Crimes of Marketing
I've been finding the press coverage of the Supreme Court's unanimous decision in favor of copyright holders in the Grokster case to be shockingly unenlightening, but as I read Justice Souter's opinion (PDF) this may not be quite so bad as it seems. He upholds the old Sony rule that the mere fact that a technology has infringing uses is not grounds for holding its maker liable for infringement. He also seems to reject the plaintiffs' desire to transform "substantial non-infringing use" from a qualitative standard (are there non-trivial legal uses of the technology) to a quantitative one (is the technology, in fact, mostly used legally). Instead what I think he's saying is that Grokster and StreamCast can be held liable not for their technology, but for their marketing campaign which was allegedly geared toward advertising their products' infringing uses.
On its face, that's not the worst thing one could imagine. There isn't a really compelling public interest in the availability of advertisements saying "hey use this to illegally copy software." On the other hand, the standard in use here seems very vague. Souter doesn't say that the marketing, per se was illegal. Rather, he says the marketing is evidence of an intent for the product to be used illegally, and the intent was illegal. The Sony rule is now supposed to be interpreted as a kind of rule of evidence -- the mere existence of infringing uses is out of bands as evidence of intent to induce infringement.
But where does this stop? Suppose someone working for Intel or Apple or Dell or Microsoft wrote a memo years ago arguing that they should make computers that can play music because "nowadays lots of people rip songs off their CDs or download music over the internet" does that turn the entire computer industry in a massive criminal conspiracy?
The big questions, in other words, seem to me to have been deferred. Are we looking at a narrow ruling against a very specific kind of marketing campaign, or is this an invitation for the content industry to go on all kinds of fishing expeditions that will let them shut down anything that any of its inventors ever contemplated being used illegally? I'll be interested in seeing some of the various legal and economics bloggers weigh in, so check this post for further updates.
Update [2005-6-27 13:11:42 by yglesias]: A lot of the action here seems to be in the concurrences. One, by Justice Breyer (joined by Stevens and O'Connor) argues for the sort of narrow construal of this decision that I'd like to see. The other, by Justice Ginsburg (joined by Rehnquist and Kennedy) suggests that the Court ought to revisit the Sony rule and make it easier for IP owners to sue inventors. The other three justices leave us nothing more than the unclear opinion. The real action will be determined by where they come down on the round of litigation that's sure to follow this. See also Lawrence Solum's post on the concurrences.
Ahhh...the Court wants to have the best of both worlds. The argument was that a ruling this way would stifle technological innovations. So the Court says you can make software that can hack into the Pentagon's computers if you wanted to, for example, as long as you don't market it as such. They try to balance the commercial interests of the music/movie industry with that of the commercial interests computer software/hardware industry. All of the file sharers out there, hit your p2p networks before they are gone...
I hate this ruling btw...it is like saying it is alright to watch erotica as long as isn't marketed as something that might arouse you. It is a judicial cop-out...
June 27, 2005 9:23 AM | Reply | Permalink
I haven't been following this too closely, since I have no fear that file sharing is going to go away no matter what decisions are made in courts of law, but I think the Supreme Court decision only says that the case against Grokster can go to trial, not that it is in fact guilty of anything.
June 27, 2005 9:39 AM | Reply | Permalink
I really don’t see the point of why Souter went there, as the file-sharing networks have contended from the getgo that they merely provided the network and had no idea what type of content the users exchanged. Just as a hotel owner would not violate one’s privacy in their hotel room, the owner would have no idea if you were doing anything illegal in your room.
I imagine if a hotel advertised that you could rent their rooms and you were welcome to commit illegal activity inside, they could be held liable as well.
June 27, 2005 9:45 AM | Reply | Permalink
I assumed this decision was terrible from the capsule summaries, but having looked at the verdict, I am not sure how you can argue it any other way.
If a company creates a product, actively advertises that it will do fun and illegal things, and then people do just that (with help from customer service to do it, no less), they are clearly breaking the law. The rule should be pretty straightforward to keep mum on the illegal aspects of something and let word of mouth do it for you. If we are to cry foul when evil kleptocratic corporations boast internally about getting around the law (tobacco industry, anyone?), it is fair to hold filesharing companies to the same standard. Also, aren't there standards in corporate law already in place for judging when a company is liable and when they are protected from the illegal actions of employees?
