April 25, 2003 12:46 PM PDT

Judge: File-swapping tools are legal

A federal judge in Los Angeles has handed a stunning court victory to file-swapping services Streamcast Networks and Grokster, dismissing much of the record industry and movie studios' lawsuit against the two companies.
Read more about file-swapping

In an almost complete reversal of previous victories for the record labels and movie studios, federal court Judge Stephen Wilson ruled that Streamcast--parent of the Morpheus software--and Grokster were not liable for copyright infringements that took place using their software. The ruling does not directly affect Kazaa, software distributed by Sharman Networks, which has also been targeted by the entertainment industry.

"Defendants distribute and support software, the users of which can and do choose to employ it for both lawful and unlawful ends," Wilson wrote in his opinion, released Friday. "Grokster and StreamCast are not significantly different from companies that sell home video recorders or copy machines, both of which can be and are used to infringe copyrights."

The ruling is the second major setback to date to the entertainment industry's efforts to keep a tight rein on online file-swapping, following a similiar decision in the Netherlands last year that found that Kazaa was not liable for its users' copyright infringements. If upheld, the decision could lead artists, record labels and movie studios to cast new legal strategies that they have until now been reluctant to try, including bringing lawsuits against individuals who copy unauthorized works over Napster-like networks.

According to the major record labels, file-swapping is a major contributor to declines in music sales over the past few years, a trend that has thrown the industry into disarray. Debt-ridden media conglomerates are now considering sales of their music divisions even as they begin to test paid online music services intended to compete with free file-swapping networks and turn the tide.

Attorneys called the ruling a blow for entertainment and record companies trying to stop the networks used to swap unauthorized copies of their works.

"This is a very serious setback for the record industry and other content industries, because they've uniformly won these cases in the U.S.," Mark Radcliffe, an intellectual property attorney at Gray Cary Ware & Freidenrich said.

While the ruling in no way validates the legality of downloading copyrighted music online, it would shield companies providing decentralized file-swapping software such as Gnutella from liability for the actions of people using their products.

As such, it could provide new leverage for file-swapping companies such as Grokster, Streamcast and Sharman in negotiations with record companies and other copyright holders to license works legitimately. Since Napster's $1 billion settlement offer with the record industry in 2001, file-swapping companies have repeatedly sought an amicable settlement with copyright holders but have been almost universally rebuffed.

The court's ruling applies only to existing versions of the Morpheus and Grokster software. Earlier versions of the software, which functioned slightly differently, could potentially leave the companies open to liability.

A spokeswoman for the Motion Picture Association of America (MPAA) said the copyright holders were deeply disappointed in the decision and would certainly appeal.

"We feel strongly that those who encourage, facilitate and profit from piracy should be held accountable for actions," MPAA spokeswoman Marta Grutka said. "We're hoping that people aren't taking this as an invitation to continue along the path of what is clearly illegal activity."

Recording industry officials said they saw some good in the ruling, but that they too would immediately appeal to the 9th Circuit Court of Appeals.

"We are pleased with the Court's affirmation that individual users are accountable for illegally uploading and downloading copyrighted works off of publicly accessible peer-to-peer networks," said Recording Industry Association of America (RIAA) chief executive officer Hilary Rosen in a statement. "(But) businesses that intentionally facilitate massive piracy should not be able to evade responsibility for their actions."

IMAGE TEXT HERE

Wilson's decision comes in the most closely watched Net copyright case since Napster's demise.

The two pieces of file-swapping software affected by Friday's ruling remain among the most popular downloads on the Net, although they operate deep in the shadow of market leader Kazaa. Morpheus--once the undisputed leader--has fallen to about 120,000 downloads per week, according to Download.com, a software aggregation site operated by News.com publisher CNET Networks. Kazaa, by contrast, was downloaded more than 2.7 million times during the past week.

The RIAA and the MPAA sued Streamcast, Grokster, and the original parent company of Kazaa's software in October 2001, and the case has been making its way slowly through court since that time.

In late 2002, both sides asked the judge for summary judgment, or a quick ruling in their favor before going to a full trial. Wilson's decision in favor of the file-swapping companies Friday was tied to that months-old series of requests.

The decision does not directly affect Kazaa, at least not immediately. At the time that Grokster and Streamcast were arguing for summary judgment, Wilson had not yet ruled that the Australia-based Sharman Networks could be sued in the United States.

Sharman is scheduled to meet with RIAA and MPAA attorneys in court on Monday, to argue over whether its counterclaim against the record labels and movie studios should be dismissed. Friday's ruling, however, could change the direction of that hearing.

The judge's surprise ruling marked the first validation of an argument that file-swapping supporters have been making since Napster's first controversial arrival. Peer-to-peer file-trading is a technology that can be used for activities well beyond copyright infringement, and the technology should not be blocked altogether to stop solely its illegal uses, these backers have said.

In making that argument, the judge looked back to the landmark 1984 Supreme Court ruling that upheld the legality of Sony's Betamax videocassette recorder (VCR). That decision helped establish the doctrine of "substantial noninfringing use," which protects technology providers that distribute products--like the VCR or photocopier--that can be used for both legal and illegal purposes.

"We are absolutely very proud of this judge for having the unusual capacity to be able to grasp the technology and its future benefit to taxpayers and shareholders around the world," said Wayne Rosso, president of Grokster. "Technology is usually way ahead of courts and legislature. The fact that judge was able to acutely comprehend (this technology) is a credit to the legal system."

Not like Napster
Much of Wilson's ruling hung on the technological differences between Napster and the newer, decentralized file-swapping services.

Napster's service opened itself to liability for its users' actions by actively playing a role in connecting people who were downloading and uploading songs--a little like a physical swap meet provides the facilities for people exchanging illegal material, the judge said. By contrast, Grokster and Streamcast distributed software to people and had no control over what their users did afterwards, Wilson said.

When users search for and initiate transfers of files using the Grokster client, they do so without any information being transmitted to or through any computers owned or controlled by Grokster," Wilson wrote. "Neither Grokster nor StreamCast provides the site and facilities" for direct infringement. "If either defendant closed their doors and deactivated all computers within their control, users of their products could continue sharing files with little or no interruption."

It didn't matter that the companies were aware generally of copyright infringement happening using their software, Wilson added--they would have to know of specific instances of infringement and be able to do something about it, to be liable for those users' actions.

That stands in stark contrast to an earlier ruling against file-swapping company Aimster, in which the judge explicitly said the file-trading company did not need to know about individual acts of copyright infringement as they were happening to be held liable for the illegal activity.

Friday's decision is likely to send shock waves throughout the copyright and technology communities, which have adjusted slowly over the last year to the notion that file-trading services such as these were mostly likely illegal. Technology companies have complained that the repeated lawsuits have stifled innovation, but many also have begun to move forward in alliances with authorized music--and film-distribution services.

The case will certainly be appealed. Because different courts have come to very different conclusions about the law, the issue could go as high as the U.S. Supreme Court, a process that would likely take years.

