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					                       UNITED STATES DISTRICT COURT
                  FOR THE SOUTHERN DISTRICT OF NEW YORK


                                                1
VIACOM INTERNATIONAL INC.,                      1
COMEDY PARTNERS,                                )
COUNTRY MUSIC TELEVISION, INC.,                 1
PARAMOUNT PICTURES CORPORATION,                 )
and BLACK ENTERTAINMENT TELEVISION              1
LLC,                                            )
                                                1
                              Plaintiffs,       )   Case No. 1:07-cv-02 103 (LLS)
                     v.                         )   (Related Case No. 1:07-cv-03582 (LLS)
                                                1
YOUTUBE INC., YOUTUBE, LLC, and                 )
GOOGLE, INC.,                                   1
                                                1
                              Defendants.       1
                                                1

     MEMORANDUM OF LAW IN SUPPORT OF VIACOM'S MOTION FOR
  PARTIAL SUMMARY JUDGMENT ON LIABILITY AND INAPPLICABILITY OF
   THE DIGITAL MILLENNIUM COPYRIGHT ACT SAFE HARBOR DEFENSE


Stuart J. Baskin (No. SB-9936)               Paul M. Smith (No. PS-2362)
John Gueli (No. JG-8427)                     William M. Hohengarten (No. WH-5233)
Kirsten Nelson Cunha (No. KN-0283)           Scott B. Wilkens (pro hac vice)
SHEARMAN & STERLING LLP                      Matthew S. Hellman (pro hac vice)
599 Lexington Avenue                         JENNER & BLOCK LLP
New York, NY 10022                           1099 New York Avenue, NW
Telephone: (2 12) 848-4000                   Washington, DC 20001
Facsimile: (2 12) 848-7 179                  Telephone: (202) 639-6000
                                             Facsimile: (202) 639-6066

                                             Susan J. Kohlmann (No. SK-1855)
                                             JENNER & BLOCK LLP
                                             9 19 Third Avenue
                                             New York, NY 10022
                                             Telephone: (2 12) 89 1- 1690
                                             Facsimile: (2 12) 89 1- 1699

                                 Attorneysfor Plaintiffs
                                                     TABLE OF CONTENTS

                                                                                                                                            PAGE

TABLE OF AUTHORITIES                           .........................................................................................................
                                                                                                                                                   111


PRELIMINARY STATEMENT.................................................................................................
                                                                                                                     1

SUMMARY JUDGMENT STANDARD                             ....................................................................................4
ARGUMENT .................................................................................................................................5

I   .   DEFENDANTS ARE LIABLE UNDER GROKSTER BECAUSE THEY
        INTENTIONALLY OPERATED YOUTUBE AS A HAVEN FOR MASSIVE
        INFRINGEMENT     ...................................................................................................................5
        A. Statement of Undisputed Facts Relevant to Point I .......................................................5

           1. The Founders' Knowledge and Intent Concerning Infringement ..........................5

              2   .   Google's Knowledge and Intent Concerning Infringement                                     ..................................12
              3. Defendants Cannot Walk Away from Their Contemporaneous Internal
                 Documents         ..................................................................................................................21
          .
        B Defendants' Intentional Operation of YouTube as an Infringement Haven
          Makes Them Liable Under Grokster...........................................................................24

    .
I1 DEFENDANTS ARE VICARIOUSLY LIABLE BECAUSE THEY DERIVED A
   DIRECT FINANCIAL BENEFIT FROM INFRINGEMENT THAT THEY HAD THE
   RIGHT AND ABILITY TO CONTROL                   ............................................................................
                                                              30

    A. Statement of Undisputed Facts Relevant to Point I1....................................................30

        1 Defendants' Direct Financial Benefit from Infringement .....................................30
         .
        2. Defendants' Right and Ability to Control Infringement .......................................32

    B. Defendants' Financial Interest and Control Makes Them Vicariously Liable.........38

        1 Direct Financial Benefit ............................................................................................38
         .
        2. Right and Ability To Control ..................................................................................40

1II.DEFENDANTS ARE ALSO LIABLE AS DIRECT INFRINGERS...............................42

    A . Statement of Facts Relevant to Point I11.......................................................................42

          .
        B Defendants' Own Conduct Constitutes Direct Infringement .....................................45
IV.DEFENDANTS DO NOT QUALIFY FOR THE DMCA DEFENSE                  ..............................47
     A. Defendants' Knowledge and Intent Defeat the DMCA Defense.................................50

       .
     B Defendants' Direct Financial Benefit and Right and Ability to Control
       Infringement Defeat the DMCA Defense                           ......................................................................56
       .
     C The Infringement on YouTube Does Not Result from the Specified Core
       Internet Functions to Which The DMCA Applies                            .......................................................61
CONCLUSION ............................................................................................................................67
                                               TABLE OF AUTHORITIES



A M Records. Inc . v. Napster. Inc.. 239 F.3d 1004 (9th Cir. 2001) .................... 38. 39. 40. 41. 58

In re Aimster Copyright Litigation. 334 F.3d 643 (7th Cir. 2003)...................................50. 51

ALS Scan. Inc . v. RemarQ Communities. Inc.. 239 F.3d 619 (4th Cir. 2001)...............................49

Arista Records. Inc . v. Mp3Board. Inc., No . 00 CIV . 4660 ( S H S ) .
    2002 WL 1997918 (S.D.N.Y. Aug . 29. 2002) ........................................................................ 38

Arista Records LLC v. Usenet.com, Inc., 633 F . Supp . 2d 124 (S.D.N.Y.
    2009)...................................................................................................................... 38. 45. 50
                                                                                                                            26.

Associated General Contractors of California. Inc. v. California Council
   of Carpenters. 459 U.S. 5 19 ( 1 983) ........................................................................................
                                                                                                                               62

Brotherhood of Railroad Trainmen v. Baltimore & Ohio Railroad Co.,
   331 U.S. 519 (1947)................................................................................................................
                                                                                                                                    59

Buck v. Jewell-La Salle Realty Co.. 283 U.S. 191 (1 93 1 ) .............................................................37

Capital Records. Inc . v. Mp3Tunes. LLC. No . 07 Civ. 993 l(WHP). 2009
   WL 3364036 (S.D.N.Y. Oct. 16. 2009) .................................................................................45

Cartoon Network LP v. CSC Holdings. Inc., 536 F.3d 12 1 (2d Cir. 2008).
   cert. denied. 129 S . Ct . 2890 (2009) ...........................................................................44. 45. 46

Columbia Pictures Industries. Inc . v. Fung. No . CV 06-5578
   (C.D. Cal . Dec . 21. 2009)........................................................ 25. 26. 47. 48. 50. 52. 55. 57. 62

Costar Group. Inc. v Loopnet. Inc., 164 F . Supp . 2d 688 (D. Md . 2001).
   aff'd. 373 F.3d 544 (4th Cir. 2004) .........................................................................................
                                                                                                                               55

Crawford v. Metropolitan Government of Nashville and Davidson County.
   129 S . Ct. 846 (2009)..............................................................................................................
                                                                                                                                     61

Doe v. GTE Corp.. 347 F.3d 655 (7th Cir. 2003)..........................................................................
                                                                                                                       63

Ellison v. Robertson. 357 F.3d 1072 (9th Cir. 2004) ....................................................................
                                                                                                                       38

Fair Housing Council o f San Fernando Valley v. Roommates.com, LLC.
   52 1 F.3d 1 157 (9th Cir. 2008).................................................................................................
                                                                                                                                  49

Fonovisa Inc . v. Cherry Auction. Inc.. 76 F.3d 259 (9th Cir. 1996) ............................................. 38
U S. West Communications.. Inc. v. Hamilton, 224 F.3d 1049
   (9th Cir. 2000) ....................................................................................................................
                                                                                                                                      58-59

UMG Recordings. Inc. v. Veoh Networks. Inc., 620 F . Supp. 2d 1081
  (C.D. Cal. 2008) ...................................................................................................................... 64

UMG Recordings. Inc. v. Veoh Networks Inc., 665 F . Supp. 2d 1099
  (C.D. Cal . 2009) .......................................................................................................... 57. 58
                                                                                                                             52.

United States v. ASCAP (In re Application o YouTube. LLC). 6 16
                                              f
   F . Supp. 2d 447 (S.D.N.Y. 2009) ............................................................................................39

United States ex re1. Romano v. N. Y. Presbyterian. 426 F . Supp. 2d 174
   (S.D.N.Y. 2006) .......................................................................................................................
                                                                                                                                        5

Watt v. Alaska. 451 U.S. 259 (1981) .............................................................................................58



17 U.S.C. 5 106 ............................................................................................................................. 44

17 U.S.C.       8 512(a) ........................................................................................................................ 4
17 U.S.C. 8 512(b) ........................................................................................................................
                                                                                                                                          61

17 U.S.C.       5 512(c)............................................................................................................... 4, 48, 62
17 U.S.C. 5 512(c)(l)(A) ................................................................. 47-48>49. 5 1. 53. 54. 55. 62
                                                                                         4

17 U.S.C.       5 5 12(c)(l)(B).............................................................................4. 48. 55. 56. 59. 60. 62
17 U.S.C.       5 5 12(c)(l)(C)................................................................................................... 54. 57
                                                                                                                                48.

17 U.S.C.       5 512(d) .................................................................................................................... 62
                                                                                                                                            4.

17 U.S.C.       8 512(k)(l)(A) .............................................................................................................. 60
17 U.S.C.       5 512(m) ........................................................................................................... 59. 60
                                                                                                                                   58,

17 U.S.C.       5 512(n) ....................................................................................................................... 62
Fed . R . Civ. P . 56(c) ........................................................................................................................ 4

          MATERIALS
LEGISLATIVE

H.R. Rep . No . 105-551(I) (1998) ...................................................................................... 47. 58. 61

H.R. Rep . No . 105-551(II) (1998)............................................................48. 51. 53. 55. 59. 60. 61
S. Rep . No . 105-190 (1998) ........................................................................................ 51, 55, 62
                                                                                                                  48,

    AUTHORITIES
OTHER

Jane C. Ginsburg, Separating the Sony Sheepfrom the Grokster Goats,
   50 Ariz . L . Rev . 577 (2008) ........................................................................................ 53, 61
                                                                                                                        52,

I1 Paul Goldstein, Goldstein on Copyright (3d ed . 2009) ............................................................. 52

3 Melville B . Nimmer & David Nimmer, Nimmer on Copyright (2009) .....................................59

The New Oxford American Dictionary (2d ed. 2005) .................................................................. 61

Webster 's Third New International Dictionary (1986) ................................................................. 61
                                PRELIMINARY STATEMENT

       Plaintiffs Viacom International Inc. et al. ("Viacom") move for partial summary

judgment on Defendants' liability for copyright infringement and concurrently to invalidate

Defendants' reliance on the Digital Millennium Copyright Act ("DMCA") as a defense to that

infringement. The starting point for this motion is this undisputable fact: tens of thousands of

videos on YouTube, resulting in hundreds of millions of views, were taken unlawfully fiom

Viacom's copyrighted works without authorization. Statement of Undisputed Facts ("SUF")          lfl
6-9. Fostering and countenancing this piracy were central to YouTube's economic business

model. The fundamental issue is whether Defendants are liable for that intentional infringement

of copyrights or whether, alternatively, they may hide behind a policy of willful blindness and

seek to shift responsibility to clean up their site to victimized content owners like Viacom.

Under both common and statutory law, the answer is clear: Defendants are liable for the

rampant infringement they have fostered and profited from on YouTube.              Once summary

judgment is entered, trial will be dramatically shortened, focusing on assessing damages arising

from Defendants' policies of hosting and benefiting from massive copyright inhngement.

       First, Defendants are liable under Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd.,

545 U.S. 913 (2005), because they operated YouTube with the unlawful objective of profiting

from (to use their phrase) "truckloads" of infringing videos that flooded the site. YouTube's

founders single-mindedly focused on geometrically increasing the number of YouTube users to

maximize its commercial value. They recognized they could achieve that goal only if they cast a

blind eye to and did not block the huge number of unauthorized copyrighted works posted on the

site. The founders' deliberate decision to build a business based on piracy enabled them to sell

their start-up business to Google after 16 months for $1.8 billion. The Supreme Court in

Grokster found no legal or societal justification for such intentional copyright infringement.
       Prior to the acquisition, Google itself had tried to compete with YouTube by complying

with the law, without permitting infringement on Google's own Google Video site. Google

executives well recognized that YouTube was a "pirate site," a "rogue enabler of content theft"

and a "video Grokster" whose "business model is completely sustained by pirated content." But

after buying its former rival, Google abandoned its scruples in order to continue growing the

YouTube user base until well into 2008. It abandoned its own anti-piracy practices and instead

embraced YouTube's illegal business model.         As acquiror, Google assumed liability for

YouTube's pre-acquisition infringement. And once its acquisition was consummated, Google

readily embraced and perpetuated YouTube's piracy and willful blindness.

       It did not have to be this way. Defendants had at their disposal readily available and

inexpensive techniques, including fingerprinting and filtering technologies, to block the

uploading of pirated works and clean up the site. They instead made a deliberate business

decision not to broadly deploy these techniques and instead to hold content owners hostage to

Defendants' efforts to commercialize the site. More specifically, at the beginning of 2007,

Google and YouTube began to use digital fingerprinting to screen out infringing works for

copyright owners who agreed to a content license agreement with them. But for other copyright

owners - including Viacom - they engaged in a form of high-tech extortion: refusing, until May

2008, to apply that same technology to protect Viacom unless it first agreed to license its

intellectual property to YouTube.1 Defendants' intentional conduct and business decisions

render them liable for the resulting infringement under Grokster.


1 Because of this change in May 2008, this motion seeks summary judgment only for the period
prior to May 2008. While Google and YouTube may still be liable for the more limited
infringement that continued after fingerprinting was used to limit piracy of Viacom's works, we
do not ask the Court to address potential liability for post-May 2008 inhngement in this motion
and, if Viacom's summary judgment motion is granted, do not intend to do so at trial.
       Second, Google and YouTube are liable under long-standing principles of vicarious

coppght liability because they had a direct financial interest in the infringement on YouTube

and the right and ability to control it. Defendants' financial interest in infringing clips that

attracted viewers and thereby advertising revenue is direct and obvious. So is the $1.8 billion

YouTube's founders and early investors walked away with through this strategy.                And

Defendants had readily available ways to control the infringement on YouTube. Indeed, they

were deploying these very techniques for other companies, and said they would do so for

Viacom - but o
           &        if Viacom gave them a license for popular Viacom programs. Defendants'

refusal to control the infringement from which they profited makes them vicariously liable.

       Third, Google and YouTube are liable for their own directly infiinging conduct.

Defendants have tried to portray themselves as passive and innocent conduits or mere receptacles

for infringing clips posted by users. In reality, the majority of infringing acts were volitionally

initiated by Defendants themselves, such as the creation and public performance of new

infringing copies for additional distribution channels months or years after infi-inging videos

were first uploaded. Indeed, uploading users are compelled to subscribe to terms of service that

grant to YouTube a worldwide license to "use, reproduce, distribute, prepare derivative works,

display, and perform" uploaded videos. YouTube performs all of these functions, and they

constitute acts of direct infi-ingement under the copyright laws.

       The principles establishing liability summarized above parallel many of the reasons why

Defendants also are not protected by the limited defense created by the DMCA. Defendants

contend they qualify for the DMCA safe harbor because they removed specific infringing clips

located and listed by Viacom in takedown notices. To them, the DMCA is just a takedown

notice statute. Embracing Defendants' position would render most of the statute enacted by
Congress a nullity, for responding to takedown notices is only one of numerous preconditions to

DMCA immunity. Google and YouTube fail to meet at least three other preconditions.

        First, Defendants had "actual knowledge" and were "aware of facts or circumstances

from which infringing activity [was] apparent," but failed to do anything about it. 17 U.S.C.

5 512(c)(l)(A).     Indeed, they fully intended to facilitate that inkngement. Such Grokster intent

defeats any DMCA defense, which is available only to innocent service providers, not intentional

wrongdoers or those who elect to remain willfully blind to pervasive piracy.

        Second, Google and YouTube "receive[d] a financial benefit directly attributable to the

infringing activity" and had "the right and ability to control such activity." Id.       5 512(c)(l)(B).
Using statutory language taken fiom vicarious liability case law, Congress intended this prong of

the DMCA to exclude businesses that are liable under that common law vicarious liability

standard. Because Defendants are vicariously liable, they cannot take refuge in the DMCA.

        Third, Defendants' infringement does not result from providing "storage at the direction

of a user," id.   5 512(c), or the other specific functions listed in 5 512(a)-(d).   Defendants engage

in directly and secondarily infringing activities that are neither storage nor at the direction of a

user. For example, on their own initiative Defendants copy and purport to license infringing

videos for distribution over third-party platforms under commercial deals that Defendants - not

their users - negotiate. That is not storage, and it is not protected by the DMCA.

                               SUMMARY JUDGMENT STANDARD

        Summary judgment should be granted where "there is no genuine issue as to any material

fact [such] that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P.

56(c). To prevail, the movant must "'demonstrate the absence of a genuine issue of material

fact. . . . The burden is then on the non-moving party to set forth specific facts raising a genuine
issue of fact for trial."' United States ex rel. Romano v. N Y. Presbyterian, 426 F. Supp. 2d 174,

177 (S.D.N.Y. 2006) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 324 (1986)).

                                          ARGUMENT

I.     DEFENDANTS ARE LIABLE UNDER GROKSTER BECAUSE THEY
       INTENTIONALLY OPERATED YOUTUBE AS A HAVEN FOR MASSIVE
       INFRINGEMENT.

       A.      Statement of Undisputed Facts Relevant to Point 12

               1.      The Founders' Knowledge and Intent Concerning Infringement

       YouTube was founded in 2005 by Chad Hurley, Steve Chen, and Jawed Karim as a

"consumer media company" to "deliver entertaining, authentic and informative videos across the

Internet." SUF   77   10, 13-15. All three founders had worked at the Internet start-up PayPal,

whose creators made a fortune when it was sold to eBay for $1.3 billion in 2002. SUF 77 11-12.

That was the founders' plan for YouTube too. They aimed to quickly establish YouTube as the

most popular video site on the Internet, and then cash in by selling it. SUF 77 30, 36, 49-50

(Karim: "our dirty little secret . . . is that we actually just want to sell out quickly"). Because

attracting a huge "user base" of fans was essential to this plan, founder Chen urged his associates

to "concentrate all of our efforts in building up our numbers as aggressively as we can through

whatever tactics, however evil." SUF 7 85 (emphasis added); see SUF 7 36 (Karim: "Where our

value comes in is USERS."). Thus, the founders consciously aimed to attract users by emulating

notorious pirate services like "napster," "kazaa," and "bittorrent." SUF 7 29. That plan worked.

By exploiting copyrighted works without a license, YouTube became the leading Web video site,

resulting in enormous wealth for its founders and venture capital investors who, after a mere year

and a half, flipped the site to Google for $1.8 billion. SUF 77 16-27.

 For the Court's convenience, this Memorandum divides the Statement of Undisputed Facts into
subsections relevant to the point under discussion.

                                                5
       From the beginning, the founders understood that YouTube was a magnet for

unauthorized copyrighted content. As early as April 2005, they emailed each other about users

uploading "copyrighted material"   - such as   Viacom's "South Park" show, which they repeatedly

mentioned. SUF 77 3 1-32. Soon the infringement was so blatant that YouTube's own Internet

service provider complained that YouTube was violating its user agreement because, as Chen

explained, "we're hosting copyrighted content." SUF       7 33.   But the founders did nothing in

response. Id. (Chen: "i'm not about to take down content because our ISP is giving us shit.").

       The fact that YouTube was flooded with obviously infringing media clips was a constant

focus throughout the summer of 2005. As the founders' internal emails unambiguously show,

they wanted to continue exploiting infringing videos to rapidly expand their user base, while

groping for ways "to avoid the copyright bastards" - as they referred to copyright owners whose

works were being infringed. SUF 77 34-38. Right after the Supreme Court handed down the

Gvokster decision condemning the intentional operation of an Internet service that fosters

inhngement, Hurley recognized the obvious parallel to YouTube and emailed the other

founders: "we need views, [but] I'm a little concerned with the recent Supreme Court ruling on

copyrighted material." SUF 7 39. Yet, the founders could not bring themselves to reject their

reliance on the infringing videos that were critical to fueling the site's explosive growth. Id.

("we need views").

       Thus, during the summer of 2005, the founders removed some of the most obvious

infringing videos from YouTube to give the impression of copyright compliance; but they

deliberately and intentionally chose to leave up other infringing clips when they thought the

additional site traffic was worth the legal risk. SUF T[T[ 43-48. Chen explained: "That way, the

perception is that we are concerned about this type of material and we're actively monitoring it.
[But the] actual removal of this content will be in varying degrees. That way . . . YOU can find

truckloads of . . . copyrighted content . . . [if1 you [are] actively searching for it." SUF    7 60.
(emphasis supplied). In particular, the founders decided to keep inhnging "comedy clips"         -   a

Viacom specialty. SUF 7 52. Choosing to pursue their get-rich-quick scheme through piracy,

Hurley told the others: "save your meal money for some lawsuits!" SUF 7 38.

       The founders' contempt for copyright was so strong that they uploaded infringing videos

themselves. One email noted that founder "Jawed [was] putting stolen videos on the site." SUF

740; see also 7 41. Chen admonished: "We're going to have a tough time defending the fact that

we're not liable for the copyrighted material on the site because we didn't put it up when one of

the co-founders is blatantly stealing content from other sites and trying to get everyone to see it."

Id. In another case, Chen emailed about a video, saying "steal it!" SUF 7 44. When Hurley

expressed concern about "steal[ing] the movies," Chen countered:             "[Wle need to attract

traffic. . . . [Tlhe only reason why our traffic surged was due to a video of this type." Id.

       By September 2005, the founders largely abandoned even the half-hearted attempt to

create the illusion of respect for copyrights and adopted a policy that YouTube followed until at

least May 2008: they decided to keep substantially all infringing videos on the site as a draw to

users, unless and until YouTube received a "takedown notice" from the actual copyright owner

identifying a specific infringing clip by URL and demanding its removal from the site, in which

case YouTube would remove the specific clip at that URL         -   but no other^.^ This decision is

reflected in a key September 3, 2005, email exchange between the three founders, which started




   YouTube employees only rarely and sporadically removed videos without receiving a
takedown notice after adopting this policy in September 2005.
when Hurley emailed the others re "copyright material!!!": "aaalihh, the site is starting to get out

of control with copyrighted material." SUF 7 54 (emphasis added).

         Rather than responding by proposing steps to clean up the site, Chen strongly argued

against removing the illegal videos because of the effect on traffic. In fact, the September 3

internal email exchange resulted in the first of several internal YouTube documents that

quantified the vast extent and importance of infringement on the site. SUF 1754-58. Chen twice

wrote that 80% of user traffic depended on pirated videos. SUF           77   55, 57. He opposed

removing infringing videos on the ground that "if          YOU   remove the potential copvright

inhnnements . . . site traffic and virality will drop to mavbe 20% of what it is." SUF         7 55
(emphasis added). Karim proposed they "just remove the obviouslv copwight infringing stuff."

Id. (emphasis added). But Chen again insisted that even if they removed only such obviouslv

infringing clips, site traffic would drop at least 80%. SUF      7 56   ("if [we] remove all that

content[,] we go fi-om 100,000 views a day down to about 20,000 views or maybe even l ~ w e r " ) . ~

         Chen's 80% figure closely matched outside estimates of the pervasiveness of

inhngement on the YouTube site. For example, in April 2006, Peter Chernin, the Chief

Executive Officer of News America, parent of the Fox television network and the 20th Century

Fox film studio, made a widely reported speech noting that News America conducted a survey

and found that "more than 80 percent of video on [YouTube] is copyrighted content." SUF

7 145.   The report of this survey was broadly circulated within Google Video, eliciting this

response from one senior executive: "Holy cow." Id.

         To justify keeping the "obviously copyright infringing stuff' on the site, the YouTube

founders in the fall of 2005 adopted the policy of willful blindness to inhngement: they
determined to embrace the avowed pretense that the hundreds of thousands of clips on YouTube

that were stolen from popular movies and TV shows were actually owned by the uploading

users. In the September 3 email exchange, Chen explained the policy as follows: "[Tlhe

              t
c o ~ y i g h infringement stuffl,l I mean, we can presumably claim that we don't know who owns

the rights to that video and by uploading, the user is claiming that they own that video[,] we're

protected by DMCA for that. [Wle'll take it down if we get a cease and desist [i-e., a takedown

notice]." SUF 7 57; see also      7 53. Using the example of a clip pirated from a CNN show, he
outlined how YouTube would benefit from the policy of willful blindness and toleration of

infringement: "[I] really don't see what will happen. what? someone from cnn sees it? he

happens to be someone with power? he happens to want to take it down right away. he gets in

touch with cnn legal. 2 weeks later, we get a cease & desist [takedown] letter. we take the video

down." SUF     7 47; see   also   77   120, 128. In the meantime, the infhnging video remains on

YouTube as a draw to users.

       YouTube's policy of willful blindness is highlighted by an abrupt flip flop on community

flagging for copyright violations. On September 3, a worried Hurley pushed for YouTube to

start "community flagging" for infringing videos - that is, to have users flag uploaded videos as

likely violative of copyright laws for follow-up scrutiny by YouTube employees. SUF         7 58.
This is the method YouTube uses with great success to find and remove pornography from the

site. SUF 77 67-68, 70, 73. With such a system to identify and remove copyrighted material,

Hurley hoped "then we won't be liable" for infringement. SUF 7 58. Within five days, Chen

had "hooked up" "Flagging for Inappropriatelcopyrighted content." SUF 77 61-62.

       This practice lasted all of two weeks. Hurley quickly came to realize that copyright

flagging would work all too well, thereby undermining YouTube's willful blindness strategy.

                                                   9
On September 23, 2005, Hurley wrote to the other founders that they should discontinue

copyright flagging "asap" to avoid being put on notice of infringement:

       can we remove the flagging link for "copyrighted"        w.   . . . [Blasically if we
       don't remove them we could be held liable for being served a notice. it's actually
       better if we don't have the link there at all because then the copyright holder is
       responsible for serving us notice of the material and not the users.

SUF fl 64 (emphasis added). On its face, this constituted a willful decision to blind YouTube to

notice of copyright infringement and to shift the entire burden to copyright owners.

       This strategy of willful blindness left users free to flood the site with illegal content. In

February 2006, Maryrose Dunton, one of YouTube's earliest employees and its lead Product

Manager, provided another quantification of the vast extent of piracy on the site. She reported to

Chen that she "did a little exercise on Friday and went through all the most viewedlmost

discussed/top favoritesltop rated [videos on YouTube] to try and figure out what percentage is or

has copyrighted material. it was over 70%."          SUF   7   95 (emphasis added). Dunton then

sarcastically added that she had "flagged" the copyrighted videos for removal       -   showing she

understood they were infringing. Id. When deposed, she confirmed she did not really flag the

videos; they remained on YouTube as a draw to users. SUF fi 96, see also        fly 78, 88. That a
YouTube executive joked with a founder about 70% of the most popular videos on YouTube

being infringing and did nothing about it speaks volumes.

       And that was no mere slip of the pen. A month later, Dunton told another senior

YouTube employee in an instant message that "the truth of the matter is probably 75-80% of our

views come from copyrighted material." SUF fl 104. She agreed with the other employee that

YouTube has some "good original content" but "it's just such a small percentage." Id.

       In the same time period, presumably after a legal presentation, Dunton engaged in an

exchange with another YouTube employee who asked rhetorically: "was it me, or was the
                                                10
lawyer thing today a cover-your-ass thing from the company?" SUF 7 93. Dunton responded,

"oh totally . . . did you hear what they were saying? it was really hardcore . . . if we even see

coppghted material on the site, as employees we're supposed to report it." Id. She continued:

"I guess the fact that I started like 5 groups based on copyrighted material probably isn't so

great." Id. To which the other employee replied: "but it's a cover your ass . . . so the board can

say we told maryrose not to do this." Id.

       Also during this period, a senior YouTube engineer discussed with Dunton setting up an

anti-infringement tool to send automated email alerts to copyright owners when illegal content

was uploaded. SUF 77 112-13. The engineer noted that implementing the tool "isn't hard" and

would "take another day or w/e [weekend]." SUF 7 114. But Dunton explained "I hate making

it easier for these a-holes"   -   referring to copyright owners   -   and told the engineer to "forget

about the email alerts stuff' because "we're just trying to cover our asses so we don't get sued."

Id.

       YouTube even emphasized the popularity of known infi-inging videos to potential

investors. A case in point is "Lazy Sunday," taken from NBC7s show "Saturday Night Live,"

which was an enormous hit on YouTube. SUF 7 92; see also 784. Even after YouTube received

takedown notices from NBC for this video, YouTube highlighted the video's success to potential

investors and its own board to show how it was using infringing professional content to draw

viewers and to become the most popular video site on the Internet. SUF 77 89-92,98-99.
       A true smoking gun is a memorandum personally distributed by founder Karim to

YouTube's entire board of directors at a March 22, 2006 board meeting. SUF 71 109-11.5 Its

words are pointed, powerful, and unambiguous. Karim told the YouTube board point-blank:

       As of today episodes and clips of the following well-known shows can still be
       found: Family Guy, South Park, MTV Cribs, Daily Show, Reno 91 1, Dave
       Cha~elle. This content is an easy target for critics who claim that copyrighted
       content is entirely responsible for YouTube's popularity. Although YouTube is
       not legally required to monitor content (as we have explained in the press) and
       complies with DMCA takedown requests, we would benefit from preemptivelv
       removing content that is blatantly illegal and likely to attract criticism.

Id. (emphasis added).6 All of the shows underlined above and identified by Karim in this

memorandum to the YouTube board as "blatantly illegal" are Viacom programs. SUF          77 5-6.
But the board and YouTube did nothing.

       Having rapidly expanded YouTube by using infringing video clips in this way, the

founders sold the site to Google for $1.8 billion in November 2006, a mere 1-112 years after its

founding. SUF      16-19. Hurley and Chen walked away with several hundred million dollars

each, and Karim, who had left YouTube, received approximately $60 million. SUF 77 2 1-23.

              2.      Google's Knowledge and Intent Concerning Infringement

       Senior executives of Google, YouTube's principal competitor, well appreciated the

vastness of the piracy on YouTube months before Google acquired it (and then embraced its

copyright practices). When it acquired YouTube, Google assumed and became fully liable for

the acts of YouTube and its founders for the period 2005-2006. Just as importantly, Google is


5This is one of the highly inculpatory documents that Defendants never produced in discovery.
See infra at 21-23. Fortunately, it was preserved and produced by Karim after he left YouTube.

6 While Karim implied the DMCA protected YouTube's conduct, Defendants have elected not
to assert an advice of counsel defense and have accordingly blocked discovery into their actual
beliefs about this issue. Moreover, as shown in Point IV below, Karim's own acknowledgement
of "copyrighted content" that is "blatantly illegal" in reality defeats any DMCA defense.
also liable for its own post-acquisition policies and practices. Google now jointly operates the

YouTube website. Answer to Amended Compl. 7 27. And Google has perpetuated and built

upon YouTube's history of infringement, taking advantage of widespread piracy both as a draw

for users and to coerce content owners into licensing their content to Google.

       Before acquiring YouTube, Google had its own Internet video site, Google Video, which

(like YouTube) allowed users to upload videos, but (unlike YouTube) reviewed each video at

upload and blocked those that infringed copyrights. SUF 77 133-36. The person in charge of

such screening reported to a senior Google executive: "We catch around 10% of all online user

uploaded videos during review. Of these appro xi mat el^ 90% is disapproved due to copyright

violation, and the rest due to policy (porn, violence, etc.)." SUF 7 137 (emphasis added).

       But Google's good intentions and compliance with the law were not paying off.

YouTube was way ahead of Google Video in the race to build up a user base. SUF 77 146, 154.

Google executives understood that YouTube's success was largely due to what they

euphemistically labeled its "[lliberal copyright policy" of freely allowing infringing material.

SUF 77 140-45, 148, 150-52, 155-57, 159.

       Losing the user race to YouTube because of the latter's copyright infkngement, Google

Video executives engaged in a "heated debate" in 2006 "about whether we should relax

enforcement of our copyright policies in an effort to stimulate traffic growth." SUF 7 158. A top

senior executive, Peter Chane, Google Video's Business Product Manager, argued point blank

that Google Video should "beat YouTube" by "calling quits on our copyright compliance

standards." SUF 7 149. Chane specifically advocated switching Google Video to YouTube's

"reactive DMCA only" policy because "YouTube gets content when it's hot (Lazy Sunday,
Stephen Colbert, Lakers wins at the buzzer)" and it "[tlakes us too long to acquire content

directly from the [legitimate] rights holder." SUF 7 156 (emphasis in original).

       Others at Google questioned whether it should follow YouTube's strategy of winning by

breaking the law. A memorandum prepared by a top Google executive, and distributed to the

most senior executives of Google Video, recorded Google co-founder Sergey Brin as asking

whether it was right for Google to "chang[e] policy [t]o increase traffic knowing beforehand that

we'll profit from illegal ~dlownloads." SUF 77 162-63 (emphasis added)? Another executive

listed the "Top 10 reasons why we shouldn't stop screening for copyright violations"; the first

was "It crosses the threshold of Don't be Evil to facilitate distribution of other people's

intellectual property." SUF 7 164.8 In contrast, Google's Chief Executive Eric Schmidt was

quoted in support of relaxing Google Video's copyright enforcement policies. SUF 7 160.

       In May 2006, Google held a Google Product Strategy (or "GPS") meeting attended by

top executives, including CEO Schmidt. The GPS focused on Google Video. SUF                 7 147.
Before the meeting, David Eun, a senior Google executive responsible for negotiating license

agreements with content owners, sent an email to Schmidt summarizing the internal "heated

debate whether we should relax enforcement of our copyright policies in an effort to stimulate

traffic growth" to beat YouTube at its own game. SUF 77 158-59. Eun told Schmidt:

       I think we should beat YouTube . . . - but not at all costs. A large part of their
       traffic is from pirated content. When we compare our traffic numbers to theirs,
       we should acknowledge that we are comparing our "legal traffic" to their mix of


7 At his deposition, Brin claimed not to have made this statement. Hohengarten Decl. 7 352 &
Ex. 318 at 61 :17-62:19. Regardless, the statement attributed to him was widely circulated
among top Google officials.

8 This language had particular significance at Google, whose informal motto is "Don't Be Evil."
SUF 7 164. Thus, "cross[ing] the threshold of Don't be Evil" indicated a conscious turning point
for the company toward intentional wrongful conduct.
       traffic from legal and illegal content. One senior media executive told me they
       are monitoring YouTube very closely and referred to them as a "video Grokster."

Id. (emphasis added).g

       Likewise, Google Video executives vividly described YouTube's illegal practices to the

GPS meeting's attendees. In a memorandum marked "final" for integration into the material

prepared for the GPS, the Google Video team advised senior Google executives:

              YouTube is "a 'rogue enabler' of content theft"

              "YouTube's content is all free, and much of it is highly sought after pirated clips"

              "YouTube's business model is completely sustained by pirated content. They are
              at the mercy of companies not responding with DMCA requests."

              "[Content owners] (mainly) perceive YouTube as trafficking, mostly illegal
              content - it's a video Grokster"

SUF 7 157 (emphasis added).

       Despite Google's keen awareness that infringement was the linchpin to YouTube's

success, in October 2006 Google decided to buy its rival     -   and its valuable user base built up

with illegal content   -   for $1.8 billion.   SUF   77 16-19.    Significantly, the vast extent of

infringement on YouTube was confirmed by Google's own pre-acquisition due diligence

conducted by Google executives and its financial advisor, Credit Suisse. SUF 77 166-82.

       Credit Suisse analyzed a sample of videos from YouTube that Google deemed

representative of site traffic, and determined that more than      60% of   the video views in the

YouTube sample were "premium," their shorthand for "the content is copyright[ed] (either in

whole or in substantial part)" or "removed [and] taken down" in response to a takedown notice

9 When deposed, Schmidt professed not to remember this email about "pirated content" all over
YouTube, five months before Google acquired it. Hohengarten Decl. 7 348 & Ex. 3 14 at 75: 14-
82:4. The issue was not lost on other Google executives. For example, on May 10, 2006, Ethan
Anderson, International Business Product Manager for Google Video, stated: "I can't believe
you're recommending buying YouTube. . . . they're 80% illegal pirated content." SUF 7 153.
(and thus plainly infringing). SUF    7 170.   Credit Suisse also estimated that YouTube had a

license for only 10% of those premium copyrighted video views. SUF 7 174; see also SUF 7 171

(premium content on YouTube included "Legitimate and Illegitimate" uploads) (emphasis

added). In other words, 54% (90% of 60%) of the video views in the due diligence sample were

of premium copyrighted content that was admittedly unauthorized by the content owner.

       This analysis was incorporated into the board book prepared by Credit Suisse and

presented to the Google board of directors on the day it authorized the purchase of YouTube,

October 9, 2006. SUF     77 175-76.   The board book emphasized the "tremendous growth" in

YouTube's user base and its "loyal global following." SUF 7 178. Credit Suisse advised the

Google board that virtually the entire financial value of YouTube, with a base case value of

billion, derived from Google's ability to monetize that vast entrenched user base in the future.

SUF 7 180. The book then told the board that "60% of total video streams on yellow website" -

their code name for YouTube - "are 'Premium. "' SUF 7 181. The board also was advised that

Credit Suisse's valuation "[a]ssumes 10% of premium content providers allow [YouTube] to

monetize their content in [fiscal year 20071"   -   confirming that 90% of premium copyrighted

content was simply being displayed on the site without permission. SUF T( 182. Google's entire

board thus was on clear notice of the vast scope of YouTube's copyright infringement.Io

Notwithstanding this knowledge, the board authorized the purchase. SUF 7 16.l




lo  The board was even warned about "uncertain legal issues." SUF 7 177. This was a
euphemism for copyright infringement liability, as everyone well knew, for indemnification for
copyright liability was a hotly negotiated deal term during the merger negotiations. Recognizing
what it was buying, an early Google term sheet sought indemnification for copyright liability
suits up to 12.5% of the purchase price. SUF 7 183. Recognizing what they were selling,
YouTube's founders and investors strongly resisted, and a lesser copyright indemnification
                                                                        1
provision was agreed to by the parties in the merger agreement. SUF 1 184-85. After Viacom
filed this suit, Defendants purportedly discovered a "scrivener's error" in the original merger
                                                16
       Whether the correct quantification of the scope of YouTube's piracy was that it attracted

80% of site traffic (per Steve Chen), accounted for 80% of its content (News America), 70% of

its most popular videos and 75-80% of the resulting views (Maryrose Dunton), 80% of all

content (Ethan Anderson), or 54% of all views (Credit Suisse), it was unavoidably clear, as Chad

Hurley summed it up, that YouTube was "out of control with copyrighted material."          Still,

having paid an immense sum for a website literally overrun with illegal content, Google's

highest priority was to preserve YouTube's competitive advantage and continue aggressively to

grow the user base. After the deal closed, the mandate to aggressively grow came by way of an

edict from Google CEO Schmidt. He instructed the YouTube team that their focus should be "to

grow playbacks to lblday [one billion per day]." SUF 7 188. That goal remained unchanged

until March 2008, when Chad Hurley wrote that "three weeks ago Eric shifted his thinking on

YouTube's focus. So, since that time we have rapidly been redirecting our efforts from user

growth to monetization." SUF 7 201.

