Wednesday’s Congressional Internet Caucus conference had a host of panels that addressed hot IP issues. Two specifically addressed the potential impact of the Supreme Court MGM v. Grokster case and legislation that might be crafted in reaction to it. Panelists included several congressional staffers on committees of jurisdiction, Boalt Law School Internet expert Pam Samuelson, Viet Dinh, a former Supreme Court clerk, current Georgetown law professor and consultant to the MPAA and RIAA and lawyers for the Digital Media Association, MPAA and technology companies.
If one thing was clear from the panels, it’s that Congress greatly appreciates the relative quiet on the debate afforded by the coming Supreme Court decision.
Regardless, most everyone acknowledges that Congress will have to reengage in the heated battle after a late spring or early summer ruling. This is because the Supreme Court is unlikely to completely accept the 9th Circuit Appellate Court’s decision in favor of Grokster (for one, the Court almost never agrees with the 9th Circuit on any issue), and is as equally unlikely to provide guidelines so detailed and comprehensive in the ruling that it takes Congress of the hook....
Instead, the decision will probably lead to additional years of legal battles at the trial court level to address the Supreme’s ruling and new facts garnered in the case. It will also likely provide new impetus for Congress (and state legislatures) to step in and codify hot buttons like defining secondary liability and active inducement in the Internet age.
How did we get here and what’s this all about weren’t two questions asked by Caucus audience members this week, but they were probably thought by most.
First off, 28 large media companies and publishers sued the makers of Grokster, KaZaA, and Morpheus as liable for pirated content on their respective P2P networks. Grokster claimed, in response, that they simply created and distributed software and it took off organically. Since their network of users is decentralized, Grokster claimed it had no control of their users and couldn’t filter the content that they distributed.
The 9th Circuit ruled in favor of Grokster, absolving P2P providers of liability under the fair-use guidelines created in the Sony Betamax v. Universal case of 1984. However, in 2003, the 7th Circuit effectively shut down Aimster’s P2P service by creating new balancing tests for infringement beyond the “substantial non-infringing” ruling in the Betamax case. The Supreme Court stepped in on Grokster v. MGM to mend the split between the two rulings.
On her Internet Caucus panel, Pam Samuelson provided a fairly objective recap of the Grokster case and its implications.
Samuelson says the result of this argument will reverberate far beyond the plaintiffs and the defendants and that it will have major impact on the balance of power between the IT and content industries. She notes that since the movie industry lost the Sony Betamax case 20-years-ago, hardware, software and, eventually, Internet innovators enjoyed a stable and clear investment environment that let a thousand companies and products bloom. Why? Because the Sony case provided a safe harbor for businesses that created products whose products have substantial non-infringing uses.
The Sony case, of course, also has reaped billions for the industry that fought the copying of TV content in 1985 through VHS, and now, DVD sales. Indeed the MPAA lawyer on one panel admitted that they were simply wrong 20 years ago.
Are they wrong again? Some panelists suggested that the movie industry should focus on finding ways to make money off of decentralized P2P networks. Moreover, for the greater good, isn’t an open and robust Internet better than the alternative?
Alec French of Congressman Howard Berman’s (D-LA) office thinks not. To him and, frankly, most of his non-Hollywood congressional colleagues on the panels, the copyright system is simply not protected online. He asks for people to simply look at the reality of the situation. “P2P piracy is out of control,” he says and there’s more piracy via P2P than in any other means in the world.
Not surprisingly, RIAA/MPAA consultant and law professor Viet Dinh agrees. He emphasizes that 90 percent of content on Grokster is infringing. To him, the other 10 percent doesn’t equal the definition of “substantial non-infringing” use.
Dinh also makes the rarely mentioned, but appropriate argument that Napster was taken down by the same circuit court that ruled in favor of Grokster. Napster had centralized servers. Grokster wisely doesn’t. Still is that enough for Grokster, the business, to escape secondary liability? (The user is “directly” liable) – Especially when this money-making venture is encouraging and facilitating predominately infringing uses?
This last point is brings up the word that is likely to continue shape legislation and court decisions to come: Induce, or, more accurately “active inducement.”
While we’ll have better clues when the Court hears the case on March 29, Professor Samuelson thinks the most likely result in the Grokster case will be a reverse and remand of the circuit decision on active inducement theory. They’ll state broadly that there is no safe harbor for technology if you are actively inducing infringement and ask the lower courts to do more analysis in the facts of the case centered on the theory. For more tea leaves, Samuelson suggests that Supreme Court watchers read the neutral Digital Media Association amicus brief to the court (one of dozens of such briefs). DiMA represents most of the “legitimate” online media companies, including Apple, Yahoo!, Microsoft and RealNetworks. The trade association jointly filed the brief with the Center for Democracy and Technology, the Information Technology Association of America and the NetCoalition. An exceprt:
Amici do not condone – indeed, they strongly condemn – the use of peer-to-peer technologies to violate copyright law. Neither, however, do amici support the substantial broadening of the standards for secondary liability that petitioners urge this Court to adopt. Amici submit this brief to apprise the Court of the dangers to technological innovation, free expression, and democratic values online that are posed by petitioners’ position.
Amici urge this Court to reaffirm and clarify the reasoning set forth in this Court’s decision in Sony Corp. v. Universal City Studios, 464 U.S. 417 (1984). Without the crucial protections for technology innovators recognized in Sony, courts would be put in the untenable position of deciding when a provider of novel technology has “done enough” to prevent intentional misuse by others. Worse yet, courts would be called upon to balance the theoretical cost-efficiency of potentially unproven design changes that a technology provider might make to reduce the risk that technology users might violate the copyright laws.