Along the theme of individual rights, it is only fair to let artists decide how they want copyright privileges to apply to their works, with fair-use rights universally protected. Many artists out there DO allow some expanded rights to things like live concerts, and a few actually encouraged trading on Napster. If anything, the flood if illegal works was a hindrance for them, since it meant finding legal and copyable songs was a needle in a haystack. If an artist wants to release an album under a Creative Commons license, they deserve the right to do it (see this band for an example), but we shouldn't force it upon every artist, even if a serious case could be made that it would be better for them and the entertainment industry in the long run. I don't think semi-shady companies advertising illegal copying while acknowledging that there may be legal uses will help the case, since it can and should be made the other way around.
June 27, 2005 9:53 AM | Reply | Permalink
"Instead what I think he's saying is that Grokster and StreamCast can be held liable not for their technology, but for their marketing campaign which was allegedly geared toward advertising their products' infringing uses."
Damn straight.
The easiest way to kill the bulk of piracy is to take the profit motive out of piracy.
That's what the Souter decision is all about, and it's a good example of how to split the baby without killing the baby.
"The big questions, in other words, seem to me to have been deferred."
I'd disagree.
By saying that the profit motive had to be removed from piracy, but not moving against the underlying technology, this is the big decision.
This can be extended and expanded on for years.
I'm not a fan of Bush the Elder, but he at least made a good Supreme Court pick. (Or rather, Sununu the Elder did.)
June 27, 2005 9:58 AM | Reply | Permalink
There's a very interesting comment by the Court at the end of the Grokster opinion. At the district court, both sides had cross-moved for summary judgment. This means that each side had contended that there was no reason to have a trial at all -- that there was no evidence from which a jury could find for the other side, so the court should just grant judgment to them. The district court, affirmed by the 9th Circuit, did grant summary judgment to Grokster and necessarily denied MGM's summary judgment motion.
The Supremes' decision today vacates that grant of summary judgment to Grokster -- in other words, it says that there is evidence from which a jury could find for MGM. But its parting shot goes much farther: "On remand, reconsideration of MGM's motion for summary judgment will be in order." In other words, the Court is perhaps hinting that it thinks that the evidence in MGM's favor is so strong that Grokster should lose without the need for a trial. This comment by the Court isn't binding; MGM never appealed (at least to the Supreme Court) the denial of its summary judgment motion and so the issue technically wasn't before the Court. But given this, for the Court to make this comment strikes me as going a bit out of its way to suggest the strength of MGM's case. It'll be interesting to see what happens on remand.
June 27, 2005 10:03 AM | Reply | Permalink
I think there were 4 justices who wanted to rule in the copyright holder's favor and 4 justices who felt that you can't hold people responsible for misuse of their product (with the underlying concern about technology growth). There was one justice who agreed with both sides of the argument and brokered a deal that everybody felt comfortable with. And even though he wrote the opinion of the Court I don't know if it was Souter who brokered the deal...I am betting it was O'Connor, Kennedy or Breyer. Petey is right this settles nothing in the big picture. All it does is open the door for more litigation for decades to come.
June 27, 2005 10:11 AM | Reply | Permalink
Libertine is right.
The other thing is that marketing isn't such a big hurdle. Supposed you have a web site that allows downloading P-P software. That is "marketing".
June 27, 2005 10:38 AM | Reply | Permalink
Yep Joe o...
Here is the new marketing campaign for the p2p companies to get around this ruling...
"Our product is a great tool to share files with your friends over the internet.
JUST DON'T SHARE COPYRIGHTED MATERIAL, THAT IS AGAINST THE LAW!!!
(nudge, nudge, wink, wink)"
Emphasis on a REALLY BIG "nudge, nudge, wink, wink".
June 27, 2005 10:44 AM | Reply | Permalink
I never understood why the case was brought to begin with.
Assume the worst. Assume that Grokster now loses on remand and goes bankrupt. Then what prevents a new, non-US company, registered perhaps in the Cayman Islands and using servers in Russia, from distributing software which does exactly what Grokster's does and interoperates with the network of existing Grokster software? What, in that case, will MGM have accomplished?