"This is far from over," said Fred von Lohmann, an Electronic Frontier Foundation attorney who has represented Streamcast in the case. "This is not the end, but it sends a very strong message to the technology community that the court understands the risk to innovation."

In the interim, the ruling is likely to produce another round of interest in legislation affecting copyright issue on the Net--an outcome that Wilson himself foresaw.

Policy, "as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials," Wilson wrote. "Congress has the constitutional authority and the institutional ability to accommodate fully the raised permutations of competing interests that are inevitably implicated by such new technology...Additional legislative guidance may be well-counseled."

News.com's Lisa Bowman contributed to this report.

47 comments

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File Swopping
I can send a song (music) to my friends now.
and they can send theirs back to me..
I just look at The Programs that upon up a place to where we can have a better volum.
I hope that this thing will be put to rest and just leave the internet alone.
Posted by (1 comment )
Reply Link Flag
Not Right
The ruling is the second major setback to date to the entertainment industry's efforts to keep a tight rein on online file-swapping, following a similiar decision in the Netherlands last year that found that Kazaa was not liable for its users' copyright infringements. If upheld, the decision could lead artists, record labels and movie studios to cast new legal strategies that they have until now been reluctant to try, including bringing lawsuits against individuals who copy unauthorized works over Napster-like networks.

This is not right, when I joined, I was told it is legal to download and upload music from our files which come from our CD's we bought, so if I request a song how am I suppose to know if it is legal or not? After all it's all music. If they don't want us to download a certain song than an warning label should pop up and say "WARNING you are about to download a song that is illeagal Click here to cancell if you continue you can be subject to (Whatever)" & uploads shoud say "Warning a song is about to be uploaded that is against the copy rights of that artist. Please click here to cancell upload and please remove it from your share files."
Posted by (2 comments )
Reply Link Flag
Micro$oft's DRM Answer
Your suggestion that songs on CDs being uploaded, or songs being downloaded, be tracked and that users be warned about the legal repurcusions is a neat idea, but Micro$oft has already come up with an answer to the problem. Windows Media Player keeps track of CDs you buy and play on it, and files in the Windows Media Audio format have embedded copy protection.

Also, if a company were able to WARN users not to download something that is illegal, they also have the ability to stop it cold in it's tracks, to not even allow them the opportunity to break the law, which would make them directly liable for allowing it. That's what killed Napster, their supposed enforcement capability was also their downfall.

The ruling in this article doesn't say that P2Ps are not liable if they have the ability to control, or censor, the uses of their network. It sais they are not liable for merely providing the Tools that can be used for illegal activities, even though they have no control over what people use them for.

But, Napster is back, with a business deal that involves licensing of the songs being downloaded. You pay for the song you want to download, if you don't like it, too bad, so sad.

BTW, DRM means Digital Rights Management, a new thing to fight piracy. Good luck guys.

Krepta.
Posted by Krepta3000 (2 comments )
Link Flag
Right about that.
Concerning the tons of different media there is out there. How is a user to know what is copyrighted and what is free to share. You do make a good point on this one. It will be alot easier going after the people who share this material instead of the downloaders. It is not entirely possible for the user to know which material they download is copyrighted or not. It probally be impossible or hardly accurate for P2P Companies to include a warning in their software.
Posted by NEND (11 comments )
Link Flag
100% Legal? I think not...
I was reading an article about Wayne Shorter today (12/23/04) on NYTimes.com and followed an advertiser's link offering 100% legal free jazz.

That ultimately led me to this article and for me to email the NYTimes complaining about what I consider false advertising. It turns out the 100% legal free music is nothing but that file sharing rip off which now they are trying to get you to sign up and pay to use?

I am writing merely to protest these sites and the idea they can be passed off as 100% legal.

Ironically, people like Wayne Shorter lose out on royalties because of these sites. This District Court Judge from California apparently says the service itself is not illegal but what people do with it? That makes little sense and is irrelevant to the question is it legal to use.
Posted by (3 comments )
Reply Link Flag
Its legal!
[quote]That makes little sense and is irrelevant to the question is it legal to use.[/quote]

Of course its legal to use, if its used legaly and not for swapping of copyrighted material.
This is what the judge meant, Could Sony be liable for making a recording device like the mini disc player or Video Recorder, that was used to infringe on its own copyright ?
Music or Movies that were produced by Sony ?

Are they liable for making a DVD Recorder that can be used for copying there own PS2 games ?
Its upto the user to be responsible for what he does with his device. I rest my case..
Posted by (1 comment )
Link Flag
illegal made illegal?
There's no idea to pay for illegal download networks. Why on earth is this possible that these music stealing criminals run websites?
Posted by (1 comment )
Link Flag
How it came to this...
In a word SONY...
First came the video cassette recorder (VCR)...
Sony fought to allow the introduction of the VCR saying that it wasn't the technology, but rather the user who had control of whether what they copied was legal or not... (technically it is illegal to copy anything on TV)...
They won... hence betamax was borne, followed swiftly by VHS...
Then came PCs and the Internet, CD burners and so on...
And companies like Napster were born...
Fair enough... put your VCR on the NET and upload the tapes to a server from which anyone could download the content, thus sharing what was already illegally copied, or even sharing your legally purchased tapes added a new level.
Napster was run as a client-server application.
This meant that you copied your music to a computer owned by Napster, from which other users could access their (illegal) copies.
Easy to stop (from a legal standpoint). If Napster couldn't control what was on their servers, just shut the servers down - which was what happened.
Enter peer-to-peer sharing.
I (Joe Blow) could write a program that used the old IBM based peer-to-peer networking protocols and allowed users to "share" files without the need for a server that could be shut down by the legal hob-knobs....
Easy to shut down 1 server - but try to shut down 10,000,000 "servers"!
Of course, as any gun manufacturer might point out - "we can't control what the end-user does with the gun", so is the argument offered by those who develop these file sharing programs.
The problem remains. Just exacerbated by over-zealous legal action.
I recently bought a program from slysoft.com called AnyDVD. Frustrated with the 5 kids in my household constantly using my (extensive) collection of DVDs and leaving them scattered and scratched around the living room floor, I decided I needed to copy them in order to save them from imminent destruction.
What I am doing with this software is legal. I have paid for legitimate copies of the DVD, and reserve the right to watch each title whether it has been scratched beyond recognition or not...
But you could easily use the same software to make illegal copies of ANY DVD if you chose to do so.
The difference is - I had to BUY the program (with a credit card). I prooved that I was an adult, and understood the ramifications if I acted illegally.
The companies (like Kazaa, LimeWire etc) are entering into contracts with (often) minors who do not understand the implications of what they do - and definitely don't take the time to read the "fine print".
As I see it, there needs to be an "adult verification" system similar to that which restricts access to paid porn sites applied to those companies who profess peer-to-peer file sharing.
Whether this happens or not will remain to be seen.
I am sure that Sony Music is amongst the "music industry leaders" who are now fighting these peer-to-peer developers.
I wonder if they ever envisioned what a mess they created for themselves way back when...?
Posted by Ozzzzz (6 comments )
Link Flag
Case going to the Supreme Court
.. COPYING ENTERTAINMENT: THE NEXT BATTLE The Supreme Court Agrees To Hear a Case on Web Technology and Copyright, 12/16/2004 N.Y. L.J. 5, col. 2, 5, col. 2 (2004)

Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., --- S.Ct. ----, 2004 WL 2289054, 73 USLW 3247 (U.S. Dec 10, 2004) (NO. 04-480)
Posted by (3 comments )
Reply Link Flag
Are the music unions part of the "overcompensated" music industry?
Supreme Court of the United States.
METRO-GOLDWYN-MAYER STUDIOS INC., et al., Petitioners,
v.
GROKSTER, LTD., et al., Respondents.
No. 04-480.
January 25, 2005.

