Supreme Court to hear P2P case by Rn8y83


									                            The Illustrated Story of Copyright

                                A Note on the Tasini Case

    On June 25, 2001, the Supreme Court of the United States, by a vote of 7 to 2,
decided the Tasini case in favor of the author/plaintiffs. I've included here the full opinion
of the Second Circuit Court of Appeals (which was affirmed), the majority opinion of the
Supreme Court (per Justice Ginsburg), and the Supreme Court dissent (per Justice

    Tasini and the other authors wrote articles that appeared in the New York Times and
other publications. The Times and the other publications then licensed Mead Data Central
Corp. to publish the articles on NEXIS, their online database, and on CD-ROMs. The
authors claimed that the license violated their copyright in the underlying works.

    The contracts covering the original publication of the articles did not specifically
cover the right to use such materials in a database. When an independent contributor to a
collective work does not make any specific provision to the contrary, the "default"
interpretation of the contract, under section 201(c) of the copyright act, is that the license
covers the use of the article in the collective work, or in any "revision" of that collective
work. The narrow issue in the case was thus whether inclusion of such articles in a
computer database was a "revision" of the collective work in which it first appeared.

    The Second Circuit Court of Appeals, and then the Supreme Court, held that making
the articles available in such a database was not a "revision" under the statute, and thus
held that the New York Times and the other defendants violated the copyrights of the
original authors. The courts emphasized that, as seen in the database, the articles were
simply copies of the original individual works, retaining none of the context or formatting
as the articles appeared in the newspapers or magazines.

    Each side in the case had a very good public policy argument. The authors didn't sell
the copyrights in their works, but only granted a limited license to the newspapers and
magazines; accordingly, it made perfect sense, particularly given the narrowness of the
license provided in the copyright act, to protect the authors of the original works rather
than give the economic benefit of a whole new market to the licensees of the rights. On
the other hand, the licensees argued that, if it was necessary to get permission (and pay
for permission) from all contributors to their publications, then it would be difficult if not
impossible to make historical records, such as the New York Times, available through
online or other databases. It might be argued that the case would be a closer one when
CD-ROMs are used to digitize the entire original newspapers in which the articles are
written (as in another appellate court case decided against National Geographic), while
retrieval of individual articles from an online database, devoid of their original context,
might more plausibly remain within the control of the original contributors. However, the
majority seemed unconvinced by the distinction, and affirmed the rights of authors in
both contexts
    While the specific issue before the Court involved a narrow interpretation of a
specific provision of the copyright act, similar issues are raised in many other contexts.
Whenever a new technology becomes available, it is unclear whether existing contracts
granting rights in copyright include the new technology or not. Did a contract covering
theatrical rights in a book at the end of the nineteenth century cover their inclusion in a
motion picture when that technology was invented? Did a contract covering motion
picture distribution rights in the middle of the twentieth century include the right to
distribute such works in video tapes or disks when the home video technology was later
developed? Many of the cases turned on how general the language was in the given
contract; and the outcome in the Tasini case depended upon an interpretation of one
specific clause of the copyright act. But since the general problem arises in so many new
technology contexts, the case may have repercussions beyond its narrow scope, and
strengthen the claim of authors in such new technological uses of copyrighted works.

    While the dissent expressed some concern about granting an injunction in the case,
the majority concluded that it was too early to discuss the remedy, and that the lower
court should be the one to fashion an appropriate remedy, weighing the pros and cons of
granting injunctive relief. Along with other recent cases that have limited injunctive relief
(the appellate court opinion in the Napster case, or the appellate court opinion denying a
preliminary injunction in the "Gone With the Wind" case), this case would seem to
suggest, at least by way of dictum, that denial of injunctive relief, or the fashioning of
some more clever remedy that creates a collective licensing system, might properly
balance the competing interests in this and the other cases.

Read the full text of the Second Circuit opinion.
(Second Circuit Court of Appeals, Feb. 25, 2000)

Read the full text of the Supreme Court majority opinion.
(June 25, 2001)

Read the full text of the Supreme Court dissent.
(June 25, 2001)

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October 1, 2012

Supreme Court to hear P2P case
Published: December 10, 2004, 3:34 PM PST
By John Borland
Staff Writer, CNET

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updateThe U.S. Supreme Court on Friday said it would hear a controversial
case on whether file-sharing software companies could be held legally
responsible for copyright infringement on their networks.

