A federal judge has dismissed a billion dollar claim from Viacom for copyright infringement by YouTube, saying that the video sharing web site owned by Google acted in accordance with the takedown provisions of the Digital Millennium Copyright Act. Although not conclusive, the judgement could be critical to YouTube becoming profitable. Users of YouTube in the United States watched over 100 videos each on average last month.

Viacom, which owns digital media brands such as MTV and Comedy Central, alleged three years ago that YouTube was liable for the intentional infringement of thousands of its copyrighted works because it was aware of infringing activity but failed to prevent it.

Louis Stanton, a United States district judge in a federal court in New York, said: “Mere knowledge of prevalence of such activity in general is not enough.” He ruled that a service provider “cannot by inspection determine whether the use has been licensed by the owner, or whether its posting is a ‘fair use’ of the material, or even whether its copyright owner or licensee objects to its posting.”

YouTube had submitted that in some cases Viacom employees had also been uploading thousands of videos to YouTube to promote their programmes.

When Viacom filed a takedown notice against YouTube in February 2007 citing some 100,000 videos, YouTube complied, removing most of the material by the next business day. The judge remarked that this “shows that the DMCA notification regime works efficiently”.

In a statement, Viacom said it believed the ruling by the lower court is “fundamentally flawed” and plans to appeal the decision. “YouTube and Google stole hundreds of thousands of video clips from artists and content creators, including Viacom, building a substantial business that was sold for billions of dollars,” said Michael Fricklas, the General Counsel for Viacom. “We believe that should not be allowed by law or common sense.”

Kent Walker, his counterpart at Google, said the decision “follows established judicial consensus that online services like YouTube are protected when they work cooperatively with copyright holders to help them manage their rights online.”

“This is an important victory not just for us, but also for the billions of people around the world who use the web to communicate and share experiences with each other.”

A case by the Football Association Premier League alleging infringement of copyright on football matches was also dismissed.

Of course, the Digital Millennium Copyright Act only applies in the United States. Ironically, it was heavily lobbied for by Hollywood studios in order to protect their intellectual properties from piracy.

Although Viacom may appeal the summary judgement, the decision significantly improves the prospects for YouTube, potentially allowing the service to attract more advertising and premium programming. It also gives some comfort to other social networking sites that encourage user contributed content.

According to the latest figures from comScore, Google accounted for 43% of online videos viewed in the United States in May, with an all-time high of 14.6 billion views, representing over 100 videos per viewer. Hulu was the next most popular video site, with 1.7 billion views or a 3.5% share, with an average 27 videos per viewer and an average of 2.7 hours viewing in the month. Viacom was fifth, with around 346 million online video views or around 1% of the market, attracting 10 videos per viewer.