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Grokking Grokster

by Quinn Norton

On June 27, the Supreme Court vacated the decision of the Ninth Circuit Court, and remanded the case of MGM v. Grokster back to them. This they did unanimously, based on the opinion that the Ninth Circuit had misinterpreted the Universal Studios v. Sony "Betamax" decision of 1983. That decision said that as long as technology (in that case VCRs) had a substantial noninfringing use, their makers couldn't be held liable for the illegal uses that broke copyright.

Since then, commentary on what the Supreme Court decision means, for copyright holders and technology creators, has come fast and thick. The Recording Industry Association of American (RIAA) announced, "The Supreme Court [held] that if you build a business that aids and abets theft you will be held accountable." Larry Lessig, notably of Creative Commons and the Eldred case, talked about ten years of diminished innovation in America. But why? The decision itself looks a bit nebulous to a layperson's eyes. If you're a coder, it might not be clear what happened or how it affects you.

Most of the technology created since 1983, hardware and software alike, have trusted the Sony "safe harbor" to protect them against liability. This decision seemed to say not-so-fast: Sony doesn't necessarily protect makers of a technology who induce their customers to break copyright. As legal professor Randy Picker, who filed a "Friend of the Court" or Amicus document on behalf of MGM, put it, "The big picture on this is the Supreme Court has introduced a new set of doctrines into copyright that will catch the Groksters of the world...If a company is saying 'we're going to rely on lots of copyright infringement for our business,' that makes you a bad guy and you can't do that."

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But it might not be quite as clear as that. Fred Von Lohmann of the EFF, who represented Grokster in district and circuit court, pointed out that Sony also openly advertised dubious uses of its Betamax, some of which were ruled a fair use, like time shifting. But "Librarying [building up a library of aired works for repeat viewing] was never ruled a fair use." So, what makes Sony OK and Grokster not? If it's fair use, Von Lohmann sees that as something developers can't rely on at the moment. "It's a lottery," he says. "Right now it's very hard to tell what if anything is a fair use. Even the Sony fair uses are in question; many people on the other side would like to say Sony doesn't apply in the internet age."

The Souter opinion stepped around clarifying or narrowing Sony. The high court seemed to indicate that you could say you relied on infringement, just not, for goodness sake, as much as Grokster appeared to have. The term they gave the thing that Grokster did that Sony didn't is taken from patent law: inducement. "Inducement" means one thing and one thing only; it's what's called a "term of art" in the legal world. A term of art is a normal word that means something special within the scope of a particular field. Scope, for example, means one thing in programming—the subsection of a program over which a particular variable operates—that it never means in the wider world. Inducement is about intending to have your customers break the law, encouraging them, and telling them how. In this context, it means that if the Grokster defendants did everything the MGM plaintiffs claim they did, they actively and egregiously encouraged and profited from their end users' breaking of copyright. That's inducement, and that's what the Supreme Court said for sure you can't do.

What you are allowed to do in principle, is make a multipurpose thing. To put it in real-world terms, if you make and sell a crowbar, society doesn't hold you responsible for your customers using the crowbar to break in and steal things.

The Supreme Court set up the idea of intellectual property's crowbar in 1983, in the Betamax case. Betamax set up the idea of "substantial noninfringing use," meaning that people could use a Betamax machine to record things that were legal, even if, at that point, they weren't.

Betamax had sweeping effects. Companies or persons could make a product that was part of the chain of copyright infringement, and as long as the sole purpose of it wasn't breaking copyright, they didn't need to fear litigation. These multipurpose devices were in a Sony-derived "Safe Harbor." Something single purpose, like, say, an audiotape of a specific length of a particular copyrighted work, could be, and was, ruled to be illegal, as it had no real noninfringing use. It meant that when you made something with a legal purpose, you didn't have to imagine all the possible uses it had and work out if all those uses were legal.

MGM see companies such as Grokster and StreamCast Networks (makers of Morpheus and MusicCity) as basing their entire business models on allowing their customers to break copyright. They claim that's not what Sony was designed to protect, and the Supreme Court agreed.

So Guilty?

It's possible to look at some of the things StreamCast and Grokster did and conclude (like the jury at the end of The Producers) that they aren't just guilty, but so guilty.

The technical term for guilt in this civil case is "liability." And in the American legal system, to be found liable it has to be clear what law was broken.

What everyone knows in this case is that the defendant's products, like many P2P products, are clearly about getting media freely and easily. It doesn't seem like they got into the game to promote independent bands and film doing their plucky best against the man. And few of you out there that did the downloading exclaimed, "Finally, a nonlabel source for the obscure amateur music collection I've always dreamed of!"

But what does that make them guilty of? It lives in a space that society at large isn't comfortable with. We know certain people who make certain products that are beyond the pale: bombs, or bank accounts for genocidal dictators. Others, while dodgy or even a bit slimy, aren't actually illegal. Free-basing gear, spying equipment, and censorship software for China—these are all legal businesses, despite being unsavory. So too the case with the limbo of Grokster; even if you feel violating copyright is wrong as well as illegal, and find what they do to be morally dubious and in questionable taste, it's hard for anyone yet to say whether they were technically liable. For that matter, there's some question as to what they might be liable for, and what is the appropriate remedy (the legalese word for punishment).

Supreme Court Reply Hazy, Try Again Later

People looking for the Grokster decision to answer any of the great outstanding questions of copyright in the digital age went away largely disappointed. The court failed to clarify issues like vicarious liability, appropriate damages, and if the fair uses established in the Sony case still really apply in the digital age.

