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« Powerful Language from the MGM v. Grokster Decision | Main | Posner Blogs on Fair Use and Copyright »

August 19, 2004

The Grokster Decision - Where It's At

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Ernie Miller has a comprehensive round-up on the decision, plus additional analysis of its possible impact on --you guessed it -- the push for the Induce Act.

Later: Fred von Lohmann has more @ Deep Links:

The Ninth Circuit's ruling in MGM v. Grokster today clarified four points of incredible importance to innovators of all stripes, including peer-to-peer developers:

  • The Court made clear that, for purposes of the "Betamax defense" announced by the Supreme Court in 1984, the important question is whether a technology is merely capable of a substantial noninfringing use, not the proportion of noninfringing to infringing uses. The opposite rule, urged by the entertainment industry, would kill off new technologies prematurely, as infringing uses tend to be common until the incumbent entertainment industries adjust their business models to take advantage of the new opportunities created by the new technology. (When there were no pre-recorded videocassettes, the VCR was doubtless used for more infringement than it was after there were Blockbusters on every corner.)
  • The Court also explained that, in order to trump the Betamax defense, a copyright owner must show that the technology developer had (1) knowledge of specific infringments (2) at a time when it could do something about those infringements. The entertainment industry, in contrast, had argued that it should be enough to simply deliver a pile of "infringement notices" to the technology developer after the fact. Such a rule would have imperilled all kinds of companies. (Imagine Xerox receiving a pile of infringement notices about photocopiers that it had sold the year before -- should it be liable for infringing activities at every Kinkos in America?)
  • The Court also clarified that copyright law does not require technology developers to design only the technologies that the entertainment industry would approve. The plaintiffs had argued that vicarious liability principles should be interpreted to require that all innovators design their technologies to minimize the possibility of infringing uses. Of course, short of inviting Hollywood lawyers into engineering meetings, such a rule would have left innovators subject to eternal legal harassment for "not doing enough."
  • Finally, and perhaps most important, the Court observed that, in the long run, a competive, unfettered market for innovation ends up helping copyright owners (even if it doesn't help today's entertainment industry oligopolists). In fact, today's ruling will likely be remembered as yet another example of the courts rescuing the entertainment industry from its own short-sightedness. In the words of the Court, "Further, as we have observed, we live in a quicksilver technological environment with courts ill-suited to fix the flow of internet innovation. The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through wellestablished distribution mechanisms. Yet, history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player."

Comments (4) + TrackBacks (0) | Category: Laws and Regulations


1. Mike liveright on August 20, 2004 12:18 AM writes...

The decision is good for those of us who feel that the MPAA position is too restrictive, but...

1) Lets not count our chickens, The supreme court may overturn, or/and the congress may rewrite the law or ammend the constution which ever it takes.

2) I still have not seen a position that both allows us, the users more access while preserves a reasonable revenue protection for the Copyright holders/creaters and distributers.

I don't want them to control the development of new technology but I don't believe that failing to have some way of protecting copyright is a winner, both because the MEDIA companies are too strong, and thus it will not fly, and because I do think that they, and the CREATORS need to have reasonable economic return to continue to create.

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2. adamthomas on August 20, 2004 1:50 AM writes...

So is there now a East-coast/West-coast battle? Shut out Studio321 and previously granted fair-use rights in SDNY while affirming the utility of public-domain in the competitive markets of the 9th Circ.?

Step up to the mic East.

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3. Branko Collin on August 20, 2004 7:05 AM writes...

"I still have not seen a position that both allows us, the users more access while preserves a reasonable revenue protection for the Copyright holders/creators and distributors."

Unless I read the law incorrectly (IA after all NAL), US copyright should not provide for "reasonable revenue protection" for creators. Instead, it should provide an incentive for creators to create. (The only thing distributors have a right to is a swift kick in the pants.)

Of course, Congress could provide this incentive by making sure that all creators, or at least those who made a job out of it, are fed every month. Another, equally reasonable, solution would be to make sure that an elite of creators gets filthy rich on the licensing of their works; this in turn could be an incentive for other creators to create, even if it does not bring them anything, the same way people buy lottery tickets in the hope to hit the jackpot one day.

Regardless of how creators are spurred on to create, their creations should always be (at least in the US) in the service of the public. Outlawing P2P would be a disservice to the public, and should only happen if there's a real threat that creators will stop creating. (Although I expect that in the latter case, P2P won't be your biggest concern.)

The balance you suggest, between a public right and a private right, does not exist. US copyright law is, or at least should be, a balance between two public interests.

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4. Kop on August 20, 2004 10:33 AM writes...

Exactly Branko! The existence of a private right is only a means to further the public interest in having an incentive to create. The right to exclude is not God-given or naturally-ocurring. It is state-created and enforced through the people's consent for the people's benefit. "She needs to get hers," is not an interest to be balanced by the courts. The public interest in having an incentive should be balanced with the public interest in using creative works.

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