       With its initial focus on user growth, Google reversed its own earlier copyright

compliance policies and adopted YouTube's willful blindness strategy. Instead of screening as

was done at Google Video, now every infringing video would remain freely available on

YouTube until a copyright owner could detect it and send a takedown notice. SUF 7 189. And

Defendants' executives continued to be well aware of the massive inhngement on YouTube,

just as they had been in the pre-acquisition period. For example, an employee charged with



agreement and increased the size of the indemnification provision for copyright infringement.
SUF 7 186.

11The acquisition price authorized by the board was $1.65 billion in Google stock based on a 30-
day average of the stock price at the time of closing. SUF 7 16. When the deal actually closed
on November 13,2006, the purchase price was $1.775 billion. SUF 7 19.
selecting videos for prominent placement on the site reported that "we're running into issues

finding enough videos because they have so many copyrighted violations." SUF 7 192. Google

executives emailed clips that infringed Viacom's copyrights to each other - but did nothing to

stop the infringement. SUF      77 190-91,   193-94. And a post-acquisition "YouTube Content

                                                   Diy
Policy Training" manual even highlighted Viacom's " a l Show" by name as an example of

content to "Approve" when reviewing videos flagged for terms-of-use violations. SUF         7 69.
Thus, as Google founder Brin had candidly stated during Google's internal debate on this issue a

few months earlier, the company was consciously "changing [its] policy to increase traffic

knowing beforehand that we'll profit from illegal downloads." SUF 7 162. This changed only in

mid-2008, after Schmidt "shifted his thinking on YouTube's focus," and Google began to use

filtering technologies to curtail infringement.

       Given Google's earlier history of respecting copyright, Viacom negotiated with Google

from November 2006 until February 2007 over a possible "content partnership" agreement to

license some of Viacom's copyrighted works to appear on YouTube. SUF 7 203. During the

negotiations, Viacom made clear that without such a license, the appearance of Viacom works on

YouTube was unauthorized. SUF 7204.               Viacom also insisted on compensation for past

infringement of its works as part of any license. SUF 7 205. Google offered a package that it

valued at a minimum of $590 million for a content license from Viacom.               SUF   7 206.
Importantly, Google's offer and term sheet included an explicit guarantee that Google would use

digital fingerprinting technology to prescreen all uploads to YouTube and block any videos from

Viacom works not licensed under the agreement.            SUF   7 207.   Ultimately, however, the

negotiations broke down, and Defendants never obtained a license from Viacom. SUF 7 208.
On February 2, 2007, Viacom sent takedown notices for more than 100,000 infi-inging videos on

YouTube. SUF f1210.

       With the collapse of the deal to license Viacorn's videos, Google and YouTube withdrew

their offer to use fingerprint technology to protect Viacom's content. This was so even though

Viacom strongly urged the two companies to cooperate in good faith to clean up the site.

Viacom's General Counsel, Michael Fricklas, pressed Defendants to use fingerprinting to

prevent infringement of Viacom's works, and offered to have Viacorn's technology experts

cooperate with Defendants as needed to that end. SUF        fl 209. Google's General Counsel,
responding to Viacom and NBC Universal on February 16, 2007, rejected cooperation and

refused to use fingerprint technologies for Viacom or NBCU in the absence of a license

agreement. SUF 77 2 17-1 8. Defendants did not deploy fingerprinting to prevent infkingement of

Viacom's works for another year and a half - long after this suit was filed. SUF 77 217-22.

       Parallel to Viacom's efforts to elicit cooperation from YouTube and Google, the Motion

Picture Association of America ("MPAA") engaged in a similar discussion on behalf of all the

movie studios, including Viacom's Paramount. The history of the MPAA's failed efforts on

behalf of all the movie studios vividly illustrates YouTube7sand Google's attitude and practices.

       The MPAA was represented in its talks with Defendants by its Executive Vice President

and Chief Strategic Officer. SUF 77 223-24. Starting around April 2006, the MPAA negotiated

with YouTube because "there was a lot of copyrighted content on the site that was owned or

controlled by the motion picture studios." SUF 7 223. "The discussion was about encouraging

YouTube to do two things: deal with the content that we identified on the site that was

copyrighted, infringement content from the motion picture studios; and two, and relatedly

integrating filtering software that would address that copyrighted content." SUF 7 225. But after

                                               19
months of htile discussions, YouTube refused to work with the MPAA or to utilize or even

agree to test fingerprint and filtering technologies. YouTube's expressed reason was stark and

candid: piracy was drawing users to the site. As the MPAA's EVP testified: "[tlhere were a

range of reasons given including the fact that the copyrighted content on YouTube was a major

lure for their users." SUF 7 226.12

       Google announced its acquisition of YouTube on October 9, 2006.             That revived

negotiations with the MPAA. On October 13 and November 9,2006, the MPAA transmitted two

specific written proposals to the Defendants calling for cooperation and the testing of filtering

technologies, including the technology of a company called Audible Magic, from whom

YouTube already had a license in hand. SUF 77 227-28; infra at 35. The MPAA even agreed to

pay for the test. SUF 77 227-28. That was a generous concession, since the cost of filtering was

comparatively trivial, SUF 7 3 11, and Google hardly needed the financial boost, its cash hoard

having grown to $1 1.2 billion by the end of 2006, SUF 7 28.

       Google and YouTube did not respond for months. Then, in January 2007, Defendants

flatly rejected cooperation or filtering to prevent piracy unless the studios granted Defendants

licenses and revenue sharing agreements: "[Flor those companies who were not and did not

develop a licensing agreement with Google, they weren't going to be doing this sort of a pilot



'2 This testimony is particularly powerful since YouTube executives made the exact same
statement to Google Video executives in 2006, which the latter even reduced to writing. On
Friday, January 13,2006, Peter Chane and a Google Video colleague met with YouTube's CEO
Chad Hurley and another senior YouTube executive Chris Maxcy. SUF 77 140-41. Two days
later, Chane wrote an email to Jonathan Rosenberg, the head of product development for all of
Google, explaining that YouTube was able to display copyrighted content unavailable on Google
Video because Google had a "zero tolerance policy to copyrighted content," whereas YouTube
had no such policy and was using piracy on the site to draw user traffic. Chane wrote to
Rosenberg: "[Tlhey are aware of this [lax enforcement policy] (I spoke with them on friday) and
they plan on exploiting this in order to get more and more traffic." SUF 7 141.
initiative or filtering." SUF 7 229. That reflected the thinking of Google Senior Vice President

Jonathan Rosenberg, who had earlier told Chane that the "lesson" from YouTube was to "play

faster and looser and be aggressive until either a court says 'no' or a deal gets struck." SUF



       Within the month, having been rebuffed both individually and as a member of the

MPAA, Viacom commenced this suit.l3

               3.     Defendants Cannot Walk Away from Their Contemporaneous Internal
                      Documents.

       The internal emails and memoranda of YouTube's founders and Google's senior

executives discussed above make a compelling and indisputable record of Defendants' intent to

use infi-inging videos clips to build the YouTube business. Viacom's position is not dependent




13  Having rejected all cooperation and filtering, the Defendants today hide behind their willful
blindness policy and argue that they cannot be expected to differentiate between illegal and
authorized clips. Hence, they argue, the responsibility for copyright compliance on YouTube
should rest with the victimized content owners, with YouTube fiee to lure users to the site with
"truckloads" of pirated materials unless and until the content owners detect them and request
their removal listing specific infringing URLs. In this vein, much of Defendants' deposition time
has been expended questioning whether Viacom employees had uploaded some videos to
YouTube as promotional material, thereby authorizing their presence there. This whole exercise
is a red herring. First, none of the infhnging clips at issue in this lawsuit were uploaded to
YouTube by Viacom or its authorized agents. SUF T[ 9. Second, the number of uploads to
YouTube that Viacom did authorize (for which Viacom is not suing for infringement) was very
limited compared to the 63,000 unauthorized infringing clips claimed by Viacom in this
litigation. Hohengarten Decl. Ex. 2 (Solow Decl.) 77 17, 30-32. Third, of that small number of
authorized clips, virtually all were uploaded to YouTube using official Viacom account names,
and YouTube was fully aware of this fact. Id. 7 31-32. Fourth, Defendants' own offer to use
fingerprinting in connection with a license to block unauthorized works while permitting
authorized uploads makes clear that Defendants had yet another way to distinguish between legal
and illegal uploads had they wanted to. That is the entire point of fingerprinting. Had they
cooperated, Defendants' entire authorization argument relied upon in this litigation would have
been resolved and gone up in smoke. Instead, they chose the path of non-cooperation and willful
blindness, forcing Viacom and other studios to play a cat and mouse game with illegal uploaders,
with Defendants enjoying the financial rewards from this piracy in the interim.
on extrapolations or interpretations from these documents. Defendants' own words, in plain

English, speak for themselves - clearly and forcefully.

        And this is a case where these written words speak all the more powerfully given the

Defendants' failure to preserve and produce many key documents and the ostensible memory

failures of their key executives when deposed. Among the most compelling documents are the

internal emails and memoranda of YouTube's founders. Almost none of these key internal

documents were produced by Goonle or YouTube, which claims they were all lost. Hohengarten

Decl. 7 263. Among others, Chad Hurley, a founder and YouTube's Chief Executive from its

inception to today, revealed for the first time of his deposition that he "lost all" of his YouTube

emails for the key time period of this case. Id.   7 264.   Fortunately, Karim, who left YouTube in

2006 and preserved these materials on his own personal computer, discharged his duties to this

Court and produced them. Id.     77 218-63.   Otherwise they would have never surfaced in this

litigation.

        Similarly unusual are the document destruction practices followed by Google's CEO Eric

Schmidt. He claims to use and email from "probably 30" different computers. Id.        7 348 & Ex.
314, at 7:7-10. As set forth above, Schmidt was deeply involved in the decision to acquire

YouTube and its post-acquisition policies. Yet, for the key period from June 2006 (when Google

started intensely to focus on YouTube's policies and practices and debated whether to acquire it)

through February 2007 (when negotiations fell apart with Viacom and the MPAA, resulting in

this lawsuit), Schmidt's search for responsive materials "yielded 19 documents." Id.    77 266, 348
& Ex. 3 14 at 18. The absence of emails and documents is explained by a practice litigation-

conscious in the extreme. Schmidt explained: "[ilt has been my practice for 30 years to not

retain my emails unless asked specifically." Id.    7 348 & Ex. 314 at 18.    He went on to testify:
"It was my practice to delete or otherwise cause the emails that I had read to go away as quickly

as possible." Id. at 18-19.14

       Similar bizarre practices surfaced when senior executives testified about these key

documents. When Mr. Hurley was shown the email chains preserved by Mr. Karim, he

developed serial amnesia. This is no lawyer's exaggeration: we include pages 177-317 of Mr.

Hurley's testimony (Hohengarten Decl. fl 346 & Ex. 312) and invite the Court to review it. To

the same effect is the testimony of Larry Page, one of Google's two co-founders and top three

executives, who essentially disclaimed memory on any topic relevant to this litigation, even

including, for example, whether he was in favor of Google's acquisition of YouTube, even

though it was Google's largest corporate transaction to date and viewed as transforrnative to its

business. Hohengarten Decl. 7 349 & Ex. 3 15, at 129:23-134:15. We enclose Mr. Page's entire

deposition as Exhibit 3 15 to the Hohengarten Declaration. This Court can decide whether these

key executives and witnesses behaved with the level of candor and respect for the legal process

that this Court has a right to expect from senior executives of important public companies.

       Due to these practices, we and the Court will never know what else was "lost" or made to

"go away as quickly as possible." Fortunately, the documents that fortuitously survived and

were produced still provide ample indisputable evidence of unlawful intent. Given Defendants'

wholesale failures to preserve relevant documents or recall key salient facts, the surviving

documents speak all the more loudly as undisputed facts that warrant summary judgment.




l 4 This practice is certainly ironic coming from the CEO of a company that prominently markets
its email service to the public as providing "lots of space" and "free storage" for emails.
Hohengarten Decl. 7 3 16 & Ex. 288.
         B.     Defendants' Intentional Operation of YouTube as an Infringement Haven
                Makes Them Liable Under Grokster.

         Defendants' conduct squarely makes them liable for the infi-ingement on YouTube under

the Supreme Court's Grokster decision. In Grokster, the high court ruled that Internet businesses

-   like all other businesses - are liable for infringement when they operate a website with the

unlawful intention, purpose, or objective that it will be used at least in part for infringing activity.

The Court recognized no legal or social benefit in rewarding such piracy.

         Grokster addressed whether two Internet "peer-to-peer" services were legally liable for

facilitating infringement by their users who copied and distributed popular music and movies

over the services. The lower courts in Grokster had ruled that the peer-to-peer services were

                                                                                f
immune from liability under the Supreme Court's earlier decision in Sony Corp. o America v.

Universal City Studios, Inc., 464 U.S. 417 (1984), because the services had "substantial

noninfringing uses"   - that   is, they could be used for authorized exchanges of copyrighted works

in addition to unauthorized infringement.          Grokster, 545 U.S. at 927-28; id. at 931-32

(summarizing Sony holding). The Supreme Court likewise assumed the defendants' services had

substantial noninfringing uses. Id. at 933-35. But the Supreme Court held that notwithstanding

other substantial noninfringing uses, the services were still liable for the infringement they

facilitated because they had the actual intent, purpose, or objective of facilitating infringement

with their product. Id. at 937-40. Thus, "a copyright holder may proceed against a technology

provider where a provable specific intent to infringe (of the kind the Court describes) is present."

Id. at 962-63 (Breyer, J., concurring) (emphasis added).

         The Grokster decision is squarely applicable here. First, the Supreme Court emphatically

rejected the knowledge standard applied by the Ninth Circuit in that case, which had held that the

peer-to-peer services could be secondarily liable for facilitating infringement only if they had
                                                  24
"knowledge of specific infringement." Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 380

F.3d 1154, 1162 (9th Cir. 2004) (emphasis added), rev 'd, 545 U.S. 913 (2005). The Supreme

Court held that requiring '"specific knowledge of infringement"' was "error." 545 U.S. at 934.

The Grokister Court recognized that acting with an unlawful purpose, intent or objective is the

epitome of culpable conduct, and a defendant may not escape liability merely because it does not

-   or even could not   -   know of each specific act of infringement whereby its unlawful purpose

comes to fruition. See id. at 922-23 (peer-to-peer services are liable even though they could not

identify the specific works that were being illegally downl~aded).'~

         The Supreme Court also emphasized that although the intentional facilitation of

infringement is often called "inducement," this form of liability is not limited to situations in

which a message encouraging infringement is actually communicated to users (e.g., through

advertising). Rather, as explained above, Groltster held that a business is liable whenever it

operates with a purpose of facilitating infringement, regardless of whether it communicates that

message. Advertisements or other messages are only one form of "direct evidence of unlawful

purpose." 545 U.S. at 935. Liability ultimately rests on the existence of the unlawful purpose

itself, which can also be established by other kinds of evidence. Thus, whether "messages"

encouraging infringement "were communicated is not to the point," because such messages are

merely one way of "prov[ing] by a defendant's own statements that his unlawful purpose



'5 Viacom notes that Defendants still have not produced data from YouTube's Logging Database
that could show that senior YouTube and Google executives did, in fact, watch and know of
many of the specific infringing videos at issue in this case. Nonetheless, there is abundant
evidence in Defendants' emails and other communications to show that Defendants were well
aware of specific cases of infringement of Viacorn's copyrights without doing anything about it.
See, e.g., SUF 77 32, 59, 69, 105, 110, 116-17, 122, 130, 132, 165. As Grokster makes clear,
however, such specific knowledge is not needed for inducement liability based on an overarching
intent to profit fiom infringement.
disqualifies him from claiming protection." Id. at 938 (emphasis added). As a recent decision

explained: "Importantly, liability may attach [under Grokster] even if the defendant does not

induce specific acts of infringement. Instead, the court may 'infer[] a patently illegal objective

from statements and actions showing what [the defendant's] objective was."' Columbia Pictures

Indus., Inc. v. Fung, No. CV 06-5578, slip op. at 23 (C.D. Cal. Dec. 21, 2009) (citation and

footnote omitted) (quoting Grokster, 545 U.S. at 941) (Hohengarten Decl. 7 2, Ex. 1).

       Indeed, in Grokster the Supreme Court inferred the defendants' unlawful purpose from

three factors that are direct echoes of the facts in this case: (1) the defendants were "aiming to

satisfy a known source of demand for copyright infringement," which showed an "intent on the

part of each to bring about infringement"; (2) "neither company attempted to develop filtering

tools or other mechanisms to diminish the infringing activity," which "underscore[d] [the

defendants'] intentional facilitation of their users' infringement"; and (3) the defendants made

"money by selling advertising space," so that the "commercial sense of their enterprise turn[ed]

on high-volume use, which the record show[ed] [was] infringing," which in the context of the

entire record supported a finding of "unlawful intent." 545 U.S. at 939-40.

       The Grokster Court also emphasized that this kind of unlawful intent can and should be

found on summary judgment, effectively directing summary judgment for the plaintiffs in that

case. Grokster, 545 U.S. at 941. On remand, the Grokster district court in fact entered summary

judgment against the peer-to-peer services based on their "unlawful objective to promote

inhngement" shown through "voluminous documentary evidence."                   Metro-Goldwyn-Mayer

Studios, Inc. v. Grokster, Ltd., 454 F. Supp. 2d 966, 971, 984, 985 (C.D. Cal. 2006). Other

recent cases   -   including in this District   -   have also not hesitated to enter summary judgment
against businesses like YouTube and Google on this same basis. Fung, slip op. at 35; Arista

Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124,150-54 (S.D.N.Y. 2009).

       Here, the evidence of YouTube's and Google's unlawful objective of operating the

YouTube site as a haven for infringement is even more powerful than in Grokster, Usenet, or

Fung. YouTube's founders made a conscious decision to build their user base "as aggressively

as we can through whatever tactics, however evil." SUF 7 85. They knew the site was "out of

control with copyrighted material"       -   including videos taken from Viacom programs they

identified by name   -   but they decided    not to   block even "the obviously copyright infringing

stuff," because if they did "site traffic [would] drop to maybe 20% of what it is." SUF 71 54-58.

They disabled community flagging for infringement (but not for other improper content) to avoid

obtaining "notice" from users and to shift the entire burden to copyright owners. SUF 77 64-65.

They sneered at rights holders as "copyright bastards" and "a-holes," killed simple engineering

fixes that would have made it easier to detect infringement, and admitted they were "just trying

to cover our asses."     SUF   77 34,   74-77, 107, 112-15, 119, 131, 135. They celebrated the

popularity of known infringing clips to investors. SUF 7 99. And they cynically mocked the

very idea they would flag videos for removal after an executive identified 70 percent of the most

popular clips as infi-inging. SUF 77 95-96. At least one of the founders was himself "putting

stolen videos on the site," while another urged his colleagues to "Steal it!" because "our traffic

surged . . . due to a video of this type." SUF 7 44. It is no wonder Hurley was "concerned with

the recent supreme court ruling on copyrighted material" in Grokster. SUF 7 39. But the allure

of using infringing videos to build the user base and get rich quick was too great. Instead of

stemming the floodtide of infhngement, the founders opted to "save [their] meal money for some

lawsuits." SUF 7 38.
       Likewise, Google decided to buy YouTube after its own executives warned senior

management that YouTube was a "'rogue enabler' of content theft," a "video Grokster,"

"trafficking mostly illegal content," whose b'business model is completely sustained by pirated

content," with a "large part of their traffic . .. from pirated content." SUF 77 157-59. Google's

own board book, documenting traffic of 60% "premium" content of which only 10% was

authorized, validated these warnings.      SUF 77181-82.     Google then adopted YouTube's

copyright policy to "increase traffic knowing beforehand that we'll profit from illegal

[d]ownloads." SUF 7 162. And when a license from Viacom was not forthcoming, Defendants

refused to use the fingerprinting technology they already had in hand or other proactive measures

to block Viacom videos, knowing they had no license from Viacom. SUF 77 203-17. They even

rejected proposals by Viacom and the MPAA that they jointly test filtering techniques, an

investigation that the MPAA agreed to largely fund. SUF      77 209, 217, 227-28.    Unless they

were awarded a content license, Defendants refused to prevent illegal uploading and imposed the

entire burden on Viacom and the other studios to search YouTube 2417 for infi-inging clips      -



while Defendants reaped the profits. Id.

       In short, "unequivocal indications of unlawful purpose in [Defendants'] internal

communications," Grokster, 545 U.S. at 938, plainly show that Google and YouTube "knew

[their] business model depended on massive infringing use, and acted to grow [their] business

accordingly," Grokster, 454 F. Supp. 2d at 989. In addition, the other indicia of unlawful

purpose noted in Gvokster are also present here. First, Defendants were "aiming to satisfy a

known source of demand for copyright infringement." 545 U.S. at 939. Whether Chen had it

precisely right in September 2005 when he estimated infi-ingement-driven traffic at 80%, or

Dunton at 70% in February 2006, or Google's diligence team at 54% in October 2006, "the
staggering scale of infringement makes it more likely that [Defendants] condoned illegal use, and

provides the backdrop against which all of [Defendants'] actions must be assessed." Grokster,

454 F. Supp. 2d at 985.'6 Second, as detailed in@ at 34-37, Defendants refused until May 2008

to implement readily available "filtering tools or other mechanisms to diminish the infringing

activity" in order to protect Viacom's works. 545 U.S. at 939. That overall failure "underscores

[their] intentional facilitation o f . . . infringement." Id. It also highlights their deliberate strategy

of willful blindness. Third, as described infra at 29-31, Defendants "make money by selling

advertising space, by directing ads to the screens of computers employing their [service]."

Grokster, 545 U.S at 940. "[Tlhe more the [service] is used, the more ads are sent out and the

greater the advertising revenue becomes. Since the extent of the [service's] use determines the

gain to [Defendants], the commercial sense of their enterprise turns on high-volume use, which

the record shows is infringing." Id. That describes YouTube to a tee: If Defendants stopped the

infringement, it would slash site traffic and with it current as well as future advertising revenue.

        Google and YouTube were not just innocent and unwitting accomplices to infringement

perpetrated by YouTube users. Defendants operated YouTube with the unlawful objective of

using infringing material to explosively build their user base and become the dominant video

website on the Internet.      Grohter establishes beyond question that they are liable for the

infringement they intentionally made possible.



'6 Moreover, Defendants' infringement of Viacom's works has been far more extensive than
indicated by the already large number of accused clips at issue in this litigation due to
infringement of content for which Viacom owns, but has not registered, the copyright. See Reed
Elsevier, Inc. v. Muchnick, No. 08-103, 2010 WL 693679, at "3, *11 (U.S. Mar. 2, 2010) (court
has subject-matter jurisdiction to adjudicate infringement claims for unregistered works and
include them in relief such as settlement); Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146,
1154 n.1 (9th Cir. 2007) (registration requirement "does not limit the remedies a court can
grant").
11.    DEFENDANTS ARE VICARIOUSLY LIABLE BECAUSE THEY DERIVED A
       DIRECT FINANCIAL BENEFIT PROM INFRINGEMENT THAT THEY HAD
       THE RIGHT AND ABILITY TO CONTROL.

       Even apart from their unlawful intent, Defendants are secondarily liable for the

infringement on YouTube under principles of vicarious copyright liability, because they derived

a direct financial interest from the infringement and had the right and ability to control it.

       A.      Statement of Undisputed Facts Relevant to Point I1

                1.      Defendants' Direct Financial Benefit from Infringement

       Like TV stations and other media outlets, YouTube makes money by selling ads that

appear on YouTube and are seen by users who come to the site to find and watch videos            -


including the majority of users drawn by infringing videos. YouTube initially focused its efforts

on building up a base of users who would spend time on the site and return in the fbture. SUF

77 29-30, 35-37,44, 57, 188; supra at 5-8.    Once that user base reached a critical mass, YouTube

sought to "monetize" it, principally through advertising. SUF 77 201,236,238-40.

       YouTube's monetization has centered on selling advertising that appears at different

places on the YouTube site. From a few months after YouTube's founding until January 2007,

ads appeared on the "watch page" (the webpage on YouTube where a user views a selected

video) for videos without regard to whether YouTube had a license agreement with the owner.

SUF   77 241-46.     For example, when a viewer watched an infringing clip from Viacorn's hit

programs such as "The Daily Show," "South Park," "Rugrats" and many others, an

advertisement appeared next to the video and YouTube earned revenue from that advertising.

SUF 77 247, 25 1 (screen shots of advertising on the watch pages for Viacom works). The scope

of the user base watching those ads was staggering. In the pre-acquisition board book, Google's

financial advisor projected there would be 126 billion watch page views in 2007. SUF 7 246.
        Displaying ads on the watch pages of inhnging videos represents the most clear-cut

direct financial benefit imaginable, and Google quickly came to realize that it was fatal to its

efforts to evade liability. So the practice came to a screeching halt in January 2007. SUF 7 248.

An internal email among senior Google advertising executives explained:

        A major decision in the works that you should be aware of - for legal reasons
        (that I don't fully understand what has changed, and our GC will be back in SF on
        Monday to articulate) all ads/monetization on the watch pages for user generated
        content will need to come down. This will have a tremendous impact on
        inventory.

SUF T[ 250 (emphasis added). But, of course, this abrupt change in policy could not change the

fact that YouTube advertised on watch pages during the explosive growth year of 2006. Thus,

YouTube in this litigation cannot even hope to disclaim receipt of a direct financial benefit

through users watching illegal videos.

        Even thereafter, Defendants continued to place ads on other pages of the YouTube site

and thereby profited from users drawn by infringing material. First, they sold ads appearing on

the YouTube homepage. SUF l'I[ 252-53. Second, they sold ads that appear on search results

pages   -   the largest source of revenue on YouTube. SUF 77 254-57. Third, they sold ads that

appear on browse pages, i.e., pages organizing videos by category or other characteristics such as

"most watched." SUF 7 260. Thus, if a user went to YouTube looking for clips that infringed

Viacorn's copyrights in popular shows like "South Park," either via the home page, a term

search, or browsing, YouTube made money from the ads served to that user drawn by infringing

material. SUF      77 259,   266. Google's pre-acquisition board book projected more than 154

billion views of the home and search results pages alone in 2007. SUF 7179. Fourth, YouTube

displayed ads on every upload page, i.e., the webpage shown to an uploading user during the

upload process. SUF 7 262. Thus, Defendants made money from infringement of the accused
clips infringing Viacorn's copyrights here by advertising to the user as he or she uploaded the

infringing video. Fifth, even after January 2007, YouTube showed "house ads" and suggested

"related videos" on the watch pages of infringing videos, thereby driving traffic to other parts of

the site with advertising. SUF T[T[ 263-65, 335-36.

       Moreover, as noted previously, by Defendants' own internal written admissions, 54 to 80

percent of the video views and site traffic on YouTube was drawn by unauthorized copyrighted

clips. See supra 16-17. As a Google executive overseeing monetization of YouTube explained,

"Users are searching for lots of things, but primarily for premium content." SUF T[ 195. Having

those popular videos was critical to building up a monetizable user base. See supra 8-9.      That

was why the founders adopted their willful blindness strategy, and what Google found so

financially attractive about YouTube when it agreed to pay $1.8 billion. (Point I supra).

               2.      Defendants' Right and Ability to Control Infringement

       In addition, YouTube and (after the acquisition) Google have always had the right and

ability to control the infringement on YouTube. They simply chose not to. YouTube has always

had and exercised the unfettered       to remove videos from the site and terminate user accounts

for any reason at YouTube's complete discretion. SUF T[ 267 (YouTube terms of use); SUF

T[ 268 ("The terms of use states specifically that we have the right to remove content at our sole

discretion for any reason whatsoever"). And YouTube does in fact constantly remove videos

and terminate user accounts based on the judgment of YouTube employees that videos uploaded

by a user include content that YouTube does not want to have on its site, such as hate speech,

violence, or erotic videos. SUF T[T[ 269-73. Thus, YouTube, not its uploading users, exercises

the ultimate editorial judgment and control over the content available on the site.
       YouTube has also always had the practical abilitv to prevent a large amount of the blatant

copyright infhngement on the site - if it wanted to. But it consistently refused to do so.17 For

example, until November 2005, YouTube employees reviewed every uploaded video to screen

out pornography, hate speech, and violence. SUF 7 269. Yet, YouTube deliberately decided not

to remove even "blatantly" or "obviously" inhnging videos. Supra at 7-10. It easily could

have. During the same period, Google Video used human review to block 10% of all uploads for

terrns-of-use violations - of which a 90% were due to copyright infringement. SUF            7 137.
Google abandoned that practice around the time it bought YouTube. SUF 7 138.

       As site traffic grew, YouTube had the ability to identify infringing videos in the same

way it keeps pornography and hate speech off the site to the present day. In Fall 2005, YouTube

instituted "community flagging" for identifying suspect videos. SUF 7 61-62. This tool enlists

YouTube's users to flag videos they believe are inappropriate with a click of a mouse on a menu

supplied by YouTube. SUF 7 63. A flagged video is then put in a queue for review by YouTube

employees, who make the decision whether to remove it. SUF 7 66. Community flagging has

expedited removal of pornography and other content YouTube regards as undesirable. SUF 7 70.

       YouTube instituted community flagging for copyright violations in September 2005 too.

SUF   77 61-62.   That lasted two weeks. SUF      7 65.   As discussed above, YouTube stopped

community flagging for copyright not because it was ineffective, but because it would generate




17 The only, very limited exception is that YouTube employed a technology called "hash-based
identification" to prevent a new upload of a video file that is exactly identical to one that was
removed pursuant to a takedown notice or other policy violation. SUF 7 274. However, such
identification will not prevent the same content from being uploaded as a video file that differs in
even the slightest way from the first. SUF 7 275. And even this minimal protection against
infringement was triggered only if a copyright owner first sent a takedown notice. SUF 7 276.
red flags and put YouTube on "notice" of specific copyright violations. SUF 7 64. YouTube

had a practical tool to detect infnngement, and opted to disable it for precisely that reason.

         YouTube has also always had the ability to find infringing clips by searching for

keywords associated with copyrighted content (e.g., "daily show") using YouTube's own search

feature and index. This is the method that copyright owners are forced to use to find videos that

infringe their copyrights on YouTube in order to send takedown notices. SUF               77 277-78.
YouTube could, of course, do it too. Indeed, until October 2006, YouTube employees

sporadically engaged in just such term searches for copyrighted material. SUF 7 272. But they

removed only some of the infringing content they found, and left other blatantly infringing clips

on the site when they thought the increased site traffic outweighed the risk of getting caught.

Supra at 11-12. Google had used the same technique for its Google Video website using search

terms for many Viacom programs before it acquired YouTube. SUF 7 139.

         In fact, Defendants' practical ability to combat infringement in this way is greatly

superior to having copyright owners deploy the same method. Rights holders can only search for

infringing videos   after the videos are live on the YouTube site, resulting in     inevitable delay

during which Defendants reap the profits - before removal through a takedown notice. SUF

7 279.   In fact, as discussed above, YouTube's business plan was predicated on using this delay

in detection and takedown to generate site traffic with infringing videos in the interim. Supra at

9. In contrast, Defendants, as the operators of the YouTube site with unique control over it, can

use keyword searching (human or automated) to identify and block likely infhnging videos

during the upload process, thereby preventing the infringement before it happens. SUF 7 280.

         Indeed, YouTube almost implemented an automated search tool, but abandoned it

precisely because it would be effective. SUF 7 112-14. In an instant message exchange between
YouTube engineer Matt Rizzo and YouTube executive Maryrose Dunton, Rizzo explained that

setting up that tool "isn't hard" and would only "take another day or w/e [weekend]." SUF

1114.   But Dunton said "[I] hate this feature. I hate making it easier for these a-holes" -

referring to copyright owners - and directed the engineer "to forget about" the tool Id. As she

explained, "we're just trying to cover our asses so we don't get sued." Id.

        Last, but not least, from the start YouTube had access to a more sophisticated tool to

identify and filter out infringing videos, technology known as digital fingerprinting. A digital

fingerprint is a unique digital identifier of the content in the audio and/or video track of an audio-

visual work. SUF     7 281.   In order to identify probable infilngement, a digital fingerprinting

service maintains a reference database of the digital fingerprints of copyrighted works obtained

from copyright owners (much as the FBI maintains a reference database of fingerprints). SUF

7 282. Then, when a video is uploaded to YouTube, the technology can instantaneously take the
digital fingerprint of the uploaded video (much like a real fingerprint taken from a crime scene)

and compare it to the reference database of fingerprints of copyrighted works. SUF 7 283. If

there is a fingerprint match - indicating that the audio andlor video track of the uploaded video

matches a copyrighted work in whole or in part       -   then YouTube can automatically block the

upload or take other action, such as flagging the video for employee review. SUF 1284.

Computers readily accomplish this function during the upload process so that infi-inging videos

never go live on the site. SUF 7 285.

        Audio fingerprinting services have been in widespread commercial use to forestall

copyright infringement over the Internet since well before YouTube started business. SUF

1
1 286-90.   Early on, copyright owners urged YouTube to use such fingerprinting technology to

stop infi-ingement. SUF TTT[ 225, 291. Initially YouTube refused to implement fingerprinting at
all. SUF 7226. In October 2006, however, as Google was acquiring YouTube, YouTube

contracted with a established fingerprinting vendor called Audible Magic to fingerprint videos

uploaded to the site and check them against reference fingerprints of copyrighted works. SUF

y 292.   This Audible Magic technology was available when YouTube was founded, and the cost

was minimal for the dominant Internet video site: $200,000 to $300,000. SUF 77 287, 3 11.

         But even after Defendants began using Audible Magic fingerprinting on YouTube, they

refused requests by copyright owners to use that technology to prevent infringement of any

owner's copyrights - unless the owner first aanted YouTube a content license and revenue

sharing deal. SUF 17 293-98. Specifically, during 2006 and 2007, Defendants negotiated with

most major content owners for legitimate licenses for their intellectual property on YouTube. In

every such negotiation, Defendants agreed to utilize filtering and fingerprinting to protect the

owner's intellectual property - as part of a license agreement. SUF 77 299-3 10. Thus, YouTube

offered to use fingerprinting for Warner Music in September 2006, for CBS in October 2006, for

Turner in October 2006, for Disney in December 2006, for Viacom in 2006 and again in

February 2007, for NBC Universal in February 2007, for EM1 in March 2007, and for Universal

Music in June 2007 - all in connection with license agreements. Id.

         Yet there was a catch   -   and a giant one. Until 2008, Defendants refused to use this

existing fingerprinting technology, even though it had an Audible Magic license in place to do

so, for a content owner to prevent theft of its intellectual property unless the owner agreed to

grant YouTube a content partnership license. SUF 77 296-98. Thus, Google and YouTube used

fingerprinting as a pressure point: if a company wanted its intellectual property protected, it had

to agree to grant a content license for many of its works or face having its shows uploaded

without restraint onto YouTube. Id. In fact, YouTube structured its relationship with Audible
Magic to check uploaded works only against the reference fingerprints for works of companies

that had granted YouTube a license. SUF 71294-96. Reference fingerprints of all other works

were simply ignored. Id.

       As noted, Defendants offered to use Audible Magic fingerprinting as part of a potential

content partnership license from Viacom. SUF 7 207. But after those license negotiations ended

in an impasse, Google's General Counsel rebuffed the request of Viacom7s General Counsel to

cooperate to stem infringement using the same Audible Magic fingerprinting that Google had

just offered as part of a license deal. SUF 77 209, 217; supra at 18-19. At the same time, it

rebuffed similar offers to cooperate from movie studios through the MPAA, which also proposed

that YouTube deploy the Audible Magic technology it already had in hand. Supra at 19-20.

       Shortly thereafter, Viacom filed this lawsuit.        Still Defendants refused to use

fingerprinting or the other proactive measures at their disposal to stem the infi-ingement of

Viacom's copyrights on YouTube. SUF 77 21 7-20. Finally, at the first status conference before

this Court in July 2007, months after this suit was filed, Defendants7counsel announced for the

first time that Defendants would now implement their own proprietary video fingerprinting

technology and would make it available to all copyright owners. SUF         7 314.   Despite this

promise, Defendants did not in fact deploy this Google proprietary system to block infringement

of Viacom's copyrights until May 2008. SUF         7 222.   All the while, Defendants operated

Audible Magic's technology on YouTube (and continued to do so until the end of 2009), but

refused to use that existing tool to protect Viacom's rights during the interim period before the

Google technology was up and running. SUF 77 293-98. Thus, from YouTube7s founding in

2005 until May 2008, Google and YouTube had the right and ability to take major steps to
control infringement through existing technology but refused to do so.               In the meantime,

YouTube swelled its user base and became the dominant video site on the Internet.

       B.      Defendants' Financial Interest and Control Makes Them Vicariously Liable.

       Defendants are liable under established rules of vicarious copyright liability, long applied

in this Circuit, which arises when "the right and ability to supervise coalesce with an obvious and

direct financial interest in the exploitation of copyrighted materials      -   even in the absence of

actual knowledge." Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir.

1963); see also id. at 308 (vicarious liability "plac[es] responsibility where it can and should be

effectively exercised"). Both elements of vicarious liability exist here.

               1.      Direct Financial Benefit

       Defendants derive an obvious and direct financial benefit from the infringing activity on

YouTube. The Second Circuit's Shapiro decision built on cases holding dancehall operators

liable for infringing performances by bands they engaged because the infringement provided "the

proprietor with a source of customers and enhanced income." 3 16 F.2d at 307; see also Buck v.

Jewell-La Salle Realty Co., 283 U.S. 191, 198 (193 1) ("One who hires an orchestra for a public

performance for profit is not relieved from a charge of infringement merely because he does not

select the particular program to be played"). Those cases exemplify a firmly established rule in

copyright law: a direct financial benefit exists whenever infringing material is a "draw" for

customers. Fonovisa Inc. v. Cherry Auction, Inc., 76 F.3d 259,263-64 (9th Cir. 1996).

       The "draw" standard was applied to the Napster peer-to-peer service, which users

employed to exchange infringing copies of sound recordings. A&M Records, Inc. v. Napster,

Inc., 239 F.3d 1004, 1023 (9th Cir. 2001). Napster had a direct financial interest in infringement

even though it had never earned any revenue, because infringing recordings were a "draw" for
users, and Napster's "future revenue [was] directly dependent upon 'increases in userbase."' Id.

at 1023. Courts in this District have applied the "draw" standard of financial interest in similar

situations. Arista Records, Inc. v. Mp3Board, Inc., No. 00 CIV. 4660 (SHS), 2002 WL 1997918,

at "1 1 (S.D.N.Y. Aug. 29,2002); Usenet.com, 633 F. Supp. 2d at 156-57.

       Google and YouTube incontestably derived a direct financial interest from the

infringement on the YouTube site under this draw standard. As in Napster, YouTube's founders

built up its user base using the draw of infringing material with plans to monetize that user base

in the future - which they did by flipping the business to Google for $1.8 billion. Supra at 5-8.

And inhnging videos were the major draw for the site - accounting for 54 to 80 percent of video

views and site traffic using Defendants' own estimates - during the period when YouTube

established its dominance. Supra at 16-17; see also SUF l'I[ 196-200, 202. Thus, although

"[tlhere is no requirement that the draw be 'substantial"' for there to be a direct financial interest

in infringement, Ellison v. Robertson, 357 F.3d 1072, 1079 (9th Cir. 2004), here the inhnging

draw was in fact enormous.

