Was just reading about the policy of the site (now, GOOOOOOGLE) in case of copyright infringement issues.
Could find what I was expecting... Yes, site will not be with you if somebody sue you for copyright violation issues. That means, company would'nt protect you if you are in problem becuase of copyright issues.
You can read more about this at,
[YouTube's no friend to copyright violators]
http://news.zdnet.com/2100-9595_22-6128252.html