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Intellectual Property Law
04/04/2005 07:22 AM
By David J. Byer
The U.S. Supreme Court last week heard opening arguments in
Metro- Goldwyn- Mayer Studios Inc. et al. v. Grokster Ltd. and
StreamCast Networks Inc.
The case, which involves certain peer- to- peer file- sharing
technology and services used by many for the downloading and
sharing of music and movies over the Internet, has been
characterized by some intellectual property lawyers as the most
important copyright case in decades.
The entertainment industry plaintiffs appealed to the Supreme
Court after the district and appeals courts refused to hold Grokster
and StreamCast liable for “ contributory” or “ vicarious” copyright
infringement based on the use of their services by consumers who
directly infringed copyrights. In its simplest form, those courts held
that Grokster and StreamCast could not be held “ secondarily” liable
because their services are “ capable of substantial non- infringing
uses.”
That is, authorized uses are possible. This “ rule” was derived from
the famous 1984 Sony Corp. v. Universal City Studios decision in
which the Supreme Court refused to find VCR manufacturers liable
for possible copyright infringement by consumers.
Many people in the technology world see Grokster as a potential
watershed event. Fifty- five “ friends of the court” have filed amicus
briefs with the court. Nineteen of those briefs support the music
and movie industry, 26 support Grokster and StreamCast, and 10
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support neither side but were filed to raise issues of importance.
American City Business
Journals
(news from 41 Business
publications around the
country)
The groups submitting these supplemental briefs are
extraordinarily diverse. They include Intel Corp., the National
Venture Capital Association, the Consumer Electronics Association,
groups of law professors, the American Civil Liberties Union, the
Business Software Alliance, the U.S. Solicitor General’s Office, the
Major League Baseball Commissioner’s Office and the Christian
Coalition of America. Almost everyone, it seems, believes the
issues before the court are important, and everyone has an opinion
as to the proper outcome.
The arguments made by both sides differ greatly as to the
existence and importance of certain facts, as well as to the
interpretation of the law, especially the effect of Sony. Yet both
sides urge the court to adopt their position, in part, to ensure that
“ innovation” is nurtured and supported. Everyone agrees that a
ruling that would impede innovation would damage our economy
and our culture.
The problem, of course, is that the sides have very different views
about how innovation is best encouraged.
The music and movie industry argues that an “ epidemic” of illegal
music downloading has caused direct damage to entertainment
providers, breeding a “ culture of contempt for intellectual property,
and for the rights of others generally, in cyberspace.”
They suggest that any legal rule that allows such activity
“ threatens innovation — not only in artistic creation but also in
software design (which copyright protects), as well as in the efforts
of legitimate business to distribute copyrighted content in digital
form on the Internet …”
“ Artistic creation and technological innovation” they say, are best
encouraged by a copyright law that prohibits such conduct.
Grokster, StreamCast and their supporters disagree. They argue
that innovation would be stifled by any decision holding an
uninvolved service provider or manufacturer of technology liable for
infringements committed by independent users.
For them, the rule in Sony (that there can be no infringement if the
service or technology is capable of significant non- infringing uses)
must be maintained.
It protects “ innovations like photographs, radio, cable television,
the VCR, photocopiers, audiocassette decks, Sony’s Walkman,
TiVo, CD and DVD burners, and Apple’s iPod …” and “ yet unrealized
or unimagined future improvements and innovations that will
benefit creators and consumers tomorrow.”
The National Venture Capital Association argues that investors
need a clear and precise rule, such as the one in Sony, to support
investment and thus innovation. They believe the rule in Sony “ has
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been the midwife for the technological revolution of the past two
decades. It is not by chance that the Sony decision coincided with a
period of unprecedented innovation and technological progress.”
Moreover, a move away from Sony could have “ a devastating
impact on the development of legitimate and valuable new
products and services for consumers.”
This is not an easy case with simple answers. Reasonable people
can disagree about the best way to encourage innovation. If the
court takes on the central issues, Grokster may very well provide
new guidance as to the balance that must be struck between the
intellectual property protection necessary to protect creativity and
the freedom necessary to support future growth and development.
At a minimum, the court will have the opportunity to revisit the
Sony decision, which more than 20 years ago tried to strike that
balance.
Whatever the court decides, this debate will not end soon; it
merely will find a new venue.
Both sides acknowledge that legislation ultimately may be required.
Based on past history, we can be sure that if the entertainment
industry loses, it will be knocking on Congress’ door.
After all, last year it strongly supported the proposed Inducing
Infringement of Copyrights Act of 2004, which arguably would have
overturned legislatively the lower court decisions.
The Induce Act ultimately did not pass, but it or its progeny no
doubt wait in the wings.
David J. Byer is a partner in the intellectual property group at
Kirkpatrick & Lockhart Nicholson Graham LLP in Boston. He can be
reached at dbyer@ klng.com.
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