You Say Napster, I Say Grokster

What do you do when technology outpaces the law?

The Supreme Court on Friday announced it would hear MGM Studios Inc. v. Grokster Ltd. and StreamCast Networks Inc.—a suit asking whether distributors of peer-to-peer file-sharing software may be held liable for infringing copyrights of the music that gets swapped with such software. To paraphrase the late Warren Zevon, send lawyers, geeks, and money. At the lawyer level, the Grokster case turns on subtle questions of copyright law. To the geek, it turns on technical features of software and Internet architecture. And to the entertainment, electronics, software, communications, and Internet industries, it’s all about money. Billions.

Efforts to understand the file-sharing cases often get bogged down in fine distinctions—the difference between sharing and stealing, for instance—and they founder for a lack of good precedent: Is file sharing like photocopying or like flying a plane over your neighbor’s backyard? The Supreme Court may well have taken this case precisely because that type of legal inquiry is too nuanced for the conflict at hand.

Grokster is, of course, the sequel to Napster. And Napster, the mother of all music-swapping services, was forced in 2001 to abort its operations by the federal 9th Circuit Court of Appeals. Those using Grokster software, however (along with the products of competitive compatriots such as Morpheaus and KaZaA), kept on swappin’. And surprisingly, the same 9th Circuit that shut down Napster ruled Grokster was street-legal. To find a software developer such as Grokster liable, the appeals court ruled, would require proof that the developer actually knew of specific infringements and failed to block them. The court thus saw Napster and Grokster as entirely different digital animals: Napster provided a centralized service to facilitate music file sharing, following the classic Internet model in which the consumer connected to Napster’s central Web site to transact business through Napster’s server. Grokster and other similar peer-to-peer operations, however, don’t involve a middleman. In a peer-to-peer distribution network, information does not sit on a central server. Instead, every user’s computer makes information available to every other user’s computer in the network. The 9th Circuit found these distinctions enough to take Grokster off the legal hook. The music industry appealed.

There is a generational dynamic here that gives the Grokster case a special cultural resonance. My kids understand that if they walk into a Wal-Mart and pilfer an Usher CD, they’re stealing about $12’s worth of somebody else’s property. My kids have a much harder time grasping the notion that if they download all those same Usher songs, they’re also stealing somebody else’s property—maybe not quite the full $12’s worth since the plastic disk, the liner notes, and packaging all count for something, but certainly most of the $12 since the real value rests not in the plastic but the musical performance digitally embedded in it.

Lawrence Lessig, an engaging law professor and writer, likes to point out that changes in technology often force changes in the law. He uses as a vivid example the old rule of property that held that a person owned not only the surface of his or her land, but the airspace above it and all the ground beneath it—from the center of the earth to the heavens. When airplanes came along, however, that old law had to yield, or air travel would have been impossible. It would not have been tenable to require that pilots secure permission before flying over the property of others, even though the law had for centuries treated intrusion on someone’s airspace as a trespass. Lessig also argues that it makes no sense to treat a whole generation of American downloaders as pirates and criminals. By analogy to the planes, he urges that if the law treats all these kids as lawbreakers, then something is wrong with the law, not the kids.

But is Lessig right or just clever? If you use the Internet to rip off the entire content of somebody’s movie or CD to avoid purchasing it yourself, isn’t it a little more serious than a fly-over? These are the kinds of gauzy hypotheticals the courts are now poised to resolve.

The last time the Supreme Court considered a major challenge to copyright laws (in a case in which Lessig himself argued against the expansion of copyright and lost), the court recognized that the framers of the Constitution saw the protection of intellectual property as an engine of creativity and innovation. It is one thing to endorse a liberal conception of “fair use,” as in the Supreme Court’s quite enlightened decision a few years ago that a 2 Live Crew parody of the famous Roy Orbison song “Oh, Pretty Woman” did not violate Orbison’s copyright. It is quite another to countenance outright theft, however.

In all the music-sharing cases, and in the movie-sharing cases that are just now being launched, the core claim is the same: The owners of the music and movies argue that it ought not matter precisely how the sharing system is technically constructed. The bottom line is that people are copying songs and movies without paying for them, and that’s wrong, period—a principle as simple and pristine as “Thou shalt not steal.” The Motion Picture Association of America recently announced that it had commenced a series of lawsuits against persons allegedly indulging in illegal sharing of copyrighted films on the Internet, following the lead of the Recording Industry Association of America, which began filing its cases against music downloaders over a year ago.

