No Sharing Allowed

Everybody wants a bite

2006-05-08T09:42:00.000-07:00

A several-decade-long dispute may be over between the Beatles' Apple Records company and that OTHER ubiquitous Apple company (you know, the one selling those cute white mp3 players in every crevice of the universe) . Fights between the companies had reached a truce in 1991, when they each agreed not to infringe upon each others' business territories. Apple Computers, however, allegedly broke that agreement via its iTunes service. However, the British Judge Edward Mann ruled for Jobs, saying the logos weren't similar enough to be confusing to end users. Score one for the iUniverse.

RIAA claims ripping isn't "fair use"

2006-03-04T13:57:00.000-08:00

As a matter of law, every purchaser of a copyrighted work has the right to enjoy that work for all fair use. In the case of music, this includes acts such as private home exhibition. And, as many have assumed, it also includes making copies on portable media devices, such as the iPod.

However, the RIAA seems to be saying that copies on your iPod are illegal, or at best permissive by the RIAA themselves. Kooky? I think so too.

Settled, but far from over

2006-03-04T10:25:00.000-08:00

It's been quite a while since I posted anything on this blog. That was, in large part, due to the escalating demands of law school as last semester drew to a close. Then, with the race for employment this semester, No Sharing remained shelved while I sorted everything out. But I'm back, and am pleased to announce that Grokster has continued to make waves in the industry and the law. Before any substantive posts, a brief update on the posture:

On November 7, 2005, the parties submitted a settlement agreement to the court, which was accepted. According to Video Business Online, Grokster's website displayed a message saying "the United States Supreme Court unanimously confirmed that using this service to trade copyrighted material is illegal. ... There are legal services for downloading music and movies. This service is not one of them."

Now, that last line isn't true with respect to freely shared works. Grokster's display of that message can only be attributed to the fact that Grokster was purchased by Sony, who likely aimed to bolster their own legal download sites. More to come, after I finish my open research memo assignment.

Notes from the Grokster panel

2005-10-30T06:30:00.000-08:00

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.

Grokster panel in Phoenix

2005-10-04T08:17:00.000-07:00

The University of Arizona (UA) and Arizona State University (ASU) Intellectual Property Student Associations will jointly present a panel on the Grokster decision on Friday, Oct 21, from 3:40-5:15pm, in the Great Hall at ASU's College of Law.

Panelists include:
Dennis Karjala - Professor of Law (ASU)
Graeme Austin - Professor of Law (UA)
Barak Orback - Associate Professor of Law (UA)
Brad Biddle, Esq. - Sr. Attorney, Intel Corp.

Refreshments following the panel. All in the area are welcome to attend. For more information, please e-mail Yakov Sidorin, IPSA president for UA.

The RIAA throws its weight around

2005-10-04T07:54:00.000-07:00

Well, who ever said Grokster wouldn't be a big thing? The events of the past two weeks would be enough for them to eat their words pretty quickly.

The RIAA was the center of attention in recent news. First, the Association issued Cease-and-Decist letters to seven undisclosed p2p filesharing networks. Two of them, WinMX and eDonkey, buckled under the pressure, and closed their doors.

But that victory wasn't nearly enough to satisfy the zealous, Grokster-charged RIAA. In a slew of suits which rivals the massive pirate hunt of 2003, the RIAA has filed suits against 757 college students. The record industry is on the warpath.

And they've got support in Washington. Last session's proposed antipiracy bill is cropping up again, though it seems at this point as though Congress may just let the courts shuffle around with the issue for a bit longer before stepping in with any legislation.

Grokster acquired by Sony

2005-09-20T08:00:00.000-07:00

Grokster (the company, not the court decision) has been acquired by Sony, inc. and will be rereleased under the name Mashboxx, a legitimate, "label-friendly" p2p service. Apparently, the service will continue to allow general file sharing, and will also have an iTunes-like storefront. It is interesting to see how, if general sharing is allowed, the new service will prevent infringing shares. It certainly seems like illegal p2p is on the decline.

Belated Update

2005-09-18T13:09:00.000-07:00

Well, as my first year of law school continues, I'm finding myself unable to update this blog with the regularity I had anticipated. That being said, no one reads it anyway, so I suppose that doesn't matter.

