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Inducement Standard in 'Grokster' Internet File-Sharing Decision
Limits Liability of Technology Innovators
by
Chris McManes
The Supreme Court handed down its decision in the
MGM Studios vs. Grokster electronic
file-sharing case on 27 June. IEEE-USA filed an
amicus brief in this case in January.
The case hinges on a lawsuit
brought by entertainment companies against Grokster and StreamCast Networks, two companies that offer peer-to-peer
file-sharing software. The suit claimed that operators of
file-sharing systems should be held responsible when their users
copy music, movies and other protected works without permission.
IEEE-USA contends that providers
of technologies capable of both good and ill
—
such as a VCR or a file-sharing system
—
should not be liable for the copyright infringement of users,
unless the provider has actively encouraged its users to
infringe.
IEEE-USA Today’s Engineer
interviewed IEEE-USA President-Elect Ralph Wyndrum and IEEE-USA
Intellectual Property Committee Chair Andy Greenberg for their
perspectives on the case.
The interview was conducted on 14 June. Following is a transcript of that
interview:
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q |
Andy, can
you give us a brief summary of the dispute between MGM
and Grokster? |
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a |
Greenberg: This
case affects nearly five million of our nation’s
engineers and technologists, who are represented by
IEEE-USA. It involves MGM and record studios and film
studios, who on one hand, make copyrighted music and
film, and on the other hand, the makers of peer-to-peer
file-sharing software, such as Grokster and StreamCast.
In this case, the studios
are saying that the defendant, makers of the
peer-to-peer software, should be liable when end-users
use the software to infringe a copyright. This is very
different from saying that the Grokster and SteamCast
people are actually making copies of works. They are
not; they are simply providing the technology that many
third parties are using to infringe. This brings back
the specter of the Sony Betamax case, which the Supreme
Court considered nearly 20 years ago, in which Sony was
ironically a plaintiff in this case< [and] was the
defendant when movie studios sued [it] for making the Betamax video tape recorder.
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|
q |
Why
did IEEE-USA feel compelled to file an amicus brief in
Grokster? |
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Greenberg: Well,
our engineers are on the front line of the copyright and
file-sharing issues. We are not only inventors,
innovators, creators and entrepreneurs in all
technologies, we are also creators of content, writing
the computer software that is often distributed through
them. Accordingly, we are interested in making sure that
whatever rule is adopted, whether the Supreme Court
adopts the rule on the Sony side, that is, the Betamax
side, which is that when there is a technology that’s
capable of being used for both good and ill
—
a neutral technology
—
that there should be no liability; but that where the
software is being used by its promoters to exploit and
induce people to infringe, that there can be liability
to stop that kind of exploitation and that they not hide
behind the Sony exception.
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q |
So, is
that the gist of the IEEE-USA position? |
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Greenberg:
IEEE-USA’s position is that there should never be
liability for selling or introducing a technology that’s
neutral —
could be used for both good and ill
—
unless the defendant has actively induced its users to
infringe.
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q |
By
“actively induced,” what exactly do you mean? |
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Greenberg: What
we mean is that they have gone out and they’ve explained
to users, “Hey, here is a wonderful technology you can
use to get free copies of computer software or free
copies of music without paying the copyright owners.”
That would be an affirmative effort, not related to the
technology, but a separate effort to try to get people
to infringe and to violate the copyrights, and in doing
that, to profit.
It’s one thing to sell a technology for copying and
distributing information; it’s another thing to actually
go out and say, “Now use this to commit business torts
or crimes.”
|
|
q |
Ralph, why should the average person care about the
upcoming Supreme Court decision? |
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Wyndrum: The
average person is clearly the beneficiary of new
technology, and the average person, for example, may
well participate in file sharing when that person
transfers videos of [his or her] grandchildren, or
videos of family members performing musical [recitals],
that sort of thing. Surely, we would not try to restrict
that kind of use, which involves no kind of copyright
issues at all.
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q |
Gentlemen, will it be a victory or defeat for the
general public if the Court rules in favor of one side
or the other? |
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Greenberg: If I
can speak to that, Ralph, I think that a rule that’s too
rigid, that allows companies to exploit a tendency to
take things for free would be a problem for the public
as a whole, and a rule too loose, one that allows the
studios to sue and control, or use that threat of
control to stifle working technology. Neither ruling
would serve the purposes; some balance has to be struck.
We are activists for the balance because we really do
represent both sides of this issue. The public benefits
when it is able to have complete access to technology
and to use [it] for lawful purposes.
Ralph pointed out that there
[are] some times where copyright is not implicated at
all. There are other times where new technology can be
used to find new and better ways to distribute
copyrighted materials. For example, after the studios
lost their case against Sony for the Beta-max, they made
a fortune selling, licensing and renting videos; and
entire industries were created for their content they
never could have had, but for the innovation of the video
tape recorder. Likewise, we’re now seeing stores, like iTunes music stores, and many other technologies that
might not have existed if the studios were allowed to
chill those technologies in their birth. And that’s what
would happen if the rule were to expose somebody to
liability merely because somebody is using their
technology to violate the law.
