6:36 pm, August 7, 2005
On June 27, 2005, the Supreme Court decided MGM v. Grokster. From the sounds in the press, you'd think Hollywood won. But before we get into that, let's address a fundamental question: What does “Grok” mean? Although it sounds like something a psychedelic toad might say, it's actually a verb invented by Robert Heinlein, to describe an enhanced way of knowing other people, in his hilarious scifi spoof of hippies and psychics, “Stranger In A Strange Land.” The novel hasn’t been popular since the seventies, though, and this literary allusion has probably had little significance for most Grokster users, who just want to get free music. In that regard, Grokster was very helpful. As Justice Souter wrote in Grokster: “The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement.”
That was bad, as you might have guessed. Because thievery is bad, and giving people tools to steal, while suggesting they can’t be caught, is inducing people to steal, which is bad enough to make honest people stay out of the business. And by and large, I think honest people stayed out of the business of providing tools specifically marketed to the infringing public.
Grokster marked no change in the law, however, and for Hollywood's long term interests, that was a disappointment. The Ninth Circuit has merely been directed to impose liability for copyright infringement where the manufacturer clearly identifies infringement as the raison d' etre of the product. That was the case with Napster, and it has to be the case with Grokster, Morpheus, and Kazaa, the other defendants in the case. Advocating thievery by means of your device is unlawful, and it doesn't matter that you don't sell the software, particularly where the software is purveyed via a “free software” scheme that plants spyware and advertising on your desk or laptop computer. That was of course the case with Kazaa, which brought millions of desktop machines to a standstill, able only to stream banners, popups, and other garbage.
Justice Souter’s opinion described the Ninth Circuit’s holding as follows:
Justice Souter in MGM v. Grokster
The Ninth Circuit [concluded that] distribution of a commercial product capable of substantial noninfringing uses could not give rise to contributory liability for infringement unless the distributor had actual knowledge of specific instances of infringement and failed to act on that knowledge. The fact that the software was capable of substantial noninfringing uses in the Ninth Circuit's view meant that Grokster and StreamCast were not liable, because they had no such actual knowledge, owing to the decentralized architecture of their software. The court also held that Grokster and StreamCast did not materially contribute to their users' infringement because it was the users themselves who searched for, retrieved, and stored the infringing files, with no involvement by the defendants beyond providing the software in the first place.
What is this about “substantial noninfringing uses?” Since when did anyone load Grokster, Streatmcast, Morpheus, Kazaa or any other “FastTrack-based” P2P system on their machine so they could engage in a noninfringing use? Napster and the Grokster defendants were all disseminating software that induced people to steal. The trial judge killed Napster because Shawn Fanning had clearly announced at the start of the venture his intention to encourage piracy. Napster had substantial non-infringing uses, in a theoretical sense, but that didn’t save it from being sued out of existence, so what was the difference between Fanning’s piratical venture and the software at issue in Grokster? Napster stored the infringing content on its own severs, whereas the FastTrack based P2P software allowed each desktop user to treat the whole Internet as a hard drive, thus eliminating the need for the server. The Supreme Court saw this as a distinction without a difference – the point wasn’t how the software worked, but how it was marketed. Marketing discloses the intention, wrongful or otherwise, of the software distributor. In order to avoid infringement suits, anyone who sells software utilities that copy content as part of their use and value should never announce, as an incentive, that their product can be used to commit theft.
Of course, some people like to popularize the “grey” character of their ware, but they are often swindlers with strange agendas. Steve Cohen trumpeted the piratical utility of his Earth Station 5 web-based P2P utility by declaring ES Five to be “at war with the RIAA.” Cohen supposedly housed the venture in Jenin, Palestine, and said he was never served with a lawsuit because no process servers would go there. Probably there was no one in Palestine — who would work there when they could just work in Israel and claim to work in Jenin using a mail drop? Steve's dodges are so predictable, but once you have the Washington Post repeating your cover story, like Cohen did back in February 2004, you're in good shape. The intrepid old swindler told me half of his purpose in running the site, which stole and re-streamed “The Naked News” from http://www.es-5.com, was to offend the owners of Wired Solutions, the creators of the Naked News. But when Ashcroft said he was going to go criminal on copyright infringers, Cohen decided to get out of the business, because he didn't want to be involved with anything criminal. He said he was not bothered by the civil arrest warrant he's been subject to since 2001 for failing to appear in San Jose US District Court as ordered by Judge James A. Ware in Kremen v. Cohen.
