A German royalties group scored a court victory over Google's YouTube on Friday in a ruling which forces the video-sharing site to take down copyrighted clips.
The court in Hamburg said the website was responsible for the content its users published, a decision which could be a first step towards YouTube and other Internet publishers having to pay large sums in royalties.
Friday's ruling comes less than a month after a US appeals court dealt Google a major setback by reviving lawsuits from Viacom Inc, the English Premier League and various other media companies over the use of copyrighted videos on YouTube without permission.
The suit in Hamburg, for allegedly infringing the copyright on seven music clips, was brought against YouTube in 2010 by German royalty collections body GEMA and several other groups handling music rights.
YouTube argued it merely provided the technical framework to publish content and was not responsible for monitoring videos and music clips for possible copyright violations.
The Hamburg court said that YouTube was responsible for the content users post online and should remove any clips for which GEMA has asserted copyright protection. The court also said YouTube did not have to proactively trawl through its site in search of possible copyright violations but must remove clips at the request of the rights holder.
"We welcome this decision," a spokesman for Google in Germany said, saying the court's move created legal certainty for both uploading sites and the people who use them.
A spokesman for GEMA said: "This in an important partial victory."
GEMA, which says it represents more than 64,000 songwriters and musicians, demands that music-on-demand platforms that stream music to users for free and are financed by advertisements pay just over 10 percent of their music revenues.
Sites that are very interactive should also have to pay at least 0.6 euro cents ($0.008) per stream, according to GEMA.
YouTube says some 60 hours of video are uploaded to its site every minute, and more than 3 billion hours of video are watched on the platform each month.
Recent lawsuits have centred on a crucial issue for media companies: how to win Internet viewers without ceding control of TV shows, movies and music.
But a push for better legal protection of artists' and media companies' rights has met opposition from those who fear tighter regulation will curb their freedom to download movies and music for free and encourage internet surveillance.
Earlier this year, tens of thousands of demonstrators took to the streets across Europe to protest an international anti-piracy agreement.
One vocal group opposing the Anti-Counterfeiting Trade Agreement (ACTA) is Germany's upstart Pirate Party, which came out of nowhere last year and according to a recent poll has overtaken the Greens to become the third strongest political grouping in the country.
The arrest of Kim Dotcom, the German national who founded online file-sharing site Megaupload.com, earlier this year is the most prominent recent case of authorities cracking down on copyright infringement.
Prosecutors say he was the ringleader of a group that netted $175 million since 2005 by copying and distributing music, movies and other copyrighted content without authorisation.
Google said on Friday it was prepared to resume negotiations with GEMA to seek an agreement on the use of copyrighted content. GEMA and YouTube held talks from April 2009 until the suit was filed in September 2010, with no result.
($1 = 0.7609 euros)