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FEATURE |
The Future of P2P File Sharing -
Implications of Sharman and Grokster*
Some see illegal peer-to-peer (‘P2P’) file-sharing as an
evil that must be stamped out with rigorous copyright enforcement; others see
it as heralding a new commercial reality that businesses must adjust to and
adopt to effectively tackle infringement. The copyright owner’s interests have
to be measured against freedom of information, privacy concerns and the need to
promote technology and innovation. It is the composing of these various
interests into an acceptable equation that presents the greatest difficulties.
Introduction
Peer-to-peer (‘P2P’) file sharing is so prevalent today that
it is estimated that illegal file sharing traffic is at rate a 40 to 50 times
the traffic of legitimate sites.1 Tracking services show that in September
2005, the average number of people logged onto P2P networks worldwide was over
nine million – double the number from two years earlier2 – with access to
over a billion music files.3 Indeed, some view file sharing as an
irreversible trend that should not be outlawed but instead managed in other
ways in order to harness maximum benefit for both the user and copyright owner.4 Opinions run the
gamut but the two extreme ends respectively urge the outlawing of any device or
system that can be abused by users to directly infringe copyright and the
absolute protection of such device or system that shows the potential to be
used in a lawful manner.
With it has come a series of litigation in the
Background
File sharing system
A P2P file sharing system can be set up in various
ways.
1 Centralised
system: the distributor maintains on its server an index of the available file
names of
online users.7
2 Decentralised system:
searching, file transferring and locating other users are carried out without
the help of the software provider or its server nor the establishment of
intermediaries.8
3 Supernode
(or ‘distributed’) network model used in both Sharman and Grokster.
An intermediate system where a select number of users’ computers on the network
are designated as supernodes or indexing servers to keep an index of available
files. The actual files available for downloading are kept in the respective
users’ computers.
For the decentralised and the
intermediate systems, even if the central server was shut down, ‘users of [the
software] products would continue sharing files with little or no
interruption’.9
The
Australian position
Sharman Networks Ltd (‘Sharman’)
operated the Kazaa Internet P2P file sharing system and distributed its Kazaa software
free to users. ‘Blue files’ were stored in a My Shared Folder in each user’s
computer. The system directed a user’s search request via a supernode that
searched through indices of all current blue files available in other users’ My
Shared Folders. The requesting party then downloaded the desired file for free
directly from the My Shared Folder of the other user. Paid website advertising
constituted the main source of Sharman’s revenue. Through a tie-up with Alnet
Inc (‘Alnet’), the Kazaa network offered other works made available by licence
with copyright owners. These works were called ‘gold files’.
The copyright owners sued Sharman,
Alnet and related companies, as well as the CEOs and key technology personnel
who were alleged to have control over the operations and file sharing policies
of the Kazaa network.
Sharman was liable for authorising
users’ primary copyright infringement as Wilcox J found ‘something more’ than
mere provision of facilities for copyright infringement. There was positive conduct
by Sharman, including promotion of its website as a file sharing facility.
There was also a marked failure to install any sort of filtering devices at
all, due to a financial motive in increasing file sharing.
The
Grokster, Ltd. and StreamCast
Networks, Inc distributed free software products allowing users to share
electronic files by the users’ computers communicating directly with each
other. Communications were not dependent on and did not go through a central
server. It was proven that a significant percentage of users were exchanging
copyrighted music files although there was some evidence of non-infringing uses
(such as sharing of public domain material, licensed music videos and movie
segments, and free electronic books). The entertainment industry sued under the
common law actions of contributory infringement and vicarious liability.