On Writ of Certiorari to the United States Court of Appeals for the Ninth

Circuit


Brief of the American Federation of Musicians of the United States and Canada,
American Federation of Television and Radio Artists, Directors Guild of
America, Screen Actors Guild, Inc., and Writers Guild of America, West as Amici
Curiae in Support of Petitioners
George H. Cohen

Patricia Polach Laurence Gold [FN*] Bredhoff & Kaiser, P.L.L.C. 805 Fifteenth Street, N.W. Washington, D.C. 20005 (202) 842-2600

FN* Counsel of Record



*i TABLE OF CONTENTS

TABLE OF AUTHORITIES ... ii

INTEREST OF THE AMICI CURIAE ... 1

SUMMARY OF ARGUMENT ... 8

ARGUMENT ... 8

CONCLUSION ... 15





*ii TABLE OF AUTHORITIES

CASES

Polygram International Publishing, Inc. v. Nevada/TIG, Inc., 855 F. Supp. 1314 (D. Mass. 1994) ... 10-11

Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304 (2d Cir. 1963) ... passim

Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984) ... 9


*1 INTEREST OF THE AMICI CURIAE [FN1]

FN1. The parties have consented to the filing of this brief. No part of this brief was written by counsel for a party. No one other than the amici curiae made a monetary contribution to the preparation or submission of this brief.




The amici curiae are five labor organizations comprised of the musicians, vocalists, writers, actors and directors who create and perform in American sound recordings and films. The American Federation of Musicians of the United States *2 and Canada (AFM) has 100,000 professional musician members and the American Federation of Television and Radio Artists (AFTRA) has approximately 80,000 professional vocalist, radio/television performer and newsperson members. AFM and AFTRA members include tens of thousands of musicians and vocalists who make sound recordings both as "featured" or "royalty" artists and as "session" musicians and vocalists. The Directors Guild of America (DGA) has over 12,000 members who are motion picture and television film directors, assistant directors and unit production managers. The Screen Actors Guild, Inc. (SAG) has over 120,000 members including both "principal" and "background" actors in motion picture and television films. The Writers Guild of America west (WGAwest or WGA) represents 8,500 theatrical film, broadcast and television writers.
Grokster and StreamCast operate - for a profit - internet services through which millions of users copy and distribute copyrighted sound recordings and films without the copyright holders' authorization and without making any payments. The question in this case is whether Grokster and StreamCast, the Respondents in this Court, are liable as contributory infringers, or under the


copyright law vicarious liability standard, for these massive infringements.
Grokster/StreamCast would have it that the parties with an interest - and a financial stake - in the answer to that question are the "technology industry" on one side and the "entertainment industry" on the other. That is misleading in the extreme.
The harmful effects of the infringements on the Grokster/StreamCast services are not absorbed by some abstract "entertainment industry." To the contrary, that harm directly affects the AFM, AFTRA, DGA, SAG and WGA artists who create those sound recordings and films. To appreciate why requires some understanding of what these artists contribute *3 to the collaborative processes that result in sound recordings and films and how they are compensated for their work.
The Creative Process
Across and within all genres, each sound recording is a unique artistic expression informed by the contributions of the musicians and vocalists who collaborate to create the recorded performance. Royalty and session artists alike combine their talents - and the ability to express their deepest emotions - to record a performance that transcends its parts and becomes a singular work of art. The concrete examples, from John Coltrane's legendary jazz expression of spirituality, "A Love Supreme," to Patsy Cline's

extraordinary country-western hit, "Crazy," could be multiplied endlessly. What the recording companies that finance and then sell the resulting CDs and music files are providing the public - and what the public wants - is the performers' musical creation.
The same is equally true for films, each artistic aspect of which depends upon the unique visions of its collaborators that fuse to create a singular work. Screen writers labor in solitude to translate inspiration into an effective script. Directors take the writers' words and transform them into moving pictures on the screen that convey their cinematic vision. And actors by their ability to capture and project their characters' mental and psychological states communicate with audiences in a way that makes the viewer feel the film's story. Films are the product of technical know-how, experience and coordinated teamwork. But from "E.T." to "The Godfather," it is the creators' art that moves the audience.
How Performers Are Compensated
AFM, AFTRA, DGA, SAG and WGA creative artists follow a hard, financially uncertain and precarious calling. A few "stars" do fabulously well. Tens of thousands of artists with great talent and commitment never make a go of it. The *4 great majority who succeed struggle financially and earn no more than a modest living. In this regard, they are heavily dependent on financial


arrangements that produce sporadic and varied income streams tied to the sale or licensing of their creative works.
Session musicians and vocalists - who work in recording sessions under the AFM and AFTRA industry-wide agreements on an on-called basis - earn scale wages, pension contributions, "re-use" fees if the recording is used in another medium, and, for vocalists, health coverage if they qualify by reaching annual earnings minimums. In addition, session musicians receive deferred income from the Sound Recording Special Payments Fund, which is funded by signatory companies in accordance with a formula tied to sales, and session vocalists receive "contingent scale" payments when recordings reach certain sales plateaus. Musicians who record film scores share in the receipts from the exploitation of their films in secondary markets like DVD sales via payments from the Film Musicians Secondary Markets Fund.
On the intermittent occasions when they are making a record, royalty artists are entitled to the union-negotiated payments just described. But they are heavily dependent on income from selling and licensing their recordings to earn a living, to meet the eligibility requirements for health coverage, and in particular to pay for the costs of their recording projects.
Recording musicians and vocalists also receive income from the performance of their recordings on the digital music services that make authorized, non-

