It isn’t the books settlement, but in a major legal victory for Google, a New York court yesterday rejected Viacom’s $1 billion copyright infringement suit against the search engine giant over its popular YouTube service. In a ruling that stunned court-watchers, most of whom expected the case to almost certainly go to trial (and most likely settle along the way), the court granted Google’s motion for summary judgment.

In strong language, the court found that YouTube does qualify for protection from the potentially infringing acts of users under the safe harbor provision of the Digital Millennium Copyright Act (DMCA). And, in something of a rebuke to Viacom, the court actually praised Google for its handling of infringement complaints. “The present case shows that the DMCA notification regime works,” Judge Louis Stanton wrote. “When Viacom over a period of months accumulated some 100,000 videos and then sent one mass takedown notice on February 2, 2007, by the next business day YouTube had removed virtually all of them.”

Viacom sued Google/YouTube for $1 billion in March, 2007, alleging massive copyright infringement. In March of this year, Google and Viacom each filed motions for summary judgment. In its motion, Viacom accused YouTube and Google of building a business on material the company knew to be infringing, and disputed Google's claim to be a "safe harbor" under the DMCA. But in its motion, Google defended its "safe harbor" claim, illustrating a key point: copyrighted content is not necessarily unauthorized content, and Google has no way of judging which content being hosted on its site is infringing until a copyright holder steps forward.

“The crux of Viacom’s argument rests on trying to break the DMCA safe harbor because Google and YouTube execs knew that there was a lot of infringing content on the site," Techdirt blogger Mike Masnick explained earlier this year. "But Viacom’s argument breaks down entirely when you realize it doesn't explain how Google could ever make the actual determination of which videos are infringing.”

In yesterday’s ruling, the court agreed with Masnick. “Mere knowledge of the prevalence of [infringement] in general is not enough,” Stanton wrote in his decision. “To let knowledge of a generalized practice of infringement in the industry, or of a proclivity of users to post infringing materials, impose responsibility on service providers to discover which of their users’ postings infringe a copyright would contravene the structure and operation of the DMCA.”

In a statement, Google officials praised the ruling. “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.” wrote Kent Walker, Google vice president and general counsel. A Viacom victory, they argued, would have crippled the Internet, forcing service providers to screen their sites for copyright infringement.

Viacom general counsel Michael Fricklas called the ruling “fundamentally flawed,” and vowed to appeal. “It is, and should be, illegal for companies to build their businesses with creative material they have stolen from others,“ he said, adding that “legitimate websites shouldn’t have to compete with pirates.”

Fricklas’ indignation aside, Viacom’s legal arguments were soundly trounced in court. “Basically, the court sided with Google/YouTube on every point and eviscerated the arguments of Viacom," noted Techdirt's Masnick. New York Law School’s James Grimmelmann, who has followed the Google Book Settlement closely, also noted the force of Stanton’s ruling. “The opinion reads like he didn't even think the case was close,” Grimmelmann told PW. “He read the caselaw as pointing strongly in a single direction: YouTube's duty is to respond to specific knowledge and notices, and that's it." If the ruling is upheld on appeal, he noted "it’s a big, solid umbrella for online businesses to shelter under.”