Grok news has, believe it or not, continued in my absence. The RIAA (Recording Industry Association of America) has been using the Grokster decision as a basis for sending C&D (Cease and Decist) letters to various p2p client distributors. ZDNet has more.

In the theme of this blog ...

2005-09-05T22:28:00.000-07:00

Being that this blog is meant to outline the Grokster case (not simply general legal news), and because the title of this blog embraces a general ban on sharing, I will NOT tell you that John Roberts, Supreme Court Justice nominee, has had his appointment upgraded to that of Chief Justice in the wake of Rehnquist's death.

Rehnquist dies, KaZaA under fire

2005-09-05T12:55:00.000-07:00

Supreme Court Chief Justice William Rehnquist died Saturday evening, overtaken by thyroid cancer. The justice made important marks on the legal community during his 33-year tenure, not the least of which involved the case from which this blog was spawned. Grokster was, in fact, the last decision of which Renquist was a part.

In other Grok news, p2p program KaZaA has been ordered by an Australian court to alter its program to ward off illegal file sharing activity. ZDnet states that the modification, or even downfall of the KaZaA system will not prevent illegal file shares due to the decentralized nature of the system.

Off and running!

2005-08-30T07:52:00.000-07:00

A big thanks to Denise Howell of Bag and Baggage for linking up to this site. Denise is actually part of the Grok news today, as she is moderating an ABTL Panel Dinner to discuss the Grokster decision. If you live near Los Angeles, it's be a great thing to attend. And yes, Denise, Wikipedia is amazing.

Another Grok event is coming up, right here in Tucson. The Intellectual Property Student Association at the University of Arizona will host a discussion on Grokster 9/12, with more details forthcoming.

Grokster Decision Tested

2005-08-26T14:20:00.000-07:00

Here we are, just five months after the Grokster decision was handed down, and already it's being called into use as a precedent case. Perfect 10, an adult entertainment company, is suing Google for displaying their images on their image search engine.

Dr. Norm Zada, the founder of Perfect 10, says if unchecked, the ability of search engines to distribute copyrighted material will be "the end of intellectual property in this country." (Didn't a teacher ever tell him hyperbole weakens an argument?)

The search results that display on Google's site do not point to images on Perfect 10's site, but rather to third party websites who are illegally displaying the images. Perfect 10 is suing Google for infringement, and hopes to draw support from the Grokster decision.

It's not very likely that if the courts do rule in favor of Perfect 10, that they will do so on the basis of Grokster. Google clearly does not advertise to infringing users in an attempt to capture their business, nor do they have a business model which implies dependence upon infringing users. These things were at the heart of the MGM v. Grokster reversal. Perfect 10's best ammunition against Google is that Google's image index consists of thumbnail-sized images of all searchable files, and sharing those images could be viewed as infringement.

Blessing in Disguise?

2005-08-24T18:42:00.000-07:00

While some have misgivings about the effect of MGM v. Grokster on the tech industry, the music industry has taken the decision to mean support for legitimate digital trade, bolstering the industry's confidence in the success of online music sales. Warner Music announced this week that they will be launching a digital music label, which may be good news for struggling independent artists. "The decision in the Grokster case creates an economic incentive to invest in the digital music space ... (accelerating) the growth of legitimate digital music services,"said Warner CEO Edgar Bronfman, Jr. See CNN's full story for more.

The continued reinforcement of legitimate e-commerce in the music industry may ultimately outweigh whatever short-term chill is suffered by innovators in the tech industry. And as of yet, that chill has yet to be evidenced.

First Impact

2005-08-22T15:08:00.000-07:00

On the surface, the Grokster decision seems a slap in the face to both innovators and the casual downloader, as it could be interpreted to place inventors of technology at risk for liability if they fail to safeguard their inventions from illegal use. The court barred Grokster from protection under the Sony rule because it could be interpreted based on the merits that Grokster acted intentionally to capture a market of abusers. They held that "one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties."

Some are quick to interpret this decision as an affront to the process of innovation, and envision that future distributors of p2p or other sharing technologies would be required to carefully document the steps they take to avoid inducing infringement. Some see this as hedging on the Sony rule territory, and could lead to vast uncertainties on who is and is not liable of vicarious infringement, and particularly what constitutes active inducement. Brian's Brain holds such an opinion.