infringing use of copyrighted recordings on the internet. Webcasts that are "non-interactive" pay compulsory license fees, of which featured performers receive 45% and nonfeatured performers receive 5% as mandated by the Copyright Act. "Interactive" digital music services - such as internet subscription services that stream particular recordings "on-demand" - must negotiate *5 licenses with copyright owners. The resulting license income is shared with royalty artists pursuant to their royalty contracts, and with session performers pursuant to union agreements.
As in music, employment for motion picture and television film creators is intermittent and sporadic and requires marketing oneself for specific, short term projects. Screenwriters, directors and actors who do so most successfully still may work at best only one year out of two. Industry-wide agreements negotiated by DGA, SAG, AFTRA and WGA establish minimum payments for every sort of script, role and directorial project, and enable creators to earn pensions and health coverage (if they meet annual earnings minimums). A critical feature of the union contracts, and an essential component of writers', actors' and directors' incomes, are residual payments that pay creators a portion of the income generated by the continued exploitation of their films in foreign distributions, pay or cable TV, and sale or rental of videocassettes and DVDs after the completion of the film's original run. Creators depend on residual


payments from the use of their past projects to carry them through the periods when they are not working. Even when they are working, residual payments are a critical component of their incomes and their ability to meet annual earnings requirements to qualify for health coverage.
How Performers are Harmed by Unauthorized Distribution of Sound Recordings and Films
Unauthorized free copying and distribution of copyrighted sound recordings and films on the internet directly harm the creative artists represented by the amici curiae.
First and foremost, every infringing download of a sound recording or film denies creators payment for their work to which they are entitled as a matter of copyright law and contract, and which they can ill afford to lose. And because *6 their work is an expression of their being, such theft hurts in a way beyond the financial - through their performances, artists offer up their very essences to the consumer, and the consumer refuses to offer anything in return.
Secondly, each infringing free download is most likely a substitute for a purchase. Every lost sale represents a lost royalty payment for the royalty artist, and/or a lost Special Payments Fund or Secondary Markets Fund contribution which decreases musicians' income, and/or a lessened potential for

a vocalist to achieve a contingent scale payment, and/or a lost residual payment for a writer, actor or director. In addition, because entitlement to AFTRA, DGA, SAG and WGA health coverage depends upon reaching minimum annual earnings (including earnings in the form of royalties or residuals), lost sales can lead not only to lower pensions but also to the loss of health insurance for vocalists, writers, actors, directors and their families.
So far as we are aware, there is no scientific certainty as to the precise quantitative effect of infringing free downloading. But there is no question that as this illegal practice has increased exponentially, CD sales in the U.S. have dropped precipitously, and that musicians and vocalists already have felt the pain of lost royalties, lowered Special Payments Fund payments, and fewer contingent scale payments. For example, the Sound Recording Special Payments Fund collections from signatory recording companies, based on sales, for fiscal year 2003 totaled $14,852,222 - a 30% decrease from the 2002 collections of $21,183,689. This decrease is extremely painful financially since Special Payments Fund payments form a substantial portion of musicians' earnings.
Third, infringing free distribution of sound recordings on the internet competes with distribution of sound recordings on the internet by lawful services that pay distribution and performance royalties to performers. Why pay a monthly fee to an online subscription service that will provide you with


*7 on-demand streams of the sound recordings you choose, if you can download those sound recordings for free? Why pay even a mere $0.99 or $0.79 for a legal permanent download of a sound recording if you can get that download illegally for nothing? Musicians and vocalists have a vital stake in the development of the lawful internet market for sound recordings, but that market is unfairly forced to compete with free - and illegal - internet distributions. As compression technologies improve and high-speed broadband becomes ubiquitous, legitimate new internet movie services like MovieLink will be similarly threatened by competition from illegal and free distribution on the internet.
Finally, musicians and vocalists have already suffered from contraction in the industry caused by lost sales revenues, as labels reduce their artist rosters and thus decrease recording opportunities for royalty and session artists alike. Artists may not always agree with their recording companies, but they rightly fear the demise of the companies that employ them and distribute their work. Rhetoric about new "entertainment business models" provides little comfort to artists as long as the technology industries foster the twin misconceptions that there is no need and no reason to pay for sound recordings, and that no one is hurt by their theft. Again, as it becomes easier to download films, film creators will face the same threats.
In sum, there is no fat in the incomes of most sound recording and film

creators. While it is true that they create for love and out of passion, it is also true that they must be able to earn a living - unreduced by unlawful "sharing" that shares nothing with them or they will be unable to continue to devote themselves to music and film, and to satisfy the public's desire for their art.


*8 SUMMARY OF ARGUMENT
Under the copyright law vicarious liability standard, Grokster and StreamCast are liable for the direct infringer conduct (viz the unauthorized copying and distributing of copyrighted works) that takes place in the course of Grokster's/Stream Cast's business operations.
First of all, Grokster and StreamCast operate businesses that are actively engaged in the "exploitation of copyright materials" Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2nd Cir. 1963), and are thus subject to copyright law vicarious liability for direct infringer conduct committed in the course of those business operations.
Grokster/StreamCast, moreover, have the most "obvious and direct financial interest," Green, 316 F.2d at 307, in the infringing exploitation of copyright materials, that takes place in the course of its business operations.
Third, Grokster/StreamCast have the "right and ability to supervise,"


Green, 316 F.2d at 307 in the sense of "the power to police carefully the conduct" of the person who is the direct infringer, id. at 308.
The forgoing being so it is therefore just and proper to hold Grokster/Stream-Cast vicariously liable for the direct infringer conduct at issue here.

ARGUMENT
Under the copyright law vicarious liability standard, Grokster and StreamCast are liable for the direct infringer conduct (viz the unauthorized copying and distributing of copyrighted works) that takes place in the course of Grokster's/Stream Cast's business operations. The Ninth Circuit's contrary conclusion rests on a misunderstanding of, and misapplication of, that standard.
1. Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304 (2d Cir. 1963) sets out the classic statement of the *9 copyright law standard. See, e.g. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 437 n. 18 (1984) (citing and quoting Green with approval). Green proceeds by drawing the rule on the "pattern of business relationships which would render one person liable for the infringing conduct of another" from the "open-ended terminology" of the relevant Copyright Act provisions; "the elements that have given rise to the doctrine of respondeat superior;" and the "principle which can be extracted" for the "legion" of cases "which hold [a] dance hall

proprietor liable for the infringement of copyright resulting from the performance of a musical composition by [an independent contractor] band or orchestra whose activities provide the proprietor with a source of customers and enhanced income." Id. at 307. And, Green distills those materials by formulating the governing standard in the following terms:
When the right and ability to supervise coalesce with an obvious and direct financial interest in the exploitation of copyrighted materials - even in the absence of actual knowledge that the copyright monopoly is being impaired ... - the purposes of copyright law may be best effectuated by the imposition of liability upon the beneficiary of that exploitation. [http://316 F.2d at 307 (citation omitted).|http://316 F.2d at 307 (citation omitted).]
In elaborating on the foregoing, Green emphasizes that the copyright law vicarious liability standard "cannot be deemed unduly harsh or unfair." Id. at 308. The person who is held vicariously liable has "the power to police carefully the conduct" of the person who is the direct infringer and the governing standard "simply encourages [the former] to do so thus placing responsibility where it can and should be effectively exercised." Id.
As Judge Robert E. Keeton has added in this last regard, in his thorough and scholarly opinion in Polygram International *10 Publishing, Inc. v. Nevada/TIG, Inc., 855 F. Supp. 1314, 1325 (D. Mass. 1994):


