchange less than six months after YouTube’s February 2005 inception showed that Chen was worried about Jawed Karim’s lax attitude toward copyrights might cause trouble.

“Jawed, please stop putting stolen videos on the site,” Chen wrote in the July 19, 2005, e-mail. “We’re going to have a tough time defending the fact that we’re not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it.”

In a statement after the documents were unsealed, YouTube said Chen’s e-mail was referring to some aviation videos that had been making the rounds on the Web. “The exchange has nothing to do with supposed piracy of media content,” YouTube said.

Karim left YouTube before Google bought it in 2006.

Viacom was sizing up YouTube as a takeover target before it launched its legal attack accusing YouTube of illegally hosting roughly 62,000 clips from the company’s stable of movies and cable TV programming.

MTV Networks, the division overseeing Viacom’s cable TV operations, made the case for a YouTube bid in a July 2006 presentation. Google swooped in to buy YouTube five months later.

“We believe YouTube would make a transformative acquisition for MTV Networks/Viacom that would immediately make us the leading deliverer of video online,” Viacom’s review said.

Viacom also hailed YouTube as “the dominant platform” for Web video and worried that the site would end up being sold to News Corp.’s MySpace. The documents didn’t mention how much Viacom might be willing to pay for YouTube.

The presentation was drawn up by Adam Cahan, an MTV Networks executive vice president. Cahan had just left Google earlier in 2006 to work for Viacom.

Since Google took over, YouTube has struck licensing deals with many media companies, which now get a cut of revenue from ads shown on the video site.

YouTube won over much of the professional media by developing technology that automatically detects video and audio claimed by its copyright owners.

One of the biggest disputes in Viacom’s lawsuit is over how YouTube monitored its site for copyright violations before Google bought it.

Viacom contends YouTube’s employees realized copyright-protected video was being illegally posted on the Web site, but routinely looked the other way because they knew the professionally produced material would bring in more people.

YouTube lawyers have contended there was no way to know whether copyright-protected video was coming from pirates or from movie and TV studios looking to use the Web site as a promotional tool. If a studio issued a notice of a copyright violation, YouTube says it promptly removed the specified clip as required under the 1998 Digital Millennium Copyright Act.