Man Without Qualities

Tuesday, June 28, 2005


Last December, the Man Without Qualities suggested:

[The Ninth Circuit] opinion in MGM v. Grokster reflects an appalling fixation of the importance of centralized servers and other centralized features in applying the Supreme Court's 1984 Sony-Betamax decision, the high court's last major decision regarding the scope if copyright protection in connection with electronic copying technology. .... The file-sharing software provided by Grockster and the like is nothing more - and was specifically intended by their creators to be nothing more - than a decentralized, grid computing version of the old, discredited Napster scam. So don't be surprised if the Supreme Court fix takes the form of yet another dismissive, unanimous, per curium reversal of the Ninth Circuit by a high court that can barely conceal its contempt.
Well, of course, I was wrong: The Supreme Court decision is not per curium! However, the Supreme Court decision is yet another dismissive, unanimous, reversal of the Ninth Circuit by a high court that can barely conceal its contempt, at least with respect to the issues of whether a "centralized server" much mattered and the importance of intentional inducement to infringe (which the Ninth Circuit had ignored).

But what to make of Justice Breyer's concurrence? Here, Justice Breyer is writing in a case in which only three out of the total of nine Justices can agree to any one of the three competing and inconsistent interpretations of the Sony rule. Yet Justice Breyer writes:
Sony's rule, as I interpret it, has provided entrepreneurs with needed assurance that they will be shielded from copyright liability as they bring valuable new technologies to market. Sony's rule is clear. That clarity allows those who develop new products that are capable of substantial noninfringing uses to know, ex ante, that distribution of their product will not yield massive monetary liability. At the same time, it helps deter them from distributing products that have no other real function than--or that are specifically intended for--copyright infringement, deterrence that the Court's holding today reinforces (by adding a weapon to the copyright holder's legal arsenal).
What can he possibly be talking about here? Napster, Grokster and all such enterprises have been created in an environment of gross uncertainty born of Sony - that's why Justice Breyer had to hear this case. Sony has not generally been construed as Justice Breyer interprets it in his concurrence, and those who have chosen to construe the case in that way have not done so with any high degree of certainty. And no other construction of Sony has prevailed, either. The mounds of inconsistent briefs that have been filed with the Court include many different interpretations of the Sony rule.

That means that regardless of what rule ought to apply in Grokster, and regardless of whether Sony should be overturned or construed, Sony definitely has not provided entrepreneurs with needed assurance that they will be shielded from copyright liability as they bring valuable new technologies to market. Justice Breyer may think that if his view were adopted, such needed assurance would follow in the future, but such assurance has definitely not been a feature of the past. Indeed, Sony deliberately withheld the kind of certainty Justice Breyer says it provided, as when Sony refused to (in the words of that case) "give precise content to the question of how much [actual or potential] use is commercially significant."

Perhaps Justice Breyer means that there have been some entrepreneurs who have, with great subjective certainty, given Sony Justice Breyer's meaning and thereby obtained in their own minds "needed assurance that they will be shielded from copyright liability?" - or perhaps he means to refer to entrepreneurs whose products are far afield from software of the type under consideration in this case? In that case his claim would take on a kind of religious tone ("Accept my teachings and achieve necessary assurances and peace of mind!") or collapse into a contentless tautology or into simple irrelevancy. What difference does it make if hardware makers, for example, achieved peace of mind through Sony? (And, if any event, it certainly wasn't the difference between Juestice Breyer's reading of that case and those of Justices Ginsburg and Souter that made the difference.) Was Justice Breyer appointed to the Court to write pseudo-religious pap or contentless tautologies or irrelevancies? Just asking. Of course, it's sad that with this Supreme Court decision any entrepreneurs who had sought necessary assurances by accepting Justice Breyer's construction of Sony have now gone the way of the 29-year-olds seeking renewed life through the fiery ritual of carrousel in Logan's Run.

And then there is the weird way he counts. Even if Justice Breyer's construction of Sony were accepted, the courts would still have to flesh out what "commercially significant" noninfringing use is. And whatever "commercially significant" means it does not mean a percentage of actual uses. For example, suppose 50% of all uses of a particular technology were noninfringing, but the aggregate value of those uses was .0000001% of the value of the total uses. Obviously, the noninfringing uses would not be commercially significant. Yet, Justice Breyer writes:
Grokster passes Sony's test--that is, whether the company's product is capable of substantial or commercially significant noninfringing uses. ... [S]ome number of files near 10% ... apparently are noninfringing, a figure very similar to the 9% or so of authorized time-shifting uses of the VCR that the Court faced in Sony.
But does Justice Breyer actually believe that the commercial value of all Grokster downloads of free electronic books, public domain and authorized software, licensed music videos and the like are now anything like 10% of value of the total, including all of the pirated songs and videos that are the actual targets of Grokster users (and, I believe, Grokster)? I don't know which is more frightening: That a Supreme Court Justice could actually believe that, or that he doesn't believe it - but wrote this concurrence anyway.