If software distribution is outlawed, then only outlaws will distribute software, to coin a phrase.
And since the business model for this sort of thing is to bundle unwanted software with the p2p software, if only outlaws are distributing it, the bundled software will get worse. You think the zombie problem is bad now, you ain't seen nothing yet.
Jim (who can't be bothered to register)
June 27, 2005 10:46 AM | Reply | Permalink
I was thinking about "Outlaw guide to off road bicycling in X County" where there would be a detailed description of paths that should not be taken, just so reader knows what to avoid. The title would be a bit of giveaway however.
So the title should be "AVOIDING outlaw bicycling in X Country".
The instructions should go step by step, explaining why each of them is illegal (if it is). As in the putative guide:
"the easy to cross metal gate marks the end of the property of State Prison and the beginning of a private farm. Do not enter! Now you would be tresspassing on private property, .... of state criminal code and liability under .... civil law stature. The long abandoned jeep road continues on the mountain ridge with two forks; taking the right turns leads to dead ends. After a mile, you would reach the ground in public nature reserve Y. While open to public, bicycling is not allowed. Etc.
June 27, 2005 10:53 AM | Reply | Permalink
June 27, 2005 11:12 AM | Reply | Permalink
Update [2005-6-27 13:11:42 by yglesias]: A lot of the action here seems to be in the concurrences. One, by Justice Breyer (joined by Stevens and O'Connor) argues for the sort of narrow construal of this decision that I'd like to see. The other, by Justice Ginsburg (joined by Rehnquist and Kennedy) suggests that the Court ought to revisit the Sony rule and make it easier for IP owners to sue inventors. The other three justices leave us nothing more than the unclear opinion. The real action will be determined by where they come down on the round of litigation that's sure to follow this. See also Lawrence Solum's post on the concurrences.
So Breyer, Stevens and O'Connor were more sympathetic to the file sharers. Bader-Ginsburg, Rehnquist and Kennedy wanted to revisit Sony. Which means Scalia and Thomas were the only ones who signed onto Souter's opinion without comment? What a strange breakdown of the Court in this case.
June 27, 2005 11:12 AM | Reply | Permalink
"Petey is right this settles nothing in the big picture. All it does is open the door for more litigation for decades to come."
Well, yes and no.
There will indeed be litigation for decades to come, but it will all be about refining the details of this particular decision.
This decision will have much more impact than the insta-analyses are realizing. The ground rules are now set, even if the details will evolve.
June 27, 2005 11:23 AM | Reply | Permalink
When reading Matt's addendum of how the concurrences broke down I have never seen such a splintered "unanimous" ruling petey. 3 different factions of 3 justices...it appears, on the underlying issues, this court didn't know what to do.
June 27, 2005 11:28 AM | Reply | Permalink
"...it appears, on the underlying issues, this court didn't know what to do."
Technology changes, and that's why the muddle. But I believe the present and future clear direction of the court is that if you try to profit from piracy, you're in the cross-hairs.
June 27, 2005 11:54 AM | Reply | Permalink
The problem with the ruling is that it allows evidence of intent, which could be anything at all.
That means that no corporation would be safe unless it polices its users. And that means they'll police more heavily than the law requires, just to be safe.
iocaste
June 27, 2005 12:01 PM | Reply | Permalink
Does this mean that you could no longer sell guns and knives with violent marketing names ("the executioner" "the terminator" etc)? Do you have to call them the "the onion slicer" or "the yuppie outdoorsman"?
June 27, 2005 12:04 PM | Reply | Permalink
I think it completely sidesteps the piracy issue petey. The technology to engage in piracy is still going to be available, and all the software companies have to do is not endorse it's use in piracy of music/movies. That means that the music/movie industries' only recourse will be, to again, go after the people sharing the copyrighted material. They tried that in the past and decided they didn't want to go that route.
June 27, 2005 12:14 PM | Reply | Permalink
The best strategy for dealing with the problem of illegal p2p downloading of content is making it easier for people to find and download the same content quickly for a reasonable price.
June 27, 2005 12:33 PM | Reply | Permalink
I imagine if a hotel advertised that you could rent their rooms and you were welcome to commit illegal activity inside, they could be held liable as well.