       In addition   -   and in this respect unlike Napster, which had no current revenues          -



Defendants have earned actual ad revenue from the draw of infringing videos on YouTube. As

Judge Connor explained, "YouTube is supported entirely by advertising revenues" and its

"unique drawing power       . . . is   almost wholly attributable to its broad and varied store of

streaming videos."       United States v. ASCAP (In re Application o YouTube, LLC), 616
                                                                    f

F. Supp. 2d 447, 449 (S.D.N.Y. 2009). That "drawing power" was largely due to infringement.

Supra at 16-17. That constitutes a direct financial benefit, and Defendants effectively conceded

as much when, "for legal reasons," they stopped placing ads on watch pages of infringing videos

in early 2007, after Google's acquisition. SUF T[ 250. Of course, that could not undo the fact
that they earned revenues from ads on the watch pages of infringing clips before 2007. SUF

   241, 247, 251.      And even without watch page ads, Defendants directly benefit from

infringement by placing ads on the home, search, browse and upload pages that are viewed by

users drawn by infringement. SUF        77 252-66. Thus, "[tlhe     more new visitors [Defendants']

inhnging site attracts, the more money [Defendants] make[]." Perfect 10, Inc. v. Cybernet

Ventures, Inc., 2 13 F. Supp. 2d 1146, 118 1 (C.D. Cal. 2002). That is a direct financial interest in

infringement.

                2.     Right and Ability To Control

       Defendants also have the right and ability to control the infringing activity on YouTube,

This element is satisfied when the defendant has and exercises the right to block users or content

for any reason at its complete discretion. E.g., Napster, 239 F.3d at 1023.l8 Moreover, the

defendant need not have perfect or absolute control over the infringing conduct. For example,

the Ninth Circuit emphasized that Napsta had limited control over infringing use of its peer-to-

peer service because it only controlled an imperfect index of recordings available for download,

not the recordings themselves. Id. at 1023-24. But that limited control was sufficient for

vicarious liability. Id. at 1024. While perfection was not required, Napster's "reserved right to

police [had to] be exercised to its fullest extent." Id. at 1023.

        Defendants have, and fiequently exercise, the           to remove videos from YouTube at

their complete discretion for anv reason whatsoever. They routinely remove videos containing

adult material, hate speech, nudity, violence, and any other content that Defendants, in their sole



l 8 Some cases have suggested the defendant must also have some additional "practical ability" to
"stop or limit the . . . infringing conduct." E.g., Pe$ect 10, Inc. v. Amazon.com, Inc., 508 F.3d
1146, 1173-74 (9th Cir. 2007). Although that standard has not been applied in this Circuit, as we
show below, Defendants also have such practical ability.
judgment, deem offensive or incompatible with the kind of media and entertainment destination

they want to operate to attract the broadest array of viewers. SUF       267-72. This kind of broad

power has been viewed as the epitome of the right and ability to control. Napster, 239 F.3d at

1023 ("The ability to block infringers' access to a particular environment for any reason

whatsoever is evidence of the right and ability to supervise"). When a media business removes

material at its discretion, then that business is exercising ultimate editorial control over the

content on the site, even if users select works for submission in the first instance.

       And Defendants have always had the practical ability to use their editorial control over

the YouTube site to limit infringement. As we have described in detail, YouTube had an array

of techniques available to it to find inhnging uploads, ranging from human review, to

community flagging, manual or automated term searches using YouTube's own index, and

digital fingerprinting. Supra at 31-37. Yet Defendants deliberately chose not to deploy those

techniques, instructing human reviewers and keyword searchers not to remove blatantly

infringing videos; shutting down community flagging for infringement afier two weeks because

it might put them on notice of infringement; killing a keyword filter because they did not want to

help "these a-holes" (i.e., copyright owners); and refusing to use digital fingerprinting unless the

rights holder granted a license. Supra at 9-1 1, 17-20. Indeed, YouTube and Google actually

made use of their practical ability to curtail infringement for favored license partners by using

Audible Magic fingerprinting beginning in early 2007 - but refused to use the very same tools to

prevent infringement of Viacom's copyrights until at least May 2008. SUF fl222,295-98.

       This is a textbook case where vicarious liability arises because Defendants deliberately

refused to exercise their "reserved right to police . . . to its fullest extent." Napster, 239 F.3d at

1023. As the Second Circuit has explained, where a defendant has "the power to police carefully
the conduct of its" users, vicarious liability "will simply encourage it to do so, thus placing

responsibility where it can and should be effectively exercised." Shapiro, 316 F.2d at 308; see

also Napster, 239 F.3d at 1023 ("Turning a blind eye to detectable acts of infringement for the

sake of profit gives rise to liability."). YouTube and Google are vicariously liable.

111.      DEFENDANTS ARE ALSO LIABLE AS DIRECT INFRINGERS.

          In addition to being secondary infringers, YouTube and Google are direct infringers in

their own right. Unlike peer-to-peer networks, where the infringing conduct occurs on the

computers of users, Grolnster, 545 U.S. at 919-20, here Defendants actively and volitionally

participate in infringing acts that occur on facilities they control and operate, pursuant to

processes they have developed and frequently modify, typically with no input from users at all.

         A.      Statement of Facts Relevant to Point 111

         Although users initially select the videos they will submit or "upload" to YouTube,

YouTube and Google are inextricably implicated in all of the actual acts of reproduction, public

performance and display, and distribution that constitute direct infringement. When a user

submits a video for upload, YouTube makes an exact copy of it in its original format (i.e., the

format in which it is uploaded by the user). SUF 7 3 15. In addition, YouTube makes one or

more additional copies of every video during the upload process in a different format called

Flash. SUF 77 3 16, 3 18.l 9 YouTube makes these additional copies on its own initiative because

it is an entertainment site, and YouTube's use of the Flash format allows it to perform videos for

virtually any visitor to its site via the Internet. SUF 7 319. As YouTube's longest-employed

engineer testified, "[tlhe system performed . . . the replication as a course of its normal operation,

. . . uninstructed by the user."      SUF   7 321.     In addition, well after initial upload, "[flor


l9   Making copies in different file formats is called "transcoding." SUF 7 3 17.

                                                  42
particularly popular videos that are watched very frequently" on YouTube, YouTube makes and

sends "a replica" of the video to a "content distribution partner to facilitate timely streaming to

all users." SUF    7 322.   YouTube then performs the infringing videos by streaming them on

demand to the computers of millions of users. SUF 7 323. That is, of course, YouTube's entire

purpose as a "media entertainment" site. On top of that, YouTube distributes a complete copy of

an infringing video to the computer of any user who views it, which is retrievable for playback

and permanent storage. SUF 7 323.

         YouTube and Google also have granted licenses to other major companies to distribute

YouTube's library of videos broadly over other "platforms" beyond YouTube's Internet-

accessible site. YouTube has contracts with Apple to distribute videos over iPhones and

AppleTV, SUF 7324; with Sony, Panasonic, and TiVo, SUF 77 325-27; and with the world's

largest cellular companies such as Cingular, Verizon Wireless, and Vodafone, SUF 7 328. Such

third-party platforms often are not compatible with YouTube's Flash format. Thus, to distribute

videos over these new platforms, in 2007 Defendants began working through YouTube's library

of videos uploaded in the past so that Defendants could make even more new copies of those

videos in at least two more file formats that work with these different third-party platforms. SUF

7 330.   YouTube made these new copies on its own initiative, without any request by its users,

many of whom had uploaded the original videos months or years before. Id. The uploading

users also had no input into the commercial terms agreed between Defendants and the companies

that operate the third-party platforms, which typically involve revenue sharing from advertising

                                           1
under terms negotiated by Defendants. SUF 1 324-28.

         Defendants also take many other proactive steps to induce users to watch videos and thus

generate advertising revenues without any input from the users who upload videos. YouTube
employs "editors" to scour the site for interesting videos that YouTube, on its own initiative,

then "features" with conspicuous positioning on its home page. SUF       7 33 1.   YouTube gives

prominent placement to videos that are most viewed, most frequently tagged as "favorites" by

users, or currently being watched on the site. SUF 7 333. YouTube indexes videos and provides

a search function so that viewers can find videos using search terms, suggests related videos to

users whenever they are watching a video, and provides a host of ways to browse through videos.

SUF 71 334-42. These features keep users glued to the YouTube site, allowing Defendants to

earn more advertising revenue   -   just as a TV station profits by keeping viewers glued to the

screen. As founder Jawed Karim explained, "users who keep coming back . . . are really

valuable because they spend time watching. And if they watch, then it's just like TV, which

means lots of value." SUF 7 35. And, of course, Defendants, not users, negotiate the advertising

deals that generate revenue for their entertainment business.

       Tellingly, YouTube requires uploading users to accept Terms of Service providing that

the user "grant[s] YouTube a worldwide, non-exclusive, royalty-free, sublicenseable and

transferable license to use, reproduce, distribute, prepare derivative works of, display, and

perform" each uploaded video. SUF T[ 345. That purported license on its face covers multiple

acts of direct infringement. YouTube also requires a user to warrant that he or she owns the

copyright for videos a user uploads, or has permission from the copyright owner to do so. SUF 7

346. Thus, YouTube's Terms of Service acknowledge that Defendants need a valid license from

the actual copyright owner to copy and perform a video on the YouTube site. But, as previously

discussed, Defendants know the purported "licenses" they obtain from uploading users under

YouTube's terms of use are shams for almost all of the professionally produced videos that fill

the site, only 10% of which are legitimately licensed. Supra at 16.
        Because they know the purported licenses they obtain from uploading users for most

professional media content are a sham, Defendants have sought content partnership licenses from

content owners   -   again showing they know their conduct constitutes inhngement absent a

license. SUF I T [ 203, 347, 299-310. 1n doing so, Defendants demand a release for their prior

infringing activities "arising out of or in connection with, the unauthorized reformatting,

duplication, distribution, hosting, performance, transmission or exhibition of' the content

owners' intellectual property. SUF 7 347. By their own words, Defendants demonstrate their

understanding that a license is required for these directly infringing activities.

        B.     Defendants' Own Conduct Constitutes Direct Infringement

        Defendants are committing direct infringement. As noted, unlike peer-to-peer networks,

all the infringmg acts on YouTube are being committed on facilities operated and controlled by

Defendants themselves, not their users. Defendants themselves engage in the copying, public

performances and displays, and distribution of copies that infringe Viacom's exclusive rights

under copyright. See 17 U.S.C. i$ 106; SUF 77 315-16,318,320-23,330,343-44.

       Moreover, Defendants' involvement in these infringing acts meets and exceeds the level

of "volition" required for direct infringement by copying under Second Circuit case law. See

Cartoon Network L P v. CSC Holdings, Inc., 536 F.3d 121, 130-31 (2d Cir. 2008), cert. denied,

129 S. Ct. 2890 (2009). Although direct infringement is a strict liability tort, see id. at 130, the

Court of Appeals concluded that it still requires some element of "volitional conduct," a

requirement derived from a line of cases beginning with Religious Technology Center v. Netcom

On-Line Communication Services, Inc., 907 F. Supp. 1361 (N.D. Cal. 1995) ("Netcom").            See

Cartoon Network, 536 F.3d at 131;see also id. at 130 ("The question is who made this copy").
       Netcom concerned a company that simply provided basic Internet functions that others

used to transmit infringing material, and reasoned that "the mere fact that Netcorn's system

incidentallv makes temporary copies of plaintiffs' works does not mean Netcom has caused the

copying." Netcom, 907 F. Supp. at 1368-69 (emphasis added). In Cartoon Network, the Second

Circuit reached the same conclusion about a service called RS-DVR that made a single copy of a

copyrighted work as an automated response to a user's request for that copy, where access to the

resulting copy was strictly limited to the user who requested it. 536 F.3d at 130. The Second

Circuit reasoned that this service was simply the equivalent to a remote-storage DVR or VCR,

and that the home viewer who records a program on a DVR or VCR is the person who makes the

copy and thus the direct infringer. Id. at 131.

       But as two Judges in this District have recognized, the "volitional conduct" standard of

Cartoon Network is satisfied where - as here - the defendants' intentional conduct transforms

them '"from passive providers of a space in which infringing activities happened to occur to

active participants in the process of copyright infringement.'"   Usenet.com, 633 F. Supp. 2d at

148 (quoting Playboy Enters., Inc. v. Russ Hardenburgh, Inc., 982 F. Supp. 503, 513 (N.D. Ohio

1997)); accord Capital Records, Inc. v. Mp3Tunes, LLC, No. 07 Civ. 9931(WHP), 2009 WL

3364036, at *4 (S.D.N.Y. Oct. 16, 2009); see also Playboy Enters., Inc. v. Webbworld, Inc., 991

F. Supp. 543, 552-53 (N.D. Tex. 1997), afd, 168 F.3d 486 (5th Cir. 1999). These cases stand

for the proposition that when defendants themselves operate the computers and other facilities

where infringing acts take place and do so with the intent of providing a haven for infi-lngement,

their conduct exceeds the minimal level of "volition" required to commit direct infringement -

which is, after all, a strict liability tort, see Cartoon Network, 536 F.3d at 130. And, as shown
above in Point I, Defendants have operated YouTube with the actual intent to inhnge. The

volitional element of their direct infringement is easily satisfied.

        The volitional aspect of Defendants' infringement is also demonstrated by another sharp

contrast with the service addressed in Cartoon Network. In that case, the RS-DVR service made

a single copy of a program as an automatic response to a customer request for the copy, and then

stored that copy for that customer alone. Cartoon Network, 536 F.3d at 130. Here, in stark

contrast, Defendants do not simply make a single, personal      COPY   of an infringing video when a

user submits it for upload. To the contrary, YouTube makes multiple additional transcoded

copies without any prompt or request by the user, and then performs that video to millions of

viewers on demand. And long after the uploading user submits a video           -   possibly months or

even years later - Defendants make additional server copies of the videos depending on viewing

demand and how Defendants choose to manage their system. Defendants have also made

additional copies long after upload in different transcoded formats on their own initiative so that

they could distribute the videos over third-party platforms under distribution deals that

Defendants - not their users - negotiated. Defendants did not commit that infringing conduct in

response to user requests. They did it on their own initiative, just like any other media company

whose business is the financial exploitation and distribution of entertainment content. They are

therefore liable as direct infringers.

IV.     DEFENDANTS DO NOT QUALIFY FOR THE DMCA DEFENSE.

        As shown above, Defendants are plainly liable under three bases with deep roots in

copyright law. The extent of copyright infringement on YouTube has been so extensive, and

Defendants' conscious decisions to welcome and cast a blind eye to such piracy so clear cut, that

Defendants have only one place to attempt to hide: they claim the DMCA immunizes their
conduct. But Congress through the DMCA did not immunize the kind of extremely culpable

conduct at issue in Gvokster (and here), or quietly and by implication repudiate cases like

Shapiro and years of copyright law by creating a safe haven for willful or willfully blind

infringers who refuse to remove infringing material unless they receive takedown notices. For

many of the same reasons described above in establishing liability, Defendants cannot escape

liability for their infringing conduct by seeking refuge in the DMCA safe harbor.

       The DMCA was inspired by Netcom, the case that introduced the concept of a "volitional

act" into direct liability. See H.R. Rep. No. 105-551(I), at 11 (1998); supra, Point 111. Netcom

reasoned that businesses carrying out specified core Internet functions should not be liable as

direct infringers for incidental infringement in the absence of volitional conduct - but should be

held accountable under the more stringent standards that apply to secondary infringement claims.

See Netcom, 907 F. Supp. at 1373. Thus, the preconditions of the DMCA immunity reflect and

largely track traditional secondary liability standards. If Defendants are liable for infringement

under these long established standards, they thereby also lose resort to the DMCA. See Fung,

slip op. at 36 ("In many ways, the Digital Millennium Copyright Act is simply a restatement of

the legal standards establishing secondary copyright infringement - in many cases, if a defendant

is liable for secondary infringement, the defendant is not entitled to Digital Millennium

Copyright Act immunity").

       The wording and logic of the statute makes this clear. The DMCA safe harbor is closed

to a service provider that has "actual knowledge" or is "aware of facts or circumstances from

which infringing activity is apparent," but does not "act[] expeditiously" to stop it. 17 U.S.C.

5 512(c)(l)(A). The DMCA also incorporates vicarious liability standards by denying immunity
to defendants that "receive a financial benefit directly attributable to the infringing activity" and
have "the right and ability to control such activity." Id.   5 512(c)(l)(B).   Moreover, the DMCA

does not eviscerate copyright by immunizing any and every infringing activity on the Internet,

but protects only incidental infringement unavoidably caused by performing specified core

Internet functions, such as providing "storage at the direction of a user." Id.   5 5 12(c). To qualify
for the DMCA defense, a provider must show that it passes all of these tests (and others). E.g.,

Tur v. YouTube, Inc., No. CV064436, 2007 WL 1893635, at *2-*3 (C.D. Cal. June 20, 2007).

As we show next, Google and YouTube fail all three.

       Defendants nonetheless maintain that the DMCA immunizes them for their infringing

conduct solely because Defendants remove the specific infringing videos identified by URL in

takedown notices from copyright owners. If that were true, then the DMCA would be just a

takedown notice statute, and all else meaningless surplusage. Defendants' problem is that the

plain statutory language makes clear that responding to takedown notices is only one of several

preconditions of the DMCA defense. See 17 U.S.C. § 512(c)(l)(C); see also S. Rep. No. 105-

190, at 45 (1998) ("Section 512 does not require use of the notice and take-down procedure");

Fung, slip op. at 37-38; Tur v. YouTube, 2007 WL 1893635, at "3.

       The DMCA in short does not place the entire burden on copyright holders to continually

monitor all sites like YouTube for infringing activity and send an unending series of takedown

notices, while the website owners intentionally profit from infiinging activity they could control.

Rather, the DMCA "balance[s] the interests" of copyright owners and service providers, H.R.

Rep. No. 105-551(II), at 21, by imposing "strong incentives" for them "to cooperate to detect

and deal with copyright infringement," S. Rep. No. 105-190, at 20; see id. at 8 (DMCA gives

"copyright owners reasonable assurance . . . against massive piracy" over the Internet). As the

Ninth Circuit cautioned about another limited Internet immunity, the Internet's "vast reach into
the lives of millions is exactly why we must be careful not to exceed the scope of the immunity

provided by Congress and thus give online businesses an unfair advantage over their real-world

                                                                                         f
counterparts, which must comply with laws of general applicability." Fair Hous. Council o Sun

Fernando Valley v. Roommates.com, LLC, 52 1 F.3d 1157, 1164 n. 15 (9th Cir. 2008) (en banc).

       A.     Defendants' Knowledge and Intent Defeat the DMCA Defense.

       As shown in Point I above, Defendants operated YouTube with knowledge and

awareness of, and intent to use, copyright infringement as the key to their success in attracting

the largest user base of any Internet video site. That runs afoul of the DMCA, which is

unavailable to a business that either has "actual knowledge" or is "aware of facts or

circumstances from which inhnging activity is apparent" and does not "expeditiously" take

action to stop the inhngement. 17 U.S.C.      8 512(c)(l)(A). As the Fourth Circuit explained,
"[tlhe DMCA's protection of an innocent service provider disappears at the moment the service

provider loses its innocence. . . . At that point, the Act shifts responsibility to the service

provider to disable the inhnging matter." ALS Scan, Inc. v. RemarQ Communities, Inc., 239

F.3d 619, 625 (4th Cir. 2001) (emphasis added); see also Online Policy Group v. Diebold, Inc.,

337 F. Supp. 2d 1195, 1200-01 (N.D. Cal. 2004) (DMCA only "limits . . . liability . . . for

incidental" - not intentional - "acts of copyright inhngement").

       As the undisputed facts set out above make clear, to say there were red flags everywhere

on YouTube is a gross understatement. Defendants were not merely aware of red flags signaling

rampant infringement; they rallied around them. Their own documents are contemporaneous

admissions that they knew infringing videos generated 54 to 80 percent of the traffic on

YouTube        that YouTube's business plan intentionally rested on such infringement-driven
traffic. This is exactly the kind of intentional guilt the Supreme Court condemned in Grokster.

And Grokster liability inherently defeats the DMCA:

       inducement liability [under Grokster] and the Digital Millennium Copyright Act
       safe harbors are inherently contradictory. Inducement liability is based on active
       bad faith conduct aimed at promoting inhngement; the statutory safe harbors are
       based on passive good faith conduct aimed at operating a legitimate internet
       business. Here, as discussed supra, Defendants are liable for inducement [under
       Grokster]. There is no safe harbor for such conduct.

Fung, slip op. at 43; accord Usenet, 633 F. Supp. 2d at 142 ("if Defendants . . . encouraged or

fostered . . . infringement, they would be ineligible for the DMCA's safe harbor provi~ions").~O

       Defendants nonetheless contend their knowledge and awareness that vast quantities of

copyright works were being uploaded is irrelevant under the DMCA unless they had specific

knowledge that a particular clip was infringing.        Absent specific knowledge, they argue,

YouTube and Google are free to willfully blind themselves to the vast dumping of copyrighted

works on the site and just sit back and await DMCA takedown notices, while they intentionally

profit from rampant infringement in the meantime.

       This is not and rationally could not be the law. An entertainment business may not

intentionally exploit copyrighted works to attract a large audience, but escape liability by closing

its eyes to the specific infringing videos by which it implements that plan. Willful blindness

does not negate Defendants7culpability. It intensifies it. As Judge Richard Posner explained for

the Seventh Circuit in rejecting a "specific knowledge" theory for purposes of contributory

infi-ingement, "Jwlillful blindness is knowledge, in copyright law . . . as it is in the law



20 In Usenet, Judge Baer entered a default sanction on the DMCA defense and thus did not
directly rule on the merits of the defense. See 633 F. Supp. 2d 142. However, his ruling that
intentional fostering of infringement defeats the DMCA was a key part of the reasoning
supporting the default, and therefore was an unambiguous holding in the case in full agreement
with Fung, the only other case to address this issue under the DMCA.
generally." In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003) (emphasis added);

see also id. at 655 ("The [DMCA] does not abolish contributory infringement"); Fung, slip op. at

42. For defendants to prevail, they must have this Court read the concept of willful blindness out

of copyright law and the DMCA statute even though it is applied universally, even in the

criminal law, as a form of knowledge. E.g., Giordano v. United States, 32 F. Supp. 2d 640,641-

42 (S.D.N.Y. 1999) (Stanton, J.) (enhancing sentence under knowledge standard because

defendant "willfully blinded himself to such knowledge to such degree that he is chargeable with

knowledge as a matter of law").

       In addition to conflicting with case law, Defendants' position is contradicted by the plain

language of the DMCA itself. The word "specific" (or similar language) does not appear as a

limitation in   8 512(c)(l)(A),   and courts may not read such a limitation into a statute when

Congress did not include it. See, e.g., Bridge v. Phoenix Bond & Indem. Co., 128 S. Ct. 213 1,

2 145 (2008). The statutory language expressly looks to whether Defendants either have "actual

knowledge"      or   are "aware of facts and circumstances from which infringing activity"     -   not

specific infringing videos - "is apparent." 17 U.S.C.     5 512(c)(l)(A)(i),   (ii) (emphasis added).

"The term 'activity' is intended to mean activity using the material on the system or network" or

"wrongll activity that is occurring at the site on the provider's system or network." S. Rep.

105-190, at 44. Thus, the defense is closed to a defendant that "becomes aware of a 'red flag'

[and] takes no action." H.R. Rep. 105-551(II), at 53; see id. at 57 (explaining that parallel

8 512(d) safe harbor is not     available to a defendant who "turned a blind eye to 'red flags' of

obvious infringement"); see Perfect 10 v. Cybernet, 213 F. Supp. 2d at 1177 (DMCA does not

"endorse business practices that would encourage content providers to turn a blind eye to the

source of massive copyright infringement while continuing to knowingly profit").
       In short, there is no "specific knowledge" requirement in the DMCA - particularly where

Defendants intentionally foster infringement. Defendants' proposed "specific knowledge of

infringement" requirement is the very same "error" that the Supreme Court rejected for purposes

of secondary liability in Grokster, 545 U.S. at 934; see also Fung, slip op. at 36 (DMCA

generally tracks standards for secondary liability). Congress did not intend to immunize the kind

of extreme, mass culpability at issue in Grokster      -   and this case - by absolving intentional

infringers as long as they remain willfully ignorant of the specific clips that are infringing.

       As Columbia Law Professor Jane Ginsburg explains, under the DMCA "awareness

                               to
triggers a proactive obli~ation block access in order to qualify for the statutory immunity."

Jane C. Ginsburg, Separating the Sony Sheepfrom the Grokster Goats, 50 Ariz. L. Rev. 577,596

(2008) (emphasis added); see also I1 Paul Goldstein, Goldstein on Copyright $ 8.3.2, at 8:41 (3d

ed. 2009) (DMCA incorporates "inquiry notice" standard). Once Defendants were aware that

YouTube was filled with infringing material (which was in fact their very plan), they were

required to look into the matter further, not close their eyes to it. Their failure to identify which

individual videos were infringing stemmed from their willful blindness policy of taking no action

in the face of red flags, which only underscores their liability.

       In their pre-motion letter to the Court, Defendants assert they have no obligation to take

action in the face of red flags of infringement under the interpretation of the DMCA in Perfect

lo, Inc. v. CCBill, LLC, 488 F.3d 1102, 1113 (9th Cir. 2007), and UMG Recordings, Inc. v. Veoh

Networks Inc., 665 F. Supp. 2d 1099, 1108 (C.D. Cal. 2009). That is incorrect. Neither case

involved the kind of intentional Grokster wrongdoing at issue here. As the Fung decision from

the same Circuit makes clear, these cases certainly do not stand for the proposition that the

DMCA shields such intentional conduct from infilngement liability. Further, even in the
absence of such intent, the DMCA places the burden on the service provider          -   not copyright

owners    -   to expeditiously remove material when faced with a red flag.                17 U.S.C.

8 512(c)(l)(A)(ii),   (iii) ("aware[ness] of facts or circumstances from which infringing activity is

apparent" triggers duty to "expeditiously remove, or disable access to, the material"); H.R. Rep.

105-551(II), at 53 (DMCA defense is forfeited when defendant "becomes aware of a 'red flag'

... and takes no action.") Thus, the DMCA does not sanction willful blindness. Especially after
Gvokster, such a reading offends all sensible considerations of policy by placing the entire

responsibility to police a website not on the service provider that financially benefits from

massive infringement, but upon the content owners who are its victims. As Columbia Law

Professor Ginsburg explains:

         CCBill notwithstanding, "apparent" does not mean "in fact illegal," nor does it
         mean "conclusively exists." Such an interpretation would allow the service
         provider to ''turn a blind eye" to infringements because the provider could claim
         that the possibility that some files might be fair use means that inhngement can
         never be "apparent" as to any file. By the same token, 8 512(m)'s dispensation
         of service providers from "affirmatively seeking facts indicating infringing
         activity," should not entitle the service provider to remain militantly ignorant.

Ginsburg, supra, 50 Ariz. L. Rev. at 598 (footnotes omitted).

         The contrary reading that Defendants extract from Pe$ect 10 v. CCBill and UMG v. Veoh

cannot be reconciled with the DMCA's statutory language, which, as noted above, employs both

actual and willful blindness variants of knowledge. It cannot be reconciled with the legislative

history as described above, which openly embraces the concepts of willful blindness and "red

flag" knowledge. It cannot be reconciled with the case law outside of the Ninth Circuit,

including Judge Posner's decision for the Seventh Circuit in Aimster, the Fourth Circuit in ALS

Scan, this Court in Usenet, and the Central District of California in Fung. It cannot be reconciled

with the scholarly recognition that the DMCA imposes "a proactive obligation" to inquire and an
"inquiry notice" standard. And it cannot be reconciled with Grokster's condemnation of

businesses that are intentionally built on infringement while trying to hide behind their willful

ignorance of particular infringing acts. Any such reading offends all sensible considerations of

policy, for it places the responsibility to police a website not on the service provider that

financially benefits from massive infringement, but upon the content owners who are the victims.

       The DMCA struck a balance whereby a service provider, armed with actual or red flag

knowledge of substantive illicit activity on the site, must inquire further and act to clean up the

site. It is for that reason that both Viacom individually and the MPAA on behalf of the film

industry generally offered to cooperate with YouTube and Google to assist in identifying illegal

videos and adopt procedures for blocking illegal uploads - overtures of shared responsibility and

cooperation rebuffed by Google and YouTube until long after this lawsuit was filed. Supra at

18-20. Defendants chose to remain willfblly blind. That is their undoing under the DMCA.

       Because Defendants were well aware of and even intended to facilitate the rampant

infringement on YouTube, they forfeited the protection of the DMCA unless they "act[ed]

expeditiously to remove, or disable access to, the material." 17 U.S.C. § 512(c)(l)(A)(iii). They

did not meet this requirement by idly waiting for copyright owners to send takedown notices, and

only then removing the specific infringing videos identified in such notices.         An entirely

different prong of $ 5 12(c) requires a service provider to remove infringing material in response

to takedown notices. Id. $ 512(c)(l)(C). The duty to remove infringing material based on

knowledge or awareness is an independent and distinct requirement of the DMCA.                  Id.

$ 5 12(c)(l)(A). That requirement would be completely meaningless if it were only triggered by

takedown notices already covered by $ 512(c)(l)(C). The legislative history confirms what is

plain from the structure of the statute:
       A service provider wishing to benefit from the limitation on liability under
       subsection (c) must 'take down' or disable access to infringing material residing
       on its system or network of which it has actual knowledge or that meets the 'red
       flag' test, even if the copyright owner or its anent does not notify it of a claimed
       infringement.

S. Rep. 105-190, at 45 (emphasis added); see H.R. Rep. 105-551(1I), at 54 (same).

       Google and YouTube made no effort to do this until May 2008, when they finally broadly

used filtering technology to block clips that infringe Viacom7s copyrights.          Before that,

Defendants refused to remove "the copyright infringement stuff' unless they first received a

takedown notice for a specific video. SUF       77 38,   189, 220. Massive infringement would

thereby be maintained on their site as a draw to viewers and advertisers. Supra at 8-9. That

violates $ 512(c)(l)(A)'s requirement to remove infringing material triggered by knowledge or

awareness of infringing activity. Defendants cannot take refuge in the DMCA.

       B.       Defendants' Direct Financial Benefit and Right and Ability to Control
                Infringement Defeat the DMCA Defense.

       Defendants also fall outside the DMCA because they "receive a financial benefit directly

attributable to the inhnging activity" and have "the right and ability to control such activity."

17 U.S.C.   5 512(c)(l)(B).   This prong of the DMCA tracks the traditional standard for common

law vicarious copyright liability. CCBill, 488 F.3d at 1117; see Shapiro, 3 16 F.2d at 307. And

where, as here, "Congress uses terms that have accumulated settled meaning under common law,

a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the

established meaning of these terms." Neder v. United States, 527 U.S. 1, 21 (1999) (quotation

marks omitted). Thus, the standard for this prong of the DMCA is the same as for vicarious

liability. CCBi11, 488 F.3d at 1117; Costar Group, Inc. v. Loopnet, Inc., 164 F. Supp. 2d 688,

704 (D. Md. 2001), afd, 373 F.3d 544 (4th Cir. 2004); see also Fung, slip op. at 36 (DMCA

generally incorporates standards for secondary copyright liability).

                                                56
       As shown above in Point 1 , Defendants are liable for the infringement on YouTube
                                1

under the common law of vicarious copyright liability. Therefore, under the plain language of

5 512(c)(l)(B) incorporating that standard, Defendants cannot use the DMCA to escape liability.
They could have curtailed the infringement from which they were profiting, but succumbed to

the lure of immediate riches. The DMCA does not immunize such conduct.

       Defendants could evade that conclusion only if direct financial benefit and right and

ability to control meant one thing in the common law and another under the DMCA. No such

argument is possible, however, because the Supreme Court has established a high hurdle for

overcoming the presumption that statutory language incorporates settled common law meanings:

statutory terms with accumulated common law meaning "must" be read to incorporate that

meaning - the only exception being if the statute "dictates" otherwise. Neder, 527 U.S. at 21.

       That defeats any perverse attempt to distort the DMCA to immunize conduct that would

otherwise incur common law vicarious liability, for nothing in the DMCA "dictates" departure

from the common law. First, with respect to the direct financial interest prong, the cases

expressly and unanimously hold that the "draw" standard applies in the same way under the

DMCA as under the common law. E.g., CCBiIZ, 488 F.3d at 1117 ("we hold that 'direct

financial benefit' [in the DMCA] should be interpreted consistent with the similarly-worded

common law standard for vicarious copyright liability," and therefore that "the relevant inquiry

is whether the infringing activity constitutes a draw for subscribers") (quotation marks omitted).

       Moreover, as required by Neder, courts have also recognized that the "right and ability to

control" element of the DMCA must "be interpreted consistently with common law." lo Group,

Inc. v. Veoh Networks, Inc., 586 F. Supp. 2d 1132, 1150 (N.D. Cal. 2008). For example, in

Fung, the Court granted summary judgment due to defendant's right and ability to control under
the DMCA by applying the control standard for vicarious liability, under which "the 'ability to

block inhngers' access to a particular environment for any reason whatsoever is evidence of the

right and ability to supervise."' Fung, slip op. at 39 n.27 (quoting Napster, 239 F.3d at 1023).

Similarly, in prior litigation against YouTube, the court held that YouTube would have the right

and ability to control under the DMCA if the record showed that it had "the technical capabilities

needed to detect and prescreen allegedly infringing videotapes." Tur v. YouTube, 2007 WL

1893635, at *3. That is the case here. The undisputed facts show that YouTube and Google

have both the right to block access for any reason, and the practical ability to curtail

infringement. They thus have "the right and ability to control." Supra Point 11. 21

       Despite the Neder rule, other decisions have suggested that the control prong of the

DMCA should be different from the control prong of vicarious liability - without ever explaining

exactly what "the right and ability control" means under the DMCA.              E.g., UMG, 665

F. Supp. 2d at 1113. UMG reasoned that the DMCA "dictate[s] a departure from the common

law standard" because: (1) the DMCA presupposes that a service provider can terminate repeat

infringers and remove infringing content in response to takedown notices; and (2) 17 U.S.C.

8 512(m)(l) provides that "[nlothing in this section shall be construed to condition the
applicability of subsections (a) through (d) on . . . a service provider monitoring its service or

affirmatively seeking facts indicating infringing activity." 665 F. Supp. 2d at 1113-14.

       Neither reason permits departure from the common law standard for vicarious liability.

First, the DMCA merely presupposes the ability to remove infringing material in reswonse to

takedown notices, see 17 U.S.C.     5 512(c)(l)(C),   which is different from the more pervasive


   The Tur court denied summary judgment against YouTube on the record there because no
discovery had been taken to show that YouTube had such practical ability. 2007 WL 1893635,
at *3-"4. In contrast, the extensive record here amply demonstrates practical ability.
control standard for vicarious liability turning on whether the defendant has reserved the right to

remove material it does not approve of "for any reason whatsoever," Napster, 239 F.3d at 1023.

Because the control standard for vicarious liability is not redundant or contradictory under the

DMCA, the statute does not "dictate" departure from the settled common law meaning.

       Nor does    5 512(m)   "dictate" such a departure. Far from intending to override the

common law standard, Congress made clear that notwithstanding 5 512(m), the DMCA7s            '"m
and ability to control' language . . . codifies the second element of vicarious liability." H.R. Rep.

105-551(I), at 26 (emphasis added). UMG cavalierly dismissed this legislative history because it

related to an earlier version of the DMCA. UMG, 665 F. Supp. 2d at 1115-16. However, that

earlier version contained the same two provisions at issue here: the "right and ability to control"

language, and the exact language that was ultimately enacted in     5 5 12(m) (with changes only to
the subsection references).22 Since Congress intended to codify the common law standard in a

version of the DMCA that included the same language that was eventually enacted in         5 512(m),
it is absurd to say that 3 5 12(m) "dictates" departure from that common law standard.

       Moreover, UMG's reading of        5 512(m) is   so sweeping that it deprives "the right and

ability to control" of &l
                        meaning, whether under the common law standard or any other

conceivable interpretation of those words. When a court perceives some tension between two

statutory provisions, its duty is not to read one so broadly that it effectively repeals the other. It

is to harmonize the two. E.g., Watt v. Alaska, 451 U.S. 259, 266-67 (1981). That is especially



22 Compare 17 U.S.C. 3 5 12(m)(l) ("'Nothing in this section shall be construed to condition the
applicability of subsections (a) through (d) on . . . a service provider monitoring its service or
affirmatively seeking facts indicating infringing activity"), with H.R. Rep. 105-551(I), at 8
(language of earlier bill: "Nothing in subsection (a) shall be construed to condition the
applicability of subsection (a) on a provider . . . monitoring its service or affirmatively seeking
facts indicating infringing activity").
true when the provisions were enacted together in the same Act. E.g., US. West Commc 'ns., Inc.

v. Hamilton, 224 F.3d 1049, 1053 (9th Cir. 2000). And in resolving the tension between two

provisions, a court should adopt a reading consistent with the objects of the statutory scheme as a

whole. E.g., Frank G. v. Bd. ofEduc. ofHyde Park, 459 F.3d 356, 371 (2d Cir. 2006).

           Here, the meaning of "right and ability to control" in   512(c)(l)(B) is clear. Congress's

adoption of the common law terminology, the legislative history, and the plain meaning of the

words "right and ability to control" all confirm that this language in the DMCA must encompass

situations like here, where Defendants in fact have both the legal right and the practical ability to

control infringement on the YouTube website.

           This plain understanding of "right and ability" is readily harmonized with   5 5 12(m).   The

title of    512(m) is "Protection of Privacy," and the provision "is designed to protect the privacy

of Internet users." H.R. Rep. 105-55l(II), at 64 (referring to fj 5 12(m) as § 5 12(1)). Given the

ambiguity of the word "monitor" in § 512(m) and the need to harmonize it with           5 512(c)(l)(B),
Congress's purpose of protecting privacy must inform                 512(m)'s interpretation.        See

Brotherhood o R.R. Tvainmen v. Balt. & Ohio R.R. Co., 33 1 U.S. 519, 528-29 (1947) (headings
             f

should be used to "shed light on some ambiguous word or phrase" in statute); 3 Melville B.

Nimmer & David Nimmer, Nirnmer on Copyright 5 12B09[B], at 12B-99 (2009) ("the caption of

[§ 512(m)] reads 'Protection of Privacy'       . . . [and] courts should . . . bear it in mind when
applying Section 512"). As the caption makes clear, Congress did not want to force service

providers to intrusively "monitor" private materials on their system, such as users' emails. But
the infringing videos on YouTube are offered by uploaders for the whole world to see. No

privacy interest is affected by YouTube's right and ability to control public infringement.23

       It would defy logic to conclude that Defendants lacked the "right and ability to control"

inhngement under the DMCA when, as a matter of undisputed fact, they had both the legal right

and the practical ability to do so. Indeed, the undisputed facts here negate the DMCA defense

under any reading. Defendants actually implemented Audible Magic fingerprinting technology

to control infringement for favored business partners, but when doing so, they deliberately kept

up a large number of videos that infringe Viacom's copyrights, based on their calculation that the

risk of litigation was outweighed by the reward of drawing users to the site. Supra at 35-36.

That kind of conscious toleration of known inhngement forfeits the DMCA defense under any

conceivable reading of congressional intent.

       C.      The Infringement on YouTube Does Not Result from the Specified Core
               Internet Functions to Which The DMCA Applies.

       Defendants fall outside the DMCA for an additional reason: their infringement does not

result from providing the specified core Internet functions covered by the defense. The DMCA

is very specific about the four functions it covers, 17 U.S.C.   8 512(a)-(d).   Defendants' liability

does not arise from these specific functions. In particular, their liability is not "by reason of the




23 In addition, 8 512(m) only provides that monitoring should not be treated as a free-standing
"condition" of the safe harbor. That is not the case under the common law vicarious liability
standard, because the right and ability to control is not a stand-alone condition of liability, but an
obligation that arises when it is        with financial gain, that is when a service provider has a
direct financial interest. Grokstev, 545 U.S. at 939 (holding that even though defendants "lacked
an independent duty to monitor their users' activity," "failure to develop filtering tools" is
"factor" for imposing liability) (emphasis added). And the "right and ability" to control
infringement is not the same as "monitoring" under 5 512(m); filtering and blocking uploads
before they hit the site is not the same as monitoring users' viewing of videos on the site. In
sum, 8 5 12(m) does not trump incorporation of the vicarious liability standard in 5 5 12(c)(l)(B).
                                                                                    ~
storage at the direction of a user" of infringing material under S) 5 1 2 ( ~ ) . 2 YouTube is not a

storage or web hosting service. It is a media and entertainment business no different from a TV

station - except for its lack of respect for copyright law.

