A lawyer for Viacom Inc. warned an appeals court panel Tuesday that there will be greater exploitation of copyright material on the Internet if the court lets YouTube get away with a business built on "rampant copyright infringement."

The lawyer, Paul Smith, told a three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan that a lower court judge was wrong to rule that Google Inc.'s popular video service was protected from copyright infringement claims.

"YouTube not only knew there was rampant copyright infringement on the site but welcomed it," Smith said. "These people made this kind of money on somebody else's property."

Google purchased YouTube for $1.76 billion in 2006, comfortable that it was protected by the safe harbor provision of the 1998 Digital Millennium Copyright Act. That provision shields a company from liability if they don't have actual knowledge of copyright infringement. Once notified, the company must eliminate the infringement quickly.

Google attorney Andrew Schapiro countered that YouTube follows the law and always has by taking down video when a copyright owner claims the video infringes its rights.