Can a conventioneer's wife with a brand new case of herpes sue the City of Las Vegas for its "What happens in Vegas stays in Vegas" campaign?
June 27, 2005 1:41 PM | Reply | Permalink
A lot of the action here seems to be in the concurrences. ... The other three justices leave us nothing more than the unclear opinion."
See also David Post's post.
He finds a slender but interesting piece of evidence that the Middle Three will defend the Sony doctrine.
If that turns out to be true as things get played out over the next several years, Matthew will be happy, and I'll be sad.
June 27, 2005 2:06 PM | Reply | Permalink
Libertine,
"I think it completely sidesteps the piracy issue petey."
You were most definitely right, and I was most definitely wrong.
June 27, 2005 2:36 PM | Reply | Permalink
"What a strange breakdown of the Court in this case."
Strange, indeed.
June 27, 2005 2:41 PM | Reply | Permalink
But the fact that no such haven has emerged by now (the Internet is no longer new in capitalism years) suggests that there are some real barriers to such a scheme. At the least, file servers are not a terribly profitable business, as compared to software development or other things IT, and remember, any Internet outlaw haven would be denied entry to (or be evicted from) the WTO.
Regulation of the Internet has proven far more successful than many people thought possible; witness the now laughable "Declaration of Independence of Cyberspace" from a decade ago that declared a government free Internet -- serious people actually thought this possible back then; no one so today.
June 27, 2005 3:15 PM | Reply | Permalink
The other reason there will never be any serious enforcement in most of the world is that there really is no money to be made in illegal P2P. The people putting the servers up are mostly open source geeks putting up the servers for free. The big sites are only looking to only get a few donations here and there to cover costs. Since there is no money to shake down from anyone, there's no point in most of the world police forces lifting a finger. Keeping up with the P2P computer geeks requires a lot of mind power, and these other police forces don't have that in abundance. Also, they can't shake anyone down for money that isn't there. So no potential bribes to motivate them. Nobody is being physically injured. All things considered, it means P2P will not be policed anywhere but here and maybe a few of the other G8 countries.
June 27, 2005 6:39 PM | Reply | Permalink
Most of the illegal P2P is done on with free software on free servers. The only money involved is begging for donations to cover costs.
The money in piracy is made off the net selling high quality duplicates of CDs and DVDs in regular retail storefronts. They are not selling mp3s or net video. Those pirates get ahold of real master tapes somehow, and duplicate the packaging as well. P2P really has nothing to do with this type of piracy.
June 27, 2005 6:58 PM | Reply | Permalink
Shorter MY: Rich kids should be able to steal music and movies from struggling artists but dying people shouldn't be allowed to smoke pot.
June 27, 2005 7:58 PM | Reply | Permalink
eminent domain reversed in one week's time- intelelctual prop has more rights than deeds now have- why any difference?
companies can use disclaimers to avoid liability-the burden of guilt falls on filesharers as a result
warning:filesharing can cause bankruptcy
now let's help big brother do some prosecutin'
by the way what about sharing bank records and the other ongoing scandals?
certainly there's a huge window/loophole of liability for business regarding this and sharing info doesn't apply to that
patriot provisions unaffected as well?
yuo'll hear much more about this in the coming days
<span class="byline">Mr.Murder |</span>
June 27, 2005 11:07 PM | Reply | Permalink
Re: your Apple comment
I was wondering this exact thing myself, and patting Steve Jobs on the back for not trying to police the marketplace when it comes to ripped mp3's.
In the eyes of a corporate lawyer, yes, Apple are criminals for recognising and making a fortune off a criminal-ish trend.
But so is that 70's Show.
June 28, 2005 1:36 AM | Reply | Permalink
The "all it takes is one country in the world to legalize all piracy/online porn/etc. and all Internet regulation and IP law is dead" is an old argument, and one that I once thought had to be right.
But the fact that no such haven has emerged by now (the Internet is no longer new in capitalism years) suggests that there are some real barriers to such a scheme.
Well, I'm having no trouble finding tons of pirated music/software and online porn, even without such a haven. Software like gnutella, KaZaA, BitTorrent, etc. have made it unnecessary, since the networks are distributed and there's no one to sue except the end users.
June 28, 2005 1:48 AM | Reply | Permalink