The $1 billion question prompted by Viacom Inc.'s suing Google Inc. yesterday is how a 1998 law that was supposed to retrofit copyright protection for the digital future applies in the YouTube age.

The DMCA also contained important so-called safe-harbor clauses, provisions designed to protect access providers, search engines, Web-hosting services and others from liability for copyright claims if they met several conditions.

But now some legal experts say there is little consensus or precedent on how that protection applies to video-sharing sites like YouTube. The safe-harbor dispute could hinge on several key issues, such as the extent to which YouTube has direct knowledge of copyright clips posted on its site without permission and whether it profits directly from them.

Some lawyers say court decisions may have broad ramifications. "The DMCA safe harbor covers a lot of businesses, and it's hard to see how you could go after YouTube without threatening all of the others," says Fred von Lohmann, senior attorney at the Electronic Frontier Foundation in San Francisco.

Viacom says it decided to file suit because its request last month that YouTube remove Viacom clips failed to keep them off the site. As recently as yesterday, one of the most viewed videos on YouTube was one from "The Colbert Report," owned by Viacom. The media company says it spends "tens of thousands of dollars" a month searching for its programming on YouTube so it can request its removal.

In its suit, Viacom alleges that the availability of copyright works on YouTube "is the cornerstone of [its] business plan."

"Time is up for YouTube," said Time Warner Inc. General Counsel Paul Cappuccio. "It's no longer permissible for them to have unauthorized copyrighted material on there."

Decius and I have talked about this before and he proposed some of the same points raised in this article.

How is YouTube any different than a Warez site that also has freeware programs? Perhaps a better comparison is Napster and YouTube. Napster was basically a warez site that received VC funding. How different is YouTube? One difference I can see in YouTube's favor is substantially less of its available content are copyrighted works.

This is going to be a very interesting case with immense implications in the "user generated content" world of Web 2.0

Legal experts say the main points of contention also include how much knowledge the Internet companies have of specific examples of infringement. Viacom in its suit contends it can be impossible to look at YouTube without seeing specific examples of infringement, copyright video clips uploaded by users.

I'm kind of sidestepping the larger issues here to respond to just this statement, but i can say for certain that I frequently click through a half dozen YouTube clips without seeing anything that appears to be infringing. I would never argue that infringement doesn't happen, but I think it's equally absurd to claim that one CAN NOT use the site without encountering it.

As for the whole thing, I think the result will be far reaching and I wonder if the target state argues in favor of compulsory licensing. I see no good way to allow the content owners to maintain their iron fist approach to content control without absolutely stifling technological innovation. I don't see it.