       "Storage" is not defined in the DMCA and therefore has its ordinary meaning. See, e.g.,

Crawford v. Metro. Gov't o Nashville, 129 S. Ct. 846, 850 (2009). In the computer context, to
                          f

"store" means to "record (information) in an electronic device (as a computer) from which the

data can be obtained as needed." Webster's Third New International Dictionary 2252 (1986).

Accordingly, the legislative history indicates that storage covers "providing server space for a

user's web site, for a chatroom, or other forum in which material may be posted at the direction

of a users." H.R. Rep. 105-551, at 53 (emphasis added). This example distinguishes two kinds

of businesses. The first is the purely passive business of "providing server space" (also known

as web hosting) to others for their operation of websites. Id.; see The New Oxford American

Dictionary 1903 (2d ed. 2005) ("Web hosting": "the activity or business of providing storage

space and access for Web sites"). The other is the "user's" business that employs the server

space to operate a "web site . . . in which material may be posted at the direction of a user." H.R.



24 Defendants' conduct also does not fall within the functions covered by subsections (a), (b) or
(d). Defendants do not come within the 5 512(a) safe harbor for transmission, because they do
not meet the strict definition of a "service provider" for that subsection, see 17 U.S.C.
9 512(k)(l)(A), which is limited to those who "play[] the role of a 'conduit' for the
communications of others," like a common carrier or telecommunications company. H.R. Rep.
105-551(II), at 51. They also do not come within the 5 512(b) safe harbor for system caching,
because it applies only where one user requests material from another user, and the intermediate
service provider that carries the transmission then makes an "intermediate and temporary" copy
in the course of the transmission, fj 512(b)(l)(A)-(C); see H.R. Rep. 105-551 (11), at 52. Finally,
Defendants do not come within the S) 512(d) safe harbor for "referring or linking" to infringing
material on other websites, because Defendants' core infringing conduct of making and publicly
performing multiple copies of copyrighted videos and thumbnails takes place on the YouTube
site itself. See H.R. Rep. 105-55l(II), at 51 (explaining that S) 5 12(d) applies only if a service
provider "lacks actual knowledge of infringement on the other site") (emphasis added).
Rep. 105-551(II), at 53. The legislative history makes clear that "storage" applies only to the

first kind of business - "providing server space"   -   not to operation of the "user's   web site." As

Columbia Professor Ginsburg explains: "The examples of service providers given in the House

Report consist entirely of enterprises who provide 'space' for third-party websites and fora, not

the operators of the websites themselves." Ginsburg, supra, 50 Ariz. L. Rev. at 594.

       That reflects the DMCA's fundamental purpose. The legislative history explains: "In the

ordinary course of their operations service providers must engage in all kinds of acts that expose

them to potential copyright infringement liability. For example, service providers must make . . .

electronic copies . . . in order to host World Wide Web sites." S. Rep. 105-190, at 8 (emphasis

added). Thus,    5 512(c) is   intended to protect services like web hosts that passively provide

server storage as an empty vessel for someone else's websites or other activities. It does not

protect companies that actively operate the websites as online entertainment centers. See Fung,

slip op. 38 n. 26 (only "passive . . . storage of infhnging materials" is covered by § 5 12(c)).

       That is further confirmed by          5 512(c)'s    language limiting the safe harbor to

"infringement of copyright bv reason of the storage at the direction of a user."             17 U.S.C.

5 5 12(c) (emphasis added).    This language requires a tight nexus, not merely any kind of loose

connection. As the Supreme Court has made clear in interpreting other statutes, "by reason of'

requires proximate cause, not mere but-for causation. See Holmes v. Secs. Investor Protection

Corp., 503 U.S. 258, 263-64 (1992); Associated Gen. Contractors o Cal., Inc. v. California
                                                                 f

         f
Council o Carpenters, 459 U.S. 519, 529-30 (1983). Similarly, "inhngement by reason of the
storage at the direction of a user" in § 5 12(c) requires that storage at the direction of the user be

the proximate cause of infringement, not merely one of many but-for causes.25

       Defendants do not qualify for the          5 512(c)   safe harbor because their copyright

infringement results not from web hosting, but from operating YouTube as a "consumer media

company." SUF T[ 15. YouTube7s entire business is predicated on the public performance of

videos -just like a television station - not on the storage of videos. A true storage service such

as a "web host, like a delivery service or phone company, is an intermediary and normally is

indifferent to the content of what it transmits." Doe v. GTE Corp., 347 F.3d 655, 659 (7th Cir.

2003). In stark contrast, YouTube is a "consumer media company" that uses content to attract

viewers to whom it shows advertising. SUF It[15, 44, 55, 230-36. As their emails indicate,

Defendants care intensely about which videos YouTube has available and how they are

presented, because that is how they lured an audience and advertising dollars. Supra at 5-8.

       To that end, Defendants engage in an array of directly and secondarily infringing

activities after users initially submit videos for upload, summarized supra, Point 1II.A. Those

activities are neither limited to storage nor performed at the direction of the uploading users.

Defendants make multiple copies of videos without any request by uploading users.                SUF

T[T[ 3 15-16, 320-23, 330. Defendants publicly perform and distribute videos on watch pages

designed by Defendants in order to attract advertising revenue pursuant to advertising practices

and deals that are determined, negotiated and priced by Defendants, not their users. Supra at 29-



25 The limited scope of 9 512(c) is also indicated by comparison with the other 5 512 safe
harbors, which apply only to specified basic Internet functions, namely transmission, system
caching, and indexing. 17 U.S.C. 5 512(a), (b), (d). The DMCA itself explicitly states that each
safe harbor applies  a    to the specific function described in that subsection: "Subsections (a),
(b), (c), and (d) describe separate and distinct functions for purposes of applying this section."
17 U.S.C. 5 512(n) (emphasis added).
30. Defendants, not the uploading users, decide what other videos will be suggested to users as

"related" to a video being viewed on any given watch page. SUF 7 334. The uploading user also

has no say whether and how Defendants place ads on the home, search results, and browse pages

throughout the rest of the YouTube site, which is organized and includes functions like search

that Defendants, not their users, create and continually change to maximize the amount of time

revenue-generating viewers surf YouTube.

       Most tellingly, Defendants negotiated distribution deals purporting to grant licenses fiom

YouTube to third parties like Apple and Verizon Wireless authorizing performance of

YouTube's library of videos - including infringing videos - on the third parties' platforms. To

carry out these deals, Defendants make and perform ever more copies of inhnging videos, often

months or years after the videos were first uploaded by users. SUF         7 330.    Copying and

licensing infringing videos on Defendants' own initiative for distribution over third-party

platforms is not "storage at the direction of a user." As this example drives home, Defendants

are taking material submitted by users and exploiting it for their own purposes, such that a

"majority of hnctions . . . remain outside of the safe harbor." CCBill, 488 F.3d at 1117.

       Although two courts addressing the Veoh video website interpreted "storage" more

broadly, their readings are not persuasive and, in any event, do not help Google and YouTube.

The Veoh courts read "storage" to cover any "automatic" action performed by a service

provider's computer systems that "facilitates access" to user-uploaded content. See lo, 586 F.

Supp. 2d at 1147; UMG Recordings, Inc. v. Veoh Networks, Inc., 620 F. Supp. 2d 1086 (C.D.

Cal. 2008). But, as explained supra, at 60-61, the DMCA expressly states that       5 512(c) covers
only inhngement "by reasons of' the specific function of storage, not infringement resulting

fiom other functions. And even if 5 512(c) did apply to other automatic functions in response to
user commands   -   and it does not   -   that would not help Defendants, because much of their

infi-inging conduct is performed without any user input at all.       For example, Defendants

themselves initiated the copying and distribution required to carry out the third-party platform

deals they negotiated. YouTube and Google never sought to operate a mere storage or web

hosting service. They were seeking to build a media entertainment empire comparable to other

major television and film distribution outlets - and did just that. SUF    7 94 ("we   should be

comparing ourselves to, say, abc/fox/whatever"). They are therefore ineligible for the $ 5 12

defense.
                                     CONCLUSION

      Viacom's motion for partial summary judgment should be granted.

                                  Respectfully submitted,



By:   Is/ Stuart J. Baskin                   By: Is/ Paul M. Smith

Stuart J. Baskin (No. SB-9936)               Paul M. Smith (No. PS-2362)
John Gueli (No. JG-8427)                     William M. Hohengarten (No. WH-5233)
Kirsten Nelson Cunha (No. KN-0283)           Scott B. Wilkens (pro hac vice)
SHEARMAN & STERLING LLP                      Matthew S. Hellman (pro hac vice)
599 Lexington Avenue                         JENNER & BLOCK LLP
New York, NY 10022                           1099 New York Avenue, NW
Telephone: (2 12) 848-4000                   Washington, DC 20001
Facsimile: (2 12) 848-7 179                  Telephone: (202) 639-6000
                                             Facsimile: (202) 639-6066

                                             Susan J. Kohlmann (No. SK-1855)
                                             JENNER & BLOCK LLP
                                             9 19 Third Avenue
                                             New York, NY 10022
                                             Telephone: (2 12) 89 1- 1690
                                             Facsimile: (2 12) 89 1- 1699
From Viacom’s Brief:


“   They celebrated the popular-
    ity of known infringing clips to


                           ”
    investors.


What it really says:
This refers to the YouTube
presentation at right, which
describes clips from major
media on YouTube that were
either uploaded by the creators
for promotional purposes (e.g.,
“Uploaded by MTV,” “Uploaded
by Atom Films”), or deliberately
allowed by the creators to
remain on the service (e.g.,
Lazy Sunday and CBS News).
None of these clips was “in-
fringing” any copyrights.




                                        From Viacom’s Brief:

                                       “   As early as April 2005, they
                                           emailed each other about users
                                           uploading ‘copyrighted material’
                                           — such as Viacom’s ‘South Park’



                                                                      ”
                                           show, which they repeatedly
                                           mentioned.


                                       What the email really says:
                                       In these emails from YouTube’s earli-
                                       est days, Hurley recommends reject-
                                       ing certain clips because they might
                                       violate copyright (including a South
                                       Park clip). Chen agrees, and notes
                                       that the first set of videos uploaded
                                       to YouTube should represent the
                                       type of content the founders wanted
                                       the site to be about.
From Viacom’s Brief:


“   They celebrated the popular-
    ity of known infringing clips to


                           ”
    investors.


What it really says:
This refers to the YouTube
presentation at right, which
describes clips from major
media on YouTube that were
either uploaded by the creators
for promotional purposes (e.g.,
“Uploaded by MTV,” “Uploaded
by Atom Films”), or deliberately
allowed by the creators to
remain on the service (e.g.,
Lazy Sunday and CBS News).
None of these clips was “in-
fringing” any copyrights.




                                        From Viacom’s Brief:

                                       “   As early as April 2005, they
                                           emailed each other about users
                                           uploading ‘copyrighted material’
                                           — such as Viacom’s ‘South Park’



                                                                      ”
                                           show, which they repeatedly
                                           mentioned.


                                       What the email really says:
                                       In these emails from YouTube’s earli-
                                       est days, Hurley recommends reject-
                                       ing certain clips because they might
                                       violate copyright (including a South
                                       Park clip). Chen agrees, and notes
                                       that the first set of videos uploaded
                                       to YouTube should represent the
                                       type of content the founders wanted
                                       the site to be about.
From Viacom’s Brief:


“   They celebrated the popular-
    ity of known infringing clips to


                           ”
    investors.


What it really says:
This refers to the YouTube
presentation at right, which
describes clips from major
media on YouTube that were
either uploaded by the creators
for promotional purposes (e.g.,
“Uploaded by MTV,” “Uploaded
by Atom Films”), or deliberately
allowed by the creators to
remain on the service (e.g.,
Lazy Sunday and CBS News).
None of these clips was “in-
fringing” any copyrights.




                                        From Viacom’s Brief:

                                       “   As early as April 2005, they
                                           emailed each other about users
                                           uploading ‘copyrighted material’
                                           — such as Viacom’s ‘South Park’



                                                                      ”
                                           show, which they repeatedly
                                           mentioned.


                                       What the email really says:
                                       In these emails from YouTube’s earli-
                                       est days, Hurley recommends reject-
                                       ing certain clips because they might
                                       violate copyright (including a South
                                       Park clip). Chen agrees, and notes
                                       that the first set of videos uploaded
                                       to YouTube should represent the
                                       type of content the founders wanted
                                       the site to be about.
                       UNITED STATES DISTRICT COURT
                  FOR THE SOUTHERN DISTRICT OF NEW YORK


                                                )
VIA   COM INTERNATIONAL INC., )
COMEDY PARTNERS, )
COUNTRY MUSIC TELEVISION, INC., )


liC, )
PARAMOUNT PICTURES CORPORATION, )
and BLACK ENTERTAINMENT TELEVISION )


                              Plaintiffs,
                                               )
                                               )    Case No. 1:07-cv-02103 (LLS)
                      v.                       )    (Related Case NO.1 :07-cv-03582 (LLS)
                                               )    ECF Case
YOUTUBE INC., YOUTUBE, LLC, and                )
GOOGLE, INC.,                                  )
                                               )
                              Defendants.      )
                                               )
                                               )

  VIACOM'S STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF ITS MOTION
  FOR PARTIAL SUMMARY JUDGMENT ON LIABILITY AND INAPPLICABILITY
   OF THE DIGITAL MILLENNIUM COPYRIGHT ACT SAFE HARBOR DEFENSE


Stuart J. Baskin (No. SB-9936)               Paul M. Smith (No. PS-2362)
John Guelì (No. JG-8427)                     Willam M. Hohengarten (No. WH-5233)
Kirsten Nelson Cunha (No. KN-0283)           Scott B. Wilkens (pro hac vice)
SHEARMAN & STERLING LLP                      Matthew S. Hellman (pro hac vice)
599 Lexington Avenue                         JENNER & BLOCK LLP
New York, NY 10022                           1099 New Y ork Avenue, NW
Telephone: (212) 848-4000                    Washington, DC 20001
Facsimile: (212) 848-7179                    Telephone: (202) 639-6000
                                             Facsimile: (202) 639-6066

                                             Susan 1. Kohlmann (No. SK-1855)
                                             JENNER & BLOCK LLP
                                             919 Third Avenue
                                             New York, NY 10022
                                             Telephone: (212) 891-1690
                                             Facsimile: (212) 891-1699
March 18,2010
                                 Attorneysfor PlainttfJ
                                             TABLE OF CONTENTS

i. VIACOM'S OWNERSHIP OF THE WORKS IN SUIT ................................................... 1

II. INFRINGEMENT OF THE WORKS IN SUIT ON YOUTUBE ...................................... 2

II. DEFENDANTS' KNOWLEDGE AND INTENT CONCERNING INFRINGEMENT
        ON YOUTUBE...................................................................................................................2

        A. The YouTube Founders' Knowledge and Intent Concerning Infringement on
                  YouTube ................................................................................................................. 2

        B. Google's Knowledge and Intent Concerning Infringement on YouTube............. 31

IV. DEFENDANTS' DIRECT FINANCIAL BENEFIT FROM INFRINGEMENT ............ 53

V. DEFENDANTS' RIGHT AND ABILITY TO CONTROL INFRINGEMENT.............. 62

VI. DEFENDANTS' CONDUCT AS DIRECT INFRINGEMENT AND AS BEYOND
     STORAGE AT THE DIRECTION OF A USER ............................................................. 75
                                                                         LEGEND

              For the purposes of             Via   com's Statement of              Undisputed Facts in Support ofIts Motion for

Partial Summary Judgment on Liabilìty and Inapplicabilìty of                                        the Digital Millennium Copyright

Act Safe Harbor Defense, the following abbreviations shall be used:

              "Hohengarten DecL." shall refer to the declaration ofWì1iam M. Hohengarten, dated

March 5, 2010, filed herewith.

              "Hohengarten i1_ & Ex. _," shall refer to the paragraphs of                                         the Hohengarten

Declaration and the Exhibits attached thereto, respectively. Any Exhibit attached to the

Hohengarten Declaration that was produced during the course of this litigation and marked with

Bates numbers is identified by its beginning Bates number, followed by a pinpoint citation.

Pinpoint citations shall refer to the page number(s), and paragraph or line numbers, of                                         the cited


document. In some instances Hohengarten Declaration Exhibits have been manually paginated

for ease of         the Court's reference. Where used, parentheticals indicate the nature of                                 the item cited

- e.g., deposition transcripts ("Dep.") or other declarations ("DecL."). Thus, by way of

illustration, "Hohengarten i17 & Ex. 4, G00001-00011355, at G00001-00011356" would refer

to Exhibit 4 to the Hohengarten Declaration, which has the beginning Bates number GOOOO 1-

00011355, and would refer specifically to the page of                                   that Exhibit marked with Bates number

G00001-00011356. And, "Hohengarten i1366 & Ex. 332 (Eun Dep.) at 200:1-10" would refer

to the deposition of Google employee David Eun, which is referenced at Paragraph 366 of and

attached as Exhibit 332 to the Hohengarten Declaration.

              "Solow Decl." shall refer to the declaration of                          Warren Solow, a representative of            Via   com,

dated March 3, 2010, filed herewith. The Solow Declaration is attached as Exhibit 2 to the

Hohengarten Declaration.




                                                                              11
         "SUF i1" shall refer to specific paragraph numbers in Viacom's Statement of   Undisputed

Facts.




                                                                        II
        Pursuant to Local Civil Rule 56.1, Viacom submits the following Statement of

Undisputed Facts in Support ofIts Motion for Partial Summary Judgment on Liabilìty and

Inapplìcabilìty of the Digital Mì1ennium Copyright Act Safe Harbor Defense.


                                      UNDISPUTED FACTS
i. VIACOM'S OWNERSHIP OF THE WORKS IN SUIT

                                                                     T" .,
                        iTT.".
                                  ,                                  ~
  1.   Viacom creates and acquires exclusive          Hohengarten Dec1. i13 & Ex. 2 (Solow
       rights in copyrighted audiovisual works,       Dec1. i12).
       including motion pictures and television
       programming.

  2.   Viacom distributes its copyrighted             Hohengarten Dec1. i13 & Ex. 2 (Solow
       television programs and motion pictures        Dec1. i13).
       through various outlets, including cable and
       satellite services, movie theaters, home
       entertainment products (such as DVDs and
       Blu-Ray discs) and digital platfonns.

  3.   Viacom owns many of  the world's best          Hohengarten Dec1. i13 & Ex. 2 (Solow
       known entertainment brands, including          Dec1. i14).
       Paramount Pictures, MTV, BET, VH1,
       CMT, Nickelodeon, Comedy Central, and
       SpikeTV.

  4.   Viacom's thousands of copyrighted works        Hohengarten Dec1. '1 3 & Ex. 2 (Solow
       include the following famous movies:           Dec1. i15).
       Braveheart, Gladiator, The Godfather,
       Forrest Gump, Raiders of       the Lost Ark,
       Breakfast at Tifany's, Top Gun, Grease,
       Iron Man, and Star Trek.

  5.   Viacom's thousands of copyrighted works        Hohengarten Dec1. i13 & Ex. 2 (Solow
       include the following famous television        Dec1. i16).
       shows: The Daily Show with Jon Stewart,
       The Colbert Report, South Park,
       Chappelle's Show, Spongebob Squarepants,
       The Hils, iCarly, and Dora the Explorer.

  6.   Viacom owns or controls the copyrights or      Hohengarten Dec1. i13 & Ex. 2 (Solow
       exclusive rights under copyright in the        Decl. iiii 7 -14, 17).
      3,085 audiovisual works identified in
      Exhibits A-E to the Solow Dec1. filed
      herewith ("Works in Suit").



II. INFRINGEMENT OF THE WORKS IN SUIT ON YOUTUBE

                  IT'.'.        ,.                                    "--'
                           -F

 7.   Defendants have reproduced and distributed      Hohengarten Dec1. i13 & Ex. 2 (Solow
      for viewing, and performed on the               Dec1. i1i116-26).
      Y ouTube website, 62,637 video clìps that
      infringe the Works in Suit ("Clìps in Suit");
      the Clìps in Suit are identified in
      Attachment F to the Solow Dec1. filed
      herewith.

 8.   The Clips in Suit were collectively viewed      Hohengarten Dec1. i14.
      on the Y ouTube website more than 507
      mì1ion times.

 9.   Viacom has not authorized the distribution      Hohengarten Decl. i13 & Ex. 2 (Solow
      or reproduction or performance of the Clìps     Dec1. i126).
      in Suit on Defendants' YouTube.com
      service.


III. DEFENDANTS' KNOWLEDGE AND INTENT CONCERNING
     INFRINGEMENT ON YOUTUBE

      A. The YouTube Founders' Knowledge and Intent Concerning Infringement on
         YouTube




 10. YouTube was founded in February 2005 by          Hohengarten i1393 & Ex. 356 (January 5,
     Chad Hurley, Steve Chen, and Jawed               2007 Declaration of Steve Chen in
     Karim.                                           Support of (Y ouTube' s J Motion for
                                                      Summary Adjudication of (Y ouTube' s J
                                                      First Affnnative Defense of DMCA Safe
                                                      Harbor, Robert Tur v. You  Tube, Inc., Case
                                                      No. CV 06-4436 FMC) ("declaration of
                                                      Steve Chen dated January 5, 2007") at i12.



                                                2
                                                                      Hohengarten i1346 & Ex. 312 (C. Hurley
                                                                      Dep.) at 12:21-13:7.

11. Prior to founding YouTube, Chad Hurley,                           Hohengarten i1222 & Ex. 204,
       Steve Chen, and Jawed Karim worked                             JK00009887, at JK00009890-91.
       together at the Internet start-up PayPa1.
                                                                      Hohengarten i1346 & Ex. 312 (c. Hurley
                                                                      Dep.) at 16:20-17:16).

                                                                      Hohengarten i1402 & Ex. 365.

                                                                      Hohengarten i1347 & Ex. 313 (Karim
                                                                      Dep.) at 8:24-9:14,16:3-16:23.

12. When eBay acquired PayPal for $ 1.5 billìon                       Hohengarten i16 & Ex. 3, G00001-
       in 2002, PayPal's stockholders, including                      00303096, at G00001-00303100.
       _ Chad Hurley, Steve
       Chen, and _, received                                          Hohengarten i1346 & Ex. 312 (C. Hurley
       substantial profits from the dea1.                             Dep.) at 19:11-21:12.




13. The YouTube website first became publicly Hohengarten i1393 & Ex. 356 (declaration
       accessible in a "beta" version in April             2005. of        Steve Chen dated January 5,2007) at i1
                                                                      3.

                                                                      Hohengarten i17 & Ex. 4, G00001-
                                                                      00011355, G00001-00011357.

14. YouTube publìcized the "official                   launch" of Hohengarten'1 307 & Ex. 279 (YouTube
      the YouTube website in December 2005. page entitled "YouTube Company
                                                                      History").

15. A December 15, 2005 YouTube press                                 Hohengarten i1299 & Ex. 271 (YouTube
    release described Y ouTube as a "consumer                         press release dated December 15, 2005).
      media company" that "delìver( s J
      entertaining, authentic and infonnative
      videos across the Internet."

16. On October 9,2006, Google announced its                           Hohengarten i1304 & Ex. 276 (Google
    agreement with Y ouTube for Google to                             press release dated October 9,2006).
    acquire YouTube for $1.65 billion in
    Google stock.

17. Google's acquisition of                 You   Tube closed on      Hohengarten i1305 & Ex. 277 (Google

                                                              3
      November 13, 2006.                                press release dated November 13, 2006).

                                                        Hohengarten i1366 & Ex. 332 (Eun Dep.)
                                                        at 58:3-14.

18. In connection with the acquisition, Google          Hohengarten i1305 & Ex. 277 (Google
      issued an aggregate of 3 ,217,560 shares,         press release dated November 13, 2006).
      and restricted stock units, options and a
      warrant exercisable for or convertible into
      an aggregate of 442,21 0 shares, of Google
      Class A common stock.

19. On November 13, 2006, the closing date of           Hohengarten i1306 & Ex. 278 (screenshot
      the transaction, Google Class A common            of Go ogle's finance webpage showing that
      stock closed at a price of $481.03; at that       the closing price for Google shares on
      price, the 3,659,770 shares issued and            November 13, 2006 was $481.03).
      issuable in connection with Google's
      acquisition of You Tube were worth an
      aggregate $1.77 billion.

20.   12.5 percent of the equity issued and             Hohengarten i1305 & Ex. 277 (Google
      issuable pursuant to Google's acquisition of      press release dated November 13,2006).
      Y ouTube was placed in escrow to secure
      indemnification oblìgations.


21.   As a result of   Go   ogle's acquisition of       Hohengarten i1400 & Ex. 363 (Google
      Y ouTube, Y ouTube co-founder Chad                Inc., S-3ASR Registration Statement dated
      Hurley received Google shares worth               February 7,2007)) at 5 (page numbers at
      approximately $334 mì1ion at the                  bottom center) (showing 694,087 issued to
      November 13, 2006 closing price.                  Chad Hurley).

                                                        Hohengarten i1306 & Ex. 278 (screenshot
                                                        of Go ogle's finance webpage showing that
                                                        the closing price for Google shares on
                                                        November 13, 2006 was $481.03).

                                                        Hohengarten i1346 & Ex. 312 (c. Hurley
                                                        Dep.) at 22:8-18 (stating that as a result of
                                                        the sale of You Tube to Google his net
                                                        worth increased by around $300 million).

22. As a result of Google's acquisition of              Hohengarten i1400 & Ex. 363 (Google
      YouTube, YouTube co-founder Steve Chen            Inc., S-3ASR Registration Statement
      received Google shares worth                      (February 7,2007)) at 5 (page numbers at
      approximately $301 mì1ion at the                  bottom center) (showing 625,366 issued to
      November 13,2006 closing price.                   Steve Chen).


                                                    4
                                                 Hohengarten i1306 & Ex. 278 (screenshot
                                                 of Go ogle's finance webpage showing that
                                                 the closing price for Google shares on
                                                 November 13, 2006 was $481.03).

23. As a result of Google's acquisition of       Hohengarten i1400 & Ex. 363 (Google
    Y ouTube, Y ouTube co- founder Jawed         Inc., S-3ASR Registration Statement
    Karim received Google shares worth           (February 7,2007)) at 5 (page numbers at
    approximately $66 mì1ion at the November     bottom center) (showing 137,443 issued to
    13,2006 closing price.                       Jawed Karim).

                                                 Hohengarten i1306 & Ex. 278 (screenshot
                                                 of Google's finance webpage showing that
                                                 the closing price for Google shares on
                                                 November 13,2006 was $481.03).

                                                 Hohengarten i1347 & Ex. 313 (Karim
                                                 Dep.) at 106:20-107:8 (




24. As a result of Google's acquisition of       Hohengarten i1400 & Ex. 363 (Google
    Y ouTube, Sequoia Capital, the largest       Inc., S-3ASR Registration Statement dated
    venture capital investor in Y ouTube,        February 7,2007)) at 6, 10 (page numbers
    received Google shares worth                 at bottom center) (showing 941,027 shares
    approximately $516 million at the            issued to Sequoia Capital XI, L.P.;
    November 13, 2006 closing price.             102,376 shares issued to Sequoia Capital
                                                 XI Principals Fund; and 29,724 shares
                                                 issued to Sequoia Technology Partners
                                                 XI).

                                                 Hohengarten i1306 & Ex. 278 (screenshot
                                                 of Go ogle's finance webpage showing that
                                                 the closing price for Google shares on
                                                 November 13, 2006 was $481.03).

25. Sequoia Capital invested approximately $9    Hohengarten i1329 & Ex. 297, SC0087L1,
    mì1ion in Y ouTube in late 2005 and early    at SC008781 (showing that Sequoia
    2006.                                        Capital invested $4.99 million in Series B
                                                 financing).

                                                 Hohengarten i1328 & Ex. 296, SC008403,
                                                 at SC008470-71 (showing approximately
                                                 $3.4 mì1ion invested in cash and over
                                                 $100,000 invested as debt conversion in

                                             5
                                                     Series A financing).

                                                     Hohengarten i13 51 & Ex. 317 (Botha
                                                     Dep.) at 53:20-54:5; 137:15-24.

26. As a result of Google's acquisition of           Hohengarten i1400 & Ex. 363 (Google
    Y ouTube, Artis Capital, another venture         Inc., S-3ASR Registration Statement dated
    capital investor in Y ouTube, received           February 7,2007)) at 5 (page numbers at
    Google shares worth approximately $85            bottom center) (showing 176,621 shares
       million at the November 13,2006 closing       issued to Artis Capital entities).
       pnce.
                                                     Hohengarten i1306 & Ex. 278 (screenshot
                                                     of Go ogle's finance webpage showing that
                                                     the closing price for Google shares on
                                                     November 13,2006 was $481.03).




27. Artis Capital invested approximately $3          Hohengarten i1329 & Ex. 297, SC008711,
       mì1ion in Y ouTube in early 2006.             at SC008781-83 (showing that Artis
                                                     Capital invested $3 mì1ion in Series B
                                                     financing).

28. "As of    December 31,2006," Google's            Hohengarten i1303 & Ex. 275 (Google
       "cash, cash equivalents, and marketable       Investor Relations page announcing
       securities were $11.2 billion."               Fourth Quarter and Fiscal Year 2006
                                                     Results).




                                                 6
29. In a February 11, 2005 email to YouTube co-          Hohengarten i18 & Ex. 5, G00001-
     founders Chad Hurley and Steve Chen, with           02757578, at G00001-02757578.
     the subject "aiming high," Y ouTube co-
     founder Jawed Karim wrote that, in terms of
     "the number of  users and popularity," he
     wanted to "finnl y place (Y ouTube J among"
     "napster," "kazaa," and "bittorrent."

30. In an April   23, 2005 email to YouTube co-          Hohengarten i1223 & Ex. 205,
       founders Steve Chen and Chad Hurley,              JK0000913 7, at JK0000913 7.
       Y ouTube co-founder Jawed Karim wrote:
       "It's all 'bout da videos, yo. We'll be an
       excellent acquisition target once we're huge."

31. In an April 25, 2005 email to Y ouTube co-           Hohengarten i1224 & Ex. 206,
     founders Steve Chen and Jawed Karim,                JK00004704, at JK00004704.
     YouTube co-founder Chad Hurley noted the
      presence of a "South Park" clip on Y ouTube
       and questioned whether it should be left on the
      site because "its (sic J copyrighted materiaL."

32. YouTube's content review manager Heather             Hohengarten i1368 & Ex. 334 (Gì1ette
      Gillette testified that early in Y ouTube' s       Dep.) at 7:22-9:20,46:20-47:24.
      existence "South Park" was "the content that
      appeared to be most popular and shared at that     Hohengarten i1400 & Ex. 363 (Google
      stage that we suspected could be                   Inc., S-3ASR Registration Statement
      unauthorized. "                                    (February 7,2007)) at 16 (page
                                                         numbers at bottom center) (stating
                                                         Heather Gillette's job title).

33. In a June 15,2005 email to YouTube co-               Hohengarten i1225 & Ex. 207,
     founders Chad Hurley and Y ouTube co-               JK00005039, at JK00005039.
     founder Jawed Karim, Y ouTube co- founder
      Steve Chen stated "we got a complaint from
      someone that we were violating their user
      agreement. i *think* it may be because we're
      hosting copyrighted content. instead of taking
      it down - i'm not about to take down content
      because our ISP is giving us shit - we should
      just investigate moving www.youtube.com...



                                                     7
34. In a June 15, 2005 email to YouTube co-                         Hohengarten i1226 & Ex. 208,
    founders Steve Chen and Jawed Karim,                            JK00005043, at JKOOO05043.
    YouTube co-founders Chad Hurley stated:
    "so, a way to avoid the copyright bastards
    might be to remove the 'No copyrighted or
    obscene material' lìne and let the users
    moderate the videos themselves. legally, this
    wì1 probably be better for us, as we'll make
    the case we can review all videos and tell
    them if they're concerned they have the tools
    to do it themselves."

35. In a June 20, 2005 email to Y ouTube co-                        Hohengarten i1228 & Ex. 210,
    founders Chad Hurley and Steve Chen,                            JK00009383, at JKOOO09383.
    Y ouTube co-founder Jawed Karim wrote: "If
    we want to sign up lots of users who keep
    coming back, we have to target the people
    who wì1 never upload a video in their lìfe.
    And those are really valuable because they
    spend time watching. And if they watch, then
    it's just lìke TV, which means lots of            value."




36. On June 21,2005, YouTube co-founder Jawed                       Hohengarten i1227 & Ex. 209,
    Karim stated in an email to Y ouTube co-                        JK000093 81, at JKOOO09381.
    founders Chad Hurley and Steve Chen that
    "Where our value comes in is USERS. ...
    (OJur buy-out value is positively affected by .
    . . more Y outube users. . . . The only thing we
    have control over is users. We must build
    features that sign up tons of            users, and keep
    them coming back."

37. On July 4,2005, YouTube co-founder Chad                         Hohengarten i1229 & Ex. 211,
   Hurley sent an email to YouTube co-founders                      JK00005928, at JKOOO05928.
   Steve Chen and Jawed Karim titled "budlight
   commercials," stating "we need to reject these                   Hohengarten i1230 & Ex. 212,
   too"; Steve Chen responded by asking to                          JK00005929, at JKOOO05929.
   "leave these in a bit longer? another week or
   two can't hurt;" Jawed Karim subsequently
   stated that he "added back all 28 bud videos.
   stupid. . .," and Steve Chen replìed: "okay
   first, regardless of the video they upload,
   people are going to be telling people about the
   site, therefore making it viraL. they're going to
   drive traffic. second, it adds more content to
   the site. third, we're going to be adding
   advertisements in the future so this gets them

                                                                8
    used to it. I'm asking for a couple more
    weeks."

38. In a July 10, 2005 email to Y ouTube co-             Hohengarten i1231 & Ex. 213,
    founders Chad Hurley and Steve Chen,                 JK00006057, at JKOOO06057.
    YouTube co-founder Jawed Karim reported
    that he had found a "copyright video" and
    stated: "Ordinarily I'd say reject it, but I agree
    with Steve, let's ease up on our strict polìcies
    for now. So let's just leave copyrighted stuff
    there if it' s news clips. I still think we should
    reject some other (C) things tho. . ."; Chad
    Hurley replìed, "ok man, save your meal
    money for some lawsuits! ;) no really, I guess
    we'll just see what happens."

39. In a July 10, 2005 email to Y ouTube co-             Hohengarten i1234 & Ex. 216,
    founders Jawed Karim and Steve Chen,                 JK00006055, at JKOOO06055.
    YouTube co-founder Chad Hurley wrote:
    "yup, we need views. I'm a little concerned
    with the recent supreme court rulìng on
    copyrighted material though."

40. In a July 19, 2005 email to YouTube co-              Hohengarten i123 5 & Ex. 217,
    founders Chad Hurley and Jawed Karim,                JK00006166, at JKOOO06166.
    YouTube co-founder Steve Chen wrote:
    "jawed, please stop putting stolen videos on
    the site. We're going to have a tough time
    defending the fact that we're not lìable for the
    copyrighted material on the site because we
    didn't put it up when one of   the co-founders is
    blatantly stealìng content from other sites and
    trying to get everyone to see it."

41. On July 19, 2005, YouTube co-founder Steve           Hohengarten i1236 & Ex. 218,
    Chen sent an email to Y ouTube co-founder            JK00009595, at JKOOO09595.
    Jawed Karim, copying YouTube co-founder
    Chad Hurley, stating "why don't i just put up
    20 videos of pornography and obviously
    copyrighted materials and then lìnk them from
    the front page. what were you thinking."

42. On July 22, 2005, YouTube co-founder Steve           Hohengarten ii 239 & Ex. 221,
    Chen forwarded to all Y ouTube employees a           JK00006259, at JKOOO06266,
    "YouTube Marketing Analysis" stating that            JKOOO06268.
    "users not only upload their own work, but
    can potentially upload publìcly available

                                                9
    content for viewing. Risk area here is
    copyright as many videos which are uploaded
    are not the property of the uploader. . . .
    Although the polìcy when uploading states
    that the video must be legit, Y ouTube may be
    liable for any damages which copyright
    holders may press."

43. In a July 23, 2005 email to YouTube co-             Hohengarten i1240 & Ex. 222,
    founders Steve Chen and Jawed Karim,                JK00009668, at JKOOO09668.
    Y ouTube co-founder Chad Hurley responded
    to a Y ouTube lìnk sent by Jawed Karim by
    saying: "if we reject this, we need to reject all
    the other copyrighted ones. . . . should we just
    develop a flagging system for a future push?";
    Karim responded: "I say we reject this one,
    but not the other ones. This one is totally
    blatant."

44. In a July 29,2005 email about competing             Hohengarten i1241 & Ex. 223,
    video websites, YouTube co-founder Steve            JK00006392, at JKOOO06392.
    Chen wrote to Y ouTube co-founders Chad
    Hurley and Jawed Karim, "steal it!", and Chad
    Hurley responded: "hmm, steal the movies?"
    Steve Chen replìed: "we have to keep in mind
    that we need to attract traffic. how much
    traffic wì1 we get from personal videos?
    remember, the only reason why our traffic
    surged was due to a video of this type. . . .
    viral videos wì1 tend to be THOSE type of
    videos."

45. In an August 1, 2005 email to all Y ouTube          Hohengarten i19 & Ex. 6, GOOO01-
    employees, YouTube co-founder Chad Hurley           00660588, at GOOO01-00660588.
    stated: "This user is starting to upload tons of
    'Family Guy' copyrighted clips... I think it's
                                  them. Any
    time to start rejecting some of

    objections?"

46. In an August 9, 2005 email to Y ouTube co-          Hohengarten i1242 & Ex. 224,
    founders Steve Chen and Jawed Karim,                JK00006689, at JKOOO06689-90.
    YouTube co-founder Chad Hurley stated: "we
    need to start being diligent about rejecting
    copyrighted/inappropriate content. we are
    getting serious traffic and attention now, I
    don't want this to be killed by a potentially
    bad experience of a network exec or someone

                                               10
    visiting us. like there is a cnn clip of the
    shuttle clip on the site today, if the boys from
    Turner would come to the site, they might be
    pissed? these guys are the ones that wì1 buy
    us for big money, so lets make them happy.
    we can then roll a lot of this work into a
    flagging system soon."

4 7. In response to Y ouTube co-founder Chad           Hohengarten i1242 & Ex. 224,
     Hurley's August 9, 2005 email (see SUF i146)      JK00006689, at JK00006689.
     YouTube co-founder Steve Chen stated: "but
     we should just keep that stuff on the site. I
     really don't see what wì1 happen. what?
    someone from cnn sees it? he happens to be
    someone with power? he happens to want to
    take it down right away. he get in touch with
    cnn legaL. 2 weeks later, we get a cease &
    desist letter. we take the video down"; Chad
    Hurley replied: I just don't want to create a
    bad vibe... and perhaps give the users or the
    press something bad to write about."

48. On August 10,2005, YouTube co-founder              Hohengarten i1242 & Ex. 224
    J awed Karim responded to Y ouTube co-             JK00006689, at JK00006689.
    founder Chad Hurley (see SUF i1 (previous
    para)): "lets remove stufflike movies/tv
    shows. lets keep short news clips for now. we
    can become stricter over time, just not
    overnight. lìke the CNN space shuttle clip, I
    lìke. we can remove it once we're bigger and
    better known, but for now that clip is fine."
    Steve Chen replìed, "sounds good."