Altruistic as Cohen’s campaign to free content from its owners might have been, it wasn't lawful, and he was well aware of his vulnerability to civil lawsuits, which was one of his announced reasons for locating in Palestine, a non-nation in which even the rules on local service of process are unsettled. Still, that would be no comfort to him if Ashcroft put him on a wanted listed and faxed it to Interpol, because Steve now runs casinos worldwide and doesn’t need extra heat, so he surfed right out of the infringement business. Having been to Club Fed once, he claims to be disinterested in anything would spark a return visit, and realized that his “declaration of war” would seal his doom if Ashcroft wanted to start swearing out indictments and arrest warrants.
How could the Ninth Circuit could ever insulate these defendants from liability? How could you immunize companies that were started by crooks seeking to circumvent the effect of the Napster decision by “decentralizing” their business operations, that turned all their users into infringers and scofflaws, got some of them sued, and captured all the cash? Not to mention that they deliberately fed a huge, ultra-high-tech piracy network to make sure their uses had plenty of stolen files to “trade.” (Wired article.)
Kids and grannies get sued for using Kazaa, after being encouraged to use it for that purpose, but Kazaa is not infringing? Hold it a minute! You’re trying to treat them like the Publicans treat gun manufacturers – as not responsible for the injuries their products cause? And therein, my friend, lies the difference. Gun manufacturers carefully avoid marketing to criminals. They explicitly market to the hunting, home defense, and target-shooting consumers. They don’t have to market the utility of their products to murderers, armed robbers, rapists, terrorists, and rogue cops. Hollywood has done that work for free. And Hollywood was the plaintiff in Grokster, of course, which illuminates the most important legal principle here, as in every case: “Whose ox is gored?”
Whose ox indeed? To understand the depth of this legal principle, let us return to the “Betamax Case,” Universal v. Sony, 104 S. Ct. 774. Who had oxen in that goring contest? Sony, the maker of the Betamax video recorder, which could record TV shows off the air, was sued by Universal, the maker of movies that are licensed for showing on TV. Today, of course, Sony-Time-Life is the largest producer of entertainment in the world, and is currently recycling TV reruns on the big screen in “Bewitched.” Nowadays, Universal and Sony are on the same side of the issue, and Sony would never sell such a “disruptive” technology, and indeed, has introduced only unpopular digital music devices, primarily because of their insistence on using proprietary technology like the “mini-disc” and proprietary file systems for VAIO PCs. These are habits Sony picked up since it became a content mogul, so frankly, the Betamax case is a mistake that Sony will never make again.
But let’s hit rewind and go back to those crazy days in 1976, when the Betamax invaded American homes. This machine ushered in the video store and porn boom, let people watch Monday Night Football on six other nights of the week, and let them zap advertising, that obnoxious time-thief that dilutes the pure entertainment value of a show or movie. Why did Universal lose that case? Well first, what did Universal contend? They claimed that any machine that could clip broadcasts out of the air that were only licensed to be shown by the TV networks for one, very expensive time period, shouldn’t become permanently licensed to the viewers who happen to tape the show when it was showing, using the clever timer that allowed people to start recording even while they were away. Then they come home and watch it, zapping ads all the way. This, it was universally agreed all up and down Sunset Boulevard and south to Olympic Boulevard at least, could not be right.
