The genius of Napster, Grokster, Aimster, and other free file-sharing services is the ease with which they turn law-abiders into law-breakers. Some of the credit (or blame) goes to the open-source movement—represented outside the Supreme Court today by a group waving “Don’t Stop Innovation” signs. But file sharing also owes its success to those of us who have just stopped noticing copyright warnings. According to one congressional study, most people think that copying for money is wrong, but that copying for friends is OK. In other words, who really stops to think before photocopying a magazine article or burning a copy of a CD? Swapping files with thousands of other people over a server, it turns out, doesn’t feel that different. It doesn’t feel like stealing.
American copyright law, however, would probably beg to differ. In 2001, the 9th Circuit federal court of appeals shut down Napster, and in 2003 the 7th Circuit did the same to Aimster. Though they weren’t downloading copyrighted material themselves, these companies knew they were helping their users to help themselves, and didn’t take the steps they could have to stop them. That made the companies aiders and abettors, under a legal doctrine called contributory liability. Then Grokster and StreamCast came along and tried to complicate matters. The newer companies still allow users to share music and movies (and they also sell a lot of ads). But they don’t help find or transfer the files, and they don’t control any network—in their view, terms like “network” and “service” are misleading.
Last year, a different 9th Circuit panel bought the idea that the difference in technology between Grokster and Napster is the difference between legal and illegal. The appeals court let Grokster and StreamCast off the hook, because neither company controls or regulates access to an index of files. The ruling relied heavily on Sony v. Universal City Studios, the 1984 Supreme Court decision that saved the VCR and (thank goodness!) the Betamax. In Sony, the movie studios wanted to stop the production and sale of videotape recorders because they were being used to copy TV shows. A five-member majority of the court was about to do as asked. Then, at the last minute, Justice Sandra Day O’Connor switched sides, averting embarrassment and allowing the studios to go on to reap large profits from the video market. But the resulting opinion in Sony wasn’t a model of clarity. At one point the court seemed to say that a product need only be “capable” of legitimate commercially significant use. At another, it implied that some actual use had to be legitimate and commercially significant, without saying how much.
Outside the courthouse today, a few feet away from the open-source guys are folks with guitars. Their signs read “Don’t Steal My Future” and “Feed a Musician.” That’s one way of putting the choice the court faces today—the techies vs. the musicians. (The choice is also between the big fat technology industry and the big fat recording industry, but never mind that.) The justices seem vexed by their choice. They don’t want to be the Luddites who killed off the next iPod, but they also don’t want to abandon all pretense of enforcing federal copyright law. So they vent a little by giving lawyers on both sides a hard time. Donald B. Verrilli Jr. is representing the studios that sued Grokster and StreamCast. When he implies that the court needs to clarify Sony, the justices want to know what he has in mind. “It’s not clear to me what your test is,” Justice Anthony Kennedy says (testily).
Verrilli’s proposed test is that a company like Grokster should have to show that its business is “substantially unrelated to copyright infringement.” Justice Stephen Breyer doesn’t seem happy with that standard. “Under your test, if you were counsel to Xerox, are you sure that you could recommend that your client go ahead with developing its product?” he asks. Then he repeats his question three times, swapping in for Xerox the VCR, the iPod, and Johannes Gutenberg’s printing press.
“My answers are yes and yes and yes and yes,” Verrilli responds—what choice does he have? Breyer says that in each instance, most of the foreseeable uses of the new technology could have involved copyright infringement. Verrilli backpedals. The test he wants now is that a company should be held liable when it makes a “material contribution” to copyright infringement with the knowledge that it’s doing so.
“But the maker of Xerox knows that!” Antonin Scalia exclaims. It’s not a good sign when Breyer and Scalia join forces. Worse, David Souter piles on. “Go back to the iPod,” he tells Verrilli. “I know perfectly well I could go buy a CD and put it in my iPod. But if I also know I could get the music without buying it, why wouldn’t I?” This all comes out naturally, as though Souter was listening to his iTunes on the way to work this morning.
Verrilli sits down and the justices turn with some relief to Paul Clement, the acting solicitor general, who is in the case on the side of the studios. Asked for his version of a test to replace Sony, Clement coughs up some numbers. If 50 percent of a product’s uses are legitimate and don’t involve copyright infringement, he says, that’s good enough. O’Connor asks whether Clement thinks the court should restrict itself to holding companies liable for “actual inducement” of copyright infringement. Scalia intercepts. “The actual inducement test doesn’t get you very far, does it, because a successor to Grapster or whatever this thing is called would know very well” how to avoid looking like an inducer. From this we learn that Scalia doesn’t care about sounding cool like Souter. Nor does Kennedy, who has just referred to Grokster as “an instrumentality program.”
Scalia wants Clement to explain how the court can stave off a world in which lawsuits stifle innovation. “What I worry about is the suit that comes right out of the box as a company starts up,” he says. Clement is open to giving the new kid on the block extra leeway. But he warns the court not to fall too hard for the innovation mantra. “The only newfangled idea here is that if you give someone else’s property away for free, you’re likely to attract users and advertisers,” he says. “But that is not the kind of innovation that we want to foster.”
Richard Taranto has the less-than-enviable task of explaining to the court why his client should be able to continue profiting from someone else’s property. When Taranto starts to invoke Sony—he’s not interested in a new test—Scalia calls him off. “I hope you’re not going to waste too much of your time,” he says. “This court certainly is not going to decide this case on the basis of stare decisis.” That’s Latin for standing by Sony. Ouch.
Breyer, however, is no longer on Scalia’s team. For 21 years, he points out, the Sony test has allowed plenty of technology to flourish. But Kennedy attacks before Taranto can relax. “You want to say that unlawfully expropriated property can be used as startup capital,” Kennedy says. “From a legal standpoint and an economic standpoint, that sounds wrong.”
Taranto retreats to arguing that Congress, not the courts, should resolve the substantial policy questions at stake. Congress, however, doesn’t seem to be in any hurry to do that. Last year’s proposed fix—which would have hurt rather than helped Grokster and StreamCast—died in the Senate Judiciary Committee. Like it or not, the court is stuck figuring out what to do about file sharing. And the innovation groupies outside are probably going to be disappointed by what the justices come up with. If the United States is going to have strong copyright laws, then courts don’t have much choice but to enforce them. Here’s an illuminating analogy courtesy of Judge Richard Posner, who wrote the 7th Circuit decision in Aimster: If you open a massage parlor and hire masseuses who you know are really selling sex, then you’re breaking the law. Maybe you think prostitution should be legal? Try telling that to the cops.