49. On August 11,2005, YouTube co-founders             Hohengarten i1243 & Ex. 225,
    Chad Hurley, Steve Chen, and Jawed Karim           JK00006627, at JK00006627.
    met with Sequoia Capital regarding a possible
    investment by Sequoia Capital in Y ouTube.         Hohengarten i110 & Ex. 7, G00001-
                                                       01907664, at G00001-01907664.

                                                       Hohengarten i1244 & Ex. 226 at
                                                       JK00009791.
50. On August 11, 2005, outside Sequoia's offices      Hohengarten i1261 & Ex. 240,
    in Palo Alto, YouTube co-founder Jawed                        - -
                                                       JK00010387 MVI 0922.avi.
    Karim asked the two other Y ouTube co-
    founders, as captured on video, "At what point Hohengarten i1262 & Ex. 241 (true and
    would we tell them our dirty lìttle secret,     correct transcript of Hohengarten Ex.
    which is that we actually just want to sell out 240).

                                               11
    quickly," and Chad Hurley responded, "we'll
    have to erase the file."                           Hohengarten i1346 & Ex. 312 (C.
                                                       Hurley Dep.) 106:11-108:20.
51. In an August 14, 2005 email Y ouTube co-           Hohengarten i1188 & Ex. 185,
    founder Jawed Karim reported to the two            G00001-01949763, at GOOO01-
    other Y ouTube co-founders Chad Hurley and         01949763.
    Steve Chen that the three co-founders (using
    YouTube user names "steve," "jawed," and           Hohengarten i1258 & Ex. 379,
    "Chad") were among the top six most active         JK00004669, at JK00004669 (making
    viewers on Y ouTube, in terms of number of         clear that Steve Chen, Jawed Karim,
    videos watched.                                    and Chad Hurley used Y ouTube user
                                                       names "steve," "jawed," and "chad,"
                                                       respectively).

52. In a September 1, 2005 email to Y ouTube co-       Hohengarten i111 & Ex. 8, GOOO01-
    founder Steve Chen and all Y ouTube                01424049, at GOOO01-01424049.
    employees, Y ouTube co-founder Jawed Karim
    stated, "well, we SHOULD take down any: 1)
    movies 2) TV shows. we should KEEP: 1)
    news clips 2) comedy clips (Conan, Leno, etc)
    3) music videos. In the future, I'd also reject
    these last three but not yet."

53. On September 2,2005, in response to an email       Hohengarten i1245 & Ex. 227,
    from YouTube co-founder Chad Hurley                JK00007378, at JKOOO07378.
    reporting that he had taken down clips of the
    TV show "Family Guy," YouTube co-founder
    Steve Chen stated: "should we just assume
    that a user uploading content really owns the
    content and is agreeing to all the terms of use?
    so we don't take down anything other than
    obscene stuff?"

54. In a September 3, 2005 email to the two other      Hohengarten i1233 & Ex. 215,
    Y ouTube co- founders with the subject line        JK00007416, at JKOOO07418.
    "copyrighted material! ! !", Y ouTube co-
    founder Chad Hurley wrote, "aaahhhhh, the          See also Hohengarten i1259 & Ex. 380,
    site is starting to get out of control with        JK00005597, at JK00005597 ("I really
    copyrighted materiaL. .. we are becoming           want to start rejecting copyrighted
    another big-boys or stupidvideos."                 material now. . . . We are not another
                                                       'StupidVideos' or 'Bittorrent."').

55. In a September 3,2005 email responding to          Hohengarten i1233 & Ex. 215,
    YouTube co-founder Chad Hurley's concern           JK00007416, at JKOOO07417-18.
    that "the site is starting to get out of control
    with copyrighted material" (see SUF i154),


                                                12
    YouTube co-founder Steve Chen stated to the
    other two Y ouTube co- founders that, "what's
    the difference between big-boys/stupidvideos
    vs youtube? . . . if you look at the top videos
    on the site, it's all from this type of content.
    in a way, if you remove the potential
    copyright infringements, wouldn't you stì1
    say these are 'personal' videos? if you define
    'personal' to be videos on your personal hard
    drive that you want to upload and share with
    people? anyway, if              we do remove that stuff,
    site traffic and viralìty wì1 drop to maybe
    20% of    what it is. . . i'd hate to prematurely
    attack a problem and end up just losing growth
    due to it."

56. In response (see SUF i155), YouTube co-                    Hohengarten i1233 & Ex. 215,
    founder Jawed Karim wrote: "well I'd just                  JK00007416, at JK00007 417.
    remove the obviously copyright infringing
    stuff. movies and tv shows, I'd get rid of. . . .
    we'll    leave music videos, news clips, and clips
    of comedy shows for now. I think thats a
    pretty good polìcy for now, no?"

57. In a September 3,2005 email to the two other               Hohengarten i1233 & Ex. 215,
    Y ouTube co- founders, Y ouTube co-founder                 JK00007416, at JKOOO07416.
    Steve Chen responded to Jawed Karim's
    suggestion that YouTube remove "obviously
    copyright infringing stuff' (see SUF i156) by
    stating that "i know that if (we J remove all
    that content. we go from 100,000 views a day
    down to about 20,000 views or maybe even
    lower. the copyright infringement stuff. i
    mean, we can presumably claim that we don't
    know who owns the rights to that video and by
    uploading, the user is claiming they own that
    video. we're protected by DMCA for that.
    we'll take it down if we get a 'cease and
    desist"'; Jawed Karim replied: "my suggested
    polìcy is really lax though. . . . if       we keep that
    polìcy I don't think our views will decrease at
    alL. "


58. On September 3,2005, YouTube co-founder                    Hohengarten i1233 & Ex. 215,
    Steve Chen stated in response to Y ouTube co-              JK00007416, at JKOOO074l6.
    founder Jawed Karim's "really lax" polìcy
    (see SUF i157): "yes, then i agree with you.               Hohengarten i1246 & Ex. 228,

                                                       13
    take down whole movies, take down entire TV         JK00007420, at JKOOO07420.
    shows, take down XXX stuff. everything else
    keep including sports, commercials, news, etc.
    keeping it, we improve video uploads, videos
    viewed, and user registrations"; Chad Hurley
    replìed: "lets just work in that flagging feature
    soon. . . then we won't be lìable."

59. In a September 4, 2005 email to Y ouTube co-        Hohengarten i1247 & Ex. 229,
    founder Jawed Karim and others at Y ouTube,         JK00007423, at JKOOO07423.
    a Y ouTube user stated: "Jawed - You have a
    lot of people posting Chappelle Show clips
    and stufflike that. Aren't you guys worried
    that someone might sue you for copywrite
    (sic J violation like Napster?"; Karim replìed:
    "ahaha."

60. In a September 7, 2005 email, YouTube co-           Hohengarten i1248 & Ex. 230,
    founder Steve Chen wrote to Y ouTube co-            JK00007479, at JKOOO07479.
    founders Chad Hurley and Jawed Karim, and
    Roelof Botha of Sequoia Capital (and later a        Hohengarten i13 51 & Ex. 317 (Botha
    Y ouTube board member) that Y ouTube had            Dep.) at 8 :19-9:12 (describing Roelof
    "implemented a flagging system so you can           Botha's position at Sequoia), 53:16-
    flag a video as being inappropriate or              53 :21 (describing Sequoia's investment
    copyrighted. That way, the perception is that       in Y ouTube), 93: 19-93 :21 (identifying
    we are concerned about this type of material        Roelof Botha as a Y ouTube board
    and we're actively monitoring it. The actual        member).
    removal of this content will be in varying
    degrees. We may want to keep some of the
    borderline content on the site but just remove
    it from the browse/search pages. that way,
    you can't find the content easily. Again,
    similar to Flickr, . . . you can find truckloads
    of adult and copyrighted content. It's just that
    you can't stumble upon it, you have to be
    actively searching for it."

61. In a September 8, 2005 email to all Y ouTube        Hohengarten i1260 & Ex. 381,
    employees with the subject line "committed          JK00007560, at JKOOO07560.
    changes," YouTube co-founder Steve Chen
    wrote: "Flagging for Inappropriate/
    Copyrighted Content: . . . this is hooked up
    now."

62. On September 12,2005, the "Official                 Hohengarten i1298 & Ex. 270
    Y ouTube Blog" stated: "We are ecstatic to          (September 12,2005 YouTube Blog
    announce the changes we made to the site last       entry) (emphasis in original).

                                               14
    night. . .. First up, video flagging. At the
    bottom of the video watch page, you wì1
    notice a new section for flagging a video. If
    you encounter a video that's inappropriate or
    copyrighted, please use this feature to notify
    us. We will aggressively monitor these
    submissions and respond as quickly as we
    can."

63. YouTube's community flagging system                See supra SUF i1i161-62.
    originally allowed users to flag videos as
    copyrighted or as otherwise inappropriate, for     Hohengarten i1368 & Ex. 334 (Gì1ette
    reasons such as sexual content or violence, by     Dep.) at 94:12-96:23,148:17-150:7.
    clicking a button at the bottom of the video
    watch page and selecting the reason for the        Hohengarten i13 50 & Ex. 316 (B.
    flagging from a menu of options supplìed by        Hurley Dep.) at 191:10-192:11.
    YouTube.

64. On September 23,2005, YouTube co-founder           Hohengarten i1250 & Ex. 232,
    Chad Hurley emailed YouTube co-founders            JK00008043, at JKOOO08043.
    Steve Chen and Jawed Karim, stating: "can we
    remove the flagging link for 'copyrighted'
    today? we are starting to see complaints for
    this and basically ifwe don't remove them we
    could be held lìable for being served a notice.
    it's actually better if   we don't have the lìnk
    there at all because then the copyright holder
    is responsible for serving us notice of the
    material and not the users. anyways, it would
    be good if      we could remove this asap."

65. On or shortly after September 23,2005,             Hohengarten i1397 & Ex. 360
    Y ouTube discontinued community flagging           (Defendants' Amended Reponses and
    for copyright infringement, while retaining        Objections to Plaintiffs' First Set of
    community flagging for inappropriate content       Interrogatories, Interrogatory NO.2 (Set
    and other types oftenns of use violations.         1)) at 8-9.

                                                       Hohengarten i1368 & Ex. 334 (Gillette
                                                       Dep.) at 94:12-97:15; 148:17-150:7
                                                       (testifying about the way a user flags a
                                                       video and the manner in which
                                                       YouTube's personnel review every
                                                       flagged video).

                                                       Hohengarten i1376 & Ex. 342 (Levine
                                                       Dep.) at 50:21-53:20,56:17-22.


                                                  15
66. When a Y ouTube user flags a video, the video     Hohengarten i1368 & Ex. 334 (Gì1ette
    is put into a queue for review by a team of       Dep.) at 42:2-5,92:14-17,150:23-
    Y ouTube reviewers who make a decision            151:8.
    whether to remove the video from Y ouTube.
                                                      Hohengarten i1376 & Ex. 342 (Levine
                                                      Dep.) at 51:24-52:6,56:17-22.

                                                      Hohengarten i1350 & Ex. 316 (B.
                                                      Hurley Dep.) at 191:10-192:11.

                                                      Hohengarten i112 & Ex. 9, GOOOO 1-
                                                      05951723, at GOOO01-05951725,
                                                      GOOO01-05951729.

                                                      Hohengarten i1301 & Ex. 273 (October
                                                      8, 2006 YouTube Blog post entitled
                                                      "How Flagging Works").

67. Y ouTube employs an "army of content              Hohengarten i113 & Ex. 10, GOOOO 1-
    reviewers" who review flagged videos "24          02482760, at GOOO01-02482760
    hours a day, 365 days a year."                    ("army of content reviewers").

                                                      Hohengarten i114 & Ex. 11, GOOOO 1-
                                                      00561567, at G00001-00561577 ("24
                                                      hours a day, 365 days a year").

68. Y ouTube has issued guidelìnes to content         Hohengarten i115 & Ex. 12, GOOOO 1-
    reviewers regarding the approval and rejection    00744094, at GOOO01-00744095-152.
    of flagged videos.

69. The February 23,2007 guidelines issued by         Hohengarten i115 & Ex. 12, GOOO01-
    Y ouTube to its content reviewers instructed      00744094, at GOOOO 1-00744096,
    them regarding the approval and removal of        GOOOO 1-00744120.
    videos that depict children, sexual content,
    body parts, crude content, and various illegal
    acts, but not copyright; one of the examples of
    "PG-13 sexual content" that reviewers were
    supposed to approve was a clip from the Daily
    Show.

70. Community flagging has expedited removal of       Hohengarten i112 & Ex. 9, GOOO01-
    pornography and other content Y ouTube            05951723, at GOOO01-05951728.
    regards as undesirable.
                                                      Hohengarten i116 & Ex. 13, GOOO01-
                                                      00044974, at GOOOO 1-00044979.

                                                      Hohengarten i1368 & Ex. 334 (Gì1ette
                                             16
                                                    Dep.) at 150:8-18 (testifying that she
                                                    was "confident" that pornography is
                                                    typically flagged and removed within
                                                    the first 100 views).

71. During the two-week period that community      Hohengarten i1397 & Ex. 360
    flagging for copyright infringement was        (Defendants' Amended Responses and
    available on Y ouTube, users identified and    Objections to Plaintiffs' First Set of
    flagged unauthorized copyrighted material that Interrogatories, Interrogatory No.2) at
    Y ouTube reviewed and removed.                  8-9.

72. Some Y ouTube employees advocated bringing      Hohengarten i117 & Ex. 14, GOOOO 1-
    back community flagging for copyright           07167907, at GOOO01-07167907.
    infringement, but that tool was never
    reinstated after it was disabled on or about    Hohengarten i1397 & Ex. 360
    September 23,2005.                              (Defendants' Amended Response and
                                                    Objections to Plaintiffs' First Set of
                                                    Interrogatories, Interrogatory No.2) at
                                                    8-9.

73. Y ouTube has touted the success of the          Hohengarten i112 & Ex. 9, GOOO01-
    community flagging system in expediting         05951723, at GOOO01-05951728.
    removal of videos flagged as inappropriate.
                                                    Hohengarten i116 & Ex. 13, GOOO01-
                                                    00044974, at GOOOO 1-00044979.

                                                    Hohengarten i1368 & Ex. 334 (Gì1ette
                                                    Dep.) at 150:8-18.


74. On October 11,2005, YouTube director of         Hohengarten i1232 & Ex. 214,
    finance Brent Hurley suggested to Y ouTube      JK00000382, at JKOOOO0382.
    co-founders Chad Hurley, Steve Chen, and
    Jawed Karim: "(iJfwe reject a video, flag the   Hohengarten i13 50 & Ex. 316 (B.
    user who uploaded it so that anytime they       Hurley Dep.) at 10:9-10:18 (stating
    upload a new video, we need to approve it       Brent Hurley's title).
    before going lìve"; Y ouTube never
    implemented that suggestion.                    See also Hohengarten i1184 & Ex 181,
                                                    G00001-00827716, at GOOO01-
                                                    00827716-17 (Roelef Botha of Sequoia
                                                    Capital asking whether Y ouTube could
                                                    "queue(J high risk tags. . . so that they
                                                    are reviewed before going lìve?" and
                                                    Y ouTube product manager Maryrose
                                                    Dunton writing to YouTube co-founder
                                                    Chad Hurley, "I think we can add this
                                                    fairly   easily").




                                              17
75. In the same October 11, 2005 email, Y ouTube      Hohengarten i1232 & Ex. 214,
    director of finance Brent Hurley also             JK00000382, at JKOOOO0382.
    suggested that Y ouTube should build a tool
    that would automatically flag for review "any
    video with *hot* tags, such as Family Guy,
    Angry Kid, etc. (We can add to this *hot* lìst
    as needed)," but such a tool was never
    implemented.

76. In an October 11, 2005 email, Y ouTube            Hohengarten i1232 & Ex. 214,
    director of finance Brent Hurley suggested to     JK00000382, at JKOOOO0382.
    YouTube co-founders Chad Hurley, Steve
    Chen, and Jawed Karim that Y ouTube should
    "flag/highlìght any video with a run time? 1 0
    minutes, since most of those are copyrighted
    shows."

77. On October 18, 2005, YouTube director of          Hohengarten i1251 & Ex. 233,
    finance Brent Hurley sent an email to             JK000083 31, at JKOOO08331.
    YouTube co-founder Steve Chen, Chad
    Hurley, Jawed Karim and YouTube software          Hohengarten i1392 & Ex. 386 at
    engineer Mike Solomon stating: "Yes, I            (Solomon Dep.) at 12:5-14:2 (testifying
    rejected all of the videos that were listed in    to Solomon's job description).
    this email yesterday. Looks lìke the users
    simply uploaded the videos again today.
    * *W e need to beef up admin. Create a tag
    watch lìst, lìke Family Guy, Baker
    skateboarding, etc. Also, once we reject a
    video, flag the user so that we must review all
    of their new videos before they go lìve.
    Otherwise, this will continue to happen. :("

78. In a November 8, 2005 email regarding a           Hohengarten i118 & Ex. 15, GOOO01-
    contest in which an uploading Y ouTube user       00504044, at GOOO01-00504044.
    would be awarded an iPod Nano, YouTube
    product manager Maryrose Dunton, the              Hohengarten i1363 & Ex. 329 (Dunton
    Y ouTube employee responsible for the user        Dep.) at 10:23-23:21 (describing
    functionalìty of the Y ouTube website, asked      Maryrose Dunton's job
    whether user "Bigjay" was elìgible; Y ouTube      responsibilìties ).
    interface designer Christina Brodbeck
    responded, "Cool. . . . However, most of   his    Hohengarten i1400 & Ex. 363 (Google
    stuff is copyrighted," and added, "Does this      Inc., S-3ASR Registration Statement
    matter? Probably not, as UCBearcatsl125 is        (Feb. 7,2007)) at 16 (page numbers at
    almost entirely copyrighted. Heh."; in            bottom center) (stating Christina
    response, Maryrose Dunton stated: "Ya. . . I      Brodbeck's job title).
    don't think we care too much if they've posted

                                               18
    copyrighted videos."

79. As a result of Google's acquisition of            Hohengarten i1400 & Ex. 363 (Google
    Y ouTube, Y ouTube interface designer             Inc., S-3ASR Registration Statement
    Christina Brodbeck received Google shares         (Feb. 7, 2007)) at 5 (page numbers at
    worth $9.09 million.                              bottom center) (showing 18,898 shares
                                                      issued to Christina Brodbeck).

                                                      Hohengarten i1306 & Ex. 278
                                                      (screenshot of Google's finance
                                                      webpage showing that the closing price
                                                      for Google shares on Noverrber 13,
                                                      2006 was $481.03).

80. On November 18, 2005, a YouTube user with         Hohengarten i1252 & Ex. 234,
    the email address "anonymousdude@                 JK00000824, at JKOOOO0824.
    gmail.com" sent an email to Y ouTube co-
    founders Chad Hurley, Steve Chen, and Jawed       Hohengarten i1357 & Ex. 323 (Do
    Karim, Y ouTube director of finance Brent         30(b)(6) Dep.) at 8:15-9:15 (stating
    Hurley, and Y ouTube engineering manager          Cuong Do's title).
    Cuong Do stating: "How is it that 'Family
    Guy cartoon clips are deleted, (butJ ECW,
    WWE, WCW, clips and other TV clips are
    free to watch? What is the difference with the
    copyright?"

81. On Monday, November 21,2005, a YouTube            Hohengarten i1253 & Ex. 235,
    user with the email address "lvpsganchito@        JK00000836, at JKOOOO0836.
    hotmail.com" sent an email to Y ouTube co-
    founders Chad Hurley, Steve Chen, Jawed
    Karim, Y ouTube director of finance Brent
    Hurley, and Y ouTube engineering manager
    Cuong Do, stating: "I'm a lìttle confused
    about the rejection of my last and other
    videos. I have seen other 'family guy' videos
    on here and when I put one on here its against
    the rules. Please explan. (sic J I also have
    other vids that are cartoons from TV Funhouse
    from SNL, that are still active and lìve. What
    is the difference?"

82. In a November 24,2005 email, YouTube              Hohengarten i119 & Ex. 16, GOOOO 1-
    director of finance Brent Hurley asked all        00629095, at GOOO01-00629095.
    Y ouTube employees for "help" reviewing
    videos "over the long weekend," and               Hohengarten i1350 & Ex. 316 (B.
    instructed them that, "(a J s far as copyright    Hurley Dep.) at 80:18-82:8.
    stuff is concerned, be on the look out for

                                                 19
    Family Guy, South Park, and full-length
    anime episodes," but that "music videos and
    news programs are fine to approve."

83. In a January 2, 2006 email, Y ouTube co-         Hohengarten i120 & Ex. 17, GOOOO 1-
    founder Jawed Karim recommended adding "a 00629474, at GOOO01-00629474.
    very simple feature that temporarily prevents a
    user from removing a video" because "next
    time we have another lazy sunday hit, it would
    hurt us if the user suddenly removed the
    video, either out of stupidity, or by
    accident. . . . what if we add a flag to certain
    videos so that when the owner tries to remove
    the hugely popular video it just gives some
    error message and does not remove the video."

84. In a January 3,2006 instant message exchange     Hohengarten i1206 & Ex. 194
    between Y ouTube product manager Maryrose        G00001-00507405, at 3 & at
    Dunton (IM user name maryrosedunton) and         GOOO01-00507405.
    Y ouTube software engineer Jake McGuire
    (IM user name oJAKEMo) Dunton stated:            Hohengarten i1198 & Ex. 374,
    "between (a YouTube-MySpace disputeJ and         G00001-06010126, at GOOO01-
    the Saturday Night Clìps that got put on our     06010126 (confirming that oJ AKEMo
    site (which also made the Times) we're now       is Jake McGuire's IM user name).
    getting close to 7 mì1ion views a day."
                                                     Hohengarten i1363 & Ex. 329 (Dunton
                                                     Dep.) at 34:15-18 (testifying that
                                                     maryrosedunton is Maryrose Dunton's
                                                     IM user name).

                                                     Hohengarten i1356 & Ex. 322 (Do
                                                     Dep.) at 136:19-137:2 (stating Jake
                                                     McGuire's job title).

85. In a January 25,2006 instant message             Hohengarten i1204 & Ex. 192,
    exchange, YouTube co-founder Steve Chen          G00001-00507525, at 4-5 & at
    (IM user name tunawarrior) told his colleague    GOOO01-00507526-27.
    Y ouTube product manager Maryrose Dunton
    (IM user name maryrosedunton) that he            Hohengarten i1363 & Ex. 329 (Dunton
    wanted to "concentrate all of our efforts in     Dep.) at 35:14-15 (confirming that
    building up (YouTube'sJ numbers as               tunawarrior is Steve Chen's IM user
    aggressively as we can through whatever          name).
    tactics, however evil," including "user
    metrics" and "views," and "then 3 months, sell
    it with 20m views per day and like 2m users or
    something. . . I think we can sell for
    somewhere between $250m - $500m . . . in the
                                              20
    next 3 months. . . and there *is* a potential to
    get to $1 b or something."

86. In late January 2006 email exchange,               Hohengarten i121 & Ex. 18, GOOO01-
    YouTube co-founder Steve Chen expressed            00839842, at GOOO01-00839843-44.
    concern about "our most popular videos"
    being removed from Y ouTube; Y ouTube
    content review manager Heather Gillette
    responded with an email about "the manual
    process that we have now in rejecting videos
    for copyright," and stated "if a really popular
    video is about to be rejected there (should be J
    a pop-up that says, 'this video has been
    viewed 20,000 times, are you sure you want to
    reject?'"

87. In a February 4,2006 instant message               Hohengarten i1210 & Ex. 198,
    conversation, Y ouTube product manager             G00001-01931799, at 5 & at
    Maryrose Dunton (IM user name                      GOOOO 1-0 1931806.
    maryrosedunton) told Y ouTube systems
    administrator Bradley Heilbrun (IM user name       Hohengarten i1363 & Ex. 329 (Dunton
    nurblieh) that YouTube co-founder Chad             Dep.) at 30:23-31:2 (stating Bradley
    Hurley sent her an email "and told me we           Heilbrun's job title); 35:16-23
    can't feature videos or have contest winners       (confinning that nurblieh is Bradley
    with copyrighted songs in them"; Heilbrun          Heilbrun's IM user name).
    responded "man. That's lìke half our videos";
    Dunton replied "I know."

88. In a February 4,2006 instant message               Hohengarten i121 0 & Ex. i 98,
    conversation, Y ouTube product manager             G00001-01931799, at 4-5 & at
    Maryrose Dunton (IM user name                      GOOOO i -0 1931806.
    maryrosedunton) told Y ouTube systems
    administrator Bradley Heilbrun (IM user name
    nurblieh) that Y ouTube director of finance
    Brent Hurley told her to take down a
    copyrighted Ed Sullivan show clip that she
    uploaded to Y ouTube, and she said "maybe
    I'll just make it private ;)."

89. In early February 2006, NBC Universal sent         Hohengarten i122 & Ex. 19, GOOO01-
    letters to Y ouTube requesting the removal of      00007027, at GOOO01-00007028-29.
    the "Lazy Sunday: Chronicles ofNarnia" clìp
    from the television show Saturday Night Live.      Hohengarten i123 & Ex. 20, GOOOO 1-
                                                       02403826, at GOOO01-02403826-27.
90. Y ouTube refused to remove the Lazy Sunday         Hohengarten i122 & Ex. 29, GOOO01-
    clips unless NBC Universal provided specific       00007027, at GOOO01-00007028-29.


                                              21
    URLs for the clips.                                   Hohengarten i123 & Ex. 20, GOOO01-
                                                          02403826, at GOOO01-02403826-27.
91. On February 14, 2006, YouTube vice                    Hohengarten i124 & Ex. 21, GOOOO 1-
    president of marketing and programming                02824049, at GOOOO 1-02824049.
    Kevin Donahue emailed Y ouTube product
    manager Maryrose Dunton stating: "I just got          Hohengarten i1359 & Ex. 325
    off the phone with NBC and I'm trying to get          (Donahue Dep.) at 20:23-21 :3,75:11-
    them to let us keep the Lazy Sunday clip on           76:4 (stating Kevin Donahue's job
    the site. I need to convince them of the              title).
    promotional value of doing that considering
    the fact that their legal dept. is having us
    remove ALL of their stuff. Julìe and I are
    worried that if Lazy Sunday is taken down,
    then it could be taken as a bad sign by the
    journalìsts who are writing about us now and
    may search for it."

92. On February 16, 2006, YouTube inforn1ed its           Hohengarten i1300 & Ex. 272
    users in a Y ouTube Official Blog post titled         (February 16, 2006 YouTube Blog
    "Lazy Sunday": "Hi Tubers! NBC recently               entry "Lazy Sunday").
    contacted Y ouTube and asked us to remove
    Saturday Night Live's 'Lazy Sunday:
    Chronicles of    Narnia' video. We know how
    popular that video is but Y ouTube respects the
    rights of copyright holders. You can stì1
    watch SNL's 'Lazy Sunday' video for free on
    NBC's website"; in the same blog post,
    YouTube informed     its users of"(sJome good
    news: we are happy to report that YouTube is
    now serving up more than 15 mì1ion videos
    streamed per day- that's nearly 465M videos
    streamed per month with 20,000 videos being
    uploaded daily."

93. In a February 17,2006 instant message                 Hohengarten i1209 & Ex. 197,
    conversation, Y ouTube systems administrator          G00001-00507331, at 2-3 & at
    Bradley Heilbrun (IM user name nurblìeh)              GOOOO 1-00507331-32.
    asked Y ouTube product manager Maryrose
    Dunton (IM user name maryrosedunton), "was
    it me, or was the lawyer thing today a cover-
    your-ass thing from the company?" Dunton
    responded, "oh totally. . . did you hear what
    they were saying? it was really hard  core . . . if
    we even see copyrighted material on the site,
    as employees we're supopsed (sic J to report
    it"; Heilbrun replied, "sure, whatever," and
    Dunton said "I guess the fact that I started like

                                               22
      5 groups based on copyrighted material
      probably isn't so great"; in response Heilbrun
      said "right exactly. . . but it's a cover your ass
      . . . so the board can say we told maryrose not
      to do this."

94. In an instant message exchange between                 Hohengarten i1205 & Ex. 193,
      YouTube co-founder Steve Chen (IM user               G00001-00507535, at 6-7 & at
      name tunawarrior) and YouTube product                GOOO01-00507538.
      manager Maryrose Dunton (maryrosedunton)
      dated February 28,2006, Steve Chen stated
      that, "we're the first mass entertainment thing
      accessible from the internet," that Y ouTube
      was "revolutionizing entertainment," and that
      "we are bigger than the internet, . . . we should
      be comparing ourselves to, say,
      abc/fox/whatever. "

95. In the same instant message conversation,              Hohengarten i1205 & Ex. 193,
    Y ouTube product manager Maryrose Dunton               G00001-00507535, at 8 & at
      (IM user name maryrosedunton) reported the           GOOO01-00507539.
      results of a "lìttle exercise" she performed
      wherein she "went through all the most
      viewed/most discussed/top favorites/top rated
      to try and figure out what percentage is or has
      copyrighted materiaL. it was over 70%." She
      added, "what I meant to say is after I found
      that 70%, I went and flagged it all for review."

96. When deposed, Y ouTube product manager                 Hohengarten i1363 & Ex. 329 (Dunton
      Maryrose Dunton confirmed in reference to            Dep.) at 84:12-85:9.
      the February 28,2006 instant message
      exchange with YouTube co-founder Steve
      Chen (see SUF i195) that she was being
      sarcastic and did not actually flag any of the
      copyrighted videos for review.

97.   As a result of   Go   ogle's acquisition of          Hohengarten i1400 & Ex. 363 (Google
      Y ouTube, Y ouTube product manager                   Inc., S-3ASR Registration Statement
      Maryrose Dunton received Google shares               dated February 7,2007) at 5 (showing
      worth $4.13 mì1ion.                                  8,590 shares issued to "Mayrose
                                                           Dunton" (sic J).

                                                           Hohengarten i1306 & Ex. 278
                                                           (screenshot of Google's finance
                                                           webpage showing that the closing price
                                                           for Google shares on November 13,

                                                    23
                                                       2006 was $481.03).

98. A February 2006 YouTube Board Presentation         Hohengarten i125 & Ex. 22, GOOOO 1-
    noted that YouTube received 20 mì1ion views        00762174, at GOOOO 1-00762181.
    per day and expressly pointed out the day
      when the "SNL Narnia clip," also known as
       "Lazy Sunday," was "added" to Y ouTube.


99. A March 2006 Y ouTube company                      Hohengarten i1334 & Ex. 302,
      presentation to potential investor TriplePoint   TP000479, at TPOO0490.
      Capital touted the success of the "NBC/SNL
      'Lazy Sunday' clip" as one example of
      "Incredible Results with Branded Video" and
      noted that the clip "(rJeceived 5 mì1ion views
      in about a month."

100. On March 1, 2006, Newsweek publìshed an           Hohengarten i126 & Ex. 23, GOOOOl-
    article titled "Video Napster?" with the           07728393, at GOOO01-07728393.
    subheading "Only a year old, YouTube has
       already rocketed past Google and Yahoo to
      become NO.1 in Web video. But can it
      survive the fear of a copyright crunch?"; the
      article discusses the presence on Y ouTube of
      infringing content from major media
      companies.

101.In response to the March 1,2006 Newsweek           Hohengarten i127 & Ex. 24, GOOO01-
    article, Y ouTube vice president of marketing      00522244, at GOOO01-00522244.
       and programming Kevin Donahue sent an
       email asking another Y ouTube employee to
      "please go through the newsweek article and
      work with heather to remove all of the lìsted
      copyright infringing video."

102'in an instant message conversation discussing      Hohengarten i1207 & Ex. 195,
    the March 1, 2006 Newsweek article, Bradley        G00001-01931840, at 3 & at
    Heilbrun (IM user name nurblìeh) stated to         GOOO01-01931841.
      Y ouTube product manager Maryrose Dunton
      (IM user name maryrosedunton) in an instant
      message: "this affects my chance at being
      rich, and that upsets me."

103.As a result of   Go   ogle's acquisition of        Hohengarten i1400 & Ex. 363 (Google
      Y ouTube, Y ouTube systems administrator         Inc., S-3ASR Registration Statement
      Bradley Heilbrun received Google shares          (February 7,2007)) at 5 (page numbers
      worth $6.2 mì1ion.                               at bottom center) (showing 12,885
                                                       shares issued to "Bradley Heilburn"

                                                  24
                                                     (sic J).

                                                     Hohengarten i1306 & Ex. 278
                                                     (screenshot of Google's finance
                                                     webpage showing that the closing price
                                                     for Google shares on November 13,
                                                     2006 was $481.03).

104'in a March 1, 2006 instant message               Hohengarten i1207 & Ex. 195,
    conversation with Y ouTube systems               G00001-01931840, at 6-7 & at
    administrator Bradley Heilbrun (IM user name     GOOO01-01931843.
    nurblìeh), YouTube product manager
    Maryrose Dunton (IM user name maryrose
    dunton) said "the truth of the matter is,
    probably 75-80% of our views come from
    copyrighted materiaL" She agreed that
    Y ouTube has some "good original content"
    but "it's just such a small percentage."

105. In a March 8, 2006 email, a Y ouTube            Hohengarten i1254 & Ex. 236,
    employee sent a message to other Y ouTube        JK00002261, at JKOOO02261-62.
    employees attaching a screenshot of a search
    for "dailyshow."

1 06.In a March 14, 2006 email, Y ouTube engineer    Hohengarten i128 & Ex. 25, GOOO01-
    Matt Rizzo stated: "this is some ugly            05172407, at GOOOO 1-05172407.
    javascript so these copyright cop assholes can
    click through the pages and store what they
    checked. I hope they die and rot in hell!"

107. In a March 15,2006 instant message              Hohengarten i1213 & Ex. 201,
    conversation Y ouTube engineer Matt Rizzo        GOOOO 1-00829681, at 9-10 & at
    (IM user name mattadoor) described copyright     GOOOO 1-00829687.
    owners as "fucking assholes," asking "just
    how much time do you guys want to give to        Hohengarten i1363 & Ex. 329 (Dunton
    these fucking assholes," and Y ouTube product    Dep.) at 261:20-261:21 (confirming
    manager Maryrose Dunton (IM user name            that mattadoor is Matt Rizzo's IM user
    maryrosedunton) responded: "hah. not any         name); 275:13-276:10 (confinning that
    time really."                                    "fucking assholes" refers to copyright
                                                     owners).

                                                     Hohengarten i1400 & Ex. 363 (Google
                                                     Inc., S-3ASR Registration Statement
                                                     (February 7,2007)) at 16 (page
                                                     numbers at bottom center) (lìsting Matt
                                                     Rizzo's job title).


                                            25
1 08.As a result of Google's acquisition of             Hohengarten i1400 & Ex. 363 (Google
    Y ouTube, Y ouTube engineer Matt Rizzo              Inc., S-3ASR Registration Statement
    received Google shares worth $3.7 mì1ion.           (February 7,2007)) at 6 (page numbers
                                                        at bottom center) (showing 7,731
                                                        shares issued to Matt Rizzo).

                                                        Hohengarten i1306 & Ex. 278
                                                        (screenshot 0 f Goo gl e' s finance
                                                        webpage showing that the closing price
                                                        for Google shares on November 13,
                                                        2006 was $481.03).

109. In a March 22, 2006 memorandum distributed         Hohengarten i1255 & Ex. 237,
    to the members ofYouTube's Board of                 JK00000173, at JKOOOOOl73.
    Directors at a board meeting, Y ouTube co-
    founder Jawed Karim wrote under the heading         Hohengarten i1347 & Ex. 313 (Karim
    "Copyrighted content": "Although the new            Dep.) at 178:18-179:19.
    10-minute length restriction (on clips
    uploaded to Y ouTube J serves well to reinforce
    the offcial   line that Y ouTube is not in the
    business of hosting full-length television
    shows, it probably won't cut down the actual
    amount of ìlegal content uploaded since
    standard 22-minute episodes can stì1 easily be
    uploaded in parts, and users wì1 continue to
    upload the 'juiciest' bits of television shows."

11 O.In the same March 22, 2006 memorandum,             Hohengarten i1255 & Ex. 237,
    Y ouTube co-founder Jawed Karim wrote: "As          JK00000173, at JKOOOOO173.
    of today episodes and clips of the following
    well-known shows can still be found: Family
    Guy, South Park, MTV Cribs, Daily Show,
    Reno 911, Dave Chapelle. This content is an
    easy target for critics who claim that
    copyrighted content is entirely responsible for
    YouTube's popularity. Although YouTube is
    not legally required to monitor content (as we
    have explained in the press) and complìes with
    DMCA takedown requests, we would benefit
    from preemptively removing content that is
    blatantly ìlegal and likely to attract criticism.
    This wì1 help to dispel YouTube's association
    with Napster (Newsweek: "Is YouTube the
    Napster of Video?", "Showbiz unsure if
    YouTube a friend or foe.)."

11 1.At his deposition, YouTube co-founder Jawed        Hohengarten i1347 & Ex. 313 (Karim
                                                26
    Karim stated that he distributed his March 22,     Dep.) at 178:19-183:4.
    2006 memorandum at a Y ouTube board
    meeting.

112.In March 2006, YouTube considered                  Hohengarten i1363 & Ex. 329 (Dunton
    implementing an automated tool that would          Dep.) at 303:4-305:9,307:18-308:4.
    search the metadata for each uploaded video
    to identify potentially infringing clips and
    send emails to content owners to notify them
    of the potential infringement so that they
    could review the video and request its
    removaL.

113 .At his deposition, Y ouTube director of finance   Hohengarten i1350 & Ex. 316 (B.
    Brent Hurley testified that the automated          Hurley Dep.) at 216:21-218:17.
    video metadata search tool would have
    allowed content owners to "define at their         Hohengarten i129 & Ex. 26, GOOO01-
    direction what. . . keywords that they would       00630641, at GOOO01-00630641.
    lìke to save as sort of a predefined search,"
    that the tool would have sent those content
    owners "emails . . . daily, weekly, monthly. . .
    at their direction," and that his 'vision' ofthe
    tool would have allowed Viacom to search for
    terms lìke "Daily Show."

114. In a March 11, 2006 instant message               Hohengarten i1214 & Ex. 202,
    exchange, Y ouTube engineer Matt Rizzo (IM         G00001-00829702, at 4 & at
    user name mattadoor) told YouTube product          GOOOO 1-00829704.
    manager Maryrose Dunton (IM user name
    maryrosedunton), that implementing the tool
    "isn't hard" and would only "take another day
    or w/e (weekendJ . . . but I still don't
    understand why we have to cater to these
    guys"; Dunton voiced her opposition to the
    tool, stating "(IJ hate this feature. I hate
    making it easier for these a-holes," "ok, forget
    about the email alerts stuff," and "we're just
    trying to cover our asses so we don't get
    sued."

115.YouTube never implemented the search tool          Hohengarten i1214 & Ex. 202,
    described in SUF i1114.                            G00001-00829702, at 4 & at
                                                       GOOOO 1-00829704 ("forget about the
                                                       email al erts stuff.").

116.In an April 3, 2006 email, a YouTube               Hohengarten i130 & Ex. 27, GOOO01-
    employee characterized a Fort Worth Star-          03060898, at GOOOO 1-03060899.

                                              27
    Telegram article as a "great regional piece. . .
    that really captured the passion ofthe
    Y ouTube user and would have convinced me
    as her reader to check out the service." The
    article described "South Park" and "Daily
    Show" videos on Y ouTube.