But you know what? That Monday Night Football turned out to be mighty important. The NFL and other sporting entities said they weren’t Hollywood, they weren’t making movies, they were playing sports, and even professional sports were meant to be played once and enjoyed, studied, analyzed and treasured forever. Why not just confiscate all the photos of Babe Ruth and Mickey Mantle hitting home runs? Why not indeed, Hollywood echoed, but their cries went unheeded, and all the professional sports teams and college leagues came out in favor of the value of the Betamax’s broadcast-taping capability. This was indeed a “substantial, non-infringing use” of some importance to the Supreme Court. Sports, and the interests of athletic associations, always seem to get extra-deferential treatment from the Supremes. Baseball, for example, enjoys a unique freedom from liability under the Antitrust laws for which there is no precedent other than that it is the national game, and presumably, must be rigged to protect the public. Take note, however, that professional sports did not weigh in on the side of the defendants in the Grokster case, and why should they? Sports videos were not widely shared on Kazaa any more than other public domain materials.
The second notable feature of the Betamax opinion is its conclusion that once content is broadcast over the airwaves even once, and made available for capture by this new technology, it enjoys diminished protection forever. If you can spring for a VCR, you can get your copy of Bambi virtually free, after you edit out all of the Tinkerbell visits and toy ads. Universal howled at this result like a banshee deprived of the opportunity to consume its firstborn. Record the whole damn thing! How could that be “fair use,” that previously had seemed to allow authors to quote brief portions of copyrighted works for scholarly or critical purposes? But the Supremes basically said – hey, you put it out there, now they got it, and they have the right to have it. People were surprised at this ruling, but for the first time it put teeth in a provision of the Federal Copyright Statutes that had really been ignored – 17 U.S.C. Section 107. In Section 107, Congress made it very clear that copyright protection is limited by the public’s pre-existing right of fair use of the author’s works, thus recognizing the importance of the audience in the creative dialogue. In other words, the author can obtain copyright protection, but it is “subject to” the right of the public to read, discuss, study, copy, criticize, and otherwise expose the work to criticism and appreciation. Of course, otherwise, copyright law would at minimum silence free speech. This has been successfully accomplished of course, by major news entities, that have been allowed to copyright the President’s Speeches, thus locking them out of the public domain. No one has yet challenged that, but the challenge, once made, will be successful. The President is no one’s actor, at least not according to the Constitution and Section 107.
Who is reading Grokster very carefully? All purveyors of free software that in any way utilize the copying of copyrightable content as part of its package of product benefits. Google, for example, is a free software scheme that has already scared the bejeezus out of the world’s advertising agencies and content monopolists. Witness the hue and cry over Google’s threat to put all the world's books online. That fact is, if we don't start putting libraries online, reading books will become about as popular as polo in Greenland.
Since all that Grokster really said is that you can’t advertise burglar tools as burglar tools – you have to call them omnidrectional screwdrivers. Anyone who thinks that inviting people to use your software to commit theft is a good idea is not a business partner, he or she is an RIAA private investigator looking to set you up! So keep on cranking out that P2P software, and emphasize not the pleasures of theft, but the joys of sharing public domain materials, engaging in fair use such as study, discussion, and criticism. After all, how can you study music but by listening to it? Do music teachers have to license their lessons? Suppose Kurt Cobain had been required to pay to listen to the radio? C’mon – the listener becomes the creator by listening, by studying. Media has value only when it’s consumed.
The future of media distribution is not in monopolization of creative production by either the imposition of artificial limits on distribution (the Clipper Chip, the V-Chip, the Broadcast Flag, and other Cripple-ware). The days are over when the media monopolists could enforce their monopoly through production and distribution bottlenecks (CD pressing, transporting, and selling through retail outlets), while simultaneously engaging in price-fixing schemes such as the one that the RIAA settled with the FTC in 2004 for a $450 Million fine. The days of endless gravy are over. It’s time for the dinosaurs of LA to sell their Wilshire condos and move to Australia, Israel, Florida, or Arizona. Their work is done, their sun has set. Ovitz is a washed up joke. Eisner hung around too long. Lucas has at last completed the longest shaggy dog story in history, and Steve Jobs is a bigger media mogul than Barry Diller. We can only hope that their jaded, tired vision of our world will depart with them.
http://rapeutation.com/kremen_v._cohen.pdf