Contributory infringement occurs upon
material contribution to an infringing activity together with knowledge of the
alleged secondary infringer of such infringing activity at the time of the
material contribution.10 Vicarious liability attaches when the defendant profits directly from
the infringement and has a right and ability to supervise the direct infringer
– knowledge of primary infringement is not necessary.11
The District Court12 and Ninth Circuit13 found no liability in contributory infringement
arising from primary copyright infringement by users exchanging copyrighted
music files. Applying the Sony doctrine (from Sony Corp v Universal
City Studios, Inc (‘Sony’)),14 the courts found no such intent to cause infringement at the time of
distribution of the software. At the time of actual primary infringement by
users, the distributor had no more control over how the software was being
applied – the software was capable of non-infringing uses as well. The distributor could not be regarded as
furnishing the ‘site and facilities’15 for direct infringement.16
The Supreme Court in Grokster sidestepped
the Sony difficulty by articulating an inducement theory of
infringement. Drawing from first principles of contributory infringement,
Justice Souter in Grokster distilled its essence as liability that
arises when ‘[o]ne infringes contributorily by intentionally inducing or
encouraging direct infringement’.17 This overcame the problem of the distributors having no real control
over the decentralised network system. Justice Souter shifted the emphasis away
from the technology, to focus on the alleged secondary infringer’s behaviour
instead. Thus, ‘one who distributes a device with the object of promoting its
use to infringe copyright, as shown by clear expression or affirmative steps
taken to foster infringement, is liable for the resulting acts of infringement
of third parties’.18 In determining an unlawful objective, all relevant facts are
considered. Three particularly relevant factors to showing intent are whether
the alleged secondary infringer: (a) showed itself to be aiming to satisfy a
known source of demand for copyright infringement; (b) attempted to develop
filtering tools or other mechanisms to diminish the infringing activity using
the software or technology in question; and (c) makes money by selling
advertising space, by directing ads to the screens of computers employing their
software.
The Supreme
Court accepted the Sony doctrine as correct but held that it did not
immunise a party liable for inducing copyright infringement.19 On the
facts, there was blatant advertising, and
promotion of its services for use in unlawful music file exchanges. Other
relevant factors included the failure to implement any filtering devices and
the proportionality of the number of users to the quantum of its website
advertising revenue.
The
Sony defence
In Sony,20 Sony Corp was found not contributorily liable
for the distribution of the Betamax recorder as the latter was ‘capable of
substantial non-infringing uses’.21 This case was celebrated as a resounding endorsement for technologists
and inventors who may develop products susceptible to abuse by users yet that
are perfectly able to be used legitimately. This principle derived from a
modified ‘staple article of commerce’ doctrine in patent law.
On the facts, though the Betamax
recorder could be used for making illegal copies of programmes, it was also
used in time-shifting (ie recording of programmes for viewing at a later time)
which was non-infringing or amounted to fair use. Authorised taping constituted
only approximately nine per cent of all types of uses. The US Supreme Court, on
a majority of five to four, held there was no contributory infringement.22
While Sony remains good law,
debate rages over the test of ‘capable of substantial non-infringing uses’. Two
streams of interpretations have arisen over the years.
The broad interpretation asks whether
a technology is merely capable of non-infringing uses in commerce. If
the technology has present or future substantial non-infringing uses, it
satisfied this bright line test. No comparison of the proportion of
non-infringing uses to infringing uses is required.
The narrow approach undertakes the
unenviable (and impossible) task of balancing current and potential
non-infringing uses against infringing uses. This interpretation emphasises the
‘substantial’ element over the ‘capable’ element in the Sony doctrine.
Uncertainty surrounds these
contradictory approaches.23
Going by the Sony facts, where
evidence was adduced to show that only nine per cent of the uses were legal, it
seems clear that the first approach was intended. The court did not engage in
any exercise of measuring and balancing current and anticipated non-infringing
uses against infringing use. This was Justice Breyer’s view24 in Grokster, where he laid out the
benefits of such an approach, namely certainty and the promotion of
innovation. His view, though, is
strictly obiter as he concurred with the court’s finding of active inducement
of primary infringement.
Other cases supporting the broad
approach include the Ninth Circuit case of Grokster. Here, the Ninth
Circuit expressly disagreed with In re: Aimster Copyright Litigation
(Seventh Circuit)25 which had supported a narrow reading of Sony.
Justice Ginsburg26 in Grokster entered the fray by issuing a
separate judgment on her interpretation of Sony. As with Justice Breyer, she concurred
with the court’s finding that there was unlawful inducement of infringement.
