Sheetrock's Journal: Pre-"MGM v. Grokster" jitters

It's looking like either tomorrow or Monday will bring a Supreme Court answer to whether P2P as we know it has a viable future in this country (04-480: MGM v. Grokster).

I took some time to read over the oral arguments and thought I'd list the highlights:

According to the Petitioners (MGM) the Ninth Circuit decided the case in favor of Grokster based on an expert study (submitted by the proponents) that showed 90% of the material available was or was likely to be infringing. They now argue that the Ninth Circuit improperly inferred that the other 10% was noninfringing material, and that not only is it a stretch to say there were 2.6 billion noninfringing uses but that the number of noninfringing uses is only so high because "the scale of the thing is mind-boggling". They assert that simply offering the possibility of noninfringing use is not enough to give a "perpetual free pass" to assistance of massive infringement.

This argument addresses the famous "Betamax" case (Sony Corp v. Universal City Studios) which in a 5-4 decision held that a substantial number of copyright holders would not object to having works licensed for free public broadcast timeshifted by private audiences, that this timeshifting would not substantially interfere with their sale of copyrighted works, and that the sale of copying equipment does not constitute contributory infringement "if the product is widely used for legitimate, unobjectionable purposes, or, indeed, is merely capable of substantial noninfringing uses."

They also assert that there is inducement of infringement -- that the network not only offers no resistance to infringement but actively encourages it. Based on the questioning, this looks like it could be a separate issue for the Court to decide than the one listed above.

When the counsel was asked whether he would have recommended, under his interpretation of Sony v. Universal, the invention of the Xerox, the VCR, the iPod and the printing press, he said yes. His assertion was (using the iPod as his example) "there were very significant lawful commercial uses for it". Justice Souter makes the point that this is never apparent to "the guy sitting in the garage figuring out whether to invent the iPod or not" and Justice Kennedy explains that "profit-motive-driven" inventors may very well be scared away from creating anything that could run afoul of copyright problems.

A supporting Petitioner (for United States as amicus curiae) suggests that the Sony standard could allow 50/50 infringement/noninfringement but that a greater amount of infringement with inducement to infringe could create liability under that standard. He also argues that this service was set up "from day one" to capitalize on the infringement started by the old Napster system.

The Respondents (Grokster) assert that prior acts that are alleged by the petitioners to constitute "inducement" are separate from the distribution of the product, and that only the latter issue is before this Court because of some technical deal with the appeal (as I understand it; I could be wrong.) The justices seemed to feel that if infringement played a part in getting the company to where it is today it's still relevant, and were a little confused about how the issues of prior acts and present acts were separated. So maybe they're all before the Court anyway; I don't know.

Justice Scalia says the Court won't decide this case on the basis of stare decisis. After looking that up, I'm thinking Sony v. Betamax alone won't be enough of a defense. There's also a dangerous bit where Justice Kennedy asks whether "unlawfully expropriated property can be used by the owner of the instrumentality as part of the startup capital for his product".

Justice Souter asks whether this might be a willful-ignorance case. Justice Scalia thinks decentralizing the network simply to avoid the fate of old Napster could run afoul of this. Take note, anonymity networks.

How is it all going to come out? Your guess is as good as mine. I get the feeling that there's a possibility they might not make a final judgement on this if there are technical issues surrounding the appeal that prevent them from addressing the inducement issue. I also suspect that if there's a final judgement the majority will find for MGM on the basis that the significant difference between the quality, cost of distribution and media durability in the 80s and the quality, cost of distribution and media durability at the center of this case that would increase the potential of infringing uses to harm copyright holders to a degree that puts this case outside the Sony v. Universal standard. The inducement and willful ignorance angles only cause me more concern.

Just to add a smidge more length to this entry, I think it's interesting that Sony got one side of this argument in the 80s and because they own MGM they've now got the other.