James Boyle: Not so simple

Richard Epstein: An argument with two parts

In 1984, the United States Court held in Sony Corporation v Universal City Studios (Betamax) that the owners of motion pictures could not sue the sellers of Betamax machines for contributory copyright infringement, just because their then-new equipment allowed ordinary users to record their copyrighted material.

Betamax stressed that Sony's equipment had an extensive variety of noninfringing uses, including the simple time-shifting of recorded events that left all advertisements in tact. The case was widely regarded as a backhanded victory for the short-sighted film industry that didn't quite get that Betamax and the VCR would open up an entire new revenue stream - home videos - for the very industry that sought to shut down the new technology. Like the old player-piano cases, where the player pianos which produced songs without a human player were sued for copyright infringement, a gentle judicial hand facilitated a wider commercial market for copyrighted works.

Right now (in a case where I am consulting with the Business Software Alliance, although the views here are my own) the battlelines are forming anew as the Supreme Court prepares to hear MGM v Grokster.

Is a peer-to-peer file sharing network, over which copyrighted songs are illegally swapped, likewise immune from charges of contributory infringement because, as the lower court held, Grokster's creators did not run a centralised music directory on the forbidden Napster model?

Once again, the hue and cry is that the content industry should stay its hand lest it kill a technology from which it ultimately benefits. The opponents of copyright liability are refighting the last war, only this one is much more complicated.

Initially, no one is happy about how the law of contributory infringement plays out. Conceding that the direct swap of copyright material is illegal, it still can't be the case that anyone who "facilitates" thousands of independent transfers should bear those sins as his own. By that logic every hardware or software supplier whose equipment is used for illegal swaps is branded a wrongdoer. That the net of liability cannot spread that far was a large portion of the intuition in the Betamax case. But here the institutional dynamics are quite different. Most critically, there's no intermediate business layer between Betamax and the ordinary consumer. The Supreme Court's stark choice was either too much or too little liability, and it opted for the latter. But in the case of Grokster, a no-liability rule for box manufacturers, web designers and email suppliers is easier than it was in Betamax, precisely because Grokster now occupies that crucial intermediate position.

Adopting this fixed position means that we don't have to explore a terrifying possibility, suggested by Judge Richard A. Posner in his 2003 Aimster decision: if initially presuming that so long as infringing uses are substantial (as they are with any computer), then to escape liability "a provider of the service must show that it would have been disproportionately costly for him to eliminate or at least reduce substantially the infringing use." That open-ended inquiry creates the nightmarish possibility that just about everyone in the chain of distribution - unless the term "provider of service" is narrowly construed - bears the burden of proof of showing that no technological fix was available.

No one can make these complex design determinations sensibly, even prospectively. Worse still, no jury should ever be allowed to use hindsight to impose huge damages in endless contributory infringement cases brought years after those original design decisions were made.

But as for the Groksters of this world? For them, my personal judgment - Betamax's reprieve - is all too generous. Grokster can't raise even one whiff of the fair use defence that loomed so large in Betamax.

First, there's no class of nonobjecting owners of copyrighted material who don't mind copying. Second, there is no advertisements that can be watched at a different time. And third, this time the content providers, moreover, are right to assume that this new technology won't open up new revenue streams given that iTunes has already figured out how to tap this segment of the market.

This immediate facilitator shouldn't escape because there are some noninfringing uses; there always are. Rather, Grokster should be held liable for fuelling a huge explosion in illegal transfers, even if its originators have tried to distance themselves from the illegal swaps that take place daily. If Grokster has some legitimate use, then it can be reconfigured, perhaps with consultation with the content owners, in ways that allow for the legal sharing of data, a critical function that looms larger each passing day.

Here's our moral. In dealing with contributory infringement, we can't expect the precision that is found in infringement suits directed against individual players. All that can be asked is that we try to minimise the sum of two errors, for over and underenforcement. In this case, I believe that shutting down Grokster, and leaving everyone else alone, marks the sensible first approximation to the correct solution.