Her separate judgment sought to explain why the defendants had misapplied the
Sony doctrine.
Justice Ginsburg opined that:
[e]ven if the absolute number of noninfringing files
copied using the Groskster and StreamCast software is large, it does not follow
that products are therefore put to substantial noninfringing uses and are thus
immune from liability. The number of noninfringing copies may be reflective of,
and dwarfed by, the huge total volume of files shared …. Fairly appraised, the
evidence was insufficient to demonstrate a reasonable prospect that substantial
or commercially significant noninfringing uses were likely to develop over
time.27
This opinion indicates a preference
for the narrow interpretation of Sony.
However, Justice Ginsburg failed to clarify the proportion of
non-infringing present and future uses (as compared to infringing use) that
would satisfy her understanding of the test.
The divided views on this issue among
the Supreme Court, and the Ninth and Seventh Circuits speak to a deeper problem
of policy making, and the desirability and competence of judges venturing into
areas involving complex socio-economic implications. Tellingly, Justice Souter
(delivering the court’s unanimous opinion on inducement liability) merely held
that Sony did not displace other theories of secondary liability, and
declined to further comment on Sony.28
Comparing the Australian and US
Positions
Comparing Sharman and Grokster
provides an interesting study of the scope of P2P infringement liability in
The
safe harbour
Both US and
The US safe harbour, under the Sony
doctrine,29 bars ‘secondary liability based on presuming or imputing intent to
cause infringement solely from the design or distribution of a product capable
of substantial lawful use’.30 In this case, Sony Corp, in distributing the Betamax recorder, was
found not contributorily liable for illegal taping by home viewers, as the
recorder was such a product. While
certain aspects of the Sony doctrine are still unsettled, it is at least
clear in Sony that no contributory liability attaches where after the
sale of the recorder, Sony Corp had no ‘direct involvement with the
[unauthorized taping] or direct contact with the purchasers of Betamax.’
The Australia Copyright Act (s 112E)
too prescribes a safe harbour, ie that a person who provides facilities for
making or facilitating the making of a communication is not treated as having
authorised copyright infringement in an audio-visual item simply because
another person uses the facilities to infringe copyright. When and how this safe harbour applies is
unfortunately less clear. Sharman confirmed that
s 112E applies only where there is no authorisation in the first place.
An authorisation finding in turn depends on all relevant factors of each case –
lack of action plus knowledge of primary infringement, and control over the
operational policies of the P2P network may possibly be enough to constitute
authorisation. Further, s 112E ‘does not confer general immunity against a
finding of authorisation’31 when for other reasons, the alleged secondary infringer may be taken to
have authorised the primary infringement.
Wrongful
conduct
In both cases, there was clear
positive behaviour resulting in secondary infringement liability. In Grokster,
its services were blatantly advertised as an alternative to the unauthorised
Napster services.32 Similarly, in Sharman, the software distributor made
exhortations to users to use the facility and to share their files, using the
Kazaa software as a file sharing facility, including promoting a ‘Join the
Revolution’ movement.33 In both cases, the distributor’s advertising revenues (the main source
of earnings) multiplied with greater file sharing.34
Notably, the respective judges set
quite distinct consequences of inaction at the time of the secondary infringing
act.
In Grokster, Souter J stressed
the purposeful culpable expression and conduct required for inducement of
infringement liability. This means that poor or inadequate design alone, for
instance, no or a poor attempt to implement filtering tools, is unlikely to be
sufficient to constitute secondary liability. 35
Wilcox J in Sharman, in
contrast, emphasised blameworthy inaction. Authorisation may be positive acts
or steps or may be ‘inactivity or indifference, exhibited by acts of commission
or omission’ that reaches ‘a degree as to support an inference of authorisation
or permission.’36 Notwithstanding the clear positive wrongful conduct in Sharman,
the articulated principles may be applied more broadly. Failure or omission to
properly design new products or to properly update the design for the old
products already released may possibly lead to a finding of ‘authorisation’ in
Australia. It is possible that future cases will restrict their scope by
reference to the Sharman facts or apply it on a wider basis. If the
latter holds, the Australian position would be much wider than US contributory
liability and inducement of infringement liability.
