Grokster Grok

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).

Comments

[Stephen]

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.

[Volumerates.com]

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[Asep]

We need to strike while the iron is hot! With this laestt corporate personhood Supreme Court decision in the public arena, and with many in Congress speaking out against the decision , we should immediately campaign for a federal law to declare that corporations are not persons and have no claim to obtain human rights under the U. S. Constitution. Now is the time. The President and many members of both parties in congress have spoken against it. Lets ask all our members to send a letter to the President NOW before the state of union address if possible and ask him to support a bill merely to state the obvious, that a corporation is not a person entitled to Human Rights under the U. S. Constitution. At least that will be a start. If a Constitutional amendment is needed it can be done in time, but lets try this [a bill or executive order] for a start! I have been fighting corporate personhood for over 4 years and got it in the Maine Democratic platform, where there was absolutely no opposition to it. The people when they find out about it tend to be outraged that you need to define the English language in law to get your rights. It passed unanimously in the Maine Democratic Convention in 2004 and some Maine towns have passed ordinances as well. Everyone understands the issue fairly easily. Here is what I sent to the President via whitehouse.org, and my 2 senators and my congress woman, all 3 of whom have made public statements against this laestt court decision. I request that you send a letter or petition on overturning this to your membership. Also lets partner with other groups and get them to start letter writing to their members to contact their congress reps and the president. We need to strike while the iron is hot!Unlike the way it was reported, the [Citizen United]] Supreme Court decision, which allows unlimited corporate political donations, is not just one free speech case, but one of a long train of decisions that allow corporations to escape nearly any government regulation under the century old false court doctrine that corporations are entitled to human constitutional rights because corporations are people [the so-called "corporate personhood" doctrine]. This case is being reported [by news corporations] as though it is an isolated incident, but it has been happening for a century. The personhood doctrine is far more damaging than just freedom of speech. If corporations are human, they are not only entitled to freedom of speech, but freedom from search and seizure, freedom of assembly, equal protection under the law and other human rights. The 22nd amendment, allowing equal protection under the law, was created for southern blacks to free them from Jim Crow justice in the south. After the corporate personhood doctrine it has been used over 200 times by corporations under this false corporate personhood doctrine and less than 10 times by real living human beings according to the book Unequal Protection by Thom Hartman. The original case, which hundreds of succeeding decisions used as a precedent, was never actually decided by the court, according to Hartman, but only in a footnote. Some have stated that the footnote itself was added by a clerk and was never actually part of the 1886 decision Santa Clara railroad decision. [Court records being poorly kept at that time.]Legislation supposedly trumps court precedent. Courts are supposed to consider the intent of the Congress when deciding a case. This is one of a series of cases where the court is legislating from the bench.A law passed by Congress stating that corporations are not persons entitled to human rights under the Constitution would extinguish the use of this false precedent again in the future. According to their statements the President and all 4 members of the Maine congressional delegation oppose this decision. I suggest one of them sponsor a bill that would state that no corporation is a person or can be considered to be a person for purposes of obtaining human rights under the United States constitution. This could be used in court to refute future the corporation argument that human rights are being violated by whatever law is being challenged.A Presidential executive order stating that corporations are not people may even be enough to prevent another use of this false doctrine by the Supreme Court.If the government acts on this matter alone it would have made the greatest contribution to human justice since women were given the right to vote.As a friend once said, If a corporation is a person, then a monkey is a hippopotamus.

[Hason]

I am aghast. It is bad engouh that we were FORCED to buy new TVs and converter boxes expensive ones at that, when our old TVs and VCRs worked just fine only to be stuck with the situation with the demise of decent television programming a la reality show. Any decent shows, even re-runs are off the air. Too much infomercials during prime time weekends, even! And all you get is The Office 5 days a week on NBC plus also on syndicators. No escape from the trash. The HD Conversion was a joke, a lie perpetrated on Americans. I want the status quo back. I have an expensive TV with little to watch on it. I do not want to pay $50 $100 to cable for more crap. Leave my TV alone. Better yet, Rescind licenses for stations not educating and informing the public with decent programming. Step up to the plate FCC!The only good thing is that I can watch shows I miss on Internet and avoid another expensive piece of equipment that doesn't work as well as my old VHS did. Also, do you notice how poor the picture cropping is on HD TVs? We got duped BIG TIME.

