
The system would reportedly use digital fingerprinting technology to compare user-submitted videos to copyrighted materials and filter out violations.
Youtube reportedly has been working on a filtering system since before last fall's acquisition by Google. Last February, speculation flared up again after Google chief executive Eric Schmidt said that a system would be put in place "very soon".
Those rumours picked up even more steam when it was reported that the company was working with DRM firm Audible magic to develop a system to digitally "fingerprint" user-generated content.
Youtube's current policy states that the company will only take down infringing videos at the request of the copyright owner.
The company's policies have landed both Youtube and Google in hot water with content providers.
Since last year, Youtube has received hundreds of thousands of takedown requests from content providers and royalty groups.The largest of those is the 100,000 video takedown request from Viacom that later evolved into a US$1bn lawsuit.
The Viacom suit was later combined with similar copyright suits from the FA Premier League and music label Bourne.