Design
obligation
Sharman emphasised the act of distribution as the triggering
cause of users’ infringement as well as the inaction of the distributor who had
knowledge of the users’ infringement. The lack of action includes a
reprehensible omission to properly create or revise the design of the system. A
highly significant circumstance was not installing filtering technologies to at
least ‘substantially reduce’37 the incidence of file sharing. Such filtering
obligations imply that distributors of new technology may have to continually
look to revising and updating anti-infringement features in their products for
new users who themselves may not be under distributor’s control
post-distribution.
In contrast, Grokster
did not clearly impose such a wide design obligation. The supernode model
meant that the distributor had no real control over how the users were going to
use the software. The distributor’s lack
of control prompted Grokster to formulate the inducement of infringement
doctrine to find liability based on the distributors’ objectionable conduct,
and not solely rely on the failure to develop any filtering tools.
It remains to be
seen whether future cases will interpret Grokster widely or narrowly in
this respect. The US courts’ express concern about stifling technology indicate
that the US Supreme Court will be slow to read a duty as wide as the ongoing
design duty imposed by the Australian courts.38
Knowledge
In Sharman,
knowledge (constructive or actual) is only one of several factors to be
considered on the facts of each case. Importantly, the absence of any knowledge
is not always an impediment to proving authorisation.
In the US,
knowledge remains a critical element of the doctrines of contributory
infringement and inducement of infringement. Only for vicarious liability is
knowledge not a prerequisite.
Liability of fringe players
In Australia,
the concept of ‘authorising copyright infringement’ has been widely applied to
catch fringe players in Australia. In Sharman, the
operator of the system itself and five other respondents were also liable for
authorising the users’ primary infringement. Broadly, these respondents
possessed either real control or influence over the policy-making in the
development and operation of the Kazaa system. To this extent, they could have
attempted (but failed) to implement some measure to prevent or reduce users’
copyright infringement.
There has not been the same
opportunity for the US P2P cases to examine in greater detail the extent of
liability of such fringe players. Grokster did not discuss how
contributory infringement and inducement of infringement liabilities might
apply to joint venture parties, controlling corporate shareholders and dominant
or sole directors.
Other Options for Copyright Owners
As part of the strategy to thwart
copyright infringement, copyright owners have sued secondary infringers. The
protection for technologists and distributors that had appeared so broad in
scope in Sony is today rather the worse for wear. In addition to suing
secondary infringers, copyright owners may do or are doing any one or all of
the following to counter copyright infringement:
Sue
the direct infringers
This is a monumental task for
infringement in the digital era, considering, for instance, the sheer number of
P2P users.39 Nevertheless, this
has not stopped the Recording Industry Association of America (‘RIAA’) from
doing precisely this in the last two years.40 As at January 12, 2006, it had launched at least 17,000 lawsuits41 against individuals accused of illegal
money-lending and stands to collect over US$85 million in settlement money.42
Whether RIAA’s actions have helped to
decrease primary infringement is controversial. Justice Breyer in Grokster
cites studies that show the efficacy of RIAA’s actions in reducing primary
infringement.43 However, it appears that RIAA’s court victories, in absolute numbers,
may be misleading. First, the settlement amount may be illusory insofar as the
defendants may have no means to pay.44 Second, RIAA’s practice of ‘arbitrarily targeting a few hundred unlucky
fans to sue every month out of the millions of people who download music’45 suggests RIAA’s litigious crusade may
not be actually controlling the growth of illegal file sharing, merely catching
a larger number of illegal users from an ever-growing pool.
In Fred von Lohmann’s46 words, ‘[D]espite all the publicity,
studies show that P2P usage is increasing instead of decreasing.’
Change
the business model
Copyright is said to give the right
against unacceptable copying but does not protect the businesses per se, even
though they are built upon the copyrighted works.
As suing primary infringers is costly
and cumbersome,47 and suing secondary infringers fraught with difficulty, it behooves the
copyright owner to explore alternative ways of exploiting copyright for
commercial gain.
