Back in 2010, media giant Viacom’s suit against YouTube over copyright infringement for hosting its material on the site came to a close. The courts decided the case in YouTube’s favor, but now, according to a Reuters report, the case is back on.

The 2nd U.S. Circuit Court says that a ‘reasonable jury ‘ could have decided that YouTube knew about specific infringement that was occurring on its site. This means that the lower court’s decision to dismiss Viacom’s $1 billion dollar case was a mistake.

The case was fought over the course of three years, with Viacom and Google trading barbs back and forth. YouTube argued that, under the safe harbor rules of the Digital Millenium Copyright Act, it was in the letter of the law. One of the big twists in the case was when YouTube revealed that Viacom had actually requested it take down videos that Viacom itself had uploaded.

Viacom had argued that Google’s YouTube had known about the infringement of Viacom material on the site and continued to make money on it. Viacom was in a terrible financial state, and basically felt that this would be a good infusion of cash. YouTube argued that, under the DMCA, they were obeying the letter of the law and had no intention of bailing out the struggling Viacom.

This news is especially timely considering that, just yesterday, it was announced that Google had struck a deal with Paramount studios to offer movie rentals on YouTube. Paramount is owned by Viacom Media.

Now, it looks like the case may re-enter the discussion as it gets another look by a higher court. We will, of course, continue to monitor the situation. This should be an interesting one.

Update: YouTube has issued the following statement:

The Second Circuit has upheld the long-standing interpretation of the DMCA and rejected Viacom’s reading of the law. All that is left of the Viacom lawsuit that began as a wholesale attack on YouTube is a dispute over a tiny percentage of videos long ago removed from YouTube. Nothing in this decision impacts the way YouTube is operating. YouTube will continue to be a vibrant forum for free expression around the world.