[Green's] inclusion of a policy justification for vicarious liability along with its discussion of the two elements of benefit and control reflects the now common recognition in other areas of the law that vicarious liability rests, in part at least, on a policy foundation relating to risk allocation. Even in copyright cases, in which the touchstones of benefit and control have become the defining elements for vicarious liability, we nevertheless are considering "the broader problem of identifying the circumstances in which it is just to hold one individual accountable for the acts of another." Sony, 464 U.S. at 435.
And, as Judge Keeton then explained:
When an individual seeks to profit from an enterprise in which identifiable types of losses are expected to occur, it is ordinarily fair and reasonable to place responsibility for those losses on the person who profits, even if that person makes arrangements for others to perform the acts that foreseeably cause the losses. The law of vicarious liability treats the expected losses as simply another cost of doing business. The enterprise and the person profiting from it are better able than either the innocent injured plaintiff or the person whose act caused the loss to distribute the costs and to shift them to others who have profited from the enterprise. In addition, placing responsibility for the loss on the enterprise has the added benefit of creating a greater incentive

for the enterprise to police its operations carefully to avoid unnecessary losses. [http://Id.|http://Id.]
It follows, Judge Keeton concluded, that:
This background of policy justifications for vicarious liability serves to place in context the [copyright law standard's] two elements of benefit and control derived from the previous case law .... By focusing on benefit *11 received from and control over an enterprise, a court can evaluate the defendant's ability to spread losses and police conduct within the enterprise, as well as the underlying fairness of holding the defendant liable.
The distinctive version of vicarious liability that has developed in the context of copyright omits the requirement, common elsewhere in the law of vicarious liability, that the right and ability to control extend to the "manner and means of performance." This distinctive variation is understandable, however, and is consistent with the policy foundations, as long as the right of control extends far enough to give the person (or entity) who is to be held vicariously liable a veto over [the exploitation of copyrighted materials] at all, if authorization of the copyright holder can not be established. [http://Id. at 1326.|http://Id. at 1326.]
2. Under the copyright law standard Grokster and StreamCast are vicariously liable for the direct infringements here.



First of all, Grokster and StreamCast operate businesses that are actively engaged in the "exploitation of copyright materials" Green, 316 F.2d at 307 and are thus subject to copyright law vicarious liability for direct infringer conduct committed in the course of those business operations. Grokster/StreamCast have made every effort to create the impression that they are passive third parties that have only a tenuous relationship to any business actively engaged in the "exploitation of copyright materials" and are therefore immune to vicarious liability for the direct infringer conduct at issue here under the so-called "landlord leasing" line of cases discussed in Green, id., at 307. That is a false impression.
It is the Grokster/StreamCast services, and their underlying software systems, that establish a network of user computers; that set up the stores of digital files of copyrighted works available for copying and distribution; that select the "super *12 node"/"ultra peer" user computers to host their indices; that search for and locate digital files containing a copy of a requested, copyrighted sound recording/film on the network of user computers; and that arrange a direct link between two user computers to effectuate the copying and distribution of the copyrighted work to the requesting user for his listening/viewing (and as a resource for further copying and distribution of the work). And, it is Grokster and StreamCast that actively manage their

services on an ongoing basis by performing maintenance, upgrading the software, and by increasing their processing capacities.
To be sure, Grokster and StreamCast have configured their services so that various service functions are performed through user network computers rather than Grokster/StreamCast servers. But that does not make each of those user computers a separate business that shields Grokster/StreamCast from vicarious liability for direct infringing conduct committed in the course of Grokster's/StreamCast's business operations. Each of the user computers functions through - and under the direction and control of - the Grokster/StreamCast software and is simply a means of carrying out the Grokster/StreamCast businesses. These users and their computers are no more separate entities that shield Grokster/StreamCast from vicarious liability than the phonograph record department concessionaire that provided no such shield in Green, 316 F.2d at 306, or the independent contractor bands and orchestras that provided no such shield in the "legion" of "dance hall" cases discussed in Green, id.
Second, Grokster/StreamCast have the most "obvious and direct financial interest," Green, 316 F.2d at 307, in the infringing "exploitation of copyright materials," id., that takes place in the course of its business operations. Grokster's/StreamCast's sole source of revenue is to sell


advertisers access to their users each time a user logs on to the system. Their advertising revenue is a function of the log-on volume; *13 the greater the number of users who log on, the higher Grokster's/StreamCast's advertising revenue. Indeed, since almost all users who log on are attracted by the availability of copyrighted works for free, and therefore log on to engage in the infringing copying and distribution of copyrighted works, it has been undispute - and it is indeed indisputable - that Grokster/StreamCast reap the most "direct financial benefit, via advertising revenue," Pet. App. 16a, from the infringing uses of their services, and from multiplying those infringing uses.
Third, Grokster/StreamCast have the "right and ability to supervise," Green, 316 F.2d at 307 in the sense of "the power to police carefully the conduct" of the person who is the direct infringer, id. at 308.
The most salient point is that the operations of an internet system like the Grokster/StreamCast systems are supervised and controlled through its software. And, Grokster/StreamCast have the plain legal right, and the evidence showed the practical ability, to add filtering devices to their software which are effective in blocking the infringing copying and distribution of copyrighted works and which do not interfere with or degrade a system's ability to provide for the noninfringing copying and distribution of both copyrighted and

uncopyrighted works.
On any measure that is a potent "power to police carefully the conduct" of the person who is the direct infringer. It is indeed the power to "veto" direct infringer conduct that Judge Keeton identified as the core "right of control" in assessing whether it is proper to hold the person with a financial interest in the exploitation of copyright materials vicarious liable for direct infringer conduct in the course of that person's business. Supra, p 11.
*14 To be sure, the Ninth Circuit, in a remarkable passage, came to a directly opposite conclusion:
The district court correctly characterized the Copyright Owners' evidence of the right and ability to supervise as little more than a contention that "the software itself could be altered to prevent users from sharing copyrighted files." Grokster I, 259 F. Supp.2d at 1045. In arguing that this ability constitutes evidence of the right and ability to supervise, the Copyright Owners confuse the right and ability to supervise with the strong duty imposed on entities that have already been determined to be liable for vicarious copyright infringement; such entities have an obligation to exercise their policing powers to the fullest extent, which in Napster's case included implementation of new filtering mechanism..... But the potential duty a district court may place on a vicariously liable defendant is not the same as


the "ability" contemplated by the "right and ability to supervise" test. Moreover ... we agree with the district court that possibilities for upgrading software located on another person's computer are irrelevant to determining whether vicarious liability exists. [http://Pet. App. at 19a-20a|http://Pet. App. at 19a-20a]
This is unsound from beginning to end. The Ninth Circuit never explains why a showing that a person, who is sought to be held vicariously liable, has the practical right and ability to alter software so as to prevent direct infringer conduct is not a proper showing that he has the "power to police carefully the conduct," Green, 316 F.2d at 308, of the direct infringer that makes it fair and just rather than "unduly harsh or unfair," id., to hold that person liable. We would suggest that the reason the Ninth Circuit did not venture any such explanation is that such a showing is so plainly proper that there is no reasoned argument to the contrary.
Nor does the Ninth Circuit offer anything in support of its ipse dixit that a person's right and practical ability to alter his own software that he has provided to a third person to install in the latter's computer so that the third person can participate *15 in the conduct of the first person's business is an irrelevancy. Plainly it is not. The software is the first person's software and the third person is acting for and on the first person's behalf. There is no reason to treat the third person and his computer as beyond

the first person's right and ability to supervise. There is every reason in enterprise liability and responsibility to come to the opposite conclusion.

