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Judge Rules "Ignorance Is Bliss" in Google-Viacom Copyright Lawsuit

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Federal Judge Louis L. Stanton says Google didn't know material it violated was copyrighted, but what kind of precedent does this set up?

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Federal Judge Louis L. Stanton, the 82-year-old federal judge who had previously ruled in the SEC's case against Bernie Madoff-related Cohmad Securities "that one who conducts normal business activities while ignorant that those activities are furthering a fraud is not liable for securities fraud," did it again.

Yesterday the judge found that YouTube and Google (GOOG) hadn't violated Viacom's (VIA) copyrights because they didn't know the material was copyrighted, and once they were informed that the material was copyrighted and "red flagged," YouTube had acted swiftly to take it down. In his arguments, Stanton pointed to the intent and language of the Digital Millennium Copyright Act and was clearly seeking to affirm the current law and set a precedent for future activity. He effectively avoided Viacom's argument that YouTube should be penalized and held liable for building a business by using stuff owned by somebody else.

It strikes me as a bit of a legal nicety, and sets the stage for a whole lot more work for lawyers -- and not just Viacom appellate attorneys. The decision now places the responsibility of copyright infringement on the copyright holder rather than on the party that actually uses the copyright. While there's a case to be made that there are unintended costs associated with monitoring all that Internet stuff, it's a little like saying the guy who smoked dope wasn't to blame because he didn't know it was marijuana, and could only be held liable once the person who sold him the weed said it was "righteous."

In the real world, we now expect that the content aggregators, like Yahoo (YHOO), Huffington Post, or YouTube will now be inundated by notifications the minute copyrighted material is released through normal distribution channels. How fitting that as the world focuses on the World Cup, the red flag has come of age.
No positions in stocks mentioned.

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