The court's action is good news for big record labels and Hollywood studios,
which have lost successive rulings on the issue in lower courts. They want
software companies like Morpheus parent StreamCast Networks and Grokster to
be held legally responsible when copyrighted material is swapped using their

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If this story isn't what you're searching for, try these other search results for "napster
supreme court":

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"There are seminal issues before the court--the future of the creative industries
and legitimate Internet commerce," Mitch Bainwol, chief executive officer of the
Recording Industry Association of America, said in a statement. "These are
questions not about a particular technology, but the abuse of that technology by
practitioners of a parasitical business model."

The court's decision could also be a sobering sign for technology companies well
outside the world of file-swapping. At the core of the case is an interpretation of a
20-year-old decision that made VCRs legal despite their ability to copy TV shows
and movies, which ultimately helped pave the way for a host of technologies
ranging from CD burners to Apple Computer's iPod.

That case, known as the Sony-Betamax decision, set out rough guidelines under
which technology used to make illegal copies of copyrighted material could be
distributed without the manufacturer being responsible for the resulting piracy, as
long as the product was also capable of "substantial noninfringing uses."

That's been enormously influential for computer and consumer electronics
makers over the past few years, particularly as music and movies have been
turned into easily copied digital formats. Indeed, all MP3 player makers, including
Apple, owe their recent history to a 1999 decision in which a judge said MP3
players were capable of playing legally purchased music, and were therefore
"I don't think anybody had a clue how significant that decision was when it came
out," said Jim Brelsford, an attorney at Jones Day. "So many things turned out to
be built on that."

Some in Silicon Valley fear that a Supreme Court ruling aimed at reining in file-
swapping could have unintended impacts on future product development.

"There's a lot more at stake here for the technology industry than for the
copyright industry," said Fred von Lohmann, an Electronic Frontier Foundation
attorney who has represented StreamCast Networks on the issue. "This case will
not be determinant of the future of peer to peer around the world, but it will be
determinant of the future of a whole host of future digital products."

The case itself focuses on Morpheus and Grokster, each of which are popular
file-swapping applications that are widely used to trade movies, music and

Studios and labels sued the companies in 2001, following successful legal
campaigns against peer-to-peer trailblazer Napster. Attorneys for the
entertainment conglomerates said the newer file-swapping services were, like
Napster, building businesses based on copyright infringement.

But Grokster and StreamCast were built around a different technology than
Napster. Their services involved a highly decentralized network of individual
computers trading files among themselves, rather than a network controlled from
a central location.

Lower court judges ultimately said that the companies did not directly control
what happens on their networks, and that their software could be used for legal
purposes. That shields the companies themselves from legal responsibility for
the actions of their users, the lower courts said.

"Defendants distribute and support software, the users of which can and do
choose to employ it for both lawful and unlawful ends," federal court Judge
Stephen Wilson wrote in the original opinion, released in April 2003. "Grokster
and StreamCast are not significantly different from companies that sell home
video recorders or copy machines, both of which can be and are used to infringe

With six months or more likely to pass before arguments and a ruling in the case,
the court's decision will throw new uncertainty into the file-trading industry, where
some companies have been hoping to gain permission to sell authorized copies
of music through their networks.
The court issues no comment when it decides to take a case, so there is no
indication as to what specific issues might have caught the justices' attention, or
which way they might be leaning on the issue. Oral arguments in the case will
likely be held in March, and a decision is expected by June of next year.

Outside attorneys said it's rarely possible to guess the justices' intentions before
they rule, although the oral arguments could provide some hints.

"It's completely unpredictable," said Morrison & Foerster attorney Jonathan Band.
"It could well be that the entertainment industry will rue the day when they went
to the Supreme Court."
October 1, 2012

jurisprudence The law, lawyers, and the court.

You Say Napster, I Say Grokster
What do you do when technology outpaces the law?
By Rod Smolla
Posted Monday, Dec. 13, 2004, at 3:10 PM PT

The Supreme Court on Friday announced it would hear MGM Studios Inc. v. Grokster
Ltd. and StreamCast Networks Inc.—a suit asking whether distributors of peer-to-peer
file-sharing software may be held liable for infringing copyrights of the music that gets
swapped with such software. To paraphrase the late Warren Zevon, send lawyers, geeks,
and money. At the lawyer level, the Grokster case turns on subtle questions of copyright
law. To the geek, it turns on technical features of software and Internet architecture. And
to the entertainment, electronics, software, communications, and Internet industries, it's
all about money. Billions.