CONCLUSION
The decision and judgment of the United States Court of Appeals for the Ninth Circuit should be reversed.
22 NO. 18 Andrews Computer & Internet Litig. Rep. 2

Related Andrews Newsletter Articles(Back to Top)
22 NO. 18 Andrews Computer & Internet Litig. Rep. 2
11 NO. 22 Andrews Intell. Prop. Litig. Rep. 3
U.S.,2005.
Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.
2005 WL 189888




Briefs and Other Related Documents (Back to top)

. 2005 WL 166587 (Appellate Brief) Brief for Motion Picture Studio and Recording Company Petitioners%tc (Jan. 24, 2005)
. 2005 WL 166588 (Appellate Brief) Brief for Songwriter and Music Publisher Petitioners%tc (Jan. 24, 2005)
. 2005 WL 166589 (Appellate Brief) Brief of the Digital Media Association, NetCoalition, The Center for Democracy and Technology, and the Information Technology Association of America as Amici Curiae in Support of Neither Party%tc (Jan. 24, 2005)
. 2005 WL 166590 (Appellate Brief) Brief of the Business Software Alliance As Amicus Curiae Supporting Petitioners%tc (Jan. 24, 2005)
. 2005 WL 166591 (Appellate Brief) Brief of Defenders of Property Rights as Amicus Curiae in Support of Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176434 (Appellate Brief) Brief of Amicus Curiae National Association of Recording Merchandisers in Support of Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176435 (Appellate Brief) Brief of Amici Curiae SNOCAP, Inc. in Support of Neither Party%tc (Jan. 24, 2005)
. 2005 WL 176436 (Appellate Brief) Brief Amici Curiae of Audible Magic Corporation, Digimarc Corporation and Gracenote in Support of Neither Party%tc (Jan. 24, 2005)
. 2005 WL 176437 (Appellate Brief) Brief of Amicus Curiae Bridgemar Services, Ltd. d/b/a iMesh.com in Support of Neither Party%tc (Jan. 24, 2005)
. 2005 WL 176438 (Appellate Brief) Brief of Amicus Curiae the Progress & Freedom Foundation in Support of the Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176439 (Appellate Brief) Brief of the National Association of Broadcasters as Amicus Curiae in Support of Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176440 (Appellate Brief) Brief Of Amici Curiae Office Of The Commissioner Of Baseball, National Basketball Association, National Football League, Professional Photographers of America, Inc., American Society Of Media Photographers, Inc., Association Of American Publishers, I nc., Association Of American University Presses, Producers Guild Of America, Inc., Graphic Artists Guild, Entertainment Software Association, The Authors Guild, Inc., And The Independent Film & Television Alliance In Support Of Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176441 (Appellate Brief) Brief of Amici Curiae Kenneth J. Arrow, Ian Ayres, Gary Becker, William M. Landes, Steven Levitt, Douglas Lichtman, Kevin Murphy, Randal Picker, Andrew Rosenfield, and Steven Shavell in Support of Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176442 (Appellate Brief) Brief Amici Curiae of Utah, North Carolina, Virginia, Rhode Island, Texas, Mississippi, Alabama, Alaska, Arizona, Arkansas, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Vermont, West Virginia, Wisconsin and the Territory of Guam in Support of Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176443 (Appellate Brief) Brief of Professor Lee A. Hollaar as Amicus Curiae in Support of Neither Party%n1%n%tc (Jan. 24, 2005)
. 2005 WL 176445 (Appellate Brief) Brief Of Amici Curiae Napster, LLC, Musicnet, Inc., Cinemanow, Inc., Sea Blue Media, LLC d/b/a Cdigix, Movielink, LLC, Tennessee Pacific Group, LLC d/b/a Pass Along Networks, Wurld Media, Inc., and Virtual Music Stores Ltd. In Support Of Petitioners% tc (Jan. 24, 2005)
. 2005 WL 176446 (Appellate Brief) Brief for Amicus Curiae the Intellectual Property Owners Association in Support of Neither Party%tc (Jan. 24, 2005)
. 2005 WL 176447 (Appellate Brief) Brief of IEEE-USA as Amicus Curiae in Support of Neither Party%n1%n%tc (Jan. 24, 2005)