117.In a May 14,2006 email exchange with                   Hohengarten i131 & Ex. 28, GOOOO 1-
    YouTube's copyright personnel, a YouTube               00558783, at GOOOO 1-00558783-84.
    user whose South Park clip had been taken
    down wrote: "You guys have TONS of South
    Park Clìps... is mine the only one in violation?
    You have WWF/WWE Media. WCW Media.
    Tons of Media that is liable for infringement
    of copyrights and your site promotes it.
    Seems odd."

118.In a May 14,2006 email exchange with                   Hohengaiien i131 & Ex. 28, GOOO01-
    YouTube's copyright personnel, a YouTube               00558783, at GOOO01-00558783-84.
    user responded to Y ouTube' s claim that it
    "remove( s J videos when we receive a
    complaint from a rights holder" by saying:
    "knowing that you contain a lot of
    copywrighted (sic J media, why don't you guys
    remove it instead of wait around for a
    complaint? Basically everyone else gets away
    with it while I am now warned about it.
    Seems odd again. So what would happen if I
    report the entire youtube website and it's
    content? Would you guys remove your ìlegal
    media then?"

119.In a May 25,2006 instant message                       Hohengarten i1216 & Ex. 376,
    conversation, Y ouTube product manager                 G00001-07169708, at 8 & at
    Matthew Liu (IM user name coda322) stated:             GOOOO 1-07169713.
    "one of the vids in my playlìst got removed
    . . . for copyright infringement. . . assholes . . .   Hohengarten i1200 & Ex. 278,
    im going (sic J to go hit the customer service         G00001-07181365, at GOOO01-
    lady."                                                 07181365 (noting that coda322 is
                                                           Matthew Liu's AOL account name).

                                                           Hohengarten i1193 & Ex. 190,
                                                           G00001-06525907, at GOOO01-
                                                           06525907 (noting that coda322 is a
                                                           Y ouTube account name used by
                                                           Matthew Liu).


                                                 28
120'in a June 4,2006 instant message                    Hohengarten i1217 & Ex. 377,
    conversation, Y ouTube product manager              G00001-07169928, at 2 & at
    Matthew Liu (IM user name coda322) directed GOOOO 1-07169928.
    a friend to two Y ouTube profile playlìst pages
    containing content that he recognized as
    infringing, stating, "go watch some superman.
    . . dont show other people though. . . it can
    get taken off'; Liu's friend asked, "why would
    it get taken off(?J"; Liu responded, "cuz its
    copyrighted. . . technically we shouldn't
    allow it . . . but we're not going to take it off
    until the person that holds the copyright. . . is
    lìke . . . you shouldnt have that. . . then we'll
    take it off ."

121.In a June 26,2006 instant message                   Hohengarten i1215 & Ex. 203,
    conversation with an unknown individual,            G00001-07169720, at 2 & at
    Y ouTube product manager Matthew Liu                GOOOO 1-07169720.
    responded to the question "what percentage of
    the videos on youtube are violating copyright
    infringement" by stating, "its a lot lower than
    you would think. . . but in tenns of. . .
    percentage of videos that are watched. . . it is
    significantl y higher."

122.0n June 27,2006, YouTube co-founders Chad           Hohengarten i132 & Ex. 29, GOOO01-
    Hurley and Steve Chen, Y ouTube product             02761607, at GOOO01-02761607.
    manager Maryrose Dunton and Y ouTube
    senior software engineer Erik Klein received a      Hohengarten i133 & Ex. 30, GOOO01-
    Wall Street Journal article about YouTube           00420319, at GOOO01-00420321.
    that stated: "critics say the most-viewed items
    often involve some type of copyright                Hohengarten i1392 & Ex. 386
    infringement. On a recent day, top-viewed           (Solomon Dep.) at 18:13-18:23
    videos included clìps from. . . 'The Daily          (testifying to Erik Klein's   job title).
    Show.'"

123. When a user uploads a video the user may           Hohengarten i1356 & Ex. 322 (Do
    choose whether to make the video publìc             Dep.) at 172:16-173:8,180:8-181:4.
    (viewable to any user unless restricted by age
    or geography) or private (viewable to only the      Hohengarten i134 7 & Ex. 313 (Karim
    uploading user and users invited by the             Dep.) at 134:3-16.
    uploading user).
                                                        Hohengarten i1368 & Ex. 334 (Gì1ette
                                                        Dep.) at 154:8-21.


                                                        Hohengarten i1385 & Ex. 351 (Schaffer
                                                        Dep.) at 162:19-24.


                                               29
124.Private videos are not searchable by a content   Hohengarten i188 & Ex. 85, GOOO01-
    owner seeking to identify instances of           00827503, at GOOO01-00827503.
    infringement on Y ouTube.
                                                     Hohengarten i157 & Ex. 54, GOOO01-
                                                     02055019, at GOOO01-02055019.

                                                     Hohengarten i1361 & Ex. 327
                                                     (Drummond Dep.) at 195:13-20.

l25.YouTube co-founder Chad Hurley testified in      Hohengarten i1346 & Ex. 312 (C.
    deposition that it is possible for a user to     Hurley Dep.) at 238:18-239:9.
    serially upload an entire movie as several
    private videos and that then the "content
    owner can't see them."

126.In June 2006 YouTube employees proactively       Hohengarten i158 & Ex. 55, GOOO01-
    reviewed private videos uploaded by the 40       02693804, GOOO01-02693808.
    users who uploaded the most private videos
    over a two-day period, concluded that 17 of      Hohengarten i159 & Ex. 56, GOOO01-
    those user accounts contained copyrighted        05150988, at GOOO01-05150988.
    private videos, and consequently closed those
    17 accounts.


127.In June 2006 YouTube employees proactively       Hohengarten i158 & Ex. 56, GOOO01-
    reviewed private videos uploaded by the 40       02693804, at GOOOO 1-02693 808.
    users who uploaded the most total videos over
    a two-day period, concluded that 22 of those     Hohengarten i159 & Ex. 56, GOOO01-
    user accounts contained copyrighted private      05150988, at GOOO01-05150988.
    videos, and closed 17 of those 22 accounts.

128.In an August 3,2006 instant message              Hohengarten i1208 & Ex. 196,
    conversation with Y ouTube engineer Matthew      G00001-07585952, at 2 & at
    Rizzo (IM user name mattadoor), YouTube          GOOO01-07585952.
    product manager Maryrose Dunton (IM user
    name maryrosedunton) said "so *technically*
    if you even perform a copyrighted song, it's

    considered infringement. but we can leave this
    up until someone bitches."

129.A YouTube board meeting presentation dated       Hohengarten i1330 & Ex. 298,
    August 23, 2006 stated: "YouTube has             SCOl1742, at SC011760.
    become the next generation media AND
    advertising platform."

130'in an August 24, 2006 email to other Y ouTube    Hohengarten i135 & Ex. 32, GOOO01-
    employees, Y ouTube systems administrator        03631419, at GOOO01-03631419.
    Paul Blair provided a lìnk to a Daily Show

                                            30
      clip on Y ouTube.                                Hohengarten i136 & Ex. 33, GOOOOl-
                                                       03406085, at G00001-03406086
                                                       (stating Paul Blair's job title).

131. Y ouTube recognized that users might break up     Hohengarten i137 & Ex. 34, G00001-
      a movie or television episode into multiple      00988969, at GOOOO 1-00988970.
      parts and upload the parts to Y ouTube, and
      considered creating a queue for human review     Hohengarten '1 368 & Ex. 334 (Gì1ette
      of videos close to ten minutes long, but never   Dep.) at 49:23-50:10,216:2-10,
      implemented such a queue.                        217:15-19.

                                                       Hohengarten i138 & Ex. 35, G00001-
                                                       00953867, at G00001-00953868.

132.A YouTube lìst of    the "top keyword searches"    Hohengarten i141 & Ex. 38, G00001-
      in the United States for September 19,2006       03045959, at G00001-03045960-63.
      listed many Viacom shows and movies,
      including "south park" ( ),
      "flavor of love" ( , "dave
      chappelle" ( ), "daily show"
      ( ), "jon stewart" (
      searches), "colbert" (
      "transfonners" (
      "southpark" (



       B. Google's Knowledge and Intent Concerning Infringement on YouTube




133.Before acquiring YouTube, Google had its           Hohengarten '1 366 & Ex. 332 (Eun
      own Internet video site, Google Video, which     Dep.) at 57:3-58:2.
      allowed users to upload videos.
                                                       Hohengarten i1381 & Ex. 347 (P.
                                                       Walker Dep.) at 240:6-240:14.

134. Until September 2006, Google Video                Hohengarten i1366 & Ex. 332 (Eun
    employees reviewed each video uploaded to          Dep.) at 118:19-121:25,130:3-130:17.
    the Google Video site for copyright
    infringement and other terms of  use               Hohengaiien i142 & Ex. 39, G00001-
    violations before allowing the video to be         00794737, at GOOOOl-00794742-43
    displayed to users of the site.                    (attachment).

                                                       Hohengarten i1194 & Ex. 191,

                                              31
                                                     G00001-00923210, at GOOO01-
                                                     00923210.

                                                     Hohengarten i1381 & Ex. 347 (P.
                                                     Walker Dep.) at 69:6-75:7.

                                                     Hohengarten i13 80 & Ex. 346
                                                     (Narasimhan Dep.) at 13:25-16:8,
                                                     51:16-53:6.

                                                     Hohengarten i144 & Ex. 41, GOOO01-
                                                     03114019, at GOOO01-03114019.

                                                     Hohengarten i146 & Ex. 43, GOOO01-
                                                     06555098, at GOOO01-06555098.

135. Until September 2006, all videos uploaded to    Hohengarten i1380 & Ex. 346
    the Google Video website were placed in a        (Narasimhan Dep.) at 12:5-16:8.
    "video approval bin, essentially a video
    review queue," and were reviewed by a
    Google employee before being made
    available for viewing on the Google Video
    website.

136.   Each video uploaded to Google Video and       Hohengarten i1366 & Ex. 332 (Eun
       placed in the v'ideo review queue was         Dep.) at 68:15-71 :8, 130:1-130:17.
       reviewed by a Google employee for copyright
       infringement, porn, violence, and other       Hohengarten i1194 & Ex. 191,
       reasons.                                      G00001-00923210, at GOOO01-
                                                     00923210.

                                                     Hohengarten i1380 & Ex. 346
                                                     (Narasimhan Dep.) at 41:16-22,50:9-
                                                     53:6.

                                                     Hohengarten i144 & Ex. 41, GOOO01-
                                                     03114019, at GOOO01-03114019.

13 7.In a June 26, 2006 email titled "ì1egal         Hohengarten i142 & Ex. 39, GOOO01-
    uploads," Google vice president of content       00794737, at GOOO01-00794737.
    partnerships David Eun asked Google Video
    content review manager Bhanu Narasimhan,         Hohengarten i1380 & Ex. 346
    who was in charge of the team reviewing          (Narasimhan Dep.) at 8:12-10:5 (stating
    videos in the video review queue: "In the        Bhanu Narasimhan's job title), 10:24-
    swirl of discussions around copyright            11:3,148:2-148:8,152:5-152:20.
    enforcement polìcies, can you tell me how


                                            32
    many illegal videos we catch each week on         Hohengarten i1366 & Ex. 332 (Eun
    average and what types/kinds/categories they      Dep.) at 25:7-25: 19 (stating David
    fall into? How do they correspond to the          Eun's job title).
    stuff that gets uploaded to Y ouTube?"; Ms.
    Narasimhan responded: "We catch around
    1 0% of all online user uploaded videos
    during review. Of these approximately 90%
    is disapproved due to copyright violation, and
    the rest due to policy (porn, violence, etc.)."

138.Google Video stopped proactively reviewing        Hohengarten i145 & Ex. 42, GOOO01-
    for copyright infringement on or about            00802317, at GOOOO 1-00802317.
    September 1, 2006.
                                                      Hohengarten i1380 & Ex. 346
                                                      (Narasimhan Dep.) at 13:25-16:8.

                                                      Hohengarten i146 & Ex. 43, GOOO01-
                                                      06555098, at GOOO01-06555098.

139.Google Video also used keyword searching          Hohengarten i147 & Ex. 44, GOOO01-
    for terms such as "Daily Show," "Jon              00990640, at GOOOO 1-00990641.
    Stewart," "Dave Chappelle," and "Comedy
    Central" to locate videos that infringed
    Viacom's and others' copyrights.

140'in a January 15, 2006 email Google executive      Hohengarten i148 & Ex. 45, GOOO01-
    Peter Chane responded to a colleague who          03592968, at GOOO01-03592968.
    emailed him a lìnk to a Y ouTube video by
    saying: "google video doesn't have this one       Hohengarten i1353 & Ex. 319 (Chane
    b/c we have a zero tolerance polìcy for           Dep.) at 8:18-10:25 (stating Peter
    copyrighted content."                             Chane's job title).

141.In the same January 15, 2006 email, Google        Hohengarten i148 & Ex. 45, GOOO01-
    executive Peter Chane continued, in reference     03592968, at GOOO01-03592968.
    to a discussion he had with Y ouTube co-
    founder Chad Hurley and another Y ouTube          Hohengarten i1353 & Ex. 319 (Chane
    executive Chris Maxcy: "youtube is at an          Dep.) at 8:18-10:25, 48:10-50:18.
    advantage b/c they aren't the target that we
    are with issues lìke this. they are aware of
    this (I spoke with them on friday) and they
    plan on exploiting this in order to get more
    and more traffic."

142.In a February 7,2006 email Google executive       Hohengarten i1 49 & Ex. 46, GOOOO 1-
    Peter Chane wrote to several Google               03594244, at GOOO01-03594244.
    colleagues: "my concern with youtube is their
    inclusion of clearly copyrighted content in

                                              33
    their index. ifyou query for SNL or Jon
    Stewart you'll see what I'm talking about. . . .
    ifthey were to be a part of google I assume
    we'd impose our zero tolerance polìcy with
    respect to copyright infringement which
    would significantly reduce their index size
    and traffic."

143.In a February 7, 2006 email Google executive                            Hohengarten i150 & Ex. 47, GOOO01-
    Peter Chane wrote to several Google                                     05084213, at GOOO01-05084213.
    colleagues: "my concern about youtube is
    their dependence upon copyrighted content
    for traffic."


144.0n March 4,2006 Google executive Patrick                                Hohengarten i151 & Ex. 48, GOOO01-
    Walker emailed Google Video Product                                     00562962, at GOOO01-00562962.
    Manager Hunter Walk, the business product
    manager of Google Video, that he was                                    Hohengarten i13 81 & Ex. 347 (P.
    "baffed" by comparisons between Y ouTube                                Walker Dep.) at 144:15-145:10
    and Google Video because Y ouTube was                                   (testifying to Hunter Walk's job title).
    "doing lìttle to stem its traffc growth on the
    back of pirated content," calling that choice                           Hohengarten i1366 & Ex. 332 (Eun
    "unsustainable and irresponsible."                                      Dep.) at 166:20-167:12 (testifying to
                                                                            Hunter Walk's job title).

145.0n April 27, 2006, Google executive Peter                               Hohengarten i152 & Ex. 49, GOOO01-
    Chane sent an email to the Video Team at                                00566289, at GOOOO 1-00566289.
    Google forwarding the statement by Peter
    Chernin, then CEO of        Fox Entertainment,
    about Y ouTube: "Exciting as it shows the
    potential pent up demand. we did a survey
    and more than 80 percent of      video on this site
    is copyrighted content"; Google Video
    business product manager Ethan Anderson
    replìed, "Holy cow."

146.By May 2006 YouTube had far surpassed                                   Hohengarten i153 & Ex. 50, GOOO01-
    Google Video in terms of                     number of   users,         00495746, at G00001-00495746 (Eric
    number of         playbacks, and number of               videos.        Schmidt stating: "My primary concern
                                                                            is that. . . we are behind Y outube.").

                                                                            Hohengarten i1 54 & Ex. 51, GOOOO 1-
                                                                            00496021, at GOOO01-00496024.

                                                                            Hohengarten i155 & Ex. 52, GOOO01-
                                                                            00496614, at GOOO01-00496633.


                                                                       34
147.In May 2006, Google held a Google Product        Hohengarten i1384 & Ex. 350
    Strategy (or "GPS") meeting attended by top      (Rosenberg Dep.) at 50: 15-51:7.
    executives, including Google CEO Eric
    Schmidt; the meeting focused on Google           Hohengarten i156 & Ex. 53 GOOO01-
    Video.                                           01495915, at GOOO01-01495915.

                                                     Hohengarten '1 348 & Ex. 314 (Schmidt
                                                     Dep.) at 76:20-78:10.

                                                     Hohengarten i1353 & Ex. 319 (Chane
                                                     Dep.) at 114:22-115:6.

148.An early May 2006 draft information sheet        Hohengarten i160 & Ex. 57 GOOO01-
    about Y ouTube created for Google co-            04430721, at GOOO01-04430722.002.
    founder Larry Page discussed YouTube's
    "Fast-start history" and stated that YouTube's   Hohengarten i1349 & Ex. 315 (Page
    "(lJack of focus on copyright violation          Dep.) at 10:22-10:24 (testifying to Larry
    (especially early on) created Napster-type       Page's job title).
    adoption increases: 'good content' available
    for free without delay."

149.In a May 2,2006, email to Google executive       Hohengarten i153 & Ex. 50, GOOO01-
    Susan Wojcicki, Google vice president of         00495746, at GOOO01-00495746.
    content partnerships David Eun stated that he
    "ran into Peter and he had this idea to 'beat    Hohengarten i1366 & Ex. 332 (Eun
    Y ouTube' by calling quits on our copyright      Dep.) 115:8-116:5,201 :2-201:9
    complìance standards"; in his deposition Eun     (testifying to Susan Wojcicki's job
    identified "Peter" as Google executive Peter     description).
    Chane.
                                                     Hohengarten i1353 & Ex. 319 (Chane
                                                     Dep.) at 9:5-10:4.

                                                     Hohengarten i1366 & Ex. 332 (Eun
                                                     Dep.) at 201 :2-201 :9.

150.A May 3, 2006 Google Video document              Hohengarten i161 & Ex. 58, GOOO01-
    stated: "Why is Y ouTube the Key                 02361246, at GOOO01-02361247.
    Competitor? Not all traffc is created equal.
    Traffic is high but content is mostly ìlegal
    content (copyright infringing but not porn);
    how would comparable usage stats look for
    consumption of just legal content?"

151.A May 5, 2006 draft presentation from            Hohengarten i162 & Ex. 59, GOOO01-
    Google vice president of content partnerships    00496065, at GOOO01-00496086.
    David Eun for the GPS meeting summarized
    the "Views of Premium Content Owners On
                                             35
    Y ouTube" and stated: "Y ouTube is
    perceived as trafficking mostly ìlegal content
    -- 'it's a video Grokster. '"

152.A May 9,2006 Google Video presentation            Hohengarten i163 & Ex. 60, G00001-
    titled "Content Acquisition Strategy Update"      00502665, at G00001-00502674,
    stated that "Y ouTube' s business model is        GOOOO 1-00502684.
    completely sustained by pirated content," and
    recommended that "we should beat Y ouTube
    by improving features and user experience,
    not being a 'rogue enabler' of content theft."

153.In a May 10, 2006 email to Google executive       Hohengarten i164 & Ex. 61, GOOOO 1-
    Patrick Walker, Google Video business             00482516, at G00001-00482516.
    product manager Ethan Anderson stated: "I
    can't belìeve you're recommending buying          Hohengarten i1381 & Ex. 347 (P.
    Y ouTube. . . . they're 80% ìlegal pirated        Walker Dep.) at 87:6-87:12 (testifying
    content"                                          to Ethan Anderson's job title).


154.A May 11, 2006 draft presentation for the         Hohengarten i1 54 & Ex. 51, GOOOO 1-
    GPS titled "Google Video" by Google               00496021, at G00001-00496024,
    executive Peter Chane stated that Y ouTube        GOOOO 1-00496031.
    had more daily video uploads and daily video
    views than Google Video.

155.The same May 11,2006 draft presentation           Hohengarten i1 54 & Ex. 51, GOOOO 1-
    stated that "Y ouTube is growing" in part         00496021, at GOOOO 1-00496031.
    because of its "Liberal copyright policy,"
    including "No proactive screening; reactive
    DMCA only," making "YouTube better for
    users."

156. The same May 11, 2006 draft presentation         Hohengarten i1 54 & Ex. 51, GOOOO 1-
    included a "Copyright polìcy parity analysis"     00496021, at G00001-00496035
    stating that on Y ouTube, "Partial works (are J   (emphasis in original).
    accepted(;J CSP AN, Family Guy, John
    Stewart, NBA clips, music videos posted on
    the site(;J YouTube gets content when it's
    hot (Lazy Sunday, Stephen Colbert, Lakers
    wins at the buzzer)"; and stating with respect
    to Google Video that it "(tJakes us too long to
    acquire content directly from the rights
    holder."

157.In a May 11, 2006 document titled "Video          Hohengarten i155 & Ex 52, G00001-
    GPS content pages FINAL," sent to Google          00496614, at G00001-00496627,

                                              36
    executive Peter Chane, Google vice president       G00001-00496633, GOOO01-
    of content partnerships David Eun, and others      00496637.
    for integration into the material prepared for
    the GPS, the Google Video team stated:
    "Premium Content Owners. . . (mainly)
    perceive YouTube as trafficking mostly
    ìlegal content -- 'it's a video Grokster'''; "we
    should beat Y ouTube by improving features
    and user experience, not being a 'rogue
    enabler' of content theft"; "Y ouTube' s
    content is all free, and much of it is highly
    sought after pirated clìps"; and "Y ouTube' s
    business model is completely sustained by
    pirated content. They are at the mercy of
    companies not responding with DMCA
    requests."

158.In a May 12,2006 email to Google CEO Eric          Hohengarten i165 & Ex. 62, GOOO01-
    Schmidt and Google senior vice president           00496651, at GOOOO 1-00496651.
    Omid Kordestani, Google vice president
    David Eun stated that "the Video team" at          Hohengarten i13 75 & Ex. 341
    Google "has focused on two questions. . . 1)       (Kordestani Dep.) at 20:14-21:7
    how we 'beat YouTube' in the short term;           (testifying to Omid Kordestani's job
    and 2) how we win over time"; and that             title).
    "there was heated debate about whether we
    should relax enforcement of our copyright
    polìcies in an effort to stimulate traffic
    growth, despite the inevitable damage it
    would cause to relationships with content
    owners. I think we should beat Y ouTube . . .
    -- but not at all costs."

159.In the same May 12,2006 email, Google vice         Hohengarten i1 65 & Ex. 62, GOOOO 1-
    president of content partnerships David Eun        00496651, at GOOOOl-496652.
    stated, regarding Y ouTube, that a "large part
    of their traffic is from pirated content. When
    we compare our traffic numbers to theirs, we
    should acknowledge that we are comparing
    our 'legal traffc' to their mix of traffc from
    legal and ìlegal content. One senior media
    executive told me they are monitoring
    Y ouTube very closely and referred to them as
    a 'Video Grokster. '"

160'in a June 2, 2006 instant message                  Hohengarten i1211 & Ex. 199,
    conversation, Google vice president of             G00001-02363217, at 2 at & at
    content partnerships David Eun (IM user            GOOO01-02363217.

                                               37
    name deun@google.com) told another
    Google executive Patrick Walker (IM user             Hohengarten i1352 & Ex. 318 (Brin
    name pwalker@google.com) that although               Dep.) at 7:15-7:17 (testifying to Sergey
    Eun and Google co-founder Sergey Brin                Brin's job title).
    opposed relaxing Google Video's copyright
    polìcies, Google's CEO Eric Schmidt                  See also Hohengarten i167 & Ex. 64,
    supported the change.                                G00001-00563430, at GOOO01-
                                                         00563431 ("Shouldn't the lesson here
                                                         be (tJo play faster and looser and be
                                                         aggressive until either a court says
                                                         ("Jno" or a deal gets struck. I don't
                                                         think there can be an in (b Jetween").


161. On June 8, 2006, Google senior vice                 Hohengarten i166 & Ex. 63, GOOO01-
    president Jonathan Rosenberg, Google Senior          00791569, at GOOO01-00791575,
    Vice President of  Product Management,               G00001-00791594 (emphasis in
    emailed Google CEO Eric Schmidt and                  original).
    Google co-founders Larry Page and Sergey
    Brin a Google Video presentation that stated         Hohengarten i1384 & Ex. 350
    the following: "Pressure premium content             (Rosenberg Dep.) at 12:9-12:18
    providers to change their model towards              (testifying to Jonathan Rosenberg's
    free(;J Adopt 'or else' stance re prosecution        position).
    of copyright infringement elsewhere(;J Set up
    'play first, deal   later' around 'hot content. '"
    The presentation also stated that "( w J e may
    be able to coax or force access to viral
    premium content," noting that Google Video
    could "Threaten a change in copyright
    polìcy" and "use threat to get deal sign-up."

162.In a June 28, 2006 email to numerous other           Hohengarten i167 & Ex. 64, GOOO01-
    Google executives, Google vice president of          00563430, at GOOOOI-00563430.
    content partnerships David Eun stated: "as
    Sergey pointed out at our last GPS, is
    changing polìcy (tJo increase traffc knowing
    beforehand that we'll profit from ìlegal
    (dJownloads how we want to conduct
    business? Is this Googley?"

163. In his deposition, Google vice president of         Hohengarten i1366 & Ex. 332 (Eun
    content partnerships David Eun identified the        Dep.) at 170:4-8.
    "Sergey" referred to in his June 28, 2006
    email (see SUF i1162) as Google founder
    Sergey Brin.

164.0n June 17,2006, Google Video business               Hohengarten i168 & Ex. 65, GOOO01-
    product manager Ethan Anderson sent                  00563469, at GOOOO 1-00563469.

                                                   38
      Google executive Patrick Walker an email
      listing the "Top 10 reasons why we shouldn't                 See also Hohengarten i1317 & Ex. 387
      stop screening for copyright violations,"                    (Google Investor Relations page entitled
      including: "1. It crosses the threshold of                   "Google Code of Conduct") ("The
      Don't be Evil to facilìtate distribution of                  Google Code of Conduct is one of the
      other people's intellectual property, and                    ways we put 'Don't be evil' into
      possibly even allowing monetization of it by                 practice. ").
      somebody who doesn't own the copyright";
      "2. Just growing any traffic is a bad idea.
      This polìcy wì1 drive us to build a giant
      index of pseudo porn, lady punches, and
      copyrighted material. . ."; "3. We should be
      able to win on features, a better (user
      interface J technology, advertising
      relationships - not just polìcy. It's a cop out
      to resort to dist-rob-ution"; and "7. It makes it
      more difficult to do content deals with you
      have an index of             pirated materiaL."


165.0n September 24,2006, less than three                          Hohengarten i169 & Ex. 66, GOOO01-
    weeks before Google announced its                              00792297, at GOOO01-00792297.
    acquisition of You  Tube, a Google employee
    sent an email that included a lìnk to a Daily
    Show video that had been uploaded to
      Y ouTube, stating: "Good old Y ouTube -
      copyright, schmoppyright."




166.Prior to Google's announcement of                   its        Hohengarten i1361 & Ex. 327
      acquisition of   Tube on October 9, 2006, a
                             You                                   (Drummond Dep.) at 23:5-26:8.
      team of Google employees performed due
      dilìgence relating to the proposed acquisition
      of   You   Tube.

167.Google hired Credit Suisse to perform a                        Hohengarten i1362 & Ex. 328 (Duncan
    valuation of You Tube and to render a fairness                 30(b)(6) Dep.) at 60:16-68:25.
    opinion regarding the proposed $1.65 bì1ion
    purchase price.                                                Hohengarten i1321 & Ex. 290, CSSU
                                                                   002845 at, CSSU 002847.

168.Google's due diligence team analyzed a                         Hohengarten i1322 & Ex. 291 CSSU

                                                              39
       random sample of             hundreds of         videos                  002686, at CSSU 002686.
       provided by Y ouTube that Google belìeved to
       be representative of the types of content on                             Hohengarten i1362 & Ex. 328 (Duncan
       YouTube.                                                                 30(b)(6) Dep.) at 87:3-91:8.

169.This random sample of     You  Tube videos was                              Hohengarten i170 & Ex. 67, GOOO01-
       given to the Google due dilìgence team by                                04736644, at GOOO01-04736644.
       YouTube co-founder Steve Chen.

170.Google's analysis of                 the random sample of                   Hohengarten i1322 & Ex. 291 CSSU
       Y ouTube videos determined that 63 % of the                              002686, at CSSU 002686.
       videos on Y ouTube were
       "Premium/removed," meaning that the                                      Hohengarten i1362 & Ex. 328 (Duncan
       content was "copyright (either in whole or                               30(b)(6) Dep.) at 89:4-7, 95:18-98:19.
       substantial part)" or "removed (andJ taken
       down."

171.Storm Duncan, managing director of                            Credit        Hohengarten i1320 & Ex. 289, CSSU
       Suisse and part of Google's YouTube                                      001863, at CSSU 001957.
       acquisition due dilìgence team, wrote in
       hand-written notes that "60% is premium,"                                Hohengarten i1362 & Ex. 328 (Duncan
       which he defined as "Professionally                                      30(b)(6) Dep.) at 199:24-200:5,207:25-
       Produced" and categorized as "Legitimate"                                210:13.
       and "Ilegitmate."


172.Credit Suisse used Google's analysis of                                     Hohengarten i1362 & Ex. 328 (Duncan
    Y ouTube videos as an input to its valuation                                30(b )(6) Dep.) at 90:23-91 :4.
       of   You   Tube.




173. Credit Suisse's valuation model for Y ouTube                               Hohengarten '1 323 & Ex. 292, CSSU
    estimated that 60% of the video views on                                    004069, at CSSU 004071.
       Y ouTube were of "premium" content.

174. Credit Suisse's valuation model for Y ouTube                               Hohengarten i1323 & Ex. 292, CSSU
    estimated that in 2007, only 10% of the video                               004069, at CSSU 004071.
       views of       premium content would be                   of

       content that was authorized to be on
       YouTube.

175.   Credit Suisse prepared a presentation                                    Hohengarten i1324 & Ex. 293, CSSU
       regarding its valuation of                 You   Tube and                003560, at CSSU 003561-86.
       presented it to Google's board of directors on
       October 9,2006, before the board voted to                                Hohengaiien i1362 & Ex. 328 (Duncan
       acquire Y ouTube.                                                        30(b)(6) Dep.) at 117:11-119:15.

                                                                                Hohengarten i1361 & Ex. 327
                                                                                (Drummond Dep.) at 15:20-16:2.

                                                                           40
176.Credit Suisse's October 9,2006 presentation       Hohengarten i1324 & Ex. 293 CSSU
    to Google's board of directors estimated that     003560, at CSSU 003570.
    "60% of total video streams on (the
    Y ouTube J website are 'Premium, '" and that      Hohengarten i1375 & Ex. 341
    "10% of premium content providers allow           (Kordestani Dep. at 109:24-110:22).
    (Y ouTube J to monetize their content in
    2007E."                                           Hohengarten i1362 & Ex. 328 (Duncan
                                                      30(b)(6) Dep. at 158:13-159:1).


177 .An October 8, 2006 draft of Credit Suisse's      Hohengarten i1325 & Ex. 294 CSSU
    presentation defined "(p Jremium content (a J s   003326, at CSSU 003335.
    copyrighted content such as movies/TV
    trailers, music videos, etc."

178.The October 9,2006 Credit Suisse                  Hohengarten i1324 & Ex. 293 CSSU
    presentation emphasized the "tremendous           003560, at CSSU 003569 (emphasizing
    growth" in Y ouTube' s userbase and its "loyal    YouTube's "tremendous growth" and
    global following."                                "loyal global following").


179. The October 9,2006 Credit Suisse                 Hohengarten i1324 & Ex. 293 CSSU
    presentation projected that there would be        003560, at CSSU 003570 (45% of280
    126 billion views of Y ouTube watch page          bì1ion; 55% of280 bì1ion).
    views in 2007, and more than 154 billion
    views of  You Tube home and search results
    pages in 2007.

180'in the October 9, 2006 presentation, Credit       Hohengarten i1324 & Ex. 293 CSSU
    Suisse advised Google's board that the base       003560, at CSSU 003573.
    case financial value of Y ouTube was $2.7
    bì1ion, derived from Google's ability to
    monetize YouTube's user base in the future.

181. The October 9, 2006 presentation informed        Hohengarten i1324 & Ex. 293 CSSU
    Google's board that "60% of  total video          003560, at CSSU 003570; see also id. at
    streams on yellow (their code name for the        CSSU 003569 (lìsting "( u Jnceiiain legal
    YouTube websiteJ are 'Premium.'"                  issues" under "(iJssues for
                                                      ( c J onsideration").

                                                      Hohengarten i1362 & Ex. 328 (Duncan
                                                      30(b)(6) Dep.) at 24:22-25:16
                                                      ( confirming that "Yellow" was the code
                                                      name for Y ouTube and "green" was the
                                                      code name for Google).

182.In the October 9, 2006 presentation Credit        Hohengarten i1324 & Ex. 293, CSSU
    Suisse advised Google's board that Credit

                                               41
      Suisse's valuation "(aJssumes 10% premium 003560, at CSSU 003570.
      content providers allow (Y ouTube J to
      monetize their content in (fiscal year 2007)."



            en' , A
          uul uue ::. '-            tV
                                         L -l   lY '-
                                                ~ n()()uip                 . T ('
                                                                         JYUbilt           T 1iihilìtv


                           ,.   ,                                               ~.T
                    T


183. On October 4, Google sent Y ouTube a tenn               Hohengarten i1326 & Ex. 295 CSSU
    sheet offering to buy Y ouTube for $1.65                 002982, at CSSU 002985-86.
    billion in Google stock; in the term sheet,
      Google proposed that Y ouTube and its
      stockholders "indemnify and hold Google
      hannless for any losses and liabilìties
      (including legal fees) relating to copyright
      lawsuits fied against the Company or
      Google" for up to 12.5% of the purchase
      price, which was to be held in escrow.

184.During negotiations, YouTube pushed for a                Hohengarten i1388 & Ex. 354 (Yu Dep.)
    smaller escrow amount.                                   at 107:4-108:3.

185.The October 9,2006 Google/YouTube            Hohengarten i1335 & Ex. 303, TP000055,
    merger agreement included indemnification at TP000079-80 (i12.9).
    and escrow provisions providing that 12.5
    percent of the consideration Google paid for Hohengarten '1348 & Ex. 314 (Schmidt
      Y ouTube would he held in escrow to satisfy            Dep.) at 65: 1 0-65:23 (testifying that he is
      legal claims made against Y ouTube and                 "aware of  what I'm going to call a
      Google, including copyright infringement               holdback. . . that. . . includes areas of
      claims.                                                copyright" and that the Google board of
                                                             directors discussed the "holdback" around
                                                             the time of the acquisition).

186.In April    2007, Defendants executed an                 Hohengaiien i1331 & Ex. 299, SC
      amendment to the Google/Y ouTube merger                010022, at SC 010023.
      agreement to correct a "scrivener's error";
      the correction increased the proportion of             Hohengarten i1361 & Ex. 327
      the escrowed merger consideration that                 (Drummond Dep.) at 89:7-92:6.
      could be used to cover copyright
      infringement claims brought against                    Hohengarten i1333 & Ex. 301,
      Defendants in connection with the                      AC007823, at AC007824.
      Y ouTube website.




                                                     42
                                         Concerning



187.The press release issued by Google               Hohengarten i171 & Ex 68, G00001-
    announcing the acquisition of Y ouTube           03548410, at GOOOO 1-03 54841 O.
    stated: "With Google's technology,
    advertiser relationships and global reach,
    Y ouTube wì1 continue to build on its
    success as one of the world's most popular
    services for video entertainment."

188.A September 14,2007 email from Google            Hohengarten i172 & Ex. 69, G00001-
    vice president of content partnerships David     02021241, at GOOOO 1-02021241.
    Eun to Google sales director Suzie Reider,
    YouTube's Chief        Marketing Officer, Eun    Hohengarten i1346 & Ex. 312 (c. Hurley
    stated: "If     we think back to last Nov. you   Dep.) at 254:11-255:22.
    are chad (HurleyJ, your head is spinning
    and Eric Schmidt, CEO of the most                Hohengarten i13 82 & Ex. 348 (Reider
    powerful company in the world tells you          Dep.) at 8:24-12:24.
    your only focus is to grow playbacks to
    1B/day. . .. that's what you do."

189. Google did not apply Google Video's             Hohengarten i1393 & Ex. 356 at i1i114-15
    earlier polìcy of proactively reviewing for      (Declaration of Steve Chen dated January
    copyright infringement to Y ouTube;              5,2007).
    instead, Google adopted YouTube's polìcy
    of allowing substantially all infringing         Hohengarten i1385 & Ex. 351 (Schaffer
    video to remain freely available on              Dep.) at 183:7-184:3.
    Y ouTube until a copyright owner could
    detect it and send a takedown notice.            Hohengarten i174 & Ex. 71, G00001-
                                                     01271624, at G00001-01271624.

                                                     See also Hohengarten i188 & Ex. 85
                                                     G00001-00827503, at G00001-
                                                     00827503 ("(TJhe general YT polìcy has
                                                     shifted to be, 'Never polìce anything pro-
                                                     actively, all content reviews should be
                                                     reactive. "').
190'in an October 13,2006 email to other             Hohengarten i175 & Ex. 72 G00001-
    Google employees, Google Video Product           03383629, at GOOOOl-03383629.
    Manager Hunter Walk provided a lìnk to a
    Colbert Report clip on Y ouTube.



                                               43
191. In a March 9, 2007 email to Y ouTube             Hohengarten i176 & Ex. 73, GOOO01-
    employees, a Google employee provided a           01364485, at GOOO01-01364485.
    lìnk to a "Funny south park" video on
    YouTube.

192.In a March 15, 2007 instant message               Hohengarten i1212 & Ex. 200, GOOO01-
    conversation Y ouTube product manager             07738864, at 2-3 & at GOOO01-
    Virginia Wang (IM user name                       07738864.
    missveeandchip) discussed her attempts to
    find videos on Y ouTube to put in a "cute         Hohengarten i1199 & Ex. 375, GOOO01-
    video" category and stated that "it was hard      06669529, at G00001-06669529 (noting
    to find anything i thought was vote worthy.       that missveeandchip is Virginia Wang's
    . . that we could use. . . since so much of it    IM user name).
    involves copywritten stuff." In an email the
    same day, Wang stated, "we're running into Hohengarten i177 & Ex. 74, GOOO01-
    issues finding enough videos because they    07155101, at GOOO01-07155101.
    have so many copyright violations."
                                                 Hohengarten i1378 & Ex. 344 (Liu Dep.)
                                                 at 60:6-61:8 (testifying to Virginia
                                                 Wang's job description).

193.In a March 23, 2007 email to other Google         Hohengarten i178 & Ex. 75, GOOO01-
    employees, a Google employee provided a           00217336, at GOOO01-00217336.
    lìnk to a Daily Show clìp on Y ouTube.

194.In an April 2, 2007 email, Google employee Hohengarten i1 80 & Ex. 77, GOOOO 1-
    Matthew Arnold wrote to two other Google 05154818, at GOOO01-05154818.
    employees (Crosby Freeman and Hugh
    Moore), highlìghting a "Daily Show" clip
    on YouTube.