POSTSCRIPT: The New York Times reports:
Gigi B. Sohn, the director of Public Knowledge, a public interest advocacy group focusing on intellectual property, said there was cause for optimism because the court "reaffirmed the core position of the Sony Betamax case ..."
Is Ms. Sohn correct? Of course not. Only three Justices signed Justice Breyer's concurrence, which was the only Grokster opinion that asserted that Sony does not need to be "revisited" - that is, overturned. Six Justices signed opinions saying that there is no need now to revisit Sony. In other words, those six Justices may well want to revisit Sony in the near future.

My guess is that the Court will seriously revise Sony in the near future. In particular, the basic Sony standard is just wrong in the software arena. That standard is adopted (but not very well adapted) from the patent law doctrine that allows "imputed intent infringement" actions against a technology purveyor if the only use for the technology is to facilitate infringement.

In my opinion, copyright law will have to adopt (either by court or Congressional action) a broader doctrine that allows copyright actions against those who market technologies which would not be commercially viable but for infringing uses to which the technology is put by third party customers of the technology owner. In other words, under the rule I propose, BitTorrent's owners would be liable for contributory infringement if BitTorrent would not be commercially viable but for the infringing uses to which it is put even if the noninfringing uses are "commercially substantial." There is no good reason why a technology should be allowed to facilitate copyright infringement if the legitimate uses of that technology are not sufficient to make its distribution commercially viable - even if some substantial legitimate use for the technology exists.

To see this, just consider the example of a hypothetical Microsoft software development effort that would cost, say,$100 million. Suppose Microsoft knows that there will be substantial noninfringing uses for the proposed software but that such legitimate uses will bring only $50 million to Microsoft, with infringing uses bringing $1 billion. Under the Sony rule (especially as misconceived by Justice Breyer, but also in its proper form), absent actual intent to facilitate infringement, Microsoft would not be liable for developing and distributing its proposed product - even though Microsoft knows that its product can only be economically justified by the thefts to which it is to be put. Can any reasonable person (never mind pseudo-visionaries like Professor Lessig) think that copyright law is going to tolerate such a thing on a continuing, major, corporate scale? Of course not. But already major players - like Goldman Sachs - have been nosing around Napster and its cousins. Some of them seem to be looking for the US intellectual property rights equivalent of the post-Soviet breakdown kleptocratic property rights free-for-all that occurred in Boris Yeltsin's Russia.

What about patent law? Why doesn't patent law have such a broader doctrine? Probably because it's a lot harder and unpredictable to create technology that would not be commercially viable but for patent infringing uses than it is to create cheesy, cheap (or at least cost-predictable) Grokster and BitTorrent type programs whose economic justification is copyright infringement (that is, theft). But if it became possible to do such things with patents, and there was a sufficient body of existing patented wealth to steal to economically justify such efforts, then patent law would adjust, too. And with the recent huge expansion in the scope of patent law, don't be surprised if such a change is soon effected.

What about other areas of law, like guns? Guns - even handguns - have many obvious legitimate uses, including self protection and protection of one's family and property - and the maintenance of a well-regulated militia. The gun trade would exist and be quite viable without any criminal uses of guns at all. If that were not the case, and the entire gun trade depended for its viability on prohibited use of guns, the law of gun liability would be very different than it is now. A proper interpretation of the Second Amendment makes it all but impossible for the legitimate gun trade to become non-viable.

And I do not think the scope of contributory copyright expansion will or should stop with my proposed revision of Sony, either.

On a separate note: It's ironic that the supporters of file sharing technology repeatedly resort to criticisms of studios, music companies and other big commercial copyright owners for bringing multiple law suits against 20 year old down loaders - since the down loaders are essentially the only players in file sharing that file sharing enthusiasts would allow copyright owners to sue. Copyright owners would be much happier suing (and shutting down) a few, centralized copyright-infringement-facilitators like Grokster than an amorphous hoard of students. The new Supreme Court decision will now allow the big copyright owners to do just that, which will likely lead to fewer expensive, not-very-effective suits against students.


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