[opendtv] News: Lively Debate as Justices Address File Sharing

From: Craig Birkmaier <craig@xxxxxxxxx>
To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
Date: Wed, 30 Mar 2005 08:07:39 -0500

http://www.nytimes.com/2005/03/30/technology/30bizcourt.html?th=&emc=th&pagewanted=print&position=

March 30, 2005

Lively Debate as Justices Address File Sharing
By LINDA GREENHOUSE

WASHINGTON, March 29 - The much-heralded Supreme Court showdown in
the Grokster case between old-fashioned entertainment and newfangled
technology found the justices surprisingly responsive on Tuesday to
warnings from Grokster, the software maker that allows Internet users
to share computer files on peer-to-peer networks, that a broad
definition of copyright infringement could curtail innovation.

Justice David H. Souter asked Donald B. Verrilli Jr., the lawyer
arguing for the Hollywood studios and the recording industry, to
envision "a guy sitting in his garage inventing the iPod."

"I know perfectly well that I can buy a CD and put it on my iPod,"
Justice Souter said. "But I also know if I can get music without
buying it, I'm going to do so."

Because that possibility was so obvious, he continued: "How do we
give the developer the confidence to go ahead? On your theory, why
isn't it a foregone conclusion from the outset that the iPod inventor
is going to lose his shirt?"

That Justice Souter, the least technically minded of the justices -
he still drafts his opinions by hand on a legal pad - could even
invite a dialogue about Apple iPods, much less suggest that he could
be tempted to engage in illegal file sharing, was an indication of
how this confrontation of powerful interests had engaged the court.

But by the end of the lively argument pitting Grokster and its allies
on the electronic frontier against the entertainment community's
stalwart defense of intellectual property rights, any prediction
about what the court will actually decide appeared perilous. The
justices themselves seemed taken aback by the procedural complexities
of the case, Metro Goldwyn Mayer Studios v. Grokster Ltd., No.
04-480, which moved through the lower federal courts on summary
judgment, without a trial.

Some justices appeared tempted by the prospect of allowing the
studios and record companies to get to trial on a legal theory that
the lower courts did not address: that Grokster and the other
defendant, StreamCast Networks, which offers the Morpheus
file-sharing service, are liable for copyright infringement for
having actively induced consumers to use their software to download
copyrighted material on an immense scale.

The Federal District Court in Los Angeles, in a decision affirmed
last year by the United States Court of Appeals for the Ninth Circuit
in San Francisco, took a different approach, ruling that the
file-sharing networks were not liable because their services were
"capable of substantial noninfringing uses."

The lower courts took that test from the Supreme Court's 1984
decision that absolved the Sony Corporation, manufacturer of the
Betamax video recorder, of copyright liability for infringing uses
that consumers might make of the product.

The Sony decision provided the right answer, and that should be the
end of the case, Richard G. Taranto, arguing for Grokster and
StreamCast, told the court. He said it was "critical" for the Supreme
Court to adhere to the "clear Sony rule" for the sake of "innovation
protection."

Justice Ruth Bader Ginsburg objected, noting that the 1984 decision
"goes on for 13 more pages" after articulating the test that provided
Sony's defense.

"If the standard was that clear, the court would have stopped
there," Justice Ginsburg continued. "I don't think you can take one
sentence from a rather long opinion and say, 'Ah-hah, we have a clear
rule.' "

In briefs filed as friends of the court, allies of the file-sharing
networks in various technology industries and civil liberties
organizations have depicted file sharing as a useful, if not vital,
means of expanding knowledge through the inexpensive transmission and
Internet archiving of lawful material in the public domain. As long
as the noninfringing uses were not "far-fetched," Mr. Taranto said,
the defense that applied to videocassette recorders should be
available for his clients' "autonomous communication tool," as he
described file sharing.

Whether this argument makes headway may depend on the technological
universe that the court considers in applying it. Grokster and
StreamCast are asking the court to look at all possible uses of file
sharing, not just the use that is made of their own software. The
plaintiffs, backed by the Bush administration, are asking the court
to focus on the business of the defendants.

Paul D. Clement, the acting solicitor general, told the justices that
while the Ninth Circuit had used as its test "the mere theoretical
capability of noninfringing uses," the Supreme Court should look at
the actual "business model" used by the defendants. It was an
"extreme case," Mr. Clement said, a model built on "copyright
infringement without liability, with the full knowledge that the draw
is unlawful copying."

"Sony could have set up a 'theoretical capability' test, but it
didn't," Mr. Clement continued. Instead, he pointed out, the Sony
decision required evidence of a "substantial" noninfringing use. The
court in that decision found that consumers used their VCR's
primarily for recording television programs that they could watch
later, a noninfringing use referred to as time-shifting.

Justice Antonin Scalia said he was concerned that legitimate uses of
a new technology might need some time to become established; in the
meantime, the developer would be defenseless against a copyright
infringement suit. "What I worry about is a suit right out of the
box," he said. "Do you give a company a couple of years to show
'substantial' noninfringement?"

Mr. Clement replied that in the government's view, there should be "a
lot of leeway at the beginning." But that was "not this case," he
said, asserting that Grokster and StreamCast had "a business plan
from Day 1 to capitalize on Napster."

Napster, the original file-sharing network, was put out of business
by a ruling by the Court of Appeals for the Ninth Circuit in 2001
that it was secondarily liable for the copyright infringement
committed by its users. The Ninth Circuit found that Grokster
differed significantly from Napster because its software permits
users to share files with one another directly, rather than going
through a central computer server.

Mr. Verrilli, the lawyer for the plaintiffs, urged the justices not
to rely on that distinction. "There is a shell game going on here,"
he said. "Our position is that we're entitled to injunctive relief
against the continued operation of this gigantic machine that was
built on infringement."

In a second argument on Tuesday, the court heard an appeal by the
Federal Communications Commission and the cable industry of another
Ninth Circuit ruling, this one with implications for the development
of the business of providing high-speed access to the Internet. The
Ninth Circuit rejected the commission's view that companies offering
cable modem service should be considered in the "information service"
rather than telecommunications business, and as such should be exempt
from the extensive regulation to which federal law subjects
traditional telephone companies.

At issue is the ability of Internet service providers to force cable
companies to open their broadband lines. The outcome of the case,
National Cable and Telecommunications Association v. Brand X Internet
Services, No. 04-277, is likely to depend on how much deference the
justices decide to give to the F.C.C. Based on the argument, the
outlook is uncertain.

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[opendtv] News: Lively Debate as Justices Address File Sharing

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