Viacom vs. YouTube: What was won. What was lost.

When Viacom filed suit against YouTube back in 2007 the web was a very different place. Video, which is likely to be 90% of web traffic by 2014, was a tiny blip on the radar screen. And YouTube, while backed by the highly regarded Sequoia Capital and growing quickly, was still very much a fragile entity that could have been crushed by a significant defeat.

You have to wonder if Viacom, in hindsight, now realizes that their billion dollar lawsuit drove the video startup into the arms of Google where it now has grown to become a powerful force in web video and likely challenger to the cable dynasty that is Viacom. Hmm, perhaps that lawsuit wasn't such a good idea after all.

Now, with a summary judgment throwing out the case before it even gets in front of a jury, Viacom is left without either a judgment or a legal threat to hold over the heads of video hosts. There's been no shortage of opinions on the judgment, with YouTube doing a victory dance, and copyright holders crying foul.

The spectrum of responses is a glimpse into the changing rules and roles in content creation and distribution.

Writing in Wired, David Kravets called the ruling: "a boon for internet freedom." Karvets's enthusiastic proclamation goes on to say that the ruling is critically important "as it applies to search engines, video-hosting companies, picture-hosting services like Flickr, social-networking sites like Facebook and micro-blogging services such as Twitter."

But Karvets warns: "it will make it all the more difficult for rights holders to protect their works."
TechCrunch's Erick Schonfeld is somewhat less enthusiastic, surprised by the summary judgment, if not the ruling itself. Says Schonfeld; "The fact that the judge granted YouTube's summary motion to dismiss the case sends a clear message to media companies: Live by the DMCA, Die by the DMCA."

One thing is clear, the Judge wanted to put a stake in the heart of this case, Schonfeld explains: "Unless Viacom can find a judge who interprets the DMCA more liberally, this lawsuit is going nowhere. YouTube is here to stay, as long as Google has billions of dollars of cash in its war chest." Of course, not everyone agrees that this was good for web freedom. Cliff Sloan of Skadden Arps and I spent a few minutes on Shelly Palmer's Digital Life show debating the ruling. As Cliff is an experienced IP attorney and litigator - and I'm...well.. not either of those, you decide for yourself if I held my own.

But others saw the case, and Viacom's threat of an appeal, as emblematic of a larger problem facing startups who are under legal attack. Spark Capital venture capitalist Bijan Sabet sees the pending appeal this way, it's bad. "Why is this bad? It's expensive for any company, even Google to keep defending themselves in court. But at least Google has the resources to defend itself. Startups don't have this capability and big companies often use litigation as a competitive strategy."

Sabet says that the threat of an appeal hangs over the head of all startups.

"We need a new legal system where small companies get a higher level of protection from large companies that use legal saber rattling and litigation as a weapon. Getting back your legal fees isn't sufficient. Maybe it's a higher penalty if the plaintiff's case doesn't hold up or a faster/more efficient motion to dismiss process when it's a startup. I don't know."

But for now, the DCMA has been ratified, and unless there's a significant change, the speed of growth of video on the web will only continue to increase as a result of this ruling.

Originally published on AlwaysON