Much of this decision picks up qualities of patent law and puts them into copyright law. Given the lack of direction regarding remedy by the Supreme Court, it's interesting to look at the nature of remedy in similar patent cases. While most recent copyright cases have famously focused on damages, huge damages (and in the case of one student, damages around $97 billion), patent cases usually focus on injunction. In other words, if you lose your case you just have to stop doing the thing that started the case off.

Professor of Law at the University of Chicago, Doug Lichtman, a legal scholar who filed Amicus in favor of MGM, is excited by the idea that injunctions could provide a better answer than damages. "That might be a fantastic thing for copyright; I'm much less chilled if I'm only going to be told to stop it already, rather than pay the music companies." Then losing a lawsuit means the technology is a no go rather than total financial ruination, and no-go technology is hardly a new thing for the industry. But it remains to be seen. A judgment without damages doesn't satisfy some observers. "Grokster ought to write a check. They ought to stop what they're doing, but they ought to write a check," says Randy Picker. But neither an injunction nor damages can have much effect on a technology genie that's already out of the bottle. Distributed technologies ruled illegal are for most purposes unstoppable after release. Then the only answer is more technology, which the malware/spam arms race has shown to be no panacea.

What's Next? Does it Start with "B" and End with "itTorrent"?

We might not see much activity after Grokster from the entertainment lawyers. One of the side effects of the Grokster decision is that for now, the copyright holders' industries aren't seeking more protection from P2P networks via Congress. The INDUCE act is pretty much dead, for now. Randy Picker sees that having a side effect. "They have that political capital to reinvest in the Broadcast Flag."

Lichtman sees vulnerability in BitTorrent, but again, not a willingness to sue. "Could they go after BitTorrent? Yes. Would it help their bottom line? Probably. Would they win? They might." But the music industry has taken quite an image hit from the heady days of defending artists' speech before Congress to suing a 12-year-old showtunes fan. In the wake of Grokster, many people believe that institutions like the RIAA and MPAA (Motion Picture Association of America) will want to take a break from litigation to mend fences. Lichtman, for one, thinks the next few years will see the copyright holders taking a cue from the success of the iTunes music story and invest more of their time and money in creating legal alternatives to unauthorized file sharing.

But what if they did decide to go after the coders? Both sides of the debate see Grokster as opening the door for a suit against the world's most popular engine of file sharing. Randy Picker and Doug Lichtman believe this opinion leaves open the possibility of looking at how a technology works and making guesses as to what went on in the mind of the designer. Wendy Seltzer of the EFF disagrees. "If the opinion says one thing clearly, it is that the design of a product alone can't be used to infer intent," she says. So who's right? That's the kind of thing the courts will be settling over the next few years.

Lichtman has also called the opinion a "hollow victory" for copyright holders, pointing out that you could build a tool for infringement, and if you never admitted that was what it was for, copyright holders could never prove you had bad intent. BitTorrent's creator, Bram Cohen, has repeatedly said that BitTorrent not only wasn't created for illegal file sharing, but isn't any good for it, since it affords users no anonymity. But Cohen may not be totally airtight, depending on how much or how little is required to prove intent. In a 1999 parody called "A Technological Activist's Agenda" Cohen claims to "build systems to disseminate information, commit digital piracy."

The backlash from his joke came right on the heels of Grokster, and Cohen had to make public announcements that it was only a joke, folks. (For instance, Bram Cohen doesn't actually create systems to synthesize recreational drugs, as the document also claims.) It disturbs many technologists to think that any errant comment can bring them under scrutiny. And indeed, most people think that Cohen's claims about the purpose of BitTorrent override the implications of a parody written two years before he started the project. But the BitTorrent waters are muddied; even Cohen beta tested BitTorrent's capacity for passing large files with a copyrighted porn preview DVD.

Supporting the fence-mending idea, the MPAA has said repeatedly that they are interested in working with Cohen rather than suing him.

Playing it Safe

Often lawyers have advised their corporate clients to avoid some of the trouble of litigation with document retention policies, a legal term for a document destruction policy. If you destroy all the company email over X days old, you aren't actually guilty of destroying evidence, as long as that's your standing company policy. Could such policies protect smaller companies and open source projects from being sued over inducement? Litchman says if you're thinking about document retention, it could be time to re-examine your motives. "I certainly don't want to go on record saying destroy documents; if you do the right thing hopefully you have nothing to hide." Even Fred Von Lohmann, who has for years told geeks of all stripes not to talk about any possible illegal uses of their creations, doesn't see document retention as a solution in the tech community, especially open source. "Geeks are data packrats... If I have to delete all my email before I commit to a CVS, I'm just not going to commit to that CVS." In fact, as much as a well-formed policy can protect you and your wallet, a badly structured document retention policy can get you in more trouble by making it look like you were destroying evidence.

What's the practical advise for someone building a new technology right now in America? Picker says simply, "The cleaner your motives are, the better off you probably are." Lichtman goes a bit deeper. If your technology either passes files out of your control or leverages something you believe to be fair use, try and view it objectively to decide if it's really a tool of infringement. "Better yet, run it by an objective third party. I'm sure some of the people at Grokster talked themselves into believing what [their customers were doing] was a fair use."

From Von Lohmann's perspective it's a bit too murky to say what's safe until all this gets worked out in the courts. Lichtman jokes, "If you've got a lot of money, it would be great to establish what exactly is fair use in the courts."

Realistically, the safest thing is just to not build another file sharing program in America until a bit more of this is all worked out. It might be a good time to work on that tagging app you've been thinking about.

Quinn Norton is a writer and photographer whose work has appeared in Wired News, The UK Guardian, Make Magazine, Seed, and more.

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