Efforts to understand the file-sharing cases often get bogged down in fine distinctions—
the difference between sharing and stealing, for instance—and they founder for a lack of
good precedent: Is file sharing like photocopying or like flying a plane over your
neighbor's backyard? The Supreme Court may well have taken this case precisely
because that type of legal inquiry is too nuanced for the conflict at hand.

Grokster is, of course, the sequel to Napster. And Napster, the mother of all music-
swapping services, was forced in 2001 to abort its operations by the federal 9th Circuit
Court of Appeals. Those using Grokster software, however (along with the products of
competitive compatriots such as Morpheaus and KaZaA), kept on swappin'. And
surprisingly, the same 9th Circuit that shut down Napster ruled Grokster was street-legal.
To find a software developer such as Grokster liable, the appeals court ruled, would
require proof that the developer actually knew of specific infringements and failed to
block them. The court thus saw Napster and Grokster as entirely different digital animals:
Napster provided a centralized service to facilitate music file sharing, following the
classic Internet model in which the consumer connected to Napster's central Web site to
transact business through Napster's server. Grokster and other similar peer-to-peer
operations, however, don't involve a middleman. In a peer-to-peer distribution network,
information does not sit on a central server. Instead, every user's computer makes
information available to every other user's computer in the network. The 9th Circuit found
these distinctions enough to take Grokster off the legal hook. The music industry

There is a generational dynamic here that gives the Grokster case a special cultural
resonance. My kids understand that if they walk into a Wal-Mart and pilfer an Usher CD,
they're stealing about $12's worth of somebody else's property. My kids have a much
harder time grasping the notion that if they download all those same Usher songs, they're
also stealing somebody else's property—maybe not quite the full $12's worth since the
plastic disk, the liner notes, and packaging all count for something, but certainly most of
the $12 since the real value rests not in the plastic but the musical performance digitally
embedded in it.

Lawrence Lessig, an engaging law professor and writer, likes to point out that changes in
technology often force changes in the law. He uses as a vivid example the old rule of
property that held that a person owned not only the surface of his or her land, but the
airspace above it and all the ground beneath it—from the center of the earth to the
heavens. When airplanes came along, however, that old law had to yield, or air travel
would have been impossible. It would not have been tenable to require that pilots secure
permission before flying over the property of others, even though the law had for
centuries treated intrusion on someone's airspace as a trespass. Lessig also argues that it
makes no sense to treat a whole generation of American downloaders as pirates and
criminals. By analogy to the planes, he urges that if the law treats all these kids as
lawbreakers, then something is wrong with the law, not the kids.

But is Lessig right or just clever? If you use the Internet to rip off the entire content of
somebody's movie or CD to avoid purchasing it yourself, isn't it a little more serious than
a fly-over? These are the kinds of gauzy hypotheticals the courts are now poised to

The last time the Supreme Court considered a major challenge to copyright laws (in a
case in which Lessig himself argued against the expansion of copyright and lost), the
court recognized that the framers of the Constitution saw the protection of intellectual
property as an engine of creativity and innovation. It is one thing to endorse a liberal
conception of "fair use," as in the Supreme Court's quite enlightened decision a few years
ago that a 2 Live Crew parody of the famous Roy Orbison song "Oh, Pretty Woman" did
not violate Orbison's copyright. It is quite another to countenance outright theft, however.

In all the music-sharing cases, and in the movie-sharing cases that are just now being
launched, the core claim is the same: The owners of the music and movies argue that it
ought not matter precisely how the sharing system is technically constructed. The bottom
line is that people are copying songs and movies without paying for them, and that's
wrong, period—a principle as simple and pristine as "Thou shalt not steal." The Motion
Picture Association of America recently announced that it had commenced a series of
lawsuits against persons allegedly indulging in illegal sharing of copyrighted films on the
Internet, following the lead of the Recording Industry Association of America, which
began filing its cases against music downloaders over a year ago.

