SCOTUS Looks at File Sharing by John Brewer April 2005 SCOTUS is the Supreme Court of the United States

Legal Bytes: SCOTUS Looks at File Sharing
         by John Brewer   April 2005

          SCOTUS is the Supreme Court of the United States. The file sharing controversy has been battled in the lower courts for a number of years. The Supreme Court is scheduled to hear debate on this issue on March 29, 2005. The style of the case is MGM v. Grokster. There are a number of software applications that permit users to join together in a large peer-to-peer network and share files. The law is fairly clear that it is improper, under most circumstances, for users to share copyrighted files with each other. However, the issue of the liability of the software companies that facilitate file sharing is less clear.
          The debate began in earnest some years ago when Napster entered the market place. Since then, other more sophisticated applications have emerged. These applications include names like Kazaa, Grokster, Morpheus and LimeWire. These names may be familiar with the younger generation but to most people in my generation, they sound like rap entertainers. The use of the word entertainer for rap musicians may not be entirely accurate as that depends on one’s perspective.
          The New York Time opines that the conflict may be far from over. “Yet, since the court can do little to alter the spread of technology or the interests of copyright owners to protect their material, many expect something resembling a permanent war. ‘We are guerrillas fighting the despotic regime,’ said Alan Morris, the executive vice president of Sharman Networks, the Australian company behind Kazaa, once the leading file-sharing network and the recording industry's leading target, which is being sued by the music industry in both American and Australian courts. ‘They have some quite heavy guns, but we can see where they are firing from,’ Mr. Morris said.
          The Times article continued with some amazing statistics, “there are about 60 million people using file-sharing services in the United States, with roughly 8.5 million logged on at a time,” said Eric Garland, chief of BigChampagne, which studies traffic on file-sharing networks. While some surveys have suggested that file-sharing activity slowed in 2003, when the Recording Industry Association of America began to sue individual users for trading copyrighted songs, Mr. Garland said that the number of people logging on to file-sharing networks had risen steadily and that he expected the number to increase by 10 percent or more this year.
          In my humble opinion, the concept of 8.5 million computer users connected peer-to-peer through the Internet at one time is incredible (regardless of how many networks are involved).
          “The music industry, meanwhile, is recovering from a long slump. It sold 814 million CD's, cassettes and units of music in other formats last year in the United States, up 2 percent, its first increase in five years,” the recording industry association said. “It also sold 140 million digital tracks in the United States,” the association said. But the industry says it thinks it would have seen a bigger sales rebound had it not been for online piracy.”
          There are more parties involved than just MGM and Grokster. Twenty-eight companies are listed as plaintiffs. The list of defendants is much smaller and the names are not as well known. The Supreme Court case evolved through the Ninth Circuit (the defendants prevailed at the circuit court of appeals) and the list of amicus briefs that have been filed is impressive. An amicus brief is a legal document containing argument and legal authorities that is filed with the court in the attempt to aid one party or the other. On August 19, 2004, the Ninth Circuit ruled, "This appeal presents the question of whether distributors of peer-to-peer file-sharing, computer-networking software may be held contributorily or vicariously liable for copyright infringements by users. Under the circumstances presented by this case, we conclude that the defendants are not liable for contributory and vicarious copyright infringement and affirm the district court's partial grant of summary judgment."
          A powerful argument of the defendants is based on an opinion by the Supreme Court involving VCRs from two decades ago. The Supreme Court's landmark decision in Sony Corporation of America v. Universal City Studios, Inc. (a.k.a. the "Sony Betamax ruling") held that a distributor cannot be held liable for users' infringement so long as the tool is capable of substantial noninfringing uses. In MGM v. Grokster, the Ninth Circuit found that P2P file-sharing software is capable of, and is in fact being used for, noninfringing uses. Relying on the Betamax precedent, the court ruled that the distributors of Grokster and Morpheus software cannot be held liable for users' copyright violations.
          The Electronic Frontier Foundation (EFF) has an excellent summary of the Sony Corporation case. “Sony v. Universal Studios, or the Betamax case, is a landmark copyright case decided by the U.S. Supreme Court in 1984 that has sheltered a wide array of technology innovators from lawsuits at the hands of the entertainment industries. In fact, it is thanks to the Betamax ruling that the makers of not just VCRs, but also every other technology capable of being used for infringement (e.g., photocopiers, personal computers, Cisco routers, CD burners, and Apple's iPod) can continue to sell their wares without fear of lawsuits from copyright owners. In the Betamax case, the Supreme Court ruled that a company was not liable for creating a technology that some customers may use for copyright infringing purposes, so long as the technology is capable of substantial non-infringing uses. In other words, where a technology has many uses, the public cannot be denied the lawful uses just because some (or many or most) may use the product to infringe copyrights.”
          "The copyright law principles set out in the Sony Betamax case have served innovators, copyright industries, and the public well for 20 years," said Fred von Lohmann, EFF's senior intellectual property attorney. "We at EFF look forward to the Supreme Court reaffirming the applicability of Betamax in the 21st century."
          The EFF website is www.eff.org. Stay tuned. This is a very important case that will affect many computer users.

John Brewer practices law in Oklahoma City, is a member of the Governor’s and Legislative Task Force for E-Commerce, and enjoys issues relating to eBusiness and cyberspace. Comments and questions are welcome and can be emailed to johnb@jnbrewer.com.

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