However, the court carefully trods around the Sony rule, stating very explicitly that "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" [fn12]. Thus, the decision can only apply where "the plaintiff is able to show, by direct or indirect evidence, that the defendant intended users to engage in copyright infringement and encouraged them to do so" (Reed Smith).

The Supreme Court is being criticized for not clearly defining the criteria under which it can be shown that a company is promoting the infringement of copyright to its users. However, that is not their responsibility. They merely need to see enough evidence to believe that such a claim might be found by a trial court. Many contend that the decision in Grokster will only be used in the narrow arena of P2P software and its cousins. This is argued in further detail on Forbes.com.

The long-term impact remains to be seen. What happens at trial may be entirely different from what is expected by the suggestions following the Supreme Court's decision. As Charles Petit mentions on IT Conversations, the sealed record of the case likely contains some "juicy little bits" that could decide the fate of Grokster, or even change the trial's course so drastically as to make it unrecognizable. The trial may have less to do with the specific technology of p2p than it does the sanctions of the record industry in general. At this point, such conjecture is purely speculative.

Understanding the Supreme Court Decision

2005-08-20T18:39:00.000-07:00

The first step in understanding where the Grokster decision is headed is to understand what the decision is. The facts of the case are that MGM and several other hollywood movie studios brought suit against Grokster and StreamCast for vicarious and contributory copyright infringement. In brief, Grokster's p2p service, while capable of the substantial noninfringing issue of legal file sharing, is largely used to illegally share copyrighted material. The program was advertised to Napster users as an alternative sharing program during the time that Napster's case was being tried in court. None of the preceding facts are contested.

What MGM argues is that such advertisement shows evidence that Grokster intended to contribute to copyright violations, and expressed that intent through those advertisements.

Grokster defends by denying that intent, and cites that therefore they cannot be found guilty under the Sony rule. Further, their software does not allow them either to filter content or block specific users, and the design of their technology provides no way of knowing about infringing transfers until after they are complete.

The decision of the Supreme Court can largely be thought of as a procedural one. The district court granted summary judgment to Grokster on both the count of vicarious infringement and the count of contributory infringement, holding that the evidence at hand was not strong enough for any reasonable jury to find for MGM. The Ninth Circuit District Court of Appeals affirmed.

The Supreme Court reversed that summary judgment, stating that ultimately, there is enough evidence that summary judgment is not available. That is, a reasonable jury might find that Grokster's advertisements were specifically intended to capture a market of infringing users, thus making Grokster guilty by the standard of assertive inducement of copyright infringement.

The unofficial source for all your Grok news!

2005-08-20T15:10:00.000-07:00

Welcome to No Sharing Allowed, the first weblog dedicated to the MGM v. Grokster decision and its effects both in industry and in court.

For those unacquainted, MGM v. Grokster was a case recently on appeal before the Supreme Court of the United States concerning whether peer-to-peer filesharing software distributors could be held liable for the copyright-infringing actions of their users.

This case immediately calls to mind Sony Corporation of America v. Universal City Studios, Inc. (the "Sony rule"), an important precedent case. This case pitted Sony against Universal for making VCRs which could record copyrighted materials, and those new recordings were being distributed in an infringing manner. In that case, the court ruled that since Universal's products had legitimate, legal purposes for which they were originally intended and advertised, Universal could not be held liable. In Grokster, the Ninth Circuit District Court followed that precedent, and granted summary judgment in favor of the defendant. The Supreme Court overturned the decision of the District Court to grant Summary Judgment in favor of the defendant, and has sent the case back to trial court.

This blog is dedicated to explaining what the case means to the law, what it means to the industry, and how those things continue to change as the case moves forward. For now, though Grokster still has an opportunity to prevail, the court's decision already speaks loudly to the industry; distributors of p2p technology can possibly be held liable for the actions of their end users, in certain situations. Stay tuned for further explanations of the legal ramifications of this decision, as well as what it means for innovators in the IT industry.

For further reading, please explore the links to the right, which contain ample information about the beginnings of this landmark case.