The same stark arguments are being pressed in Congress, which is currently
contemplating passage of the Piracy Deterrence and Education Act, HR-4077, a law that
the entertainment industries passionately endorse and that many copyright-law detractors
(such as consumer-electronics manufacturers, peer-to-peer file-sharers, and the fair-use-
electronic-frontier crowd) passionately oppose. The new law would permit prosecution of
persons who distribute products to the public by electronic means in reckless disregard of
the risk that it will induce infringement. This proposal would also allow the Justice
Department to bring infringement actions against infringers on behalf of copyright
holders to fight piracy.

Supreme Court justices, who are not exactly charter members of the download
generation, could have an awkward time connecting with all of this and may have been
tempted to throw their hands above their robes and just give up. The genius pace of
modern techno-ingenuity is enough to make some judges balk at imposing any legal
blockades, for fear the law will act as a drag on invention and creativity. This fear was
openly expressed by the judges on the 9th Circuit in Grokster, who noted circumspectly
that "we live in a quicksilver technological environment with courts ill-suited to fix the
flow of internet innovation."

And if the velocity of modern technical genius is breathtaking, so, too, is the often
ingenious entrepreneurial pluck of cyberbusinesses out to make a buck. Again in the
words of the 9th Circuit: "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." If the marketplace was able to adjust
and assimilate such copyright-infringing machines as the player piano, photocopier, tape
recorder, video recorder, personal computer, or karaoke machine, the reasoning goes, it
will eventually figure out a way to handle the MP3 player.

But this solution—to just let the market sort it out—may not satisfy either the Supreme
Court or Congress. The principal Supreme Court decision speaking to these issues is a
case from 1984 titled Sony Corp. v. Universal City Studios Inc., in which the Supreme
Court held that the sale of Betamax video recorders did not constitute "contributory
infringement" of copyright.

"Contributory infringement" borrows from a legal concept common in many areas of the
law. "Aiding and abetting" a crime is a good example. If someone sells someone a
poison, knowing that the buyer intends to use it to commit murder, the poison-seller may
be held liable for assisting the perpetrator. Yet if the seller is simply selling a toxin
typically used for legitimate purposes (such as insecticide), there is no liability when a
consumer, unbeknownst to the seller, uses that substance for foul play.
A video recorder may, of course, be used to infringe the rights of a movie copyright
holder, just as a photocopy machine may be used to infringe the copyright in printed
material. Indeed, a video recorder is no different than a tape recorder or a CD burner:
Any machine that copies stuff can also be used to copy stuff illegally. And if we're
honest, we will admit that those who manufacture and sell these machines undoubtedly
know that many of their buyers will use the machines—a CD burner, say—to violate the
nation's copyright laws. At the same time, however, these machines may also be used for
many lawful purposes. A VCR may play a film rented or purchased at Blockbuster, a use
that does not violate the law. Copiers do a lot of perfectly legal copying. The Supreme
Court in the Sony case balanced these competing concerns by reasoning that the mere
capacity of a machine to facilitate illegal copying could not, standing alone, make the sale
of that machine a contributory infringement. In a key passage, the court stated that the
machine "need merely be capable of substantial non-infringing uses."

Now try to translate this logic into the realm of peer-to-peer file-swapping services, and
go figure. Grokster claims that its software is capable of innocent use and that it is a
decentralized sharing system; Grokster has no direct knowledge of specific copyright rip-
offs. The moral, political, economic, and legal question is whether our society ought to
accept this defense.

We might start with an honesty check. Whatever Grokster says, everyone knows that
software such as Grokster's is overwhelmingly used to traffic copyrighted material. We
can quibble over the percentages, but does anyone really doubt that almost all the stuff
the swappers swap is owned by others? The music owners in the Grokster suit allege that
90 percent of the files shared in peer-to-peer systems is copyrighted. The technical
nuance that Napster involved a central server while Grokster does not rings pretty hollow
to someone who merely believes in getting paid for the use of his or her property.

Which is probably why the Supreme Court took this case, and undoubtedly why Congress
is considering its new bill. This issue is more complicated than simple theft, more
nuanced than claims to airspace, and too urgent to simply allow the markets to sort it all
out. This is a case in which the court needs to speak with its best voice, to the culture as
well as to the lawyers, helping us strike the right balance between the wide-open
cyberspace that we love for all its intellectual and entrepreneurial freedom and the
elemental insight of the framers of the Constitution that those who wish to make a life
from creativity and invention need and deserve the rule of law.

Rod Smolla is dean of the University of Richmond School of Law.
October 1, 2012

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