A federal judge in New York ruled in favor of Google Inc.'s YouTube unit Wednesday, in a closely watched copyright-infringement lawsuit brought by Viacom Inc.

The judge granted Google's motion for summary judgment in a three-year-old lawsuit in which Viacom claimed that the video-sharing Web site had sought to exploit Viacom's copyrighted works for profit. Google argued that YouTube was protected by the Digital Millennium Copyright Act.

Both sides had asked for the judge to decide the case before it went to trial.

Viacom, which has been seeking more than $1 billion in damages, said it plans to appeal Wednesday's ruling.

"We believe that this ruling by the lower court is fundamentally flawed," the media company said in an emailed statement.

In an interview, Google's general counsel, Kent Walker, called the decision "a full vindication across the board" that "resolved all the pending issues."

He said Google remains confident of its position if Viacom appeals, and continues to closely watch similar copyright cases, including one on the West Coast against Internet company Veoh.

In his decision, U.S. District Judge Louis Stanton in Manhattan said a jury could find that YouTube and Google "not only were generally aware of, but welcomed, copyright-infringing material being placed on their website" because it was "attractive to users."

But Judge Stanton said YouTube's "general" awareness of copyright infringement was not the same as "knowledge of specific and identifiable infringements of individual items." And when YouTube received "specific notice that a particular item infringed a copyright, they swiftly removed it," he said, adding that all of the disputed video clips involved in the lawsuit were off the site.

The decision is the highest-profile in a series judges have handed down in favor of Internet companies over whether they should be held liable for distributing content that might be copyrighted. It has become a pressing question as more companies, from photo-sharing sites to Facebook, rely on user-generated content.

At the same time, it is a setback for media companies, who for years have been trying to curb Internet companies' ability to distribute their content without compensating them. Media executives say they expect companies like YouTube will continue to automatically filter for copyrighted content, however, as the companies jockey for licensing agreements with media producers.

"This is a very significant decision," said Ian Ballon, a lawyer at Greenberg Traurig LLP who represents both technology and entertainment companies.

Mr. Ballon, who wasn't involved in the YouTube case, said Judge Stanton, relying on recent copyright decisions in West Coast courts, drew "a distinction between pirate sites that have been held liable for inducing people to infringe on copyright and legitimate service providers," such as YouTube, which the judge said are entitled to "safe harbor" protections under the Digital Millennium Copyright Act even if users upload unauthorized material.

Michael Fricklas, Viacom's general counsel, said he thinks that some of the previous court cases Judge Stanton cited in making the decision won't hold sway. "We believe that the Second Circuit [Court of Appeals] will ultimately decide these issues our way," he added

The ruling came several months after each side requested summary judgment and unsealed a slew of documents, in which Viacom painted YouTube as a pirate and the Internet company accused Viacom of distorting the truth.

— Amir Efrati contributed to this article.
Write to Sam Schechner at sam.schechner@wsj.comand Jessica E. Vascellaro at jessica.vascellaro@wsj.com

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