Recording companies are regarded by
some as attempting to retain their traditional preserve on music distribution
ie through recording deals signed with artistes. This motive is said to
underlie the Grokster lawsuit. P2P networks represent a new way of legal
music distribution that is seen as a real threat to traditional music business.48
Given evidence that suggests P2P file
sharing can only increase (and with it illegal music swapping), a more
effective way to stem the piracy may be through the music industry remaking their
business model of selling music.49
For instance, Shared Media Licensing
Inc operates a paid on-line music service at www.weedshare.com that allows
users to purchase individuals songs for a low fee, half of which goes directly
to the artistes themselves.50 This allows independent artistes who may otherwise not be considered
commercially marketable to directly sell their songs in a non-traditional way.
Music purchased through www.weedshare.com are expressly allowed to be shared
through P2P networks.51
Another possible
way is through collective licensing societies that grant blanket licenses for digital downloads. The societies would be
formed by the music industry players
(ie music publishers, recording companies, songwriters and artistes) to collect
royalties through such blanket licenses, and distribute them accordingly.
The premise
underlying any business restructuring is a reduction of the cost of downloading
of music or movie (all for a song). This reduction must be sufficiently
attractive for users to switch from illegal swapping to legal use yet not
militate against the incentive for creativity. The hoped-for result of higher
volume of legal users, attracted by the latest releases and their high quality,
enlightened by education, and enticed by other marketing and promotional
tactics, should help return profits to the entertainment industry. A
combination of these strategies is seen as limiting, even decreasing, illegal
swapping.
Whether any of the above business
methods is a long-term solution to rampant piracy is still an unknown. The
amazing ease of free file sharing with a click of the mouse may not be so
easily counteracted. As at the date of writing, RIAA has rejected collective
licensing (proposed by the Electronic Frontier Foundation) as the way forward
and it does not appear to have reconsidered its position.52
Use technology to track
infringement
Copyright owners
are also implementing a slew of infringement tracking or anti-infringement
devices, for instance, digital watermarking and digital fingerprinting encoded
within the file information about the author and the copyright scope and date.
This basically leads back to the issue of the efficacy of instituting action against
primary infringement and the correctness of holding secondary infringers
liable. Its direct effect on deterring primary infringers is not known.
Encryption
technology embedded, for instance, in CDs, restrict users’ ability to make a
digital copy. This has brought a set of new challenges to industry players as
seen in the lawsuits against Sony BMG Music over its failed anti-piracy
technology on music CDs. While this may temporarily slow down the ability to
copy songs, this strategy simply fails to address the reality that more and
more songs will be sold on-line in the future.
The Reality of
Enforcement Measures and Technological Advances
Technology continues to be developed
in an attempt to stay one step ahead of the law. As part of the evolution of
the P2P network, the BitTorrent software enables peers to receive from other
peers tiny digital fragments, which are eventually reconstituted as a single
file. In other words, no one peer provides the entire file. Sites supporting
the BitTorrent technology such as Pirate Bay have flourished as a platform
linking up users with movies and music files for exchange. This distinguishing
feature of BitTorrent file sharing has presented new challenges for copyright
enforcement, as there is no wholesale transfer of an entire work by any single
peer. Operators of these file swapping sites do not themselves store any
copyrighted works. In particular, the burgeoning of movie swapping has been
aided partly by improved bandwidth and increasingly sophisticated reproduction
equipment. Recent raids by the Swedish police in May 2006 and seizure of
servers at Pirate Bay offices did not prevent them from resurrecting the site
within three days by borrowing equipment 53 – due in no small part to the fact that the
copyrighted files were stored remotely in the peers’ computers and the
BitTorrent software is itself available from other sources. BitTorrent
technology has been refined to enable a trackerless mode of exchange ie without
a centralised server such as Pirate Bay to show the available torrents. The relentless march of technology and the
current inability of the law enforcement agencies to effectively stamp out
internet piracy mean that any viable business model must take into account each
and every new and ingenious development in file swapping networks.
