YouTube accused in £850m copyright lawsuit

Less than six months ago it was being hailed as the most important internet deal of the decade. But yesterday it looked as if Google's $1.65bn (£850m) acquisition of YouTube - the video sharing website that became an overnight sensation - was coming back to haunt it.

Google has been slapped with a $1bn lawsuit by one of the world's biggest media conglomerates, which claims YouTube's entire business is based on "massive, intentional copyright infringement".

Viacom - which owns television channels including MTV and Comedy Central, and the Paramount Pictures film studio - says clips from TV programmes such as South Park and The Daily Show With Jon Stewart were constantly being uploaded to YouTube, even after it had demanded they be taken down.

Millions of teenagers have flocked to YouTube in the two years since it was founded, using the site to share video diaries, short films and - most controversially - clips from television and DVDs. Almost 160,000 unauthorised clips of Viacom's programming have been available on YouTube and have been viewed more than 1.5 billion times, Viacom alleged in court papers filed in New York.

In a statement accompanying the court documents yesterday, Viacom lashed out at Google's refusal to agree a deal that would share revenues from adverts placed next to Viacom clips on YouTube. Negotiations between the two sides collapsed last month.

The company said: "YouTube is a significant, for-profit organisation that has built a lucrative business out of exploiting the devotion of fans to others' creative works in order to enrich itself and its corporate parent Google. This is value that rightfully belongs to the writers, directors and talent who create the work, and companies like Viacom that have invested to make possible this innovation and creativity. Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws."

A Google spokesman promised to fight the suit. "We have not received the lawsuit but are confident that YouTube has respected the legal rights of copyright holders and believe the courts will agree. We will certainly not let this suit become a distraction to the continuing growth and strong performance of YouTube."

Other media companies have signed revenue sharing deals, particularly the big record labels who have allowed their music videos to be placed on the website.

But Viacom has taken a more aggressive stance amid growing concern that Google is riding roughshod over established copyright law and trying to build a rival media empire under the guise of its declared mission to "organise the world's information".

The search engine company is now being sued on several fronts. Its Google News site, which marshals stories from other news websites, has been ordered to take down content from Belgian newspapers after a court case there.

And the publishing industry in the US is also trying to halt Google Books, its project to digitise all the world's books.