Earlier this week Viacom settled its long-running lawsuit against Google over video clips containing Viacom’s copyrighted material that users posted on YouTube.  The lawsuit was filed seven years ago; Viacom sought well over a billion dollars in damages.  The last major development in the case was in 2010, when a district court judge ruled in Google’s favor.  The case had bounced around between the district and Second Circuit appeals courts.  The parties agreed to settle the case just days before oral argument was to take place before the Second Circuit.

It’s surprising how little press coverage the settlement has attracted — even in the legal press — considering the strategic implications for Viacom and copyright owners in general.

The main reasons for the lack of press attention are that details of the settlement are being kept secret, and that by now the facts at issue in the case are firmly in the past.  A few months after Viacom filed the lawsuit in March 2007, Google launched its Content ID program, which enables copyright owners to block user uploads of their content to YouTube — or monetize them through shared revenue from advertising.  The lawsuit was concerned with video clips that users uploaded before Content ID was put into place.

Viacom’s determination to carry on with the litigation was clearly meant primarily to get the underlying law changed.  Viacom has been a vocal opponent of the Digital Millennium Copyright Act (DMCA) in its current form.  The law allows service providers like YouTube to respond to copyright owners’ requests to remove content (takedown notices) in order to avoid liability.  It doesn’t require service providers to proactively police their services for copyright violations.  As a result, a copyright owner has to issue a new takedown notice every time a clip of the same content appears on the network — which often happens immediately after each clip is taken down.  As a result, companies like Viacom thus spend millions of dollars issuing takedown notices in a routine that has been likened to a game of Whac-a-Mole.  

From that perspective, Google’s Content ID system goes beyond its obligations under the DMCA (Content ID has become a big revenue source for Google), so Google’s compliance with the current DMCA isn’t the issue.  Countless other service providers don’t have technology like Content ID in place; moreover, since 2007 the courts have consistently — in other litigations such as Universal Music Group v. Veoh — interpreted the DMCA not to require  that service providers act as their own copyright police.  Viacom must still be interested in getting the law changed.

In this light, what’s most interesting is not that the settlement came just days before oral argument before the Third Circuit, but that it came just days after the House Judiciary Committee held hearings in Washington on the DMCA.  These were done in the context of Congress’s decision to start on the long road to revamping the entire US copyright law.

My theory is that, while Viacom may have had various reasons to settle, the company has decided that it has a better shot at changing the law through Congress than through the courts.  The journey to a new Copyright Act is likely to take years longer than the appeals process.  But if Viacom were to get the lower court’s decision overturned in the Third Circuit, the result would be a precedent that wouldn’t apply nationwide; in particular, it wouldn’t necessarily apply in the tech-friendly Ninth Circuit.  A fix to the actual law in Congress that’s favorable to copyright owners — if Congress delivers one — could have broader applicability, both geographically and to a wider variety of digital services.   Viacom has waited six years; it can wait another ten or so.