1 95.A draft May 2007 presentation prepared by Hohengarten i181 & Ex. 78, GOOO01-
    Shashi Seth, YouTube's head of                        05943950, at GOOO01-05943951-55.
    monetization, and distributed to Google
    vice president of content partnerships David Hohengarten i1387 & Ex. 353 (Seth Dep.)
    Eun, YouTube co-founder Chad Hurley,                  at 15:15-17:2 (testifying to Shashi Seth's
    and others, reported that. of             You  Tube   job title), 157:13-24.
    searches are directed toward music videos,
    movies, celebrities, and TV programs, but             See also Hohengarten i182 & Ex. 79,
    that only _ of                videos watched by users G00001-01016844, at GOOO01-
    consisted of authorized professional                  01016844 (statement from YouTube head
    content. The same presentation stated that            of monetization Shashi Seth that based on
    "( u Jsers are searching for lots of things, but an analysis of       the top search queries on
    primarily for premium content."                       Y ouTube, ". fall under entertainment -
                                                      not surprising.").

                                                      See also Hohengarten i183 & Ex. 80,

                                               44
                                                    G00001-00225766, at GOOO01-
                                                    00225767 (analysis by Google executive
                                                    Alex Ellerson of the top 100 search
                                                    queries, determining that approximately
                                                    . of the queries were for premium
                                                    content, and that of the queries for
                                                    premium content, _ of those were
                                                    for "Entertainment TV.").

196.An analysis by Google in May 2007               Hohengarten i1 84 & Ex. 81, GOOOO 1-
    showed that while the average Y ouTube          02414976, at GOOO01-02414980.
    video was viewed 1 10 times, videos that
    had been removed for copyright                  Hohengarten i185 & Ex. 82, GOOO01-
    infringement were viewed an average of          03241189, at G00001-03241189; see
    765 times.                                      also id. at G00001-03241191 (showing
                                                    that premium content is selected by users
                                                    as "favorite" content an average of"
                                                    times per video, while original user-
                                                    generated content is selected as "favorite"
                                                    an average of only. times).


                                                    Hohengarten i1387 & Ex. 353 (Seth Dep.)
                                                    at 143:17-144:23,146:12-150:18.




197.In a June 13,2007 email, YouTube head of        Hohengarten i186 & Ex. 83, GOOO01-
    monetization Shashi Seth stated that based      00747816, at GOOO01-00747816.
    on his review ofthe top 10,000 search
    queries on YouTube: "(CJonsistent with my       Hohengarten i1387 & Ex. 353 (Seth Dep.)
    earlier findings, music video (being            at 103:12-20.
    searched mostly by artist names. . .) are
    being searched a lot, as are TV shows, . . .
    and celebrities. . . . Going down the lìst of
    10k (search tennsJ, it seems that the queries
    do reflect the popularity of the artists,
    songs, celebrities. . . Music, TV Shows,
    Movies, Celebrities, Sports, etc. are
    definitely our top categories to attack;" Mr.
    Seth further stated that "Searches do reflect
    popularity pretty well."

198.A June 2007 "YouTube Profile Study"             Hohengarten i187 & Ex. 84, GOOO01-
    showed that. of all Y ouTube users and          02201131, at GOOO01-02201132.0002
    . of    users who visit YouTube daily           (study index stating that Table 31 is about
    watch "television shows" on Y ouTube.           the "Kind of Video" users "Typically

                                              45
                                                           Watch"), G00001-02201132.0061 (Table
                                                           31 page containing percentage totals for
                                                           YouTube users generally); G00001-
                                                           02201132.0062 (Table 31 page containing
                                                           percentage totals for users who visit
                                                           Y ouTube with varying frequencies).

199.In a July 18, 2007 email YouTube                       Hohengarten i188 & Ex. 85, G00001-
    employee Julie Havens wrote: "A trend we               00827503, at G00001-00827503.
    see is that people upload copyrighted
    videos to their private videos (which are not
    reviewed unless flagged), and then invite
    large numbers of people to view the video
    which bypasses our copyright restrictions."

200.A February 19, 2008 Google presentation                Hohengarten i189 & Ex. 86, GOOOOl-
    titled "EMG Deal Review -- YouTube &                   01998134, at G00001-01998136.
    South Park Studios" stated that based on
    Y ouTube search "query data," there was
    "proven interest on Y ouTube" for clips of


    -
    South Park; the presentation further stated
    that South Park was


20 1.In March 2008, Y ouTube co- founder Chad              Hohengarten i173 & Ex. 70, G00001-
    Hurley sent an email to Google executives              01395950, at G00001-01395950.
    Susan Wojcicki and Google Video Product
    Manager Hunter Walk stating that "three                Hohengarten i1346 & Ex. 312 (C. Hurley
    weeks ago Eric shifted his thinking on                 Dep.) at 253:18-254:5.
    YouTube's focus. So, since that time we
    have rapidly been redirecting our efforts
    from user growth to monetization."

202.A YouTube user survey from April 2008                  Hohengarten i190 & Ex. 87, G00001-
    showed that. of users watch music                      00829227, at G00001-00829229.0002.
    videos on Y ouTube, . of users surveyed
    watch comedy on YouTube,. of                 users
    surveyed watch "Full           length TV programs"
    on YouTube, and. of                users watch "Full
    length movie( s J" on Y ouTube.




                                                     46
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203.From November 2006 until February 2007,                            Hohengarten i1348 & Ex. 314 (Schmidt
    Viacom negotiated with Google over a                               Dep.) at 173:22-174:23.
    possible "content partnership" agreement
    under which Viacom would lìcense some of                           Hohengarten i191 & Ex. 88, GOOO01-
    its copyrighted works to appear on                                 0079777 4, at GOOOO 1-0079777 4.
    YouTube.
                                                                       Hohengarten i1195 & Ex. 371,
                                                                       G00001-01529251, at GOOO01-
                                                                       01529251.

                                                                       Hohengarten i120 1 & Ex. 382,
                                                                       G00001-08050272, at GOOO01-
                                                                       08050272.

204.   During the negotiations, Viacom made clear Hohengarten i1270 & Ex. 244,
       that without such a lìcense, the appearance VIA01475465, at VIA01475465-76.
       of Via com works on YouTube was
       unauthorized.

205.Viacom also insisted on compensation for      Hohengarten i192 & Ex. 89, GOOO01-
    past infringement of its works as part of any 05942431, at GOOOO 1-05942431.
    license.

206.Google offered a package that it valued at                          Hohengarten i193 & Ex. 90, GOOO01-
       more than $_ for a content                                       02057400, at GOOO01-02057400.
       lìcense from Viacom.

207.Google's offer and term sheet included an                           Hohengarten i1271 & Ex. 245,
       explìcit guarantee that Google would use                         VIA00727696, at VIAOO727696.
       digital fingerprinting technology to
       prescreen all uploads to Y ouTube and block                      Hohengarten i194 & Ex. 91, GOOOO 1-
       any videos from Viacom works not lìcensed                        00984825, at GOOO01-00984837.
       under the agreement.

208. Ultimately negotiations broke down and                             Hohengarten i1270 & Ex. 244,
       Defendants never obtained a lìcense from                         VIA01475465, at VIA01475465-76.
       Viacom.

209.After the parties' lìcense negotiations ended                       Hohengarten i1270 & Ex. 244,
    in impasse, Viacom's General Counsel,                               VIA01475465, at VIA01475465-76.
    Michael Fricklas, wrote Google on
                                                                  47
       February 2,2007, pressing Defendants to
       use fingerprinting technology to prevent
       infringement of           Via   com's works, and
       offering to have Viacom technology experts
       cooperate with Defendants as needed to that
       end.

210.0n February 2,2007, Viacom issued a                            Hohengarten i1270 & Ex. 244,
       request to Y ouTube to remove over                          VIA01475465, at VIA01475465.
       100,000 videos from the YouTube website.

211. On February 2, 2007, after Viacom                             Hohengarten i1192 & Ex. 189,
       requested that Defendants remove over                       GOOOO 1-00746412, at GOOOO I-
       100,000 videos from the YouTube website,                    00746412.
       Chris Maxcy stated that he would provide
       Viacom with access to a new search tool
       that was "still in alpha" to assist Viacom in
       taking down content from the Y ouTube
       website.

212. On February 2,2007, Maxcy agreed to                           Hohengarten i1273 & Ex. 383,
    speak to a technical team at Viacom about                      VIAl7716283, at VIA17716284-85.
    the new takedown tool by phone on
    February 5, 2007.

213.0n February 5, 2007, Maxcy cancelled the                       Hohengarten i1273 & Ex. 383,
    scheduled conference call with Viacom's                        VIAI7716283, at VIAI7716283.
    technical team and informed Adam Cahan
    that Defendants would not provide Viacom
    with access to the new takedown tool
       without a content partnership deaL.


214.0n February 6,2007, instead of                providing        Hohengarten i195 & Ex. 92, GOOOOl-
       Viacom with access to the new takedown                      00746418, at GOOOOI-00746418.
       tool, Maxcy provided Viacom with access
       to YouTube's Content Verification                           Hohengarten i196 & Ex. 93, GOOOOl-
       Program, a system that had been in place                    00751570, at GOOOOI-0075l570.
       for nearly a year and allowed content
       owners to check boxes to designate                          Hohengarten i197 & Ex. 94, GOOOOl-
       individual videos for take down.                            00869300, at GOOOOl-00869300.

                                                                   See also Hohengarten i1394 & Ex. 357
                                                                   (Declaration of Zahavah Levine dated
                                                                   January 5,2007) at i114.

                                                                   See also Hohengarten i1309 & Ex. 281
                                                                   (Y ouTube page entitled "Content

                                                              48
                                                  Verification Program").

                                                  See also Hohengarten i131 0 & Ex. 282
                                                  (Y ouTube "Copyright Infringement
                                                  Notification" page lìnked to from
                                                  Y ouTube "Content Verification
                                                  Program" page as "instructions" for
                                                  submitting "removal requests" through
                                                  Y ouTube' s Content Verification
                                                  Program).

215.The Content Verification Program is           Hohengarten i1394 & Ex. 357
    separate from Google's audio and video        (Declaration of Zahavah Levine dated
    fingerprinting tools and does not include     January 5,2007) at i114 ("We have
    access to those tools.                        even created a content verification
                                                  program. . . that enables content
                                                  owners to search for their content on the
                                                  site. The tool allows content owners to
                                                  easily notify us that they wish specific
                                                  content to be removed simply by
                                                  checking a box.").

                                                  Hohengarten i13 1 8 & Ex. 388
                                                  (Y ouTube page entitled "Y ouTube
                                                  Content ID System") (distinguishing
                                                  "content verification program" from
                                                  "audio ID" and "video ID").

                                                  Hohengarten i1309 & Ex. 281
                                                  (Y ouTube page entitled "Content
                                                  Verification Program") (describing
                                                  content verification program).

                                                  Hohengarten i114 7 & Ex. 144
                                                  GOOOO 1-0 1511226, at GOOOO 1-
                                                  01511226.

216.In a February 15, 2007 email, Google vice     Hohengarten i1147 & Ex. 144,
    president of content partnerships David Eun   GOOOO 1-0 1511226, at GOOOO 1-
    stated that Y ouTube' s "CYC tools,"          01511226.
    including an "Audio fingerprinting system
    whereby the content partner can send
    'reference fingerprints' to Audible Magic's
    database," "are now live as well and are
    only offered to partners who enter into a


                                            49
    revenue deal with us."

217.In a February 16, 2007 email, Google Vice      Hohengarten i120 1 & Ex. 382,
    President and General Counsel Kent             GOOOOI-08050272, GOOO01-
    Walker informed Viacom General Counsel         08050272.
    Michael Fricklas and NBC General Counsel
    Rick Cotton that although Y ouTube was         Hohengarten i1371 & Ex. 337 (K.
    responding to takedown notices and had         Walker Dep.) at 8:2-9:23 (testifying to
    implemented "automated filtering" in the       Kent Walker's job title).
    fonn of "a unique hash" that "block( s J any
    attempt to re-upload (J identical video
    files," Y ouTube had agreed to provide
    "audio fingerprinting technology services"
    only to a "handful of partners," and would
    not provide audio fingerprinting to Viacom
    or   NBC.




218. Instead of agreeing to provide Viacom and     Hohengarten i120 1 & Ex. 382,
    NBC with audio fingerprinting, Walker          GOOOOI-08050272, at GOOO01-
    instead offered to speak with Viacom and       08050272.
    NBC about possibly providing them with
    access to a "metadata search tool" that
    enables users to "define search tenns via
    XML feeds and automatically and regularly
    receive search results matching the defined
    search tern1s."

219.0n June 28,2007 Donald Verrì1i, then a         Hohengarten i1406 & Ex. 369 (2007-
    partner at Jenner & Block, counsel for         06-28 Verrì1i to Ouweleen and Kramer)
    Viacom, sent a letter to Mark Ouweleen of      at 1-2.

    Bartlìt Beck Herman Palenchar & Scott
    LLP and David Kramer of    Wilson Sonsini
    Goodrich & Rosati, counsel for Defendants.
    The letter highlìghted ongoing infringement
    on Y ouTube of many Viacom works,
    reiterated that Viacom had not authorized
    the upload of these works to Y ouTube, and
    demanded their removaL.

220.0n June 29,2007 Mark Ouweleen                  Hohengarten i1407 & Ex. 370 (2007-
    responded to Donald Verrì1i's June 28,         06-29 Ouweleen to Verrilli) at 1-2.
    2007 letter. In his response Ouweleen
    represented that Y ouTube would not use a
    lìst of Via com works to locate future
    infringing videos on Y ouTube and stated:

                                              50
       "If in the future someone posts a video
       Paramount claims to infringe a copyright on
       one of those movies, and Paramount would
       lìke it removed, Paramount can use the
       Content Verification Program tools or send
       a DMCA takedown notice." The letter did
       not offer Viacom access to any digital
       fingerprinting technology or any YouTube-
       provided tool other than the Content
       Verification Program tool.

221.0n February 20,2008, Google executed an           Hohengarten i198 & Ex. 95, GOOOOl-
       agreement with Viacom under which              02244041, at GOOOO 1-02244041.
       Google was, for the first time, oblìgated to
       implement digital fingerprinting to protect
       against infringement of Viacom' s
       copyrighted works on Y ouTube.

222.   Defendants did not implement digital           Hohengarten i13 & Ex. 2 (Solow Decl.
       fingerprinting to prevent the infringement     i1i129).
       of Viacom' s copyrighted works on the
       YouTube website until May 2008.




223.   Beginning in April       2006, the Motion      Hohengarten i1367 & Ex. 333 (Garfield
       Picture Association of America ("MP AA"),      Dep.) at 14:14-15:4,15:10-12 ("there
       an organization that advocates for all movie   was a lot of copyrighted content on the
       studios, including Paramount Pictures          site that was owned or controlled by the
       Corporation, engaged in negotiations with      motion picture studios").
       YouTube in order to obtain YouTube's
       cooperation in preventing infringement of      Hohengarten i1383 & Ex. 349
       the copyrighted works of       the MPAA's      (Robinson Dep.) at 23:12-24:10
       members, including Paramount.                  (testifying that the MPAA represents
                                                      movie studios, including Paramount).

224. The MP AA was represented in the               Hohengarten i1367 & Ex. 333 (Garfield
       negotiations by its Executive Vice President Dep.) at 13:16-15:4.
       and Chief Strategic Offcer.

225.The negotiations between the MPAA and Hohengarten i1367 & Ex. 333 (Garfield
    YouTube were about encouraging YouTube Dep.) at 14:19-15:4 ("The discussion

                                                 51
       to remove infringing content belonging to      was about encouraging Y ouTube to do
       MP AA members, and "relatedly integrating      two things: deal with the content that
       filtering software that would address that     we identified on the site that was
       copyrighted content."                          copyrighted, infringement content from
                                                      the motion picture studios; and two, and
                                                      relatedly integrating filtering software
                                                      that would address that copyrighted
                                                      content").

226.   After months of discussions, YouTube           Hohengarten i1367 & Ex. 333 (Garfield
       informed the MP AA that it refused to work     Dep.) at 28:2-30:3,53 :4-7 ("for those
       with the MP AA to utilìze or even test         companies who were not and did not
       digital fingerprinting and filtering           develop a lìcensing agreement with
       technologies because the rampant piracy on     Google, they weren't going to be doing
       Y ouTube was acting as a "major lure" for      this sort of a pilot initiative or
       YouTube's users, drawing them to the site.     filtering") .

227.After Google's acquisition of       Tube was
                                      You             Hohengarten i1341 & Ex. 307,
       announced, on October 13, 2006, the            MPAAOI2777, at MPAA012777.
       MP AA sent a written proposal to
       Defendants callng for cooperation and        Hohengarten i1367 & Ex. 333 (Garfield
       testing of filtering technologies, including Dep.) at 32: 15-34:2.
       the technology of a company called Audible
       Magic; the MP AA agreed to pay for the
       test.

228.0n November 9,2006, the MPAA                      Hohengarten i1342 & Ex. 308,
    transmitted another written proposal to           MPAAOI2806, at MPAA012806.
    Defendants calling for cooperation and
    testing of filtering technologies, including      Hohengarten i1367 & Ex. 333 (Garfield
       Audible Magic technology; the MP AA            Dep.) at 41:14-46:25.
       again agreed to pay for the test.

229.   Google did not respond to the MPAA's           Hohengarten i1367 & Ex. 333 (Garfield
       proposal until early 2007, when Google         Dep.) at 52:7-53:7.
       rejected cooperation with the MP AA and its
       member studios, and rejected the
       deployment of filtering to prevent the
       uploading of the studios' works in the
       absence of the studios executing a licensing
       and revenue sharing agreements with
       Google.




                                                52
iv. DEFENDANTS' DIRECT FINANCIAL BENEFIT FROM INFRINGEMENT

      ., '1.1'                 m             m'                           'T ('
                 '-       OUl uoes                 -0'             "
                                                              iII::ritv            Of

                      T T T'                                              n. -1.
                               i
 230.A draft 2007 strategy document from                 Hohengarten i11 07 & Ex. 104,
     Google's company wide monetization team             G00001-00330654, at G00001-
     noted that "pornographic and copyright              00330658.
     infringed content" were "among the
     primary drivers of You Tube traffic"; the
     document further noted that "(b Jy
     developing and (sic J audience following the
     users first, Y ouTube has created advertiser
     and monetization value."

 231. In a draft July 2006 presentation, Y ouTube        Hohengarten i11 08 & Ex. 105,
     co-founder Chad Hurley stated that                  G00001-05164894, at G00001-
     Y ouTube "provide( s J the best experience          05164894.
     on the Intemet for both user-generated and
     professional content," and he described
     YouTube's growth in tenns ofthe growth
     in the number of         videos being watched
     every day, the number of         unique users on
     Y ouTube, and the "amount of time each of
     the 20M users spends daily on YouTube."

 232.Wendy Chang, a Google finance manager,              Hohengarten i1354 & Ex. 320 (Chang
     stated in her deposition that "Advertisers          Dep.) at 7:18-10:3 (testifying to Wendy
     want eyeballs. . . . so you can't make              Chang's job title), 134:3-7.
     money from the advertisers unless you have
     the users, and you're only going to have --
     have users if you have the right content."

 233.In notes from a meeting that occurred on            Hohengarten i11 09 & Ex. 106,
     October 12,2006, Google executive Susan             G00001-00330681, at G00001-
     Wojcicki stated: "Interesting lesson from           00330682.
     Y ouTube and Google Print, we always need
     to be able to rely on DMCA . . . Focus on
     the users and get the traffic. . .. Be
     comprehensive: index everything. . .
     YouTube as well--opt out, DMCA
     afterward for takedown . . . Then you have
     audience, and monetization wì1 follow."

 234.In her deposition, Google finance manager           Hohengarten Decl. i1354 & Ex. 320
     Wendy Chang agreed with the statement               (Chang Dep.) at 138:15-139:12.

                                                  53
       that "Then you have an audience and
       monetization will follow," adding that the
       three core elements of You Tube's business
       model are "the audience, the content, and
       the monetization."

235.By October 2006, when Google's board of                            Hohengaiien i1324 & Ex. 293, CSSU
    directors approved the acquisition of                              003560, at CSSU 003565-66.
       Y ouTube, the number of video views per
       month on Y ouTube had grown to 180
       mì1ion.



       " If          .                                   ~.         . A'   ..
                         '-      ouTube's                 I
                                                               '-

                              T T ,.
                                       .
                                            ,                                         ~,
236.In his deposition, YouTube director of                             Hohengarten i1350 & Ex. 316 (B.
    finance Brent Hurley stated that YouTube's                         Hurley Dep.) at 53:4-56:4.
    "primary" business model was an
    advertising based business model and that
    the goal of such a business model is: "you
    get traffc, people come to you, the site, and
    then you can insert ads onto those pages
    and -- and earn revenue from those ads."

237.As a result of               Go    ogle's acquisition of           Hohengarten i1400 & Ex. 363 (Google
       Y ouTube, Y ouTube director of finance                          Inc., S-3ASR Registration Statement
       Brent Hurley received Google shares worth                       (February 7,2007)) at 5 (page numbers
       approximately $10.74 million.                                   at bottom center) (showing 22,334
                                                                       shares issued to Brent Hurley).

                                                                       Hohengarten i1306 & Ex. 278
                                                                       (screenshot of Google's finance
                                                                       webpage showing that the high price for
                                                                       Google shares on November 13, 2006
                                                                       was $481.03).

238.In a January 5,2007 declaration, YouTube                           Hohengarten i1393 & Ex. 356
       co-founder Steve Chen stated that                               (Declaration of Steve Chen dated
       "Y ouTube earns revenue through the                             January 5,2007) at i119.
       display of banner advertising on pages
       throughout our website. At various times,
       ads have appeared, for example, on our
       homepage, on pages displaying thumbnail
       images of clips responsive to users' search

                                                               54
    queries, on pages displaying the most
    popular (or highest rated) clips for the day,
    and on 'watch pages. '"

239.In December 2005, YouTube began earning         Hohengarten i111 0 & Ex. 107,
    advertising revenue from banner                 G00001-00633965, at GOOO01-
    advertisements displayed across the             00633965.
    Y ouTube website.
                                                    Hohengarten i1111 & Ex. 108,
                                                    GOOOOI-05920388, at GOOO01-
                                                    05920388-89.

240.Google's 2007 Annual Report stated "We          Hohengarten i1315 & Ex. 287 (Google
    recognize as revenue the fees charged           2007 Annual Report) at 40.
    advertisers each time an ad is displayed on
    the Y ouTube site."

241.From early 2006 until January 2007,             Hohengarten i1382 & Ex. 348 (Reider
    advertisements appeared on the "watch           Dep.) at 50:23-53:5; 54:24-25.
    page" on Y ouTube for substantially all
    videos.                                         Hohengarten i1346 & Ex. 312 (C.
                                                    Hurley Dep.) at 226:5-14.

                                                    Hohengarten i1350 & Ex. 316 (B.
                                                    Hurley Dep.) at 151 :1-23.

                                                    Hohengarten i1112 & Ex. 109,
                                                    G00001-00763354, at GOOO01-
                                                    00763364-76.

                                                    Hohengaiien i1387 & Ex. 353 (Seth
                                                    Dep.) at 25:18-26:15.

                                                    Hohengarten i1111 & Ex. 108,
                                                    G00001-05920388, at GOOO01-
                                                    05920388-89.

                                                    Hohengarten i1398 & Ex. 361
                                                    (Defendants' Reponses and Objections
                                                    to Plaintiffs' Second Set of
                                                    Interrogatories, Interrogatory No.1) at
                                                    7.

242. The "watch page" is the page on the            Hohengaiien i1346 & Ex. 312 (C.
    Y ouTube website where a user views a           Hurley Dep.) at 113:25-114:6.
    video.


                                              55
243.In an October 7,2006 email from YouTube         Hohengarten i11 i 3 & Ex. 110,
       director of finance Brent Hurley to Google   G00001-00658376, at GOOOOl-
       executive Sean Dempsey and Credit Suisse     00658376.
       managing director Stonn Duncan, Brent
       Hurley stated "Yes, we are running ROS       Hohengarten i1350 & Ex. 316 (B.
       ads on both the search, watch and browse     Hurley Dep.) at 155:21-157:16.
       pages."
                                                    Hohengarten '1 362 & Ex. 328 (Duncan
                                                    30(b)(6) Dep.) at 10:18-11:10
                                                    (testifying to Storm Duncan's job title).

244.A "run of site" advertisement on YouTube        Hohengarten i1382 & Ex. 348 (Reider
    is an advertisement the placement of which      Dep.) at 282:20-283:5.
    is not guaranteed to the advertiser, and
    which Y ouTube can place anywhere on
    YouTube at YouTube's discretion.

245.Credit Suisse's October 9,2006                  Hohengarten i1324 & Ex. 293, CSSU
    presentation to Google's board of directors     003560, at CSSU 003570.
    stated that Y ouTube watch pages
    constituted "45% of   total page views," that
    "run of site ads" ran on YouTube's search
    and watch pages, and that "sponsored
    advertising" ran on YouTube's home page.

246.Credit Suisse's October 9, 2006                 Hohengarten i1324 & Ex. 293, CSSU
    presentation to Google's board of directors     003560, at CSSU 003570 (estimating
    estimated that in 2007 there would be           280 billon total page views, 45% from
    approximately 126 billion Y ouTube watch        watch pages).
    page views in 2007.

247.   Prior to January 2007, when a viewer         Hohengarten i1284 & Ex. 256,
       watched an infringing clip taken from        VIA14375466, at VIA14375466.
       Viacom's hit program "South Park," an
       advertisement appeared next to the video
       and Y ouTube earned revenue from that
       advertising.

248.In January 2007, YouTube stopped                Hohengarten i1398 & Ex. 361
    advertising on substantially all watch pages.   (Defendants' Reponses and Objections
                                                    to Plaintiffs' Second Set of
                                                    Interrogatories, Interrogatory No.1) at 7
                                                    ("(AJdvertisements. . . on watch pages
                                                    associated with user-uploaded video
                                                    clìps . . . ceased to appear on or about
                                                    January 1, 2007").


                                               56
                                                    See also infra SUF i1250
249. From January 2007 forward, Y ouTube has        Hohengarten i1398 & Ex. 361
     advertised only on those watch pages           (Defendants' Reponses and Objections
    displaying content belonging to one of          to Plaintiffs' Second Set of
    YouTube's "content partners."                   Interrogatories, Interrogatory No.1) at 7
                                                    ("( A Jdvertisements . . . on watch pages
                                                    associated with user-uploaded video
                                                    clips. . . ceased to appear on or about
                                                    January 1,2007").


                                                    Hohengarten i1382 & Ex. 348 (Reider
                                                    Dep.) at 50:23-54:25.

                                                    See infra SUF i1250.
250.A November 30, 2006 email from Google           Hohengarten i1114 & Ex. 111,
    sales director Suzie Reider to Google           GOOOOI-02656593, at GOOOOl-
    advertising executive Tim Annstrong             02656593.
    stated, "A major decision in the works that
    you should be aware of -- for legal reasons
    (that I don't fully understand what has
    changed, and our GC wì1 be back in SF on
    Monday to articulate) all ads/monetization
    on the watch pages for user generated
    content wì1 need to come down. This wì1
    have a tremendous impact on inventory."

251. During the period when Y ouTube was            Hohengarten i1284 & Ex. 256,
    advertising on substantially all watch pages,   VIA14375466, at VIA14375466.
    advertisements regularly appeared on watch
    pages for Viacom's content, including           Hohengarten i1276 & Ex. 248,
    works in suit in this action.                   VIA14375471, at VIA14375471.

                                                    Hohengarten i1277 & Ex. 249,
                                                    VIA14375444, at VIA14375444.

                                                    Hohengarten i1278 & Ex. 250,
                                                    VIA14375526, at VIA14375526.

                                                    Hohengarten i1279 & Ex. 251,
                                                    VIA14375557, at VIA14375557.

                                                    Hohengarten i1280 & Ex. 252,
                                                    VIA14375446, at VIA14375446.

252.Before and after January 2007, Defendants       See supra SUF i1238.
    sold ads appearing on the Y ouTube


                                             57
       homepage.                                      Hohengarten i1366 & Ex. 332 (Eun
                                                      Dep.) at 315:14-316:14.

                                                      Hohengarten i1112 & Ex. 109
                                                      G00001-00763354, at GOOO01-
                                                      00763364-76 (chart of advertising
                                                      revenue lìsting advertisements by site
                                                      page, referring to "home right" as the
                                                      right side ofYouTube's home page).

                                                      Hohengarten i1350 & Ex. 316 (B.
                                                      Hurley Dep.) at 154:25-155:4.

                                                      Hohengarten i1354 & Ex. 320 (Chang
                                                      Dep.) at 185:17-185:25.

                                                      Hohengarten i1375 & Ex. 341
                                                      (Kordestani Dep.) at 174:14-175:12.

                                                      Hohengarten i1115 & Ex. 112,
                                                      G00001-02338150, at GOOOOl-
                                                      02338170.

253.The home page on YouTube is the page              Hohengarten i1379 & Ex. 345 (Maxcy
    that first appears when a user accesses           Dep.) at 43:9-11.
    www.youtube.com over the Internet.

254.   Before and after January 2007, Defendants      Hohengarten i1354 & Ex. 320 (Chang
       sold ads that appear on Y ouTube search        Dep.) at 185:5-186:10.
       results pages.
                                                      Hohengarten i1376 & Ex. 342 (Levine
                                                      Dep.) at 271:11-18.

                                                      Hohengarten i1111 & Ex. 108,
                                                      G00001-05920388, at GOOOOl-
                                                      05920388-89.

                                                      Hohengarten i1115 & Ex. 112,
                                                      G00001-02338150, at GOOOOl-
                                                      02338170.

255.Search results pages on YouTube are the           Hohengarten i1346 & Ex. 312 (C.
    pages where Y ouTube displays results of          Hurley Dep.) at 114:23-115:8.
       user searches using Y ouTube' s search
       function.                                      Hohengarten i1313 & Ex. 285
                                                      (screenshot of search results pages).

                                                 58
                                                   Hohengarten i1393 & Ex. 356
                                                   (Declaration of Steve Chen dated
                                                   January 5,2007) at i15.

256.Advertisements on Y ouTube search results      Hohengarten i1116 & Ex. 113,
    pages were the largest revenue source for      GOOOOI-02439050, at GOOO01-
    Y ouTube in 2007.                              02439050-53.

                                                   Hohengarten i1117 & Ex. 114,
                                                   GOOOOI-00255239, at GOOO01-
                                                   00255240.

                                                   Hohengarten i1118 & Ex. 115,
                                                   GOOOO 1-0023 7661, at GOOOO 1-
                                                   00237662.

257.A Y ouTube monetization planning               Hohengarten i1119 & Ex. 116,
    document from May 2007 prepared for            GOOOOI-01295801, at GOOOOl-
    Google CEO Eric Schmidt states: "From a        01295802.
    monetization perspective, the largest
    opportunity for revenue resides on the
    YouTube search pages."

258. YouTube enables advertisers to target their   Hohengarten i1376 & Ex. 342 (Levine
    advertisements on YouTube's search pages       Dep.) at 273:15-274:25.
    to the search tenns entered by a Y ouTube
    user.                                          Hohengarten i1314 & Ex. 286.

                                                   Hohengarten i1382 & Ex. 348 (Reider
                                                   Dep.) at 199:24-200:12.

                                                   Hohengarten i1378 & Ex. 344 (Liu
                                                   Dep.) at 24:3-26: 17.

259.When a YouTube user searches YouTube           Hohengarten i1378 & Ex. 344 (Liu
    for Viacom content, Y ouTube displays          Dep.) at 24:3-26:17; 181:16-182:20;
    advertising next to the search results for     185 :24-186:7.
    that content.
                                                   Hohengarten i1287 & Ex. 259,
                                                   VIA14375204, at VIA14375204.

                                                   Hohengarten i1313 & Ex. 285, at 3, 7,
                                                   9.

                                                   Hohengarten i1288 & Ex. 260,

                                             59
                                                 VIA14375664, ~ VIA14375664.

                                                 Hohengarten i1289 & Ex. 261,
                                                 VIA14375611, at VIA14375611.

                                                 Hohengarten i1290 & Ex. 262,
                                                 VIA14375671, at VIA14375671.

                                                 Hohengarten i1291 & Ex. 263,
                                                 VIA14375620, at VIA14375620.

                                                 Hohengarten i1292 & Ex. 264,
                                                 VIA14375635, at VIA14375635.

                                                 Hohengarten i1293 & Ex. 265,
                                                 VIA14375638, at VIA14375638.

260.Before and after January 2007, Defendants    Hohengarten i1393 & Ex. 356
    also sold advertisements on the browse       (Declaration of Steve Chen dated
    pages of the Y ouTube website.               January 5, 2007) at i119.

                                                 Hohengarten i1112 & Ex. 109,
                                                 G00001-00763354, at GOOO01-
                                                 00763364.

                                                 Hohengarten i1350 & Ex. 316 (B.
                                                 Hurley Dep.) at 152:21-152:24.


                                                 Hohengarten i1113 & Ex. 110,
                                                 GOOOOI-00658376, at GOOOOl-
                                                 00658376.

261. The browse pages on Y ouTube are the        Hohengarten i1363 & Ex. 329 (Dunton
    pages where Y ouTube suggests videos for     Dep.) at 79:5-10.
    users to watch, including "Most Viewed."
    "Top Favorites," "Most Discussed,"           Hohengarten i1346 & Ex. 312 (C.
    "Recent Videos," and "Top Rated."            Hurley Dep.) at 115:19-116:9.

262.Before and after January 2007, YouTube       Hohengarten i1115 & Ex. 112,
    has also sold advertising on the video       GOOOOI-02338150, at GOOO01-
    upload page, the page where users upload     02338182.
    videos to Y ouTube.
                                                 Hohengarten i1120 & Ex. 117,
                                                 G00001-08030008, at GOOO01-
                                                 08030009.



                                            60
263.A "house advertisement" on YouTube is an        Hohengarten i1182 & Ex. 179,
    advertisement that appears on a Y ouTube        G00001-02034326, at GOOO01-
    page, promotes some other aspect of             02034326.
    Y ouTube, and directs the user to the
    corresponding Y ouTube page.

264. Even after Y ouTube decided to limit its use   Hohengarten i1182 & Ex. 179,
    of advertisements on watch pages,               G00001-02034326, at GOOO01-
    Y ouTube placed "house advertisements" on       02034326.
    watch pages, without lìmiting these
    advertisements to watch pages of                Hohengarten i1183 & Ex. 180,
    authorized content.                             G00001-06811230, at GOOO01-
                                                    06811230.

265.House advertisements have appeared on           Hohengarten i1286 & Ex. 258
    watch pages of  Via com-owned content that      (screenshot, taken September 14, 2009,
    was uploaded without Viacom's consent,          of    Tube watch page titled "Kanye
                                                         You

    including as recently as September 14,          West shits on Taylor Swift - 2009
    2009.                                           VMA's" showing a house
                                                    advertisement in the upper right corner).

                                                    Hohengarten i13 78 & Ex. 344 (Liu
                                                    Dep.) at 177:25-179:2 (testifying that
                                                    Liu Dep. Ex. 11 appears to be a
                                                    Y ouTube watch page and that the box
                                                    in the upper right corner containing the
                                                    text "Gundam 00" appears to be a house
                                                    ad for Y ouTube.com/shows).

266.From 2006 until today, if a user went to        See supra SUF i1i1238-241, 247, 251,
    Y ouTube looking for clips that infringe        252,254,256-261,265.
    Viacom's copyrights in popular shows such
    as "South Park," "The Daily Show With
    Jon Stewart," or "The Colbert Report,"
    either via YouTube's home page, search
    results page, or browse page, Y ouTube
    earned revenue from the ads served to that
    user on those pages.




                                             61
V. DEFENDANTS' RIGHT AND ABILITY TO CONTROL INFRINGEMENT




 267.YouTube's Terms of     Use have always           Hohengarten i1121 & Ex. 118,
        given Y ouTube sole discretion to remove      G00001-00421229, at G00001-
        any video from Y ouTube for any reason        00421231 (YouTubeTennsofUse,
        and to tenninate any Y ouTube user account    dated February 3, 2006 per metadata).
        for any reason.
                                                      Hohengarten i1122 & Ex. 119,
                                                      GOOOOI-02826891, at G00001-
                                                      02826893 (YouTube Tenns of Use,
                                                      dated March 14, 2006 per metadata).

                                                      Hohengarten i1123 & Ex. 120,
                                                      G00001-00824855, at G00001-
                                                      00824857 (YouTube Tenns of    Use,
                                                      dated July 26, 2006 per metadata).

                                                      Hohengarten i1124 & Ex. 121,
                                                      GOOOOI-02829970, at GOOOOl-
                                                      02829972 (YouTube Terms of   Use,
                                                      dated August 18,2006 per metadata).

                                                      Hohengarten i1196 & Ex. 372
                                                      GOOOO 1-02316969, at GOOOO 1-
                                                      02316970 (YouTube Terms of     Use,
                                                      dated November 20, 2006).

                                                      Hohengarten i1394 & Ex. 357
                                                      (Declaration of Zahavah Levine dated
                                                      January 5, 2007) at Ex. A i15.C.

                                                      Hohengarten i1127 & Ex. 124,
                                                      GOOOOI-07056597, at G00001-
                                                      07056600 (YouTube Terms of Use,
                                                      dated February 26,2007 per metadata).

                                                      Hohengarten i1128 & Ex. 125,
                                                      GOOOOI-01232697, at GOOOOl-
                                                      01232700 (YouTube Terms of     Use,
                                                      dated June 19,2007 per metadata).

 268.In her deposition, YouTube content review Hohengarten i1368 & Ex. 334 (Gì1ette
        manager Heather Gillette testified that "The Dep.) at 110:25-111:3.

                                                 62
       tenns of  use states specifically that we have
       the right to remove content at our sole
       discretion for any reason whatsoever."

269.Untillate November 2005, just before                Hohengarten i1350 & Ex. 316 (B.
    YouTube's offcial launch, YouTube                   Hurley Dep.) at 66:17-67:3,137:7-12,
    employees reviewed thumbnail images for             164:3-12.
       every video uploaded to Y ouTube and
       removed videos that violated YouTube's           Hohengarten i119 & Ex. 16, GOOOO 1-
       terms of use, including for reasons of           00629095, at GOOOOI-00629095.
       violence, pornography, and copyright
       infringement.

270.After November 2005, YouTube employees              Hohengarten i13 50 & Ex. 316 (B.
    stopped reviewing thumbnails of every               Hurley Dep.) at 66:17-67:3,164:9-12.
       video uploaded to Y ouTube.

271.0n November 24,2005, YouTube director               Hohengarten i119 & Ex. 16, GOOOO 1-
       of finance Brent Hurley instructed               00629095, at GOOOOI-00629095.
       Y ouTube employees to look for and
       remove some infringing material, such as         Hohengarten i1 350 & Ex. 316 (B.
       clips of "Family Guy, South Park, and full-      Hurley Dep.) at 81 :5-82:2.
       length anime episodes."

272.   Sporadically during 2005 and 2006,               Hohengarten i1l29 & Ex. 126,
       Y ouTube employees proactively searched          GOOOOI-02768034, at GOOO01-
       the Y ouTube site for infringing clips           02768034.
       belonging to certain content owners and
       removed thousands of such clips.                 Hohengarten i1368 & Ex. 334 (Gì1ette
                                                        Dep.) at 46:20-47:17,54:2-63:23,
                                                        72:24-73:7.

                                                        Hohengarten i1130 & Ex. 127,
                                                        GOOOOI-01027757, at GOOO01-
                                                        01027766.

                                                        Hohengarten i1363 & Ex. 329 (Dunton
                                                        Dep.) at 163:5-14.


                                                        Hohengarten i1376 & Ex. 342 (Levine
                                                        Dep.) at 211 :19-212:5.

                                                        Hohengarten i1385 & Ex. 351 (Schaffer
                                                        Dep.) at 97:25-100:13,104:25-106:6.

