TCS Daily

Grokster at last!

By James V. DeLong - June 28, 2005 12:00 AM

After all the ink and angst spilled in the 58 separate briefs filed in Grokster, the decision yesterday was surprisingly crisp, clear, and reasonable.


There was a lot in it for everybody, which means for both the content and tech industries.

There was nothing in it for Grokster the company, but then no one ever cared about Grokster itself, anyway, which was a proxy for greater interests.


The questions were always: "Can you protect content without doing heavy damage to technological innovation, and, conversely, can you protect innovation without doing heavy damage to content?" Since protecting both is absolutely essential, the dilemma is Solomonic. 


The Supreme Court split this baby about as well as possible, deciding it 9-0 in terms that give the content industry -- and honest consumers -- some significant victories and make clear that the Justices are prepared to impose serious obligations on the technology and communications industries in the interest of protecting content.


But the Court, speaking en masse, was carefully tentative in its assertion of those obligations, and clearly anxious to avoid doing serious damage to tech. In addition, a concurrence by three Justices, led by Justice Stephen Breyer, demonstrated that the only way any future Court will undermine a tech-protective reading of the 1984 Sony Betamax decision, which made videotaping TV shows for personal use legal over Hollywoods objections, is by prying the law books out of their cold, dead fingers.


A concurrence by three other Justices, led by Justice Ruth Bader Ginsburg, expressed a mirror image concern for protecting content. And the final three (David Souter, Clarence Thomas, and Antonin Scalia) kept their heads down while the shots whizzed past.


The facts of Grokster, boiled down, are that Grokster was a P2P -- peer-to-peer -- service created to fill the niche vacated when Napster was suppressed. Because, unlike Napster, it did not operate through a central server, Grokster never had the infringing material in its possession. The content industry, though, had two basic theories on why it should also be suppressed:


  1. That Grokster intended that its users infringe copyrights and induced them to do so.


  1. That, regardless what Grokster intended, its technology was in fact overwhelmingly used for infringement, and that this should be enough. (It sometimes flirted with a stronger version of this - that Grokster's technology was capable of being used for infringement, and this should justify liability, but no one ever thought this one had a chance.)


The tech industry countered by arguing that the second of these should be thrown right out of court, that Sony stands for the proposition that a technology cannot be nailed as an aider and abettor if it is capable of more than trivial non-infringing uses.  (In Sony, the Court ruled that the maker of the Betamax machine was not liable for the infringements of copyright engaged in by its users. Its theory was that the machine had significant legitimate uses, and that this insulated its purveyor from responsibility.)


On the first theory, the techies would be willing to hold someone liable for inducing infringement, but only if that someone engaged in the Internet equivalent of carrying a sign saying "steal your music here."  The basic tech effort was to extend the protection of Sony to cover every business model short of such blatancy and -- equally important -- to extend Sony to cover all technological choices. Under the tech view of the matter, a court would not look at the possibility that a Grokster might filter out offending content because it would be barred from second-guessing any technological choice.


After looking at the contending arguments, a unanimous Supreme Court said, more or less, "Why are all you people blathering on about Sony?  This is an inducement case, and we aren't going to look at Issue No. 2."


It then read "inducement" to mean that Grokster is liable if it intended that infringement occur, and was relying upon it. In particular, the Court identified as relevant evidence that Grokster was exhibiting "a patently illegal objective" not just by such things as e-mails saying "let's steal" but also by a "failure to develop filtering tools or other mechanisms to diminish the infringing activities," and by having a business model predicated upon infringement. 


The extent to which a business model is relevant was left a bit murky -- the Court says that an economic reliance on infringing activity alone is not enough to infer evil intent. But it looks like about one extra e-mail would turn the trick,


The standards that a cynical business model plus an overt act might be enough to justify liability, and that as technologies for filtering and Digital Rights Management come online the various tech players are going to be under some obligation to use them, are very, very big wins for content players. While the Court said it was not talking about the Sony standard, in fact it rejected the tech industry effort to extend that standard to cover business models as well as technologies.  


Given the role that the Court sees for filtering and business models, the debate between Breyer and Ginsburg over the exact meaning of the Sony test seems a bit beside the point. Breyer would immunize a technology that, now or in the future, could have significant non-infringing uses. Ginsburg would focus more on actual present use, and would give courts more latitude to romp through the fields of technological and business prediction.


Ginsburg's opinion did take an odd twist, because it relied heavily on legal technicalities about the state of the record, concluding that the evidence does not establish a reasonable prospect that Grokster-style technology will develop significant non-infringing uses. Not just the tech industry, but even the Recording Industry of Association of America and the Motion Picture Association of America, which took the case against Grokster to the High Court, agree that P2P has significant non-infringing potential and actual uses.


Whatever, Breyer could not persuade two other Justices to join in his broad reading of Sony, so the uncertainty of the exact scope of that decision -- of argument No. 2, above -- remains uncertain.


This is a good thing. As a first resort, it is clearly better to deal with the P2P purveyors as infringement-dependent businesses rather than infringement-enabling technologies, using the standards of evidence about the proof of evil intent that the Court put forth. The exact dimension of the Sony doctrine can wait. And, given reasonable progress in the development of technological means of protection, the issue might well wait forever, eventually joining the graveyard of unsettled issues on Moot Point. 


James V. DeLong is director of the Center for the Study of Digital Property at the Progress & Freedom Foundation.


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