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Viacom has won an appeal in the U.S. Second Circuit Court of Appeals against a lower court's decision which said that YouTube was protected under the DMCA when it came to infringing material that was posted by its users.

But YouTube is also hailing the decision as a victory for the website, now owned by Google, saying that this most recent decision has dramatically scaled down Viacom's original lawsuit.

The appeals court has ordered to case to be sent back to a lower court to determine whether YouTube deliberately turned a blind eye to on-going infringement during the early days of the website. YouTube now has to prove that they did not have prior knowledge of a few specific cases of copyright infringement on their site, and did not exercise "willful blindness" when it came to these infringing videos.

Viacom welcomed the ruling, saying it justifies their continued persistence in calling up YouTube on copyright offences, despite the company now working closely with Google/YouTube in regards to legal video distribution. 

"We are pleased that the U.S. Court of Appeals has vacated and remanded the District Court's ruling," a Viacom statement read, before adding "Intentionally ignoring theft is not protected by the law. We are confident we will prevail when the merits of our case are heard."

YouTube also welcomed the ruling, which they say throws out a large part of Viacom's argument, in particular, to their reading of the DMCA. "The Second Circuit has upheld the long-standing interpretation of the DMCA and rejected Viacom's reading of the law. All that is left of the Viacom lawsuit that began as a wholesale attack on YouTube is a dispute over a tiny percentage of videos long ago removed from YouTube. Nothing in this decision impacts the way YouTube is operating. YouTube will continue to be a vibrant forum for free expression around the world," a YouTube spokesperson told CNET.