273.When it was in YouTube's interest to do so,         Hohengarten i1132 & Ex. 129,
       Y ouTube personnel manually screened             GOOOO 1-0443 1 78 7, at GOOOO 1-

                                                 63
narrow subsets of Y ouTube videos to           04431787 (describing the "Y ouTube
ensure that they did not infringe copyright.   Director" program).

                                               Hohengarten i1133 & Ex. 130,
                                               G00001-00509640, at G00001-
                                               00509640 (showing that YouTube has
                                               proactively reviewed videos uploaded
                                               to Director Accounts for copyright
                                               infringement).

                                               Hohengarten i1134 & Ex. 131,
                                               GOOOOI-00222797, at G00001-
                                               00222797 (same).

                                               Hohengarten i1135 & Ex. 132,
                                               GOOOOI-02754251, at G00001-
                                               02754251 (describing the "User Partner
                                               Program").

                                               Hohengarten i179 & Ex. 76, G00001-
                                               03037036, at GOOOOI-03037043-44
                                               (March 2007 Monetization Strategy
                                               presentation noting that the User Partner
                                               Program used "fingerprinting and
                                               manual-review" to "( e Jnsure that only
                                               original content can be monetized.").

                                               Hohengarten i1136 & Ex. 133,
                                               GOOOOI-02027618, at G00001-
                                               02027618.

                                               Hohengarten i1185 & Ex. 182,
                                               GOOOOI-02866493, at G00001-
                                               02866501, GOOOOI-02866503
                                               (YouTube presentation about the User
                                               Partner Program noting that in
                                               considering applicants for the program
                                               YouTube employees should "(lJook for
                                               TV watermarks and other indicators,"
                                               and detennine whether the user has
                                               videos "that are in a prohibited
                                               category").

                                               Hohengarten i1187 & Ex. 184,
                                               GOOOOI-06361166, at GOOOOl-
                                               06361173, G00001-06361175.

                                         64
                                                         Hohengarten i1387 & Ex. 353 (Seth
                                                         Dep.) at 17:17-24:11,34:4-35:12,
                                                         54:11-56:21,61:2-18,68:5-11
                                                                                      the User
                                                         (describing several aspects of

                                                         Partner Program, including human
                                                         review).

                                                         Hohengarten i1131 & Ex. 128,
                                                         G00001-01535521, at G00001-
                                                         01535521 (content review manager
                                                         Heather Gì1ette stating: "we pro-
                                                         actively screen any videos and/or users
                                                         that we are highlighting on our 'honors'
                                                         pages (most watched, most subscribed,
                                                         most discussed, etc.) and remove, or
                                                         restrict these videos/users such that they
                                                         won't be on the site at all, or they won't
                                                         be highlìghted if we deem the video as
                                                         needing to be restricted.").




274. YouTube employed a technology called                Hohengarten i1393 & Ex. 356
    hash-based identification to prevent a user          (Declaration of Steve Chen dated
       from uploading a video clìp to Y ouTube           January 5, 2007) at i1l2.
       that is exactly identical in every respect to a
       video clips that YouTube had previously
       removed pursuant to a takedown notice.

275.   Hash-based identification cannot prevent          Hohengarten i1393 & Ex. 356
       re-upload of the same infringing content to       (Declaration of Steve Chen dated
       Y ouTube if the second video clip differs in      January 5,2007) at i112.
       even the slìghtest degree (e.g., in length or
       resolution) from the first clip that was          Hohengarten i1355 & Ex. 321
       removed.                                          (Chastagnol Dep.) at 56:2-22.

                                                         Hohengarten i1376 & Ex. 342 (Levine
                                                         Dep.) at 254:24-255:11.
276.And even this minimal protection against             Hohengaiien i1385 & Ex. 351 (Schaffer
    infringement generally was triggered only if         Dep.) at 132:17-20.


                                                  65
    a copyright owner first sent a takedown
    notice.                                         Hohengarten i113 7 & Ex. 134
                                                    G00001-00561601, at G00001-
                                                    00561605.




     y All I   Jrlt- ':: Abilìtv
                                      ,-..
                                   ~ywUlU -0 to              ()llt ~ ~.   '-


                     T T ,                                          T" ,
                                                                    .L
                        i
277.YouTube has always had the abilìty to find      See SUF infra i1i1278, 280, 300, 302,
    infringing clips after they are made            305; supra i1i1112, 113, 139,
    available for viewing on the Y ouTube
    website by searching for keywords
    associated with copyrighted content.

278. Viacom and other copyright owners use          Hohengarten i1369 & Ex. 335 (Housley
    keyword searching to find videos that           Dep.) at 36:22-37:8.
    infringe their copyrights on Y ouTube in
    order to send takedown notices.                 Hohengarten i13 & Ex. 2 (Solow Decl.
                                                    i12).

279.However, until mid-2008, copyright holders Hohengarten i113 6 & Ex. 133
    such as Viacom could search for infringing (Y ouTube Help page entitled "Solve a
    videos on YouTube only after YouTube       Problem: Video not in search").
    made the videos publicly searchable,
    resulting in inevitable delay before the   Hohengarten i1138 & Ex. 135,
    copyright holders can search for and find  G00001-08643428, at G00001-
    the infringing content and then send a     08643428.
    takedown notice.

280. Y ouTube has always had the abilìty to         Hohengarten i1347 & Ex. 313 (Karim
    apply keyword searching or filtering            Dep.) at 119:4-121:24 (testifying that
    (human or automated) to identify and block      Y ouTube could have reviewed videos
    infringing videos before they are made          before they were made publìcly
    available for viewing on Y ouTube.              viewable, that it would have been a very
                                                    simple change to do so, and that it was
                                                    very lìkely that they did do so for some
                                                    time).

                                                    Hohengarten i1256 & Ex. 238,
                                                    JK00009130, at JK00009130 ("(WJe
                                                    can always approve videos first
                                                    BEFORE they are shown anywhere,
                                                    that's a one-lìne code change.").


                                               66
                 R pfii"fll       ~,
                                   -i- e'Y
                                              . .~.
                                             l'g1T" I r 1l1~C;1               LU
                                                                                               ~.
                                                                                                    co

                T T T
                              .                                                              - ..
                                                                                             L
281.A digital fingerprint is a software-generated                 Hohengarten i1l40 & Ex. 136,
    digital identifier of the content in the audio                G00001-02493069, at G00001-
    and/or video track of an audio-visual work.                   02493070-71.

                                                                  Hohengarten i1370 & Ex. 336 (Ikezoye
                                                                  Dep.) at 15:15-16:11.


                                                                  Hohengarten i1395 & Ex. 358, at i1i13-
                                                                  4.

                                                                  Hohengarten i1396 & Ex. 359, at i1i14-
                                                                  5.

282.Digital fingerprinting service providers                      Hohengarten i1370 & Ex. 336 (Ikezoye
    such as Audible Magic maintain reference                      Dep.) at 23:13-19.
    databases of the digital fingerprints of
    copyrighted works.

283.When a video is uploaded to a website such                    Hohengarten i1370 & Ex. 336 (Ikezoye
    as Y ouTube, digital fingerprinting                           Dep.) at 15:15-16:11.
    technology can take the digital fingerprint
    of the uploaded video and compare it to                       Hohengarten i1395 & Ex. 358, at i1i110-
    reference databases of fingerprints of                        12.
    copyrighted works to determine whether
    there is a match.                                             Hohengarten i1396 & Ex. 359, at i1i14-
                                                                  6,10, 15.


                                                                  Hohengarten i1355 & Ex. 321
                                                                  (Chastagnol Dep.) at 88:18-25.

                                                                  Hohengarten i1399 & Ex. 362 (July 27,
                                                                  2007 Status Conference Transcript) at
                                                                  17:2-5 ("(AJny video that gets uploaded
                                                                  basically gets filtered through the
                                                                  fingerprint database, and lìke the AFIS
                                                                  that the FBI has, and if               there's a hit,
                                                                  then within minutes the computer
                                                                  knows that and pulls it down.").


                                                       67
284. If there is a fingerprint match -- indicating         Hohengarten i1395 & Ex. 358, at i111.
    that the audio and/or video track of       the

    uploaded video matches a copyrighted work Hohengarten i1396 & Ex. 359, at i1i115-
    in whole or in part -- then a website such as 19.
    YouTube can automatically discard the
    upload or take another action, such as
    flagging the video for review by an
    employee.

285.Computers can readily accomplìsh this                  Hohengarten i1395 & Ex. 358, at i111.
    fingerprint matching function so that
    infringing videos never go live on the site.           Hohengaiien i1396 & Ex. 359, at i1i111-
                                                           12.

286.Audible Magic began providing audio                    Hohengarten i1370 & Ex. 336 (Ikezoye
    fingerprinting to clients in 2004.                     Dep.) at 11:15-19,109:14-25.

287.Audible Magic could have deployed its                  Hohengarten i1370 & Ex. 336 (Ikezoye
    audio fingerprinting services on Y ouTube              Dep.) at 109:22-110:22.
    as early as February 2005, when YouTube
    was founded, and April 2005, when the
    Y ouTube website was launched in beta
    fonn.

288.By February 2006, Audible Magic was                    Hohengaiien i1396 & Ex. 359, at i121.
    conducting over five million fingerprint
    match requests, or "look ups," a day and               Hohengarten i1370 & Ex. 336 (Ikezoye
    could easily have handled tens of      millions        Dep.) at 21:21-22:7.
    of such requests.

289.At no time in YouTube's history have                   Hohengarten i1324 & Ex. 293 CSSU
    anywhere close to five mì1ion videos been              003560, at CSSU 003561, CSSU
    uploaded to Y ouTube in a single day.                  003565 ("Current number of   videos

                                                           uploaded daily: 100,000").


                                                           Hohengaiien i1140 & Ex. 137,
                                                           GOOOOI-02930251, at GOOO01-
                                                           02930256 (stating that in March 2008
                                                           YouTube had "400,000+ uploads per
                                                           day").

290.Between 2006 and mid-2009, Audible                     Hohengaiien i1370 & Ex. 336 (Ikezoye
    Magic had approximately 30 website                     Dep.) at 13:5-14:13.
    customers, including video sites MySpace,
    Grouper, and Microsoft Soapbox, who                    Hohengarten i1383 & Ex. 349
    deployed Audible Magic's fingerprinting                (Robinson Dep.) at 61:13-62:7.
    technology to identify and block

                                                      68
       unauthorized audio or audiovisual content      Hohengarten i1343 & Ex. 309,
       on their respective sites.                     MPAA0011721, at MPAAOOll721.

                                                      Hohengarten i1143 & Ex. 140,
                                                      GOOOOI-09612201, at GOOO01-
                                                      09612201.

291.   Starting early in 2006, copyright owners       Hohengarten i1367 & Ex. 333 (Garfield
       urged Y ouTube to use fingerprinting           Dep.) at 14:1-28:12.
       technology, such as Audible Magic, to stop
       infringement.                                  Hohengarten i1337 & Ex. 304, AM
                                                      002090, at AM 002091.

292.0n October 5,2006, YouTube and Audible            Hohengarten i1144 & Ex. 141,
       Magic signed an agreement for Audible          G00001-03427120, at GOOOOl-
       Magic to provide audio fingerprinting          03427120.
       services to Y ouTube.

293.YouTube did not begin using Audible               Hohengarten i1142 & Ex. 139,
    Magic's audio fingerprinting service until        G00001-01950611, at GOOOOl-
       February 2007.                                 01950611.

                                                      Hohengarten i1370 & Ex. 336 (Ikezoye
                                                      Dep.) at 57:6-16.

                                                      Hohengarten i1145 & Ex. 142,
                                                      GOOOOI-02867502, at GOOO01-
                                                      02867502 ("Audible Magic - Audio
                                                      Fingerprinting. . . Platfonn went lìve
                                                      2/14").

294.From 2007 through the end of2009,                 Hohengarten i1374 & Ex. 340 (King
       Y ouTube used Audible Magic to check           30(b)(6) Dep.) at 96:22-97:3.
       every video uploaded to the Y ouTube site,
       but only against a lìmited set of audio and    See SUF infra i1i1295-298.
       audiovisual works specified by Y ouTube.

295.Audible Magic was capable of identifying          See SUF infra i1i1296-298.
    mì1ions of copyrighted works, but
       YouTube directed Audible Magic to lìmit        Hohengaiien i1370 & Ex. 336 (Ikezoye
       its searches to identifying only specific      Dep.) at 33:4-9, 48:18-22.
       content belonging to content owners who
       had agreed to licensing and revenue sharing    Hohengarten i1141 & Ex. 138,
       deals with Y ouTube.                           G00001-02604786, at GOOO01-
                                                      02604789-90.



                                                 69
                                                  Hohengarten i1144 & Ex. 141,
                                                  G00001-03427120, at GOOOOl-
                                                  03427122, G00001-03427124 (final
                                                  agreement between Y ouTube and
                                                  Audible Magic for Audible Magic's
                                                  audio fingerprinting services, defining
                                                  "Copyrighted Content Database" as
                                                  consisting "solely of the materials
                                                  pertaining to those Content Owners
                                                  designated by fYouTubeJ" (emphasis
                                                  added)).

                                                  Hohengarten i1146 & Ex. 143,
                                                  G00001-02493328, at GOOOOl-
                                                  02493328-29.

                                                  Hohengarten i1355 & Ex. 321
                                                  (Chastagnol Dep.) at 182: 19-186:19.

                                                  Hohengarten i1370 & Ex. 336 (Ikezoye
                                                  Dep.) at 64:15-66:6,79:4-16,80:15-
                                                  81:16,93:20-94:9.

                                                  Hohengarten i1146 & Ex. 143,
                                                  G00001-02493328, at GOOO01-
                                                  02493328-29.

                                                  Hohengarten i1355 & Ex. 321
                                                  (Chastagnol Dep.) at 182:19-186:19.

                                                  Hohengarten i1338 & Ex. 305,
                                                  AMOO 1241, at AMOO 1241-42.

296. Y ouTube also used Audible Magic to create   Hohengarten i1339 & Ex. 306,
    fingerprints of audio and audiovisual works   AM000917, at AMOO0917.
    belonging to content owners who had
    agreed to lìcensing and revenue sharing       Hohengarten i1370 & Ex. 336 (Ikezoye
    deals with Y ouTube, and then to search for   Dep.) at 65:20-66:14.
    those works on the Y ouTube site, but
    Y ouTube did not use this abilìty to          Hohengarten i13 74 & Ex. 340 (King
    fingerprint or search for content owned by    30(b)(6) Dep.) at 47:16-50:14.
    Viacom.
                                                  Hohengarten i1338 & Ex. 305,
                                                  GOOOOI-015ll226, at GOOO01-
                                                  01511226.



                                            70
                                                 Hohengarten i1142 & Ex. 139,
                                                 G00001-01950611, at GOOO01-
                                                 01950613 (noting that YouTube's
                                                 "( r J eference fingerprint database" was
                                                 populated only with partner-owned
                                                 content).

                                                 Hohengarten i1361 & Ex. 327
                                                 (Drummond Dep.) at 158:12-17,
                                                 159: 13-160: 18 (testifying that YouTube
                                                 would have been willing to use audio
                                                 fingerprinting on Viacom' s behalf if
                                                 Viacom was wì1ing to "work with us,"
                                                 defined as "provide (Y ouTube J with

                                                 (Viacom J content").

                                                 Hohengarten i1137 & Ex. 134,
                                                 G00001-00561601, at GOOOOl-
                                                 00561607-08, GOOO01-00561612-15.

                                                 Hohengarten i1148 & Ex. 145,
                                                 GOOOOl-02506828, at GOOO01-
                                                 02506828.0003, GOOO01-
                                                 02506828.0005.

                                                 Hohengarten i1149 & Ex. 146,
                                                 G00001-01202238, at GOOO01-
                                                 01202240-41.

                                                 Hohengarten i1375 & Ex. 341
                                                 (Kordestani Dep.) at 244: 13-23.

                                                 Hohengaiien i1348 & Ex. 314 (Schmidt
                                                 Dep.) at 156:3-24.


                                                 Hohengarten i1346 & Ex. 312 (C.
                                                 Hurley Dep.) at 271 :17-288:15.

297.YouTube used Audible Magic to block          Hohengarten i13 74 & Ex. 340 (King
    taken-down videos from being re-uploaded     30(b)(6) Dep.) at 67:10-68:15,70:22-
    to the site, but only 011 behalf of some     78:3,84:21-88:23,89:20-90:9,95:7-
    content owners who had entered               95:25.
    agreements with Y ouTube, and not on
    behalf of content owners who had not, such
    as Viacom.



                                           71
298.Even after Defendants began using Audible      Hohengarten i1201 & Ex. 382
    Magic fingerprinting on Y ouTube, they         G00001-08050272, at GOOOOl-
    refused requests by copyright owners to use    08050272.
    that technology to prevent infringement of
    any copyright owner's copyrights unless the    Hohengarten i1348 & Ex. 315 (Schmidt
    owner first granted Y ouTube a content         Dep.) at 156:3-24.
    lìcense and revenue sharing deaL.
                                                   Hohengarten i1346 & Ex. 312 (C.
                                                   Hurley Dep.) at 271:17-288:15.

299.In a September 2006 lìcensing and revenue-     Hohengarten i1191 & Ex. 188,
    sharing agreement, Y ouTube offered to use     G00001-09684752, at GOOOOl-
    digital fingerprinting to prevent the          09684765-66, GOOOO 1-09684803-05.
    infringement of copyrighted works owned
    by Warner Music Inc.                           Hohengarten i1 40 & Ex. 37, GOOOO 1-
                                                   01627276, at GOOOOI-01627276.



300'in a September 2006 lìcensing and revenue-     Hohengarten i1191 & Ex. 188,
     sharing agreement, Y ouTube offered to use    G00001-09684752, at GOOO01-
    metadata tag searching to prevent the          09684805-06.
    infringement of copyrighted works owned
    by Warner Music Inc.

301'in an October 2006 licensing and revenue-      Hohengarten i1190 & Ex. 187,
    sharing agreement, Y ouTube offered to use     G00001-09684647, at GOOOOl-
    fingerprinting to prevent the infringement     09684660-61.
    of copyrighted works owned by CBS
    Digital Media.                                 Hohengarten i1151 & Ex. 148,
                                                   GOOOOI-01870875, at GOOOOl-
                                                   01870876.

302'in an October 2006 licensing and revenue-      Hohengarten i1190 & Ex. 187,
    sharing agreement, Y ouTube offered to use     GOOOO 1-09684647, at GOOOO 1-
    metadata tag searching to prevent the          09684660.
    infringement of copyrighted works owned
    by CBS Digital Media.

303.In negotiations for a lìcensing and revenue-   Hohengaiien i1152 & Ex. 149,
    sharing agreement Y ouTube offered to use      GOOOOI-02826036, at GOOOOl-
    fingerprinting to prevent the infringement     02826039.
    of copyrighted works owned by Turner
    Broadcasting Inc. in October 2006.

304'in an October 2006 Memorandum of               Hohengarten i1189 & Ex. 186,
    Understanding, YouTube offered to use          GOOOO 1-09684681, at GOOOO 1-
    fingerprinting to prevent the infringement     09684705-08.

                                             72
    of copyrighted works owned by Sony BMG
    Music Entertainment.                            Hohengarten i1151 & Ex. 148
                                                    G00001-01870875, at GOOO01-
                                                    01870879.

305.In an October 2006 Memorandum of                Hohengarten i1189 & Ex. 186,
    Understanding, Y ouTube offered to use          GOOOO 1-09684681, at GOOOO 1-
    metadata tag searching to prevent the           09684705, GOOO01-09684709.
    infringement of copyrighted works owned
    by Sony BMG Music Entertainment.

306'in negotiations for a lìcensing and revenue-    Hohengarten i1197 & Ex. 373,
     sharing agreement Y ouTube offered to use      G00001-02502815, at GOOOOl-
     fingerprinting to prevent the infringement     02502819 (deal framework between
     of copyrighted works owned by The Walt         Y ouTube and The Walt Disney
     Disney Company in December 2006.               Company agreeing to provide audio
                                                    fingerprinting services).

307.In negotiations for lìcensing and revenue-      Hohengarten i1271 & Ex. 245,
    sharing agreements Y ouTube offered to use      VIA00727695, at VIA00727696.
    fingerprinting for Viacom in July 2006 and
    for Viacom's MTV Networks in February           Hohengarten i194 & Ex. 91, GOOOO 1-
    2007.                                           00984825, at GOOO01-00984837.

308'in negotiations for a lìcensing and revenue-    Hohengarten i1155 & Ex. 152,
     sharing agreement Y ouTube offered to use      GOOOOOI-02874326, at GOOOO01-
     fingerprinting to prevent the infringement     02874326.
     of copyrighted works owned by NBC
    Universal in February 2007.

309'in negotiations for a lìcensing and revenue-    Hohengarten i1156 & Ex. 153,
     sharing agreement Y ouTube offered to use      G00001-02240369, at GOOO01-
     fingerprinting to prevent the infringement     02240369.
     of copyrighted works owned by EMI in
     March 2007.                                    Hohengarten i1157 & Ex. 154,
                                                    GOOOOI-02524911, at GOOOOl-
                                                    02525000.

31 O.In negotiations for a licensing and revenue-   Hohengarten i1181 & Ex. 178,
    sharing agreement Y ouTube offered to use       GOOOOI-06147947, at GOOOOl-
    fingerprinting to prevent the infringement      06147947 (draft agreement between
    of copyrighted works owned by Universal         Y ouTube and Universal Music Group
    Music in June 2007.                             Recordings, Inc. dated October 6,
                                                    2006).

                                                    Hohengarten i1151 & Ex. 148,


                                              73
                                                   G00001-01870875, at GOOO01-
                                                   01870882.

                                                   See also Hohengarten i1158 & Ex. 155,
                                                   GOOOO 1-02241782, at GOOOO 1-
                                                   02241782 (amending October 6,2006
                                                   agreement).

311. The October 5, 2006 agreement between         Hohengarten i1144 & Ex. 141,
    Audible Magic and Y ouTube required            GOOOOI-03427120, at GOOOOl-
    YouTube to pay Audible Magic $200,000          03427122, GOOO01-03427126.
    in service fees for 2007 and $300,000 in
    service fees for 2008.

312. The cost to Y ouTube of using Audible         Hohengarten i1370 & Ex. 336 (Ikezoye
    Magic's entire reference database of           Dep.) at 105:21-106:3.
    fingerprints of film and TV works would
    have been approximately twice the amount
    that Audible Magic was charging Y ouTube
    each month under the October 5, 2006
    contract.

313. Google developed its own audio                Hohengarten i1151 & Ex. 156,
    fingerprinting tool as early as November       GOOOO 1-023 5460 1, at GOOOO 1-
    2006, but did not start using it on the        02354601.
    Y ouTube site to prevent infringement of
    any copyrighted content until                  Hohengarten i1160 & Ex. 157,
    approximately February 2008.                   G00001-09612078, at GOOO01-
                                                   09612078.

                                                   Hohengarten i1373 & Ex. 339 (King
                                                   Dep.) at 125:15-126:10.

314.At the first status conference before this     Hohengarten i1399 & Ex. 362 (July 27,
    Court in July 2007, Defendants' counsel        2007 Status Conference Transcript) at
    announced for the first time that Defendants   15:15-17:7.
    would implement their own proprietary
    video fingerprinting technology and would
    make it available to all copyright holders,
    not just those who had agreed to lìcensing
    deals with Defendants.




                                             74
Vi. DEFENDANTS' CONDUCT AS DIRECT INFRINGEMENT AND AS BEYOND
     STORAGE AT THE DIRECTION OF A USER


     H"                   n.            ..       .,Ù
                                                       '-
                                                                 £j      T,
                                                                 y lUo;\J~i
                                                                                "




                       TT"                   1                                         "r"
                                ..~'.


 315. When a user submits a video for upload,                       Hohengarten i1356 & Ex. 322 (Do
     Y ouTube makes one or more exact copies                        Dep.) at 19:21-20:6.
     of the video in its original file format (i.e.,
     the format in which it is uploaded by the
     user).

 316. YouTube makes one or more additional                          Hohengarten i1357 & Ex. 323 (Do
     copies of every video during the upload                        30(b)(6) Dep.) at 85:18-86:10.
     process in a different encoding scheme and
     different file fonnat called Flash.                            Hohengarten i1356 & Ex. 322 (Do
                                                                    Dep.) at 19:21-20:6.

 317. Making copies of a video in a different                       Hohengarten i1356 & Ex. 322 (Do
     encoding scheme is called "transcoding."                       Dep.) at 17:4-15.

 318.In a July 11,2006 email, YouTube product                       Hohengarten i1161 & Ex. 158,
     manager Matthew Liu states that all                            GOOOO 1-05175716, atGOOOO 1-
     Y ouTube videos are transcoded for delìvery                    05175716.
     in Flash fonnat.

 319. Via delivery in the Flash fonnat of videos                    Hohengarten i1257 & Ex. 239,
     to users, Y ouTube ensures that its videos                     JK00008859, at JK00008859 ("Want to
     are viewable over the Intemet to most users.                   convert uploaded A VIs to Flash movies,
                                                                    so it displays nicely everywhere").

                                                                    Hohengarten i1222 & Ex. 204,
                                                                    JK00009887, at JKOOO09887.


                                                                    Hohengarten i1356 & Ex. 322 (Do.
                                                                    Dep.) at 18:2-6.

                                                                    Hohengarten i1162 & Ex. 159,
                                                                    G00001-00889264, at GOOO01-
                                                                    00889266.

 320. The uploading user does not have any                          Hohengarten i1356 & Ex. 322 (Do
     choice whether Y ouTube trans   codes the                      Dep.) at 25:14-27:18.
     video, or instead stores the video in the
                                                                    See infra SUF i1321.

                                                            75
    original format chosen by the user.

321.YouTube engineering manager Cuong Do             Hohengarten i1356 & Ex. 322 (Do
    stated in his deposition, "(tJhe system          Dep.) at 27:16-18.
    performed. . . the replìcation as a course of
    its normal operation, . . . uninstructed by
    the user."

322.In the past, "for particularly popular videos    Hohengarten i1191 & Ex. 188,
    that are watched very frequently" on             GOOOOI-09684752, at GOOO01-
    Y ouTube, Y ouTube sen( t J "a replica" of the   09684711-12.
    video "to a third-party content distribution
    partner to facilitate timely streaming to all    Hohengarten i1357 & Ex. 323 (Do
    users." Currently, YouTube uses some of          30(b)(6) Dep.) at 90:16-92:1.
    Google's own services to perform that
    function.

323.YouTube performs videos by streaming             Hohengarten i1186 & Ex. 183
    them to users' computers. As part of that        GOOOOI-00718495, at GOOOOl-
    process, Y ouTube also distributes a             00718495.
    complete and durable copy of a video to the
    computer of any user who views it.               Hohengarten i1408.

324.YouTube has contracts with Apple to              Hohengarten i1163 & Ex. 160,
    distribute videos over iPhones and               GOOOOI-09684557, at GOOOOl-
    AppleTV devices.                                 09684557-79 (Product Integration
                                                     Agreement between Y ouTube Inc. and
                                                     Apple Inc.).

                                                     Hohengarten i1164 & Ex. 161,
                                                     GOOOOI-02276277, at GOOO01-
                                                     02276277 ("Apple / YouTube
                                                     Partnership Revenue Opportunity").

                                                     Hohengarten i1165 & Ex. 162,
                                                     GOOOOI-07726987, at GOOOOl-
                                                     07726987 (May 30,2007 compilation
                                                     of press coverage of the Apple deal).

325. Y ouTube has a contract with Sony to            Hohengarten i1166 & Ex. 163,
    distribute Y ouTube videos over Sony             GOOOO 1-02243231, at GOOOO 1-
    devices.                                         02243231 (Product Integration
                                                     Agreement between Sony Electronics,
                                                     Inc. and Google Inc.).

326. YouTube has a contract with Panasonic to        Hohengarten i1168 & Ex. 165,
    distribute Y ouTube videos over Panasonic        GOOOOI-02242506, at GOOOOl-

                                               76
    devices.                                     02242506-23 (Product Integration
                                                 Agreement between Google Inc. and
                                                 Panasonic Consumer Electronics
                                                 Company, Division of Panasonic
                                                 Corporation of North America).

327.YouTube has a contract with TiVo to          Hohengarten i1l69 & Ex. 166,
    distribute Y ouTube videos over TiVo         G00001-02242907, at GOOOOl-
    devices.                                     02242907-24 (Product Integration
                                                 Agreement between Google Inc. and
                                                 TiVo Inc.).

328. YouTube has contracts with major cellular   Hohengarten i1170 & Ex. 167,
    telephone companies including AT&T,          G00001-02392607, at GOOO01-
    Verizon Wireless, and Vodafone.              02392607-43 (Content Agreement
                                                 between Y ouTube, Inc. and Cellco
                                                 Partnership d/b/a Verizon Wireless).

                                                 Hohengarteni1171 &    Ex.   168,

                                                 G00001-06176212, at GOOOOl-
                                                 06176212- 24 (Y ouTube Integration
                                                 Agreement between Google Ireland
                                                 Limited and Vodafone Group Services
                                                 Limited).

                                                 Hohengarten i1172 & Ex. 169,
                                                 G00001-06176368, at GOOOOl-
                                                 06176368-86 (agreement between
                                                 Google and AT&T Mobilìty LLC).

                                                 Hohengarten i1173 & Ex. 170,
                                                 G00001-02552363, at GOOO01-
                                                 02552363 (press releases for YouTube
                                                 deals with Verizon Wireless, Vodafone,
                                                 and Nokia).


329.As part ofYouTube's agreement with           Hohengarten i1379 & Ex. 345 (Maxcy
    Verizon Wireless, Y ouTube provided          Dep.) at 219:21-222:13.
    Verizon with copies of the YouTube videos
    that Verizon wished to make available on     Hohengarten i1391 & Ex. 385
    its mobile devices, which consisted solely   (Patterson Dep.) at 37:20-38:7.
    of  videos YouTube had selected for
    prominent placement as featured videos on    See also infra SUF i1331.
    YouTube.

330'in 2007, without any request from the        Hohengarten i1356 & Ex. 322 (Do

                                            77
       uploading users, Defendants created copies    Dep.) at Tr. 215:21-217:25.
       of all previously uploaded videos in two
       fonnats other than Flash so that the videos   Hohengarten i13 79 & Ex. 345 (Maxcy
       could be viewed on additional platforms,      Dep.) at 215:25-218:13.
       including Apple devices and non-Apple
       mobile phones.                                Hohengarten i117 4 & Ex. 171,
                                                     GOOOO 1-000 10746, at GOOOO 1-
                                                     00010746.

                                                     Hohengarten i1391 & Ex. 385
                                                     (Patterson Dep.) at 57:18-62:22.


                  ,         '1'              ~ Ten' ~_ T"
       r f' ,                .1              Yuuiuoe;-,
                  Th '  "
                                                                     T" .,
                                                                     L
331. Y ouTube employs "editors" to scour the         Hohengarten i1363 & Ex. 329 (Dunton
    Y ouTube site for interesting videos that        Dep.) at 29:23-30:6, 94: 14-1 00:4
       Y ouTube on its own initiative then           (testifying that she selected videos to
       "features" with conspicuous positioning on    feature on YouTube's home page, to
       its home page.                                highlìght "relevance" and "entertaining
                                                     content" to users).

                                                     Hohengarten i1359 & Ex. 325 (Donahue
                                                     Dep.) at 140:11-25 (testifying that
                                                     Donahue, Chen, and Dunton selected
                                                     featured videos to appear on YouTube's
                                                     homepage).


332.Some of     the videos identified by Viacom as   Hohengarten i1398 & Ex. 361
       infringing Viacom's copyrights were           (Defendants' Reponses and Objections
       selected and promoted by Y ouTube             to Plaintiffs' Second Set of
       employees as featured videos.                 Interrogatories, Interrogatory No.4) at
                                                     10 (identifying two clips in suit that
                                                     were promoted or featured by
                                                     YouTube).

333.YouTube gives prominent placement to             Hohengarten i1312 & Ex. 284
    videos that are most viewed, most                (screenshot of you tube. com website
    frequently tagged as "favorites" by users, or    showing prominent placement of
    currently being watched on the site.             "videos being watched right now").

                                                     Hohengarten i1356 & Ex. 322 (Do.
                                                     Dep.) at 112:22-118:20,121 :24-123:16.


                                               78
334.YouTube uses an algorithm that it designed       Hohengarten i1346 & Ex. 312 (C.
    to identify videos that are "related" to a       Hurley Dep.) at 173:25-174:23.
    video that a user watches, and links to
    videos identified by that tool appear both in    Hohengarten i1175 & Ex. 172,
    a box on the right-hand side of the watch        GOOOO 1-00243149, at GOOOO 1-
    page of the video to which they are related      00243149.
    (the "related videos" box) and also within
    the video player after the video that the user   Hohengarten i1282 & Ex. 254,
    watches ends.                                    VIA14375701, at VIA14375701
                                                     (screenshot of conclusion of South Park
                                                     clìp showing other "related" South Park
                                                     clìps).

                                                     Hohengarten i1176 & Ex. 173,
                                                     G00001-09684201, at G00001-
                                                     09684202-05.

335.When a user views an infringing clip from a Hohengarten i1280 & Ex. 252,
    major media company like Viacom on a        VIA14375446, at VIA14375446.
    YouTube watch page, YouTube's related
    videos toollìkely will direct the user to   Hohengarten i1281 & Ex. 253
    other similar infringing videos.            VIA14375721, at VIA14375721

                                                     Hohengarten i1282 & Ex. 254,
                                                     VIA14375701, at VIA14375701.

                                                     Hohengarten i1283 & Ex. 255,
                                                     VIA14375674, at VIA14375674.

                                                     Hohengarten i1284 & Ex. 256,
                                                     VIA14375466, at VIA14375466.

                                                     Hohengarten i1285 & Ex. 257,
                                                     VIA14375535, at VIA14375535.

336. of all video views on                           Hohengarten i1176 & Ex. 173,
    Y ouTube come from use of the related            G00001-09684201, at GOOOOl-
    videos tool.                                     09684205.

337. YouTube indexes and categories videos           Hohengarten i1393 & Ex. 356
    using information supplied by the                (Declaration of Steve Chen dated
    uploading user and provides a search             January 5, 2007) at i1i1, 4,5.
    function so that viewers can find videos
    using search terms.                              Defendants' Answer at i1 31.

                                                     Hohengarten i1l77 & Ex. 174,

                                               79
                                                    G00001-02338330, at GOOO01-
                                                    02338330, G00001-02338340-42 .

                                                    Hohengarten i1357 & Ex. 323 (Do
                                                    30(b)(6) Dep.) at 104:1-17,105:11-19,
                                                    111:12-20.

                                                    Hohengarten i1401 & Ex. 364
                                                    (deposition "cheat sheet" prepared by
                                                    Do listing data Y ouTube maintains
                                                    regarding videos).

                                                    Hohengarten i1378 & Ex. 344 (Liu
                                                    Dep.) at 62:21-63:8, 63:22-64:23.

338.As a user types search terms into               Hohengarten i13 78 & Ex. 344 (Liu
    YouTube's search field, YouTube suggests        Dep.) at 183:4-9.
    additional search terms to "help (Y ouTube
    usersJ more quickly find the videos             Hohengarten i1302 & Ex. 274.
    (they'reJ looking for."

339.YouTube's suggested search terms assist         Hohengarten i1294 & Ex. 266,
    users in locating infringing works by           VIA14375228, at VIA14375228.
    providing variations of the complete name
    or content owner of a copyrighted work          Hohengarten i1295 & Ex. 267,
    even though the user has not typed the          VIA14375363, at VIA14375363.
    work's or owner's full name.
                                                    Hohengarten i1296 & Ex. 268,
                                                    VIA14375413, at VIA14375413.

                                                    Hohengarten i1297 & Ex. 269,
                                                    VIA14375207, at VIA14375207.

340.YouTube also provides many different            See supra SUF i1i1261, 334.
    ways for users to browse through the site.

341. When Y ouTube first instituted "categories"    Hohengarten i1178 & Ex. 175,
    for videos in September 2005, YouTube           GOOOO 1-0 1177848, at GOOOO 1-
    employees reviewed and categorized the          01177848.
    videos that had been previously uploaded to
    Y ouTube, without any input from the users      Hohengarten i1298 & Ex. 270
    who had uploaded those videos.                  (September 12,2005 YouTube Blog
                                                    entry).
342. Once YouTube had instituted "categories"       Hohengarten i1357 & Ex. 323 (Do
    for videos, Y ouTube thereafter required        30(b)(6) Dep.) at 117:14-20.
    users who uploaded videos to choose a


                                               80
    "category" for the video, such as
    "Entertainment" or "Comedy."

343. Y ouTube makes and stores four                  Hohengarten i1357 & Ex. 323 (Do
    "thumbnails" from each uploaded video            30(b)(6) Dep.) at 97:20-98:25.
    without any input from or opportunity to
    opt out for the uploading user.                  Hohengarten i1356 & Ex. 322 (Do
                                                     Dep.) at 38:8-20.

                                                     Defendants' Answer at i1 31.

344.Defendants display the "thumbnail images"        Hohengarten i1179 & Ex. 176,
    of uploaded videos at various places on the      G00001-00508644, at GOOOOl-
    Y ouTube site, including on search results       00508646.
    pages.
                                                     Hohengarten i1354 & Ex. 320 (Chang
                                                     Dep.) at 187:2-18.


345. Y ouTube requires uploading users to accept     See supra SUF i1267.
    Terms of Service providing that the user
    "grant   ( s J Y ouTube a worldwide, non-
    exclusive, royalty-free, sublìcenseable and
    transferable lìcense to use, reproduce,
    distribute, prepare derivative works of,
    display, and perfonn" each uploaded video.

346. Y ouTube also requires a user to warrant        See supra SUF i1267.
    that he or she owns the copyright for the
    videos a user uploads, or has permission
    from the copyright owner to upload the
    videos.

347.In seeking content partnership lìcenses from     Hohengarten i1156 & Ex. 153,
    content owners, Defendants demanded a            G00001-02240369, at GOOO01-
    release for their prior infringing activities    02240393 (agreement with EMI Music
    "arising out of or in connection with, the       Marketing).
    unauthorized reformatting, duplìcation,
    distribution, hosting, performance,              Hohengarten i1180 & Ex. 177,
    transmission or exhibition of' the content       G00001-09531942, at GOOO01-
    owners' intellectual property.                   09531954 (agreement with Universal
                                                     Music Group with similar language).

                                                     Hohengarten i1181 & Ex. 178,
                                                     G00001-06147947, at GOOO01-
                                                     06147947 (draft UMG agreement
                                                     showing that Y ouTube inserted similar
                                                     language).

                                                81
                     Respectfully submitted,




By: /s/ Stuart 1. Baskin                        By: /s/ Paul M. Smith


Stuart J. Baskin (No. SB-9936)                  Paul M. Smith (No. PS-2362)
John Guelì (No. JG-8427)                        Willìam M. Hohengarten (No. WH-5233)
Kirsten Nelson Cunha (No. KN-0283)              Scott B. Wilkens (pro hac vice)
SHEARMAN & STERLING LLP                         Matthew S. Hellman (pro hac vice)
599 Lexington Avenue                            JENNER & BLOCK LLP
New York, NY 10022                              1099 New York Avenue, NW
Telephone: (212) 848-4000                       Washington, DC 20001
Facsimile: (212) 848-7179                       Telephone: (202) 639-6000
                                                Facsimile: (202) 639-6066

                                                Susan 1. Kohlmann (No. SK-1855)
                                                JENNER & BLOCK LLP
                                                919 Third Avenue
                                                New York, NY 10022
                                                Telephone: (212) 891-1690
                                                Facsimile: (212) 891-1699




                                               82

				
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