On a global view, there are many
players who contribute in varying degrees to the user being able to download
and play pirated files, not merely the network operator or the software
developer. Imposing liability on and apportioning blame among these players
must necessarily balance the copyright owner’s interest against the need to
promote innovation, and the right of users to enjoy the benefit of
technological advances, as well as public interest of access to knowledge and
information and privacy issues.
How this equation will be worked out
in the final analysis remains to be seen. The candid observation of Justice
Breyer in Grokster bears noting:
Consider, for example, the question whether devices can
be added to Grokster’s software that will filter out infringing files. MGM
tells us this is easy enough to do, as do several amici that produce and
sell the filtering technology … Grokster says it is not at all easy to do and
not an efficient solution in any event, and several apparently disinterested
computer science professors agree … Which account should a judge credit? Sony
says that the judge will not necessarily have to decide.54
Jeffrey Lee
Lee Chai & Boon
Notes
* This commentary is adapted from the article
by Jeffrey Lee, ‘The ongoing design duty in Universal Music Australia Pty Ltd v
Sharman License Holdings Ltd – Casting the scope of copyright infringement even
wider’ International Journal of Law and Information Technology 1 (advance
access published on December 6, 2006) at http://ijlit.oxfordjournals.org.
1 See H.
Rosen, ‘The Supreme Wisdom of Not Relying on the Court,’ the Huffington Post
(June 26, 2005) at: www.huffingtonpost.com/theblog/archive/hilary-rosen/the-supreme-wisdom–of-not_3221.html.
2 See
http://www.pcpro.co.uk/news/78525/p2p-activity-doubles-in-two-years.html.
3 See
www.rollingstone.com/news/story/_/id/7380412/?pageid=rs.Home&pageregion=sigle1&nrd=1122320285908&has-player=true&version=6.0.12.872.
4 ibid.
See also the prepared testimony of P2P United, Inc. to the United States Senate
(Committee on Commerce, Science and Transportation) July 28, 2005 at
http://www.eff.org/IP/P2P/MGM_v_Grokster.
5 [2005]
FCA 1242 (5 September 2005).
6 125
S. Ct 2764 (2005). Other notable US cases include A&M Records, Inc. v
Napster, Inc. 239F. 3d 1004 (Ninth Circuit 2001) (‘Napster’), and
In re: Aimster Copyright Litigation 334 F. 3d 643 (Seventh Circuit 2003) (‘Aimster’)
(all dealing with secondary infringement liability of P2P software providers).
7 This
was the system in Napster, supra n [6].
8 The
most notable protocol Gnutella uses a open-source concept and was used by
StreamCast Networks, Inc., one of the two distributors in the Grokster.
This system, while providing the greatest protection to the distributor from
secondary liability, has many practical implementation issues including
motivating users to donate files and to limit their own use of the network so
as to increase the range and depth of available content, and prevent a system
crash due to stark differences in user bandwidth and lack of a central
mechanism for directing traffic.
9 Metro-Goldwyn-Mayer
Studios, Inc. v Grokster, Ltd 259 F. Supp. 2d 1029 (CD Cal. 2003) at [1041].
10 Contributory
copyright infringement occurs when ‘one … with knowledge of the infringing
activity, induces, causes or materially contributes to the infringing conduct
of another…’ (see Gershwin Publishing Corp v Columbia Artists Management,
Inc. 443 F. 2d 1159 at p 1162 (Second Circuit 1971)).
11 Shapiro,
Bernstein & Co v H.L. Green Co 316 F. 2d 304 (2d Circuit 1963).
12 Metro-Goldwyn-Mayer
Studios, Inc. v Grokster, Ltd 259 F. Supp. 2d 1029 (CD Cal. 2003).
13 Metro-Goldwyn-Mayer
Studios, Inc. v Grokster, Ltd 380 F. 3d 1154 (Ninth Circuit 2004).
14 464
U.S. 417 (Supreme Court 1984).
15 Ibid,
at 1163, citing Fonovisa, Inc v Cherry Auction Inc. 76 F. 3d 259
(Ninth Circuit, 1996) and other cases.
16 Ibid at 442.
17 Supra n [6] at 2767.
18 Grokster, supra n [6]
at pages 2770, 2780.