The same stark arguments are being pressed in Congress, which is currently contemplating passage of the Piracy Deterrence and Education Act, HR-4077, a law that the entertainment industries passionately endorse and that many copyright-law detractors (such as consumer-electronics manufacturers, peer-to-peer file-sharers, and the fair-use-electronic-frontier crowd) passionately oppose. The new law would permit prosecution of persons who distribute products to the public by electronic means in reckless disregard of the risk that it will induce infringement. This proposal would also allow the Justice Department to bring infringement actions against infringers on behalf of copyright holders to fight piracy.

Supreme Court justices, who are not exactly charter members of the download generation, could have an awkward time connecting with all of this and may have been tempted to throw their hands above their robes and just give up. The genius pace of modern techno-ingenuity is enough to make some judges balk at imposing any legal blockades, for fear the law will act as a drag on invention and creativity. This fear was openly expressed by the judges on the 9th Circuit in Grokster, who noted circumspectly that “we live in a quicksilver technological environment with courts ill-suited to fix the flow of internet innovation.”

And if the velocity of modern technical genius is breathtaking, so, too, is the often ingenious entrepreneurial pluck of cyberbusinesses out to make a buck. Again in the words of the 9th Circuit: “The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well established distribution mechanisms. Yet, history has shown that time and market forces often provide equilibrium in balancing interests.” If the marketplace was able to adjust and assimilate such copyright-infringing machines as the player piano, photocopier, tape recorder, video recorder, personal computer, or karaoke machine, the reasoning goes, it will eventually figure out a way to handle the MP3 player.

But this solution—to just let the market sort it out—may not satisfy either the Supreme Court or Congress. The principal Supreme Court decision speaking to these issues is a case from 1984 titled Sony Corp. v. Universal City Studios Inc., in which the Supreme Court held that the sale of Betamax video recorders did not constitute “contributory infringement” of copyright.

“Contributory infringement” borrows from a legal concept common in many areas of the law. “Aiding and abetting” a crime is a good example. If someone sells someone a poison, knowing that the buyer intends to use it to commit murder, the poison-seller may be held liable for assisting the perpetrator. Yet if the seller is simply selling a toxin typically used for legitimate purposes (such as insecticide), there is no liability when a consumer, unbeknownst to the seller, uses that substance for foul play.

A video recorder may, of course, be used to infringe the rights of a movie copyright holder, just as a photocopy machine may be used to infringe the copyright in printed material. Indeed, a video recorder is no different than a tape recorder or a CD burner: Any machine that copies stuff can also be used to copy stuff illegally. And if we’re honest, we will admit that those who manufacture and sell these machines undoubtedly know that many of their buyers will use the machines—a CD burner, say—to violate the nation’s copyright laws. At the same time, however, these machines may also be used for many lawful purposes. A VCR may play a film rented or purchased at Blockbuster, a use that does not violate the law. Copiers do a lot of perfectly legal copying. The Supreme Court in the Sony case balanced these competing concerns by reasoning that the mere capacity of a machine to facilitate illegal copying could not, standing alone, make the sale of that machine a contributory infringement. In a key passage, the court stated that the machine “need merely be capable of substantial non-infringing uses.”

Now try to translate this logic into the realm of peer-to-peer file-swapping services, and go figure. Grokster claims that its software is capable of innocent use and that it is a decentralized sharing system; Grokster has no direct knowledge of specific copyright rip-offs. The moral, political, economic, and legal question is whether our society ought to accept this defense.

We might start with an honesty check. Whatever Grokster says, everyone knows that software such as Grokster’s is overwhelmingly used to traffic copyrighted material. We can quibble over the percentages, but does anyone really doubt that almost all the stuff the swappers swap is owned by others? The music owners in the Grokster suit allege that 90 percent of the files shared in peer-to-peer systems is copyrighted. The technical nuance that Napster involved a central server while Grokster does not rings pretty hollow to someone who merely believes in getting paid for the use of his or her property.

Which is probably why the Supreme Court took this case, and undoubtedly why Congress is considering its new bill. This issue is more complicated than simple theft, more nuanced than claims to airspace, and too urgent to simply allow the markets to sort it all out. This is a case in which the court needs to speak with its best voice, to the culture as well as to the lawyers, helping us strike the right balance between the wide-open cyberspace that we love for all its intellectual and entrepreneurial freedom and the elemental insight of the framers of the Constitution that those who wish to make a life from creativity and invention need and deserve the rule of law.