Grokster vs. RIAA

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Rich Tehrani
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Grokster vs. RIAA

Here is a good story on the ramifications of the Grokster, Kazaa and RIAA case. The issue at hand is if you sue inventors that produce products that can be used for illegal purposes, who will innovate? After all, the Xerox machine and iPOD can be used to break laws as well -- does that mean these products should be outlawed or Steve Jobs should be thrown in jail when an iPOD is used to steal a song?

Here is an excerpt:

"Copyright infringement is the only commercially significant use of file sharing," said Donald B. Verrilli Jr. an attorney for the entertainment industry. Acting Solicitor General Paul D. Clement, representing the government, said Grokster and its brethren were being allowed to "build a business model out of infringement."

Richard G. Taranto, arguing for the file-sharing companies, responded that the technology is used extensively for legal swapping of files and that the firms have no way of knowing when their users use the software illegally.

The entertainment industry wants the Sony precedent to allow for liability when the primary use of the product or service is illegal, or when the provider refuses to take steps to try to stem potential piracy.
But those notions provoked skepticism and sharp questioning from several justices, who wondered how inventors could know whether many people might use their products for illicit purposes.
"How do we know in advance on your test" whether the inventor is safe to go forward? asked Justice David H. Souter.

Justice Antonin Scalia said that an inventor has to know what his liability would be from the beginning. "I'm a new inventor," Scalia said. "I'm going to get sued right away."
Scalia and Souter asked whether other popular technologies, such as the Xerox copying machine or Apple Computer's iPod music player, would have seen the light of day given that they can and are used for illegal purposes.

And even if an inventor knows there might be illegal use, asked Justice Anthony Kennedy, how much is too much?

Justice Stephen G. Breyer noted that there are "excellent uses" of file-sharing technology, including by libraries and other institutions that transfer documents that are not copyrighted. Some music bands also allow their songs to be traded for free.

But the justices expressed discomfort with the notion that if they uphold the ruling of the Court of Appeals for the 9th Circuit Grokster and Streamcast Networks would walk away scot-free.

Breyer and O'Connor asked whether the case could be sent back to lower courts for a trial on whether Grokster and Streamcast networks deliberately induced users to steal songs and videos, which would be illegal under existing copyright law. The lower courts largely sidestepped those issues.
That is the outcome preferred by several major technology and telecommunications companies, such as Intel Corp., Microsoft Corp. and Verizon Communications Inc. which condemn Grokster but want the Sony precedent maintained.

But Verrilli argued that merely going after the Groksters of the world for encouraging infringement deprives the entertainment industry of being able to quickly seek to shut down businesses based primarily on illegal file sharing.

The case is MGM Studios v. Grokster Ltd., 04-480. A ruling in the case is expected by July.

Another area that wasn’t discussed is the constitutionality of outlawing software. I was under the impression that software was like speech and was protected as such. This wasn’t mentioned in the article and I am not an expert on the constitution or federal law.

I did a bit of research and found that the ACLU has a statement on this issue and more importantly links this case to the FCC Vs. Brand X case that admittedly has much more to do with my core competency than the recording industry does. But bringing these cases full circle, the ACLU said in a statement yesterday:

"People have grown complacent about freedom on the Internet, but bad policies can easily limit that freedom and stifle growth," said Barry Steinhardt, Director of the ACLU’s Technology and Liberty Project. "We can’t assume that the Internet is inevitably, permanently open to the free exchange of speech, ideas and information. But we are hopeful that the Supreme Court won’t let free speech be curtailed in today’s cases."

In MGM v. Grokster, the Court will decide whether Grokster and other makers of "peer-to-peer" software, which allows individuals to share computer files directly with each other, can be held liable for illegal uses of that software such as the sharing of copyrighted music files.

"File sharing is one of the most innovative uses of the Internet to emerge since the advent of the Internet," said ACLU attorney Aden Fine, an author of the ACLU’s amicus brief in the case. "This is a technology that enables a vast amount of legitimate, non-infringing speech. Technologies should not be shut down just because some people use them illegally -- especially a technology such as file sharing, which has potentials for expanding free speech that Americans have only begun to explore."

In the second case being heard by the High Court today, FCC v. Brand X (which has been consolidated with a similar case, National Cable and Telecommunications Association v. Brand X), the underlying issue is whether providers of cable broadband Internet services should be forced to provide access to Internet Service Providers other than their own.

"The cable monopolies own the wires that people use to get online," Steinhardt said. "They must not be allowed to parlay that ownership into control over subscribers’ e-mail, Web surfing, Internet telephone services, or other applications and services. These are companies that have both the technological means and the economic incentive to interfere with the free and open Internet by depriving consumers of access to competing services. If the government does not stop them, the result should surprise no one."

Steinhardt added, "At root this case is about free speech, because if the forums where speech take place are not themselves free -- and the Internet may be the greatest forum of them all -- then the First Amendment becomes nothing more than a dry, meaningless abstraction."

In 2002, the ACLU commissioned an engineering firm, Columbia Telecommunications Corp., to examine the technology behind broadband Internet access. CTC’s report makes clear that cable broadband providers can and indeed already are interfering with the free, neutral "end to end" Internet, the ACLU said. The report and a recent supplement is available at

The ACLU’s amicus briefs in both cases are online at
I never thought to tie these cases together. Does file sharing have anything to do with Internet access? I suppose the answer is yes. This country is based on freedom and one of the reasons the US is a great place to live is that we are a free and open society. At what point does freedom to choose an ISP interfere with the ability of a cable company to generate a decent living from providing cable lines to a household? At what point does the freedom to invent conflict with the needs of companies to protect their copyrights?

As is pointed out so well in this article:

Central to the Grokster case is the 1984 Sony Betamax decision, which Consumer Electronics Association President Gary Shapiro called the Magna Carta for the technology industry.

Hollywood sought to shut down Sony's video cassette recorder, but the Supreme Court ruled that as long as a device had legitimate uses that did not violate copyrights, its maker could not be sued. The author of the Betamax decision, Justice John Paul Stevens, still sits on the court.

"The country seems to have survived" the Sony standard, said Justice Breyer. Several justices asked what kind of new rule would be preferable to Sony.

Ironically, the VCR wound up producing bigger studio profits from film rentals than theater releases -- following the path of a century of innovations from the player piano to radio that the entertainment industry initially resisted.

Intel argued that many technologies -- including Internet servers, computer hard drives and DVD players -- were developed under the Sony decision, and that eroding that protection would "chill innovation and put a damper on one of the largest components of the U.S. economy: computer, software, consumer electronics and telecommunications companies."

Opening such companies to contributory copyright infringement would "let lawyers into the design room," Intel argued.

So there you have it. We are a crossroads once again. Will the US Supreme Court turn over the landmark 1984 Sony Betamax ruling and will consumers get the right to choose their ISPs over cable? IMO, I can’t see the Betamax ruling being overturned and consumers will likely be allowed to choose their ISP – eventually anyway.

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