[Karrie]

The TELCOS and Media Giants forget that the awyiars are OWNED BY WE THE PEOPLE!!! They exist TO SERVE THE PUBLIC. The TELCOS and Media Giants are always seeking to diminish the Public's control and to further GOUGE the Public financially. It is time that WE THE PEOPLE stand up and assert our ownership and rights to ALL the Public Airways. It is LONG PAST TIME for WE THE PEOPLE to harness and restrict the TELCOS and Media Giants!!!

[Mamorena]

Has anyone read SOPA? It is an extermely dangerous act that threatens free speech and expression. It runs against so many messages of independence and pro-art in Hollywood films and American-made TV productions. The paradigm of information sharing and entertainment consumerism has shifted in the last 10 years. Rather than embrace the fact that more people globally are watching their product than ever before, and then discussing it via images and clips on social websites, Hollywood is using all of its power and money the 1% ahem to dictate and patrol the web. Like the even scarier, Orwellian National Defense Act, SOPA strikes first and asks questions later, if ever. That's not hyperbole. Do some research. Theoretically, a Hollywood studio, a big producer, etc can flag a hundred websites that are felt to violate copyright and those sites will be removed. Gone. Zapped. Blacklisted. SOPA targets not only shady sites that distribute copyrighted movies through torrents. It threatens sites like Tumblr, YouTube competitors, fan made videos, fan sites, you name it. The act is akin to destroying the marshland of the web, where ideas and new life are given to forms of old media by the minute. It threatens to turn the web, with Facebook's colluded, privacy-mining assistance, into a digital Time Square. The web is often not pretty or polite, agreed. Such is life. The pro-SOPA commercial that is circulating, that's funded by Hollywood dollars, is a joke. Let's guilt and further bribe U.S. politicians by decrying the loss of jobs created by piracy and the web. There is no hard, objective data to support this. At all. Hollywood has taken a hit due to video games, due to breakthroughs in interactivity. Due to its inability to experiment with the form, and its bloated product, like comedies that run over two hours that rely on crude humor. On Transformers 4, 5, and 6. Oh, and due to the crappiest sequel it didn't make, the Great Depression 2: Jobless Millenials. Americans are struggling. There is little time for them to really look into SOPA and the National Defense Act. And channels like CNN and Fox News certainly aren't doing a thing to inform them. Wonder why. Speak up against these cretins. The 1% is going down. Their desperate measures are just that.

[Reynier]

Google and other Internet companies know that a large part of the Web's puprlaoity is due to the free and illegal availability of copyrighted content. But that's only part of the reason that they're fighting this. As owner of YouTube, Google has a vested interest in driving down the asset value of traditional media companies. It makes the purchase of media content cheaper, it maintains their dominant position as the world's video portal, and it keeps the traditional media companies in fear and weakness. There will come a time when YouTube has established itself as an entertainment encumbent. At that point Google will suddenly find it has the ability to prevent the identification, distribution and viewing of copyrighted material and will heartily endorse this kind of Federal measure. The problem is timing; strategically Google is not quite where it wants to be just yet, and this kind of legal protection will give the traditional media corporations protection that could disadvantage Google. Taking greedy corporate self interest out of the equation for a moment; would the technology companies like their patents protected in a narrow way that would curb private lawsuits? Of course they wouldn't. They are being disingenuous in trying to deny the same kind of protections to others that they regularly enforce themselves. Media and entertainment, like all other intellectual property, has economic value. Media companies big and small should have the opportunity to go after US technology companies if it can be shown that they are facilitating the theft or unauthorized use of copyrighted material.

[Madhusudan]

While Murdoch is in court having his day, maybe we shuold ask him and all of the studios to open up their balance book and see what it is they are truly protecting! The internet gives the writer producer all the power. Some may say that if content is king then Google could be King Kong. But the winner will always be the creator. Does this bill protect the creator. No. It doesn't. The internet is the truest form of democracy we now have. Just take a look at the Arab Spring. This has nothing to do with copyright yes it does. Of course it does. The internet doesn't belong to anyone one. It belongs to us all. Do you honestly think Murdoch gives a crap about democracy. He would destroy all unions if he was given half the chance. Take a look at the UK. Take a look at what that man's policies did to a young girl who was brutally murdered by a serial killer. Now we are to believe that his bill has the creators best interests at heart. COME ON!! Wake up. This bill is not about protecting the creators of content it's about protecting the wallet of those that have had the power to abuse the writers, producers, actors and musicians for way to long. If 100.million people illegally download a piece of content. Music.Film. TV. That's 100 million eyeballs.This bill will fail even if it passes. The internet is here. For good. For bad. It's here. The old archaic ways of monopolized networks and studios is over.