Craigslist this morning turned the tables on South Carolina Attorney General Henry McMaster, suing him for threatening to file criminal charges over its adult classifieds. The suit seeks declaratory relief and a restraining order against McMaster, who alleges that those classifieds often display advertisements for prostitution and graphic pornographic material.

“Despite craigslist’s legal immunity from criminal or civil liability under State law for unlawful third-party content on its Web site, and despite the numerous good-faith actions that craigslist has voluntarily taken to deter abuse of its service by third parties notwithstanding its legal immunity, McMaster has persisted in threats to criminally prosecute craigslist on the basis of third-party content appearing on the craigslist Web site,” the suit reads. “…Given Defendant McMaster‘s persistent and continuing public threats, craigslist is presently faced with the untenable choice of either completely shutting down all portions of its website that are directed at South Carolina or else putting itself and its management at risk of imminent criminal prosecution by Defendant McMaster.”

Or calling McMaster’s bluff, as craigslist has so excellently done here. And with great success, apparently. Within a few hours of the suit’s announcement, McMaster backed down, issuing a rather remarkable statement proclaiming himself victor in the spat. “The defensive legal action craigslist has taken against the solicitors and my office is good news,” he wrote. “It shows that craigslist is taking the matter seriously for the first time. More importantly, overnight they have removed the erotic services section from their website, as we asked them to do. And they are now taking responsibility for the content of their future advertisements. If they keep their word, this is a victory for law enforcement and for the people of South Carolina.”

The judge disagreed. And his reasons for doing so will undoubtedly come into play in the Viacom case and others as well. “Veoh has simply established a system whereby software automatically processes user-submitted content and recasts it in a format that is readily accessible to its users,” the judge wrote. “Veoh preselects the software parameters for the process from a range of default values set by the third-party software. … But Veoh does not itself actively participate or supervise the uploading of files. Nor does it preview or select the files before the upload is completed. Instead, video files are uploaded through an automated process which is initiated entirely at the volition of Veoh’s users.”

Google (GOOG) was understandably quite pleased with the ruling: “It is great to see the Court confirm that the DMCA protects services like YouTube that follow the law and respect copyrights,” Zahavah Levine, YouTube’s chief counsel,” said in a statement.

Viacom (VIA) was equally displeased, understandably. “Even if the Veoh decision were to be considered by other courts, that case does nothing to change the fact that YouTube is a business built on infringement that has failed to take reasonable measures to respect the rights of creators and content owners,” the company said in a statement. “Google and YouTube have engaged in massive copyright infringement–conduct that is not protected by any law, including the DMCA.”