The YouTube/Viacom lawsuit and why startups need better protection

Last week I took a few days off to get out of town with my family. And I pretty much stayed in vacation mode throughout the weekend.

But the YouTube/Viacom decision has been in my mind since last week. As many of you know by now, Viacom had sued YouTube for copyright infringement. YouTube believed they were protected under safe harbor under DMCA

The judge in this case stated DMCA works well:

The present case shows that the D.M.C.A. notification regime works efficiently: when Viacom over a period of months accumulated some 100,000 videos and then sent a mass take-down notice on February 2, 2007, by the next business day YouTube had removed virtually all of them,” Judge Stanton wrote.

That is huge and I was so pleased that the court supported YouTube in this lawsuit. 

I’m not a lawyer but to sue Veoh or Youtube to me is like suing Comcast because there is a small percentage of illegal activity taking place over email throughout their broadband network. Or like suing your phone company because someone uses the telephone to do something illegal.

Here’s the bad part: Viacom said it would appeal.

Why is this bad? It’s expensive for any company, even Google to keep defending themselves in court. But at least Google has the resources to defend itself. Startups don’t have this capability and big companies often use litigation as a competitive strategy.

I’ve seen this first hand a number of times and it feels awful. When our portfolio company Veoh was sued by UMG, the court continuously sided with Veoh but UMG kept appealing and that was deadly. 

We need a new legal system where small companies get a higher level of protection from large companies that use legal saber rattling and litigation as a weapon. Getting back your legal fees isn’t sufficient. Maybe it’s a higher penalty if the plaintiff’s case doesn’t hold up or a faster/more efficient motion to dismiss process when it’s a startup. I don’t know.

But I do know the current system needs to be fixed.

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this issue of legal “bullying” is another reason why I’m concerned about our patent system. Bigger companies can apply for thousands of patents a year or pay millions to become a member of Nathan Myrvold’s patent farm which has a huge stockpile of cash and patents. It’s an unfair fight. Patent lawsuits are another common way for big companies to bully startups in the courts.