Google responded to Viacom’s $1 billion lawsuit over alleged YouTube copyright infringement today. Their answer: Let’s fight this out, in front of a jury.

We earlier predicted that there was no way Google would agree to a settlement with Viacom that involved any damages, and assumed that they would work to sign a licensing deal instead and convince Viacom to simply settle the lawsuit. Viacom later signaled that they weren’t much interested in a deal when they agreed to provide content to Joost and then did a search advertising deal with Yahoo instead of Google.

I have visions of bloggers fighting to get a good seat at the trial, and live blogging the entire thing. The fate of YouTube’s buisness model, as well as many other web startups, will likely be linked to the outcome of this litigation.