CYBERSPACE — Only a “moron,” according to Dallas Mavericks owner Mark Cuban, would buy YouTube. Now, of course, an alleged moron has emerged and that moron’s name is Google Inc.Thick-headed business moves might not be the first thing that comes to mind when one hears the word “Google,” particularly given the company’s meteoric rise in revenues over its history and the generally healthy performance of its stock since going public.

Cuban’s point, of course, was that YouTube is quite obviously stuffed to the gills with content that infringes on the intellectual property rights of content producers ranging from BangBros to Comedy Central and all stops in between.

The question persists, therefore; has Google stepped into the crosshairs of yet more lawsuits via its acquisition of YouTube, or will “safe harbor” provisions of the Digital Millenium Copyright Act (DMCA), along with high-profile licensing deals from several major content producers, serve as an effective shield from liability for copyright infringement?

A recently announced lawsuit brought by Universal Music Group (UMG) against video sharing services Grouper and Bolt.com may, eventually, provide an answer to that question. At the moment, legal opinion on the subject appears divided, to say the least.

In its lawsuit against Grouper, UMG asserts that through its “use and exploitation of copyrighted material… Grouper has become one of the most prominent and valuable Web sites on the internet.”

UMG is seeking damages of up to $150,000 for each incident of copyright infringement, plus costs, in the lawsuit, which asserts that thousands of music videos that are the property of UMG are being viewed on both Bolt and Grouper, with no license from UMG and to the benefit of nobody other than Bolt and Grouper, or so UMG asserts.

Sites like Grouper and Bolt “cannot reasonably expect to build their business on the backs of our content and the hard work of our artists and songwriters without permission and without compensating the content creators,” a spokesman for UMG recently said, according to ZDNet.com.

Are sites like Grouper, Bolt and YouTube protected under the safe harbor provisions of the DMCA, though?

All three claim to remove copyrighted materials promptly upon receiving complaints, and officials from all three believe that fact, alone, is sufficient to shield them from liability.

“Our Web site is protected by federal law and we’re vigilant about taking down copyrighted content when we’re properly notified,” stated Josh Fesler, co-founder and chief executive of Grouper, according to the National Law Journal.

“We feel confident in our defense that YouTube qualifies for safe harbor under the DMCA and shouldn’t be tarred with the same brush that people try to tar services like Napster and Grokster,” said Kenneth Steinthal, a partner in the California office of Weil, Gotshal & Manges, the law firm that represents YouTube.

Steinhal added that YouTube “goes beyond the requirements to help content owners identify and immediately take down any user-generated content.”

Many experts agree that being responsive to removal requests, combined with forging relationships with major content producers, will provide adequate legal cover for video sharing sites.

“If they have a policy and act according to the policy, and have taken down stuff when people complain, they’re shielded of copyright infringement liability,” asserted Randy Broberg, a partner in the firm Allen, Matkins, Leck, Gamble, Mallory & Natsis.

Jason Schultz, a staff attorney with the nonprofit civil rights group the Electronic Frontier Foundation (EFF), concurred with Broberg, but not categorically.

“These companies have learned from Napster and Grokster and designed their company systems both technologically and legally in light of those mistakes previously made,” Schultz told the Journal.

“In Grokster, and somewhat in Napster, part of the argument was that the entire business model is predicated on illegal activity,” Schultz said. “That argument is now less potent against companies like YouTube and Google Video because they’ve struck these deals that have legitimized much of the content.”

Schultz conceded, however, that the question is “not black and white, for sure.”

Other experts aren’t so sure such sites qualify for the safe harbor provision, and note that a lot depends on what the sites do with content that is posted by users and how they do it.

James Nguyen, a partner and co-chairman of the entertainment and media industry team at the Los Angeles firm Foley & Lardner, noted that one of the “big legal questions is: If you exercise that discretion and control, are you being a more active participant in the content process?”

If sites are found to exercise “discretion and control” over their content – say, for example, by providing Top Ten most popular lists, and responses to keyword searches likely to be associated with infringing material (like Simpsons or The Daily Show, or Perfect 10) – then they might be liable for direct copyright infringement, rather than contributory or secondary infringement, which is what landed Grokster and Napster in trouble.

At least one such claim of direct infringement has already been filed; Io Group, Inc, a San Francisco-based adult entertainment company, has filed suit against Veoh Networks alleging direct copyright infringement, because Veoh’s website changed the formats of the videos submitted to it.

“The main argument is that the sites are engaged in direct infringement,” Gill Sperlein, Io Group’s general counsel, told the Journal. “And that sets it apart from other high-profile Internet cases.”

Already facing claims of both direct and indirect copyright infringement, via lawsuits brought Perfect 10 and The Author’s Guild Inc, among others, Google may very well have stepped into a new minefield of litigation, and whether or not the plaintiffs in such cases prevail, the litigation is sure to be costly.

“This is still a gray area and unchartered waters,” Alex Liao, a solo practitioner and licensed patent attorney in San Jose, Calif said, according to the Journal. “And when in a gray area, there’s always people who want to pursue it, there’s always a risk, or potential, of lawsuits.”