(For the full brief: Download 050124_dimanetcoalitaacdt_grokster_friend_of_court_brief.pdf )
DiMA’s argues that: Sony “shields conduct relating to technology design, manufacture, distribution, and routine advertising and support, but not active encouragement of copyright infringement” and recommends that “a remand is warranted to allow the district court to consider the record in light of a clarified Sony rule.”
A “mixed” result will likely throw things back into Congress’s court (and state legislators). The codification of active inducement, secondary liability rules and definitions of technologies will be pondered.
Samuelson and DiMA argue that any new rule need to be very narrowly targeted (unlike California state senator Kevin Murray’s bill) and maintain the Sony safe harbor for new technologies and products. This path will clearly be easier if the Supreme Court goes the DiMA-esque route.
However, what if the court instead goes the route of the 7th Circuit Aimster decision? Thus creating bonifide Supreme Court word from on high that effectively establishes new caveats to the much-loved Betamax ruling?
Answer: The technology and consumer electronics industries freak out, and broadly written laws like the Induce Act and Murray’s California bill suddenly could become much less extreme in the eyes of middle-ground legislators.
In their brief, DiMA suggest some worst case scenarios if the court agrees with the Aimster decision:
1. A provider of an e-mail service allows subscribers to attach files to e-mails sent by the subscribers. A substantial number of the attachments are infringing files. Under an Aimster approach, a court could order that the system be redesigned to prevent the sending of any attachments, or any attachments other than text files, which tend to be noninfringing.
2. A company allows individuals to upload photographs onto a website so that other users can view and download them. Although the company designed the service to permit families and friends to share baby pictures and vacation photos, many people also use the service to exchange infringing pictures of celebrities and magazine centerfolds. A court might mandate that the service be redesigned to require an uploader to identify who he is, or to restrict access to the photos to individuals specifically designated by the uploader.
3. A manufacturer of a portable music player includes storage capacity of far more songs than a typical user purchases in a lifetime. One might argue that this excess capacity encourages some users to download songs illegally. A court might order that the device be redesigned to reduce its storage capacity.
The DiMA brief continues:
Petitioners doubtless will insist that they would not challenge basic technologies such as e-mail, search engines, and MP3 players. And petitioners themselves may very well decide not to abuse the power conferred upon them under an Aimster-type approach. But the universe of potential copyright plaintiffs is far larger than petitioners, and far less responsible; indeed, legitimate companies such as eBay, AOL, and Google have already been sued for copyright infringement based on providing such services as online auctions, access to usenet groups, and search results that include images. The Aimster approach would literally open the floodgates of litigation.
By the way, can you the imagine the impact of a ruling like this on blogging services?
Perhaps a relatively open-minded forum for this perspective will be the new Senate Technology, Innovation and Competitiveness Subcommittee chaired by Senator John Ensign (R-NV). This week, an Ensign staffer said that while they will work to protect IP, they very much want to ensure that any new rule creates proper balance and doesn’t damage innovation.
There will also be a new IP subcommittee in the Senate under the Judiciary Committee that will consider the issues according to a Senator Patrick Leahy (D-VT) staffer. The Senate Judiciary Committee was the home of last year’s much debated Induce Act.
Induce Act author and Judiciary Committee head Senator Orin Hatch (R-UT) might be looking forward to this. His staffer on the Internet Caucus panel questioned why secondary liability rules that protect technology providers also don’t protect drug or automobile makers. It’s a logic game that the tech industry doesn’t want to enjoin in as they argue that too much IP protection is as bad as too little.
As the clock ticks, it’s impossible not to note that BitTorrent was a virtual afterthought on the panels. One tech lawyer brought the technology up and wondered how the decision or Induce-like laws could have on an entity that was created to share free Linux software and then was morphed by users into a massive decentralized distributor of copyrighted material that supposedly takes up a third of the Internet’s bandwidth. Viet Dinh, the Georgetown law professor and RIAA/MPAA consultant, admitted on the panel that he hadn’t heard of BitTorrent, but that content providers would go after those creating a business model based on the technology. Just today, a site that provided access to BitTorrent-enabled content, LokiTorrent, was shut down by a MPAA injunction. The MPAA is getting user logs of the site and probably noticed that LokiTorrent provided advertising on its site (from advertisers that included Best Buy and Vonage).
I personally think the lower court was correct ruling in favor of Grokster, and I hope the supreme court upholds this ruling. I feel that the Sony Standard, as well as other precendents like Vault, Sega, Connectix, Lexmark, Skylink, and others have set useful balance between copyright, content, and freedom of innovation of new technologies.
Additionally, I beleive that peer to peer technology has done a lot of good for music distribution. It has enabled music fans for the first time to build a song library of just the songs they choose without having to pay for a lot of songs they do not want. The next thing it is done is exposed consumers to music on their computers, the freedom to make "custom mixed" CDs, and made content access easier and more open than ever before.
However, I beleive that something needs to be done to get the artists and songwriters paid for P2P, without criminalizing users who have accepted this technology. I personally like some of the ideas that EFF, Neil Weinstock Nathael, Ian Clarke, and many others have suggested that involve new kinds of licensing.
I also oppose Hollywood's Campaign to restrict innovation, and embed copy protection in every device. This kind of tech policy will curtail innovation, and try to turn computers into "content vending machines" that charge for every use, and don't allow just anyone to create new content or create new devices for.
Posted by: Stephen | February 13, 2005 at 02:18 AM