Even though its users regularly post clips from the hottest music videos and TV shows, YouTube, the free video file-sharing site launched in 2005, has managed to stave off infringement suits by making deals to split ad revenue with big content providers, including CBS Corporation, the British Broadcasting Corporation, and Universal Music Group. Until this March, that is. Months of haggling for a content license between Viacom International and YouTube came to an unsuccessful end, and Viacom and a posse of its subsidiaries, including Paramount Pictures Corporation, dragged YouTubeand its new corporate parent, Googleinto federal district court in Manhattan, accusing the site of broadcasting protected works without paying.

Under federal law Internet content sharing sites aren’t liable for copyright infringement as long as they immediately take down or block illegal clips when notified by the owners. In its complaint, Viacom admits that YouTube follows the rule. But it claims that the site induces and participates directly in infringement by copying all uploaded contentincluding pirated clipsto its own servers; providing users a way to search those servers for illegal content; and broadcasting illegal clips flanked by banner advertising. Viacom alleges that YouTube doesn’t use its screening technology, and implements features that allow users to hide videos from public searches. The complaint also alleges that YouTube intends its site to be used primarily to share illegal content because that’s what brings in the ad dollars.

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