YouTube is facing a billion-dollar lawsuit from Viacom, the American entertainment giant whose empire includes MTV and Paramount Pictures, which accuses the video-sharing website of massive copyright infringement.

Viacom said that YouTube, now owned by Google, “built a lucrative business out of exploiting the devotion of fans to others’ creative works in order to enrich itself and its corporate parent Google."

In a statement, the company said that YouTube’s business model “is based on building traffic and selling advertising off of unlicensed content.” Such a model “is clearly illegal and is in obvious conflict with copyright laws,” the statement continued.

Viacom is seeking more than a billion dollars in damages, as well as an injunction prohibiting Google and YouTube from further copyright infringement.

It alleges that almost 160,000 unauthorised clips of Viacom’s programmes have been available on the website, which has attracted millions of followers during its two-year existence.

Last month, YouTube said it would remove more than 100,000 highlights of Viacom shows after a promised copyright protection system was not installed on the website.

YouTube has stepped up its efforts to remove copyrighted material, and to tie up with entertainment providers, since it was taken over by Google for $1.65 billion ($850 million) in November.

The website says it has brokered more than a thousand partnerships with content providers, including heavyweight broadcasters such as the BBC, NBC, CBS and Fox.

Viacom, however, said it had no choice but to sue after negotiations with the site proved unproductive. The company recently signed a deal with the online video company Joost, authorising some content to appear on the site.

Google, based in California, could not immediately be reached for comment on the lawsuit, but last week the company’s chief legal officer David Drummond said that the firm did obey copyright laws. “The result has been more exposure and in many cases more revenue for authors, publishers and producers of content," he said.