. 2005 WL 176448 (Appellate Brief) Brief of Amici Curiae Law Professors, Economics Professors, and Treatise Authors in Support of Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176449 (Appellate Brief) Brief of Amici Curiae International Rights Owners Supporting Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176673 (Appellate Brief) Amicus Curiae Brief of the American Intellectual Property Law Association in Support of Vacatur and Remand%tc (Jan. 24, 2005)
. 2005 WL 176674 (Appellate Brief) Brief Amicus Curiae of Americans for Tax Reform in Support of Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176675 (Appellate Brief) Brief of Professors Peter S. Menell, David Nimmer, Robert P. Merges, and Justin Hughes, as Amici Curiae in Support of Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176676 (Appellate Brief) Brief of Kids First Coalition, Christian Coalition of America, Concerned Women for America, Enough is Enough, Morality in Media, Inc., National Center for Missing and Exploited Children, National Fraternal Order of Police, National Law Center for Chi ldren and Families, and We Care America as Amici Curiae in Support of Petitioner%tc (Jan. 24, 2005)
. 2005 WL 218022 (Appellate Brief) Brief of Amici Curiae National Academy of Recording Arts & Sciences, Recording Artists' Coalition, The Country Music Association, Inc., The Gospel Music Association, The Hip-Hop Summit Action Network, Jazz Alliance International, Inc, The Rhythm & Bl ues Foundation, Sesac, Inc., Don Henley, Glenn Frey, Joe Walsh & Timothy B. Schmit (the Eagles); Jimmy Buffett, Kenny ''Babyface'' Edmonds; Mickey Hart and Bill Kreutzman (of the Grateful Dead); ''Mya'' Harrison, Gavin Rossdale, Sheryl Crow; Kix Bro (Jan. 24, 2005)
. 2005 WL 239104 (Appellate Brief) Brief of the American Society of Composers, Authors and Publishers, Broadcast Music, Inc., Association of Independent Music Publishers, Church Music Publishers Association, Nashville Songwriters Association International, and The Songwriters Guild of America as Amici Curiae in Support of Petitioners%tc (Jan. 24, 2005)
. 2005 WL 176444 (Appellate Brief) Brief Amicus Curiae of Macrovision Corporation in Support of Petitioners%tc (Jan. 21, 2005)
. 2005 WL 176677 (Appellate Brief) Brief of Video Software Dealers Association as Amicus Curiae Suggesting Reversal%tc (Jan. 21, 2005)
. 2004 WL 2700077 (Appellate Petition, Motion and Filing) Reply Brief (Nov. 22, 2004)
. 2004 WL 2569663 (Appellate Petition, Motion and Filing) Amicus Curiae Brief of the American Intellectual Property Law Association in Support Of Neither Party (Nov. 08, 2004)
. 2004 WL 2569664 (Appellate Petition, Motion and Filing) Brief Amici Curiae of Utah, North Carolina, Virginia, Rhode Island, Texas, Mississippi, Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Vermont, West Virginia, Wisconsin and the Territory of Guam in Support of Petitioners (Nov. 08, 2004)
. 2004 WL 2569665 (Appellate Petition, Motion and Filing) Brief Amicus Curiae for Recording Artists' Coalition and Don Henley, Glen Frey, Joe Walsh, Timothy B. Schmit (''The Eagles''), Kix Brooks & Ronnie Dunn (''Brooks & Dunn''), Natalie Maines, Martie Maquire, Emily Robison (''The Dixie Chicks''), Bonnie Raitt, Sheryl Crow, Phil Vasser, ''Mya'' Harrison, Kenneth ''Babyface'' Edmonds, Bill Kreutzman & Micky Hart (of ''The Grateful Dead''), Jimmy Buffett, Patty Loveless, Stevie Nicks (of ''Fleetwood Mac''), and Gavin Rossdale (Of ''Bush'') in Support o (Nov. 08, 2004)
. 2004 WL 2569666 (Appellate Petition, Motion and Filing) Brief of Amicus Curiae the Progress & Freedom Foundation in Support of the Petition for a Writ of Certiorari (Nov. 08, 2004)
. 2004 WL 2569683 (Appellate Petition, Motion and Filing) Brief of Roxio, Inc., Musicnet, Inc., Code 7 Entertainment, Inc., Cinemanow, Inc., Sea Blue Media, LLC dba Cdigix, and Movielink, LLC as Amici Curiae in Support of Petitioners (Nov. 08, 2004)
. 2004 WL 2569684 (Appellate Petition, Motion and Filing) Brief of the Computer and Communications Industry Association and Internet Archive as Amici Curiae in Support of Respondents and in Opposition to the Writ of Certiorari (Nov. 08, 2004)
. 2004 WL 2569685 (Appellate Petition, Motion and Filing) Brief of the American Society of Composers, Authors and Publishers, Broadcast Music, Inc., Association of Independent Music Publishers, Church Music Publishers Association, Nashville Songwriters Association International, and Songwriters Guild of Ame rica as Amici Curiae in Support of Petitioners (Nov. 08, 2004)
. 2004 WL 2569686 (Appellate Petition, Motion and Filing) Brief of Amici Curiae International Rights Owners Supporting Petition for a Writ of Certiorari (Nov. 08, 2004)
. 2004 WL 2569687 (Appellate Petition, Motion and Filing) Brief of Amici Curiae National Academy of Recording Arts & Sciences and American Federation of Television and Radio Artists, American Federation of Musicians of the United States and Canada, The Country Music Association, Inc., The Gospel Music Assoc iation, The Hip-Hop Summit Action Network, Jazz Alliance International, Inc, and The Rhythm & Blues Foundation Supporting the Petition for a Writ of Certiorari (Nov. 08, 2004)
. 2004 WL 2569688 (Appellate Petition, Motion and Filing) Brief of Amicus Curiae SESAC, Inc. in Support of Petitioners' Petition for a Writ of Certiorari (Nov. 08, 2004)


. 2004 WL 2569689 (Appellate Petition, Motion and Filing) Brief Of Amici Curiae Office Of The Commissioner Of Baseball, National Basketball Association, American Society Of Media Photographers, Inc., Professional Photographers Of America, Inc., Directors Guild Of America, Writers Guild Of America, west, Inc ., Screen Actors Guild, Association Of American Publishers, Inc., Association Of American University Presses, Producers Guild Of America, Inc., Graphic Artists Guild, Entertainment Software Association, Video Software Dealers Association, Interactiv (Nov. 08, 2004)
. 2004 WL 2569690 (Appellate Petition, Motion and Filing) Brief for the Washington Legal Foundation as Amicus Curiae in Support of Petitioners (Nov. 08, 2004)
. 2004 WL 2569691 (Appellate Petition, Motion and Filing) Brief by Amici Curiae Law Professors in Support of Issuance of Writ of Certiorari (Nov. 08, 2004)
. 2004 WL 2569692 (Appellate Petition, Motion and Filing) Brief in Opposition (Nov. 08, 2004)
. 2004 WL 2289200 (Appellate Petition, Motion and Filing) Petition for a Writ of Certiorari (Oct. 08, 2004)
END OF DOCUMENT
Posted by (3 comments )
Link Flag
P2Ps 100% legal, but using them...
There are many P2Ps out there, and a few of the sites that support them or list files, or whatever, are claiming that these files are 100% legal to upload or download, and they point to this article to prove it. Anyone who follows the link and understands what is said in the article will know that the TOOL may be 100% legal, but there are still illegal USES of the tool which are punishable.

So, for all those folks who don't understand, here is an analogy. It's legal to have a VCR, and it's legal to have a VHS Tape, but it's not legal to go rent Shrek on VHS and copy it, take back the original a couple hours later, and have your own VHS copy to enjoy at your leasure. Even high-speed Dubbing VCRs are legal, LOL. :)

If I had any income at all, I would love to pay a monthly fee to be able to download, or upload, whatever I want, without having to worry about legal issues. Just have the service pay into a big fund from which money is distributed to those poor foolish companies who are apparently suffering so much from the effects of file-swapping, and leave people alone.

