Today, a US appellate court released its decision in a key case in which rights holders asserted that online video site YouTube should be liable for copyright infringing content appearing on its site. According to a preliminary reading, the appeals court reversed the earlier decision, signalling that YouTube, owned by Google, could have known about infringing content and therefore may not fit under the safe harbor clause of the US Digital Millenniumn Copyright Act limiting the liability of online service providers.

The case, Viacom International, Inc. et al v. YouTube, Inc., was decided today by the US Court of Appeals for the Second Circuit. It also involves the same case brought by The Football Association Premier League Ltd etal.

The case appears to be now headed back to the lower court.

The appeals court decision states:“Appeal from the judgment of the United States District Court for the Southern District of New York (Louis L. Stanton, Judge), granting summary judgment to the defendants-appellees on all claims of direct and secondary copyright infringement based on a finding that the defendants-appellees were entitled to safe harbor protection under the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512. Although the District Court correctly held that the § 512(c) safe harbor requires knowledge or awareness of specific infringing activity, we 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. We further hold that the District Court erred by interpreting the ‘right and ability to control’ infringing activity to require ‘item-specific’ knowledge. Finally, we affirm the District Court’s holding that three of the challenged YouTube software functions fall within the safe harbor for infringement that occurs ‘by reason of’ storage at the direction of the user, and remand for further fact-finding with respect to a fourth software function.”

The copyright holders had alleged copyright infringement stemming from “the public performance, display, and reproduction of approximately 79,000 audiovisual ‘clips’ that appeared on the YouTube website between 2005 and 2008,” and are seeking damages.

Reactions are beginning to appear.

A Viacom spokesperson sent the following comment: “We are pleased with the decision by the US Court of Appeals. The Court delivered a definitive, common sense message – intentionally ignoring theft is not protected by the law.”

Sherwin Siy, deputy legal director for online civil liberties group Public Knowledge, issued the following statement: “We are pleased with the Appeals Court ruling. The Court upheld the basic principles of the Digital Millennium Copyright Act (DMCA). Crucially, the Court rejected Viacom’s attempt to create a new duty of those hosting content to monitor actively for infringement in order to qualify for the law’s safe-harbor provisions. The Court upheld the need for knowledge of specific instances of infringement in the DMCA, and that a general awareness of possible infringement is not sufficient.”