19 Souter
J stated that ‘Sony did not displace other theories of secondary
liability’ and ‘Sony’s rule limits
imputing culpable intent as a matter of law from the characteristics or
uses of a distributed product. But nothing in Sony requires courts to
ignore evidence of intent if there is such evidence, and the case was never
meant to foreclose rules of fault-based liability derived from the common law: Grokster,
supra n [6] at pages 2778- 2779].
20 Supra n [14].
21 Supra n [14] at 442.
22 Justice
Blackmun, writing for the four dissenters in Sony, felt that
contributory liability should be imposed when ‘no one would buy the product for
noninfringing purposes alone’ as this means that ‘the manufacturer is
purposefully profiting from the infringement’. (464 U.S. 417 at p 491). This
represent a view to the other extreme, that of strongly protecting of copyright
owners and a clear disincentive to innovation.
23 This
is not helped by Sony deciding that it was not necessary on its facts to
‘give precise content to the question of how much use is commercially
significant’. Supra n [14] at 442.
24 Justice
Stevens and Justice O’Connor joining.
25 334
F. 3d 643 (Seventh Circuit, 2003).
26 Justice
Rehnquist and Kennedy joining.
27 Supra
n [6] at 2786.
28 ‘It
is enough to note that the Ninth Circuit’s judgment rested on an erroneous
understanding of Sony and to leave further consideration of the Sony rule
for a day when that may be required’ (Justice Souter in Grokster, supra
n [6] at 2779).
29 Supra, see n [14].
30 Grokster, supra n
[6] at page 2778.
31 Sharman,
n [5] at para 399.
32 The
then StreamCast chief technology officer had averred that ‘[t]he goal is to get
in trouble with the law and get sued. It’s the best way to get in the new[s]’:
Grokster, supra n [6] at p [2773].
33 Sharman, supra n
[5] at para 405. The ‘Join the Revolution’ was a movement advocating
file-sharing, to which website Sharman
License Holdings Ltd provided links from its own website. ‘Especially to a young audience, the ‘Join
the Revolution’ website material would have conveyed the idea that it was
‘cool’ to defy the record companies and their stuffy reliance on their copyrights’
(per Wilcox J at para 405).
34 Grokster,
supra n [6] at page 2782 and Sharman, supra n [5] at para
407.
35 Grokster, supra n[6]
at page 2781 footnote 12. ‘Of course, in the absence of other evidence of intent,
a court would be unable to find contributory infringement liability merely based
on a failure to take affirmative steps to prevent infringement if the device
otherwise was capable of substantial noninfringing uses. Such a device would
tread too close to the Sony safe harbour.’ (per Souter J).
36 Sharman,
supra n [5] at para 402.
37 Sharman, supra n [5] at para 411.
38 It
is significant that Souter J referred to post-distribution offering of upgrades
by itself as not amounting to inducement, without commenting on whether such
offer should include filtering upgrades.
39 For
suggestions on how to reduce the cost of direct infringement claims, see Mark A
Lemely & Anthony Reese, ‘Reducing Digital Copyright Infringement Without
Restricting Innovation’ 56 Stan. L. Rev. at 1374 n 110.
40 Copyright
owners in other countries are following suit: see article ‘Music Industry
targets nearly 1,000 with file-sharing suits’ (April 14, 2005) at
www.pcpro.co.uk/news/71434/
music-industry-targets-nearly-1000-with-filesharing-suits.html (last viewed Feb
28, 2006).
41 See
the article ‘Despite Legal Onslaught, Piracy Still Haunts Music Labels’
(January 12, 2006) at http://ip.law360.com/Secure/ViewArticle.aspx?id=4979(last
viewed February 27, 2006).