The writer is the James Parker Hall Distinguished Service professor of law at the University of Chicago and Peter and Kirsten Bedford Senior Fellow at the Hoover Institution


James Boyle: Not so simple

James Boyle
© Financial Times

If the facts were as Richard Epstein reports them, then the Grokster case would be easy. He distinguishes Grokster from the Sony decision about video recorders by saying “First, there’s no class of nonobjecting owners of copyrighted material who don’t mind copying.” That is a popular belief but a false one. In fact, lots of bands use Grokster, Morpheus, and other P2P systems to distribute their own copyrighted material. A search of Grokster would reveal many, many musicians, video producers and others who are doing so. Whether it is David Byrne, the Beastie Boys, and the other musicians whose “Creative Commons” CD was recently featured on Wired Magazine, Roger McGuinn of the Byrds, or merely the teenage garage band which is distributing its first song in the hope of getting club dates, the P2P architecture is routinely used by copyright owners who are eager to distribute their work. True, as I pointed out two weeks ago, a large majority of the material on Grokster is copied without the copyright holders’ consent. But a substantial minority is not. In fact, if one compares the two cases, there might actually be more “nonobjecting owners of copyrighted material” on Grokster than were discussed in the Sony case. In Sony, the court made much of a single public domain film, a single children’s TV program, a particular type of sports programming and so on. Sony also had the very, very large category of objecting owners of copyright who were trying to prevent taping for the purposes of time shifting. The court said that time shifting was fair use. There is no neat analogue to that decision in the Grokster case - a point for Profesor Epstein’s side. But in terms of “nonobjecting owners of copyrighted material,” Grokster can actually make a case that is at least as strong as Sony and probably stronger. And all the Supreme Court required in Sony was “substantial non-infringing uses” of the challenged technology. That is the first reason the case is harder than Professor Epstein indicates.

The second reason goes deeper. As I said before in these pages, I have no particular love for Grokster and its ilk. (I am not retained by any of the parties of the case though, following Professor Epstein’s commendable lead in mentioning his consulting work on the subject, I should disclose that I may decide to sign a “friend of the court” brief by legal scholars professionally interested in the outcome of the case.) But fortunately or not, these P2P networks will make a lot of the law in the area. We had better understand what the implications of our decisions are, because they will run far beyond Grokster and Kazaa.

We talk about “cheap speech” on the internet, but bandwidth is actually expensive. If one is talking about music or video files, and one wishes to speak to many people in a short period of time, the only way to have cheap speech is over peer to peer networks. It is only if many of your viewers are willing to become broadcasting stations as they watch that you can cheaply reach a million people in a short period of time with your video of abuse in Abu Ghraib, or your parody of political leaders. It is only by making your listeners your distributors, that you can quickly reach the same number of ears that the Payola-soaked radio waves allow the record companies to reach. So one doesn’t have to cheer Grokster. Much of what goes on there is indeed illicit. But the point about P2P networks is that they are hard to police. They have multiple nodes. That is why they work. It means they will have both infringing and non infringing uses, and the non infringing uses will be centrally connected to our deepest values of free speech and cultural decentralisation. Cheap audio-visual “speech” to a mass audience will depend on P2P for the foreseeable future. Grokster is not so simple a case after all.

This writer is William Neal Reynolds Professor of Law at Duke Law School, a board member of Creative Commons and the co-founder of the Center for the Study of the Public Domain

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Richard Epstein: An argument with two parts

Richard Epstein
© FTcom

There are two parts to my argument on Grokster, and James Boyle takes issue with me on one. He does not take issue with my assertion that non-liability is the appropriate response for all systems that are upstream to Grokster, which clears away much of the thicket of potential lawsuits on the system.

His narrower point is that he thinks that the ratio of noninfringing uses to infringing uses on Grokster is not what I believe it to be. In this case, my one-dimensional mind thinks that the numbers really count. If 90 percent of the traffic on Grokster is illegal, then I would shut it down, if technically possible. If the number were 60 percent, I would be much more reluctant to do. One of the virtues, or vices, of Betamax is that it does not give a number to go with the phrase substantial noninfringing use.

But that point is critical, as is the question of whether the other P2P systems, such as Morpheus, have the same or different ratios. Clearly, some, and perhaps most, P2P systems are of immense practical importance. The hard problem in this case remains: how to stop the illicit use without bringing down the immense amount of traffic that is legally on the internet.

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