PinterestDoes Pinterest have the right to show you this image?

Photo: Pinterest / Screengrab

Pinterest today is just like YouTube in 2006.By that, do we mean a fast-growing social-sharing property without a proven revenue model?

No. We mean it’s a massive lawsuit waiting to happen.

Now that Pinterest has raised $100 million and is worth a notional $1.5 billion, it’s painted a big, fat, juicy target on itself for photographers and other copyright holders to come after it for allowing users to upload lots of gorgeous, high-resolution images.

Yes, the Digital Millennium Copyright Act offers websites which host user-generated content some protections, as long as they respond to takedown requests. That’s how YouTube defended itself against Viacom, which, sure enough, sued YouTube for copyright violations shortly after Google bought the video-sharing site.

And yes, to date Pinterest has drawn relatively few copyright violations, company representatives told the Wall Street Journal in February.

That’s certain to change, though, especially now that Pinterest’s bank account has grown to nine digits.

Porn site Perfect 10 has already sued Tumblr, which, like Pinterest, allows users to upload high-resolution photos.

Why would Google want to buy a company with a potential lawsuit hanging over it?

In an October 2006 email exposed in the Viacom-YouTube lawsuit, Google executive Susan Wojcicki wrote, “Interesting lesson from YouTube … we always need to be able to rely on [the] DMCA.”

Google Video failed because Google took a more proactive stance against copyright violations. Pinterest and Tumblr have taken the same approach—grow first, deal with copyright issues later.

Google’s lawyers, by the way, are very familiar with Perfect 10, having tangled with the same company now suing Tumblr years ago. The issue was Google’s image-search site, which featured small versions of images from Perfect 10’s websites.

But Pinterest and Tumblr have one big problem that Google didn’t. Google showed thumbnails, which were deemed not to be competitive with the full-size images on Perfect 10.

Google fought that lawsuit hard, and won, just like it fought Viacom. The reason: the ability to take snippets of copyrighted content underpins Google’s core search business.

If Pinterest or Tumblr lose a copyright case and set a legal precedent that binds Google, that could be very bad for Google’s search business as a whole.

Not to mention the fact that Google’s Facebook rival, Google+, is increasingly showcasing big, high-resolution photos as a way to compete in social networking. So Google needs to make sure the rules around how people can use copyrighted images online are set to its advantage.

One defence we’ve heard from people close to Pinterest: The site credits the source of an image and links prominently to it.

Unfortunately, the fair-use rules which grant some exceptions to copyright were written long before the idea of a hyperlink existed, and make no allowances for links or credit. (Fair use, for example, clearly lets publications like Business Insider show you screenshots of Pinterest pages featuring images that could get Pinterest in legal trouble when discussing that same topic.)

Copyright is a tangled issue, and frankly the laws as written don’t reflect the realities of the ways people share and manipulate content today. Not one bit. We’re not defending those laws—just acknowledging that they exist. Copyright law desperately needs to be rewritten in a way that’s fair to both content creators and innovators like Pinterest, Tumblr, and, yes, Google, which make their work that much more valuable.

Washington moves slowly, though. And in the meantime, there’s a strong possibility that a big lawsuit will come along that cripples the ability of all websites—not just Pinterest—to feature compelling images.

Google can’t afford a small startup without a solid business model or a sophisticated legal team to take on that battle and not win.

So to protect the $36.5 billion a year it does in advertising—largely on material created by others that it helps users discover through search—Google will have to buy Pinterest. And probably Tumblr, too.

It’s cheaper than letting them lose a lawsuit. 

DON’T MISS: Some of the gorgeous images that could get Pinterest in trouble >>

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.