42 This
is computed on the basis that US$5,000.00 is payable by the infringer on each
lawsuit. It is estimated that most people settle for between US5,000 and
US$7,000: see article ‘Despite Legal Onslaught, Piracy Still Haunts Music
Labels’, ibid.. See the website of Recording Industry Association of America at
http://www.riaa.com including the article ‘RIAA Brings New Round Of Lawsuits
Against 751 Online Music Thieves’ (December 15,
2005)(http://www.riaa.com/news/newsletter/121505.asp (last viewed February 27,
2006). See also the article by S. Knopper, ‘RIAA Will Keep on Suing’ Rolling
Stone (June 6, 2005) at www.rollingstone.com/news
story/_/id/7380412/?pageid=rs.Home&pageregion=sigle1&nrd=1122320285908&has-player=true&version=6.0.12.872
(last viewed February 27, 2006).
43 Grokster,
supra, n [6] at 2794-2795. ‘These suits have provided copyright holders with
damages; have served as a teaching tool, making clear that much file sharing,
if done without permission, is unlawful; and apparently have had a real and
significant deterrent effect.’ (per Justice Breyer)
44 See
article ‘RIAA v The People: Two Years Later’ at
http://www.eff.org/IP.P2P/RIAAatTWO-FINAL.pdf
45 See
the articles ‘File-Sharing Lawsuits Fail to Deter P2P Downloaders’ (November 3,
2005) at http://www.eff.org/news/archives/2005_11.php (last viewed February 27,
2006) and ‘Despite Legal Onslaught, Piracy Still Haunts Music Labels’, (January
12, 2006) at http://i[.law360.com/Secure/ViewArticle.aspx?id=4979 (last viewed
February 27, 2006).
46 Senior
IP Attorney, Electronic Frontier Foundation.
47 This
is seen by some as constituting a powerful argument for imposing indirect
liability on secondary infringers. ‘When a widely shared service or product is
used to commit infringement, it may be impossible to enforce rights in the
protected work effectively against all direct infringers, the only practical
alternative being to go against the distributor of the copyright device for
secondary liability on a theory of contributory or vicarious infringement’ [per
Justice Souter in Grokster , supra n [6]
at 2767].
48 ‘The
introduction of new technology is always disruptive to old markets, and
particularly to those copyright owners whose works are sold through
well-established distribution mechanisms. Yet, history has shown that time and
market forces often provide equilibrium in balancing interests, whether the new
technology be a player piano, a copier, a tape recorder, a video recorder, a
personal computer, a karaoke machine, or an MP3 player. Thus, it is prudent for
courts to exercise caution before restructuring liability theories for the purpose
of addressing specific market abuses, despite their apparent present
magnitude.’ [per Judge Thomas in Metro-Goldwyn-Mayer Studios, Inc. v
Grokster, Ltd 380 F. 3d 1154 (Ninth Circuit 2004)] at 1167]
49 The
recent summary judgments obtained by the British Phonographic Industry (BPI)
against primary P2P infringers, prompted this cynical response from the Cory
Doctorow, member of the UK Open Rights Advisory Council, ‘Congratulation,
you’ve successfully sued a customer… How many customers do you imagine you’ll
need to sue before England returns to the mall, credit card in hand?’ (see
www.pcpro.co.uk/news/hot-topics/83050/drm-lobbyists-cry-foul-over-bpi-p2p-win.html)
(January 27, 2006) (last viewed February 27, 2006).
50 Other
services are available at www.walmart.com which sells music for less than $1
per song, and http://music.yahoo.com/unlimited/ that offers users unlimited to
more than one million songs for less than US$5 a month. Apple Computer Inc.’s
online iTunes music store is another instance.
51 See
http://www.weedshare.com/help/howweedworks/. In recognition of the new
commercial reality, the website carries this statement: ‘We created Weed
because we knew there had to be a better answer to the problems of file-sharing
on the Internet. We support file-trading —after all, it’s hard to fault peop le
for sharing music that makes them happy. But we support musicians, too — it’s
hard enough for artists to make a living.’ (see
http://www.weedshare.com/company/).
52 See
http://www.eff.org/IP/P2P/MGM_v_Grokster?p2punited_testimony.pdf p 10.
53 See
article by Steven Daly, ‘Pirates of the Multiplex’ (March 2007) at
http://www.vanityfair.com/ontheweb/features/2007/03/piratebay200703 (last
viewed 1 March 2007).
54 Grokster,
supra n[6], at 2792.