YouTube and Viacom battle gets nasty

NEW YORK (CNNMoney.com) -- A bitter feud between Google's online video site YouTube and media conglomerate Viacom turned ugly on Thursday, as both companies hurled accusations at one another about engaging in deceptive and illegal practices.

The war of words began after a federal judge ordered the release of previously sealed documents relating to Viacom's three-year-old copyright infringement suit against YouTube.

In one of the documents, Viacom accuses YouTube's founders of intentionally creating a site that was "built on infringement."

"As founder Steve Chen put it, YouTube needed to 'steal' videos because those videos make 'our traffic surge,'" Viacom said in a statement, referencing a an internal YouTube e-mail. "Another YouTube founder even uploaded stolen content!"

Viacom (VIA) also said that Google (GOOG, Fortune 500) bought YouTube for $1.7 billion in 2006 "precisely because it was a haven of infringement." The media company argued that Google has the technology to automatically prevent copyrighted material from appearing on its site, but refuses to use it.

Viacom contends that by permitting reams of its copyrighted content to be posted, Google and YouTube are essentially forcing Viacom to license all of that material, since it is incredibly labor intensive for Viacom to formally request that each video be removed.

YouTube's chief counsel, in turn, posted on a company blog accusing Viacom itself of engaging in deceptive practices.

The YouTube blog post said that while Viacom was battling Google to take copyrighted material down, the media company was at the same time secretly uploading content to YouTube. Google argued that Viacom executives realized that videos posted on YouTube served as very effective promotional tools -- especially for popular shows like "The Daily Show" and "The Colbert Report."

Google referenced internal Viacom documents that showed the media company hired at least 18 different marketing firms to upload videos to the site, even deliberately "roughing up" the videos to make them look as if they were stolen. In the strangest accusation, Google said Viacom sent employees to Kinko's to upload clips, so that the computers could not be traced back to Viacom.

With so many shows secretly uploaded from so many different Viacom sources, Google said Viacom often asked Google to remove clips that were, in fact, uploaded by Viacom itself. Viacom would then "sheepishly" ask Google to post the videos again once it discovered its error, Google's lawyer said on the blog post.

Google said that YouTube is protected by the Digital Millennium Copyright Act (DMCA), which protects hosting Web sites from copyright liability as long as they take down the copyrighted content once the company is informed of its presence on its site.

Viacom is arguing that Google is not absolved by the DMCA because YouTube intends to infringe on copyrighted material. The media company believes that Google should review certain content before it is posted rather than waiting for copyright holders to request that Google remove the illegal content.