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Viacom Sues YouTube

It wants $1 billion for copyright infringement.

Viacom

(VIA) - Get Report

just upped the ante in its high-stakes battle against

Google's

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YouTube.

Viacom announced Tuesday that it has sued the popular video sharing site in federal court, seeking more than $1 billion in damages. YouTube violated its copyright protections by hosting popular clips on its site, Viacom alleges, while at the same time reaping the benefits by selling advertising. Viacom also seeks an injunction preventing YouTube from using its clips.

"There is no question that YouTube and Google are continuing to take the fruit of our efforts without permission and destroying enormous value in the process," Viacom said in a statement released Tuesday morning. "This is value that rightfully belongs to the writers, directors and talent who create it and companies like Viacom that have invested to make possible this innovation and creativity."

Viacom also said that YouTube's actions stood in "stark contrast" to that of other distributors of its content, who acknowledged its fair value.

Progress of the dispute will be closely watched as it may be a sign of things to come for YouTube's relationship with other content owners as well. Google claims that it is protected by the Digital Millennium Copyright Act (DMCA). Content owners who find their copyrighted material on YouTube should notify the company, in which case the search giant will remove it.

But with the enormous volume of clips uploaded daily to YouTube's increasingly popular service, content owners have been growing frustrated with policy that puts the onus of notifying Google on them.

Following Google's October 2006 purchase of YouTube, many industry commentators had predicted that the search giant was placing itself squarely in the sights of aggrieved media companies. In the immediate aftermath, however, the lawsuits failed to materialize. Media giant

CBS

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even claimed that posting clips from its TV shows on YouTube had increased the viewers of its televised content.

Viacom, after asking Google to initially remove its content, reneged on its request and began negotiating with the search giant in an attempt to find a partnership. But Viacom had a change of heart at the beginning of February, when negotiations broke down, and told Google to take down about 100,000 of its clips from YouTube's site.

About two weeks later, Viacom announced that it had reached an agreement with

Joost

, a rival video-sharing service, to distribute its content and would look for distribution deals with other services as well.

Also on Tuesday,

General Electric's

(GE) - Get Report

NBC -- which also has had disputes with Google in the past -- announced a deal with

vMix

, another video-sharing service.

Shares of Google were recently off $4.20, or 0.9% to $450.55. Viacom was up 35 cents, or 0.9%, to $39.90.