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|
q |
Andy,
I understand you attended the oral arguments in this
case. Did that give you a sense which way the Court will
rule? |
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Greenberg: You
know, it’s always reading tea leaves when you are asked
what the Supreme Court is going to do. I can tell you
that at least four justices showed concern and an
interest in punishing defendants for their conduct
rather than for their technology. At least two of the
justices seem to be interested in the ideas of the
IEEE-USA brief; and two other justices were very
skeptical about the idea that liability should be based
on the conduct of users. Justice [Antonin] Scalia said,
“Let’s say you are a lawyer for Apple and you’re asked
whether or not the release of the Ipod would expose you
to liability. What would your answer be under the MGM
proposal?” Scalia seemed genuinely concerned that
there’s no way you can be sure that you’re safe in
investing in technology, or bringing a technology to
market, when the mere fact that customers decide to use
it to infringe can be a basis for liability. You can’t
control what your customers do.
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q |
Who
will be the big winners if the Court adopts the active
inducement standard that IEEE-USA and others proposed? |
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Wyndrum: I think
the big winners are going to be the general public. The
general public will be getting new innovation; they will
be getting new material created; they will have access
to it; [and] they’ll be able to share their own
material. Clearly, they are going to be the
beneficiaries.
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q |
If
the Court rules on behalf of the movie studios and
recording industry, and says that those who produce
software or hardware that makes illegal file-sharing
possible are liable when consumers infringe on
copyrights, what effect do you anticipate that having on
software and hardware manufacturers? |
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Wyndrum: Let me
take that one. I think you will find, as Andy pointed
out before, that the hardware and software manufacturers
will be reticent to put any of their money into
production of devices whose application will be perhaps
severely limited, and who themselves would be liable for
the actions of their customers. It would chill
innovation and set us back. That same innovation might
well take place in other parts of the world then, not in
the United States.
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q |
Andy,
anything to add to that? |
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Greenberg:
Everybody’s going to argue that they won, no matter how
the decision comes out. So it’s really: what is the rule
and how risky is liability? If you can clearly
understand your liability under the rule, you can manage
it. If it’s going to be a question of what a judge and
jury tells you, and what the appellate courts will tell
you at the end of a long stretch of litigation, there’s
no telling what would happen. So it’s not a question of
whether or not the plaintiff can win under this result,
it’s a question of what will the rule be.
Ralph is 100 percent right.
Who would invest, and who would follow through with
these technologies? There’s enough uncertainty with the
market itself when all of a sudden you have an
additional legal uncertainty, that even in a case where
the more popular and successful your product is, the
greater that risk would become.
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q |
Ralph, as the incoming president of IEEE-USA, what
decision do you think will be in the best interests of
U.S. IEEE members? |
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Wyndrum: Well, I
think that’s been presaged by the discussion we’ve been
having. It’s clear that we represent, in IEEE-USA,
members who are at the leading edge of inventing,
innovating, creating both hardware and software for the
benefit of the general public, improving the quality of
life in the United States, and indeed, in the world.
I think a decision which
causes the culprits who may illegally be using the
technology to be guilty, but surely not the inventors of
the technology, would be the right decision.
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q |
If the Court upholds the
Ninth Circuit Court of Appeals’ ruling that peer-to-peer
network providers are not liable for the actions of the
end-user —
their customers —
is there another remedy the entertainment industry can
seek, or are they out of options? |
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Greenberg:
Although it’s hard to say, I can think of various ways
they might decide to go after the industry; that they’ll
do what they are doing, which is suing individuals [on]
a large scale. This will be their only relief, to sue
you and your neighbor and your daughter for using this
technology directly.
The idea here is that when
the technology itself creates a situation that makes
large-scale infringement possible, and people are
actually hiding behind the rules that are designed to
promote technology … and create these large schemes of
actually illegal conduct, you are not permitted to use
this to get free copies of copyrighted content. Then we
have a problem, and the problem will be that there are
going to be these individual suits, and there will be a
lot more of them than there are today. A rule needs to
strike a balance.
The technology on the
Internet is one big copy machine; realistically that’s
what we have. On the other hand, who would ever suggest
that the Internet should have been foreshortened,
stopped or stalled because it could be used to infringe.
The special interests
have attacked the innovation, virtually every new
technology that affects music, from the player piano, to
the video tape recorders, to the audio tape recorders
before that, to the digital analog tapes, then the
Internet itself and now, peer-to-peer files sharing. All
of these technologies, none of this would have happened
—
the MP3 —
had there been a simple button that allowed the studios
to shut it down because it didn’t satisfy their whim.
The point is that we can’t allow restrictions on
technology to suit a few interests, but we also have to
protect the content owners against intentional and
active exploitation of that content as seed capital for
a new venture. |
Chris McManes is IEEE-USA's
senior public relations coordinator in Washington, D.C.
Comments may
be submitted to todaysengineer@ieee.org.
Helen Hall, IEEE-USA
communications assistant, transcribed the interview.
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