July 03, 2005
Grokster and the Scope of Judicial Power-BECKER
Grokster is a company that distributes software free of charge that enables copies of files on one computer to be transferred to another computer. Grokster was sued by MGM and other owners of copyrighted music and films with the claim that Grokster was facilitating the infringement of their copyrights. The Supreme Court decided unanimously that the evidence of contributory infringement by Grokster was sufficient to warrant a trial.
I do believe the case deserves a trial, and primarily for this reason I signed (without any compensation) an Amici Curiae brief submitted by several economists to the Supreme Court against Grokster. The arguments about infringement are set out in that brief and in Posner’s discussion. This software has few other uses so far other than to copy files from one computer to another, which often is a violation of copyright protection on the files copied. Although Grokster is not per se violating any copyright by producing this software, its software unquestionably facilitates these violations. It is also much more efficient to litigate against the contributory infringement of Grokster than to litigate against every college student and other individuals who are actually engaged in transferring files illegally.
The courts have held in the past that it is not contributory infringement if a company produces a product with sufficient sales for legitimate uses, even though it is sometimes used to violate either copyright or other laws. For example, it is legal to produce box-cutters, even though they have been used to commit terrorist acts. Posner gives other examples along similar lines.
But several things concern me about the issues raised by this and related court decisions. I basically do not trust the ability of judges, even those with the best of intentions and competence, to decide the economic future of an industry. Do we really want the courts determining when the fraction of the total value due to legal sales is high enough to exonerate manufacturers from contributory infringement? Neither the wisest courts nor wisest economists have enough knowledge to make that decision in a way that is likely to produce more benefits than harm. Does the fraction of legitimate value have to be higher than 50 per cent, 75 per cent, 10 per cent, or some other number? Courts should consider past trends in these percentages because new uses for say a software-legal or illegal- inevitably emerge over time as users become more familiar with its potential. Must courts have to speculate about future uses of software or other products, speculation likely to be dominated by dreams and hopes rather than firm knowledge?
Posner suggests requiring software producers to prevent the copying of CDs or other files with non-removable electronic tags placed on them by copyright owners. Unfortunately, this suggestion merely shifts the problem one stage backwards by providing incentives to other innovators to produce software that removes such tags!
My other concern is more strictly economic. The burglar using tools to prey open doors, safes, or windows, the good example Posner uses, is almost invariably producing harm through his activities. It is much less clear that the harm exceeds the benefits when someone buy files and then shares them with friends, and in many similar violations of intellectual property. A person might pay more for files that he expects to share with friends partly because to gain their goodwill, or partly because he can then share their files. Individuals may jointly pay for files if there is software that can be used to share them. In addition, free use of some files due to copying may encourage purchase of additional ones because the music or film copied whets the appetite for certain types of music, films, or other copyrighted material.
These points are not simply intellectual exercises, for at least some of the serious studies of the effects of copying and other apparent violations of intellectual property on sales do not show any strong negative effects, and sometimes even claim to find positive effects. Posner gives the example of Betamax, a losing competitor to the VCR. The movie industry opposed Betamax because they thought it would help destroy the sale of movies, but it failed to appreciate the eventual importance of videos to their overall market. There may also be conflicts among companies with copyrights, so that the majority might gain from a freer market and prefer to do nothing, while a few companies sue because the copying of their materials hurts them.
Experience and theory tells us that it is best to let markets rather than courts determine the evolution of industries-just remember the mess made of the telephone industry by Judge Greene. I increasingly believe that this principle applies also to alleged violations of intellectual property through contributory infringement. This form of legal remedy should be used but rarely.
Posted by becker at 09:49 PM | Comments (5) | TrackBack (1)
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Comments
"This software has few other uses so far other than to copy files from one computer to another, which often is a violation of copyright protection on the files copied. Although Grokster is not per se violating any copyright by producing this software, its software unquestionably facilitates these violations."
Tell me how any of your points here do not apply to the Betamax case as well. Maybe it's a matter of proportion--60% of Betamax/VHS use was infringement whereas 90% of Grokster. But the reasons you give for allowing a trial in Grokster applied to the Betamax case when it was decided, and they apply to any number of accepted technologies even more so today, some of which allow the user to circumvent commercials (TIVO, for example). I guess one could argue whether Grokster reaches the "substantial non-infringing uses" threshold, but I think there is no question that it has the potential. Moreover, is it a matter of proportion or just an absolute number? If it's the latter, then I would argue that Grokster already has "substantial non-infringing uses" and users.
The Court focused on the actions and intent of Grokster in determining if they could be held liable, and not so much on the nature of the technology. That approach is attractive, but considering its likely effect--a chilling effect among small companies and especially individuals in providing any software or technology, especially freeware. Whether or not a line is crossed will become a moot point when the RIAA and MPAA begin to use this decision to silence and quash technlogies they view as dangerous. The high cost of litigation among innocent parties, and the likely chilling effect on innovation it will cause is a very good reason to reject the Court's determination of liability in Grokster.
Posted by Palooka at July 5, 2005 09:45 AM | direct link
While I would prefer that, ultimately, grokster and other file-sharing software may be produced and distributed without liability, I don't see why the issue shouldn't go to trial. Obviously, as pointed out by both Posner and Becker, there are ambiguities and subjective decisions to be made, and those are most appropriately considered after a full trial (as opposed to the cursory examination when considering summary judgement). Grokster has a very good argument that their lawful use is a "substantial non-infringing use," and they will now have an opportunity to present it.
Also, it is only after the trial (when a determination of liability is made) that we will see if there is any chilling effect on software innovation among small businesses and individuals.
Posted by Jack Terry at July 5, 2005 05:01 PM | direct link
One poster says that perhaps 90% of the usage of Grokster was infringing. Huh? Try 99.99%. I can't think of anyone I know who even knows anyone who has used it or the overwhelming majority of file sharing software for legitimate purposes and computers are my profession as well as hobby.
OTOH, the rumblings being made by the industry about going after BitTorrent should be slapped down hard and fast because there is substantial legitimate use of BitTorrent in the open source software community. I think they would lose that lawsuit rather badly with some large software companies more than willing to file amicus briefs in favor of the BitTorrent developers.
Posted by Jim S at July 5, 2005 10:17 PM | direct link
That 90% estimate is from a statistician employed by MGM.
From the Grokster opinion:
"Although Grokster and StreamCast do not therefore know when particular files are copied, a few searches using their software would show what is available on the networks the software reaches. MGM commissioned a
statistician to conduct a systematic search, and his study showed that nearly 90% of the files available for download on the FastTrack system were copyrighted works. Grokster and StreamCast dispute this figure, raising methodological problems and arguing that free copying even of copyrighted works may be authorized by the rightholders. They also argue that potential noninfringing uses of their software are significant in kind, even if infrequent in practice. Some musical performers, for example, have gained new audiences by distributing their copyrighted works for free across peer-to-peer networks, and some distributors of unprotected content have used peer-to-peer networks to disseminate files, Shakespeare being an example. Indeed, StreamCast has given Morpheus users the opportunity to download the briefs in this very case, though their popularity has not been quantified."
Posted by Palooka at July 5, 2005 10:35 PM | direct link
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Posted by Anonymous at July 6, 2005 11:27 AM | direct link
