In a judgement issued on Tuesday and confirmed to AFP on Thursday, Vienna's commercial court said that YouTube had played an active role in spreading such content and therefore could not claim the status of "neutral intermediary", according to the ruling cited by the Ploil-Boesch law firm.
The firm is acting on behalf of Austria's Puls 4 television station, which brought a case against YouTube in 2014 over the unauthorised presence of its content on the site.
Puls 4 and its lawyers said they had established YouTube's complicity in spreading the content through a "painstaking" analysis of how the site works.
The court found that because of the site's "links, mechanisms for sorting and filtering, in particular the generation of lists of particular categories, its analysis of users' browsing habits and its tailor-made suggestions of content... YouTube is no longer playing the role of a neutral intermediary".
"YouTube must in future -- through advance controls -- ensure that no content that infringes copyright is uploaded," it added.
According to Puls 4, if the decision is upheld on appeal it could be an important landmark in defining theresponsibility of sites like YouTube in the field of copyright protection.
"The media companies who call themselves social networks will have to recognise that they too have to take on responsibility for the content with which they earn their millions," said the head of Puls 4, Markus Breitenecker.
Austrian media quoted YouTube as saying it takes copyright protection "very seriously" and that it would study the judgement closely, while not ruling out an appeal.
The judgement comes as the European Union discusses possible reforms to copyright law to ensure news publishers and artists are better compensated for their work when it appears on online platforms.
Among the measures being considered in Brussels is forcing video-sharing sites like YouTube or Dailymotion to introduce technology to identify and delete songs or other audio-visual works which have been flagged by copyright