Sunday, October 30, 2005

Notes from the Grokster panel

The panel last Friday was a great success. Each professor from UA and ASU had a unique perspective based on their are of expertise.

The panel opened with moderator Robert Clinton noting the law and technology evolve at different paces; specifically, the legislature moves too slowly to keep up with the fast pace of technology. In the absence of on-point legislation, he said, decisions of how the law applies to new technology becomes, by default, decisions for courts to make.

Prof. Dennis Karjala (ASU) took over and gave a brief overview of the Grokster case, and contrasted it with Monotype v. Bitstream, which was decided partly under the Betamax rule.

Making a detailed economic analysis, Prof. Barak Orbach (UA) discussed platforms, and how under the platform-disturbing categories of 'good piggybackers,' 'bad piggybackers,' and 'cost externalizers,' Grokster likely falls into one of the latter two categories, and should be hit with sanctions. Good piggybackers are entities whose use of a platform enhances exposure to the industries connected by the platform, and therefore are helpful. An example would be third-party accessories vendors. Bad piggybackers and cost externalizers, on the other hand, take business away from the businesses connected by a platform, and sell them to other advertisers. This is how Grokster operated, and therefore needs to be regulated.

Prof. Graeme Austin (UA) made an analysis of the international effects of internet legislation in general. Of great import, he stressed, are the effects that a very international medium like the internet has in a world where international law is lacking. Where full faith and credit to international decisions is due is a confusing procedural question. Even more confusing is what law will apply to an entity based on what jurisdiction adjudicates its disputes! He mentioned the Kazaa injunction, described in a previous post here.

Brad Biddle, in-house counsel for Intel Corp, elaborated on the perspective of the industry. Intel filed an amicus brief for Grokster, in support of the defense. One thing for which they are concerned, he said, is whether they could, under Grokster, be held liable for vicarious copyright infringement, since their microprocessors are the tools used in millions of machines to do the infringing itself. If a plaintiff could show that Intel "actively induced" such infringement, they could potentially be liable. He noted that Grokster's immediate effects will be felt in the advertising industry, where slogans such as the popular "Rip. Mix. Burn" will be buried in favor of more Grok-neutral language.

Finally, ASU's Prof. Eric Menkhus briefly closed, saying one lesson Grokster teaches that there is an important nexus between law, technology, and business. Grokster was ultimately decided on the basis of the company's business model, which targeted infringing users. They followed the letter of the Betamax rule perfectly, but that wasn't enough. Their attempt to capture an illegal market made them guilty of vicarious infringement, and that's what Grokster is all about. Imagine, he suggested, that the Grokster software had started life as a means by which local independent artists could freely share their music. If it had then reached the same size it had at the time Grokster was decided, the court would likely have decided differently, since the business model would have been legitimate, and no "active inducement" done.


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