Image: MorgueFile

In a setback for Google, the 2nd U.S. Circuit Court of Appeals today reversed a former ruling in favor of YouTube, a popular video sharing site owned by the web giant. The successful appeal will send the case, which is likely to have widespread implications for the future of copyright law, back to district court.

In the summer of 2010, Viacom and other copyright holders sued YouTube on copyright infringement grounds. In a decision that was at the time seen as a windfall for Google, the court found that the site was not in violation of existing copyright laws.

Today’s decision hinges on the claim that YouTube was aware of specific infringing content on their servers, and on the understanding of the “safe harbor” provision of the Digital Millenium Copyright Act. Existing copyright law protects third party content hosts from liability for infringing content found on their sites, so long as they had no knowledge of the content, didn’t benefit from its presence, and have in place a policy for dealing with infringing content.

“[W]e vacate the order granting summary judgment because a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website,” reads the decision. “We further hold that the District Court erred by interpreting the ‘right and ability to control’ infringing activity to require ‘item-specific” knowledge.”

Techdirt pundit Mike Masmick opined that while the ruling is a boon for the copyright lobby – especially after last summer’s upset – it still leans in favor of Google.

“On some of the other points, [the decision is] a little fuzzy in its thinking, but this is still mostly a victory for YouTube at this stage,” Masmick wrote. “It could have been a more complete victory, but this is hardly the complete rejection of the district court ruling that some maximalists insisted was going to be delivered.”

The reversal comes after a year during which major copyright holders turned increasingly to legislative rather than legal options to deal with what they see as widespread and damaging infringement. Two bills favored by the entertainment industry, the Stop Online Piracy Act and the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act, suffered embarrassing defeats in Washington and the court of public opinion.

Google was one of a number of high-profile internet-based companies that participated in a 24 hour “blackout” protest against those pieces of legislation in January.

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