And no, having access to a computer and having an email account is not an indication of wealth, or even minimum income. If it did, I wouldn't be typing this right now. LOL :)

Happy Holidays, and be of good cheer, and all that. :)

Krepta.
Posted by Krepta3000 (2 comments )
Reply Link Flag
100 % Legal Downloads... Not quite!
Alert: We must all become more diligent in reading all the small print in the terms and conditions of all these sites who claim 100% Legal Downloads... not quite true! If if were, why would they feel the need to bury the following paragraph in their "terms":
"You agree not to: download or upload any material that:(c)... infringes any third party's intellectual property; or (d)... and You agree that you will not transmit or access any data that infringes any patent, trademark, trade secret, copyright or other proprietary rights of any party and agree to indemnify and hold harmless EZMP3s.com from their claims if you do."
In a nutshell, this means that their software is 100% legal, and downloading their software is 100% legal, BUT using the software to download or upload any copyrighted material is STILL ILLEGAL, and punishable by fines or imprisonment or both! If you read all the articles, the music industry is now considering going after the individual users of the software, you & me - since they now may not be able to go after the "Big Guy" sites that provide the means and encourage the copyright infringement. We are reaoly being duped into thinking that we are now paying for the right to download the music. WRONG AGAIN! In the fine print it also states that we are paying for the support of the product(software), & the upkeep of the website. So, in essence, it's legal to download the software, & pay for its support, BUT ILLEGAL TO USE IT! AND YOU AGREE TO INDEMNIFY AND HOLD HARMLESS ("THE WEBSITE".COM)FROM ANY CLAIMS (FINANCIAL & OTHERWISE)IF YOU DO (DOWNLOAD ANY COPYRIGHTED MATERIALS). We'll stand alone, and be 100% accountable for our own actions!
Posted by (1 comment )
Reply Link Flag
Hold them all accountable then
I have read time and time again that the file sharing companies should be held responsible for the files that the users are sharing. I am a firm believer that the law is the law and should apply to everyone. That being the case then we must start holding companie such as Sony responsible for any murders that are caught on video machines that they produced. How many porn movies are out there involving children? Lets take the manufacturing company that made the medium the film is recorded on to court.

To me it is insane to hold a company responsible for a crime that someone commits with their product when that product isn't intended for such abuse.

Just for the record...I am totally agains copyright infringement and will not be involved in file sharing. But don't kill the company that isn't responsible for an individuale crimes.
Posted by (1 comment )
Reply Link Flag
File Sharing Vs. Corporate Greed
The Recording industry is in a tizzy over the fact that there are these evil people out there "stealing" their copyrighted "hard earned" music and/or movies/videos. So let's teach them all a lesson. Let's either put them all in jail, or sue them for millions......

Having said that, if they do decide to go after the "file sharing thieves", it is only appropriate that the Huge Conglomerates who give these "thieves" the ability to perform these dastardly deeds be jailed and/or sued as well.

The Companies that produce the Computers - I.B.M., HP, Sony, Dell, Toshiba, Apple, Mac, etc.

The Audio Video guys - Scotch & 3M (Memorex), TDK, Sony, Panasonic, etc.

The Software guys - Napster, Kaza, Grokster, and the other 25 or 30 producers of "file shareware".

All the Corporations are happy because they are making BILLIONS, the poor entertainment world only had more than 3.6 TRILLION (latest estimates for 2004), spent last year alone on a global basis for people of the world to entertain themselves. This figure does not include attendance at concerts of all the different Genres and various artists from all over the world.

The only people crying about the tremendous loss of sales, due to this file sharing theft is of the Greedy American Recording/Movie Industry. The same industry in other nations, is glad to have their work recognized. And when it comes right down to it, if the product were made available to the general public at reasonable prices, maybe the theft would decrease in intensity, and numbers.

Try going to a concert today  Barbara Streisand - $5,000.00 for a seat, Celene Dione - $4,500 for a seat. People do not pay this for an Audience with the Pope, a visit with The Queen Of England, The President Of The United States, ( well not always ), or other World Dignitaries, just who the HE_ _ do these people think they are  OH thats right, they are members in good standing of the entertainment industry is is loosing MILLIONS in sales.

LETS GET A GRIP ! In the immortal words of Yogi Berra   If it aint broke, dont fix it! Everybodys making tons of cash  leave the file sharing people alone, they are not hurting anyone, business is good all around, and when it comes down to cases, people hear music and they want to go see the performer LIVE !

LIVE & LET LIVE !
Posted by (1 comment )
Reply Link Flag
But I like CDs etc in my car !!
What will be left to swap after the top-level artists, record companies, and retailers stumble and fall - or go into some other endeavor?

Old pressings of Perry Como, Lawrence Welk, and Patsy Cline?

Yeah, I could go hear locals in some local bar, and maybe a Willie Nelson will emerge occasionally.

No, I want fresh top material and I'll pay them for it, be it singles on-line, or the classic disk format.

Maybe you spend too much of your productive years sampling music, eh?
Posted by ownersedge (1 comment )
Link Flag
Re: File Sharing vs. Corporate Greed
While perhaps overly simplistic, the comment "And when it comes right down to it, if the product were made available to the general public at reasonable prices, maybe the theft would decrease in intensity, and numbers" sort of goes right to the heart of the matter. It's little more than sheer greed that pegs the price of a newly-released CD at $15+, when the actual production cost is a fraction of a dollar. And of that $15+ sale price, how much goes to the artist who actually created and performed the material? Again, just a small fraction. The RIAA and individual music companies really need to be put in their place - I'd love nothing more than to see everyone boycott them over the next month, when their sales are likely to be at their peak for the year (wishful thinking, of course). But how would CD sales surge, and pirating decrease, if the "normal" price of a new CD was reasonable - say between $5 and $8 for a single disc? And those greedy record companies would still be making a heck of a profit.
Posted by trulyevil (2 comments )
Link Flag
confused
I am really lost now from reading all of the news about downloading.Is it legal or not some body please let me know p2p legal or not
john
Posted by (1 comment )
Reply Link Flag
Is P2P LEGAL or not?
I just want to knwo why so many websites say there websites are 100% legal to download when they are not? Why hold the individual responsible for downloading and just not take the software off the market, if they are not legal for downloading.
Posted by (2 comments )
Link Flag
yeah its legal.
P2P is legal and should to be legal for years to come. Its just the users choice to download or share copyrighted material. Which makes this choice illegal. So its legal to download off these networks as long its not copyrighted.
Posted by NEND (11 comments )
Link Flag
Can they (music industry) sue Kazaa users?
Can someone tell me whether the music industry is legally entitled to file suit against Kazaa users for downloading the shared files? Does anyone know about any actions initiated on this matter?
Posted by (1 comment )
Reply Link Flag
Please let me know
If this is true, please let me know too.
Posted by (2 comments )
Link Flag
copy wright
if you read the judges statment properly you will
notice he does not mention that joe public is free from prosocution,which means that joe public will take the fall for the firm who has supplied him with the software. also while joe public takes the fall the firm who supplyed the sofware is making millions. I received a letter of the firm i visited for some music but decided not to bother, there letter said if i was worried
about it being illigal then read what a judge said about it but all it said after reading it was that the firm supplying the soft ware was exempt from prossacution as long as they did not know who was using it.
Posted by (1 comment )
Reply Link Flag
They do have a point.
Since they only distribute the software and dont have a main server so users can download off them, that leaves them not liable for any copyright infringement.

Its like a gun shop selling someone a gun. The person buying may have a good background record but who knows what there going to do with that gun. If they do something that violates the law the gun shop isnt liable for the persons actions. I think we all know whose liable for whose actions.

In my opintion P2P should continue. Its not the fault of companies that make it possible to share things over these networks. The blame should lay where its been for years - The user. Media companies just have to learn to adapt. In the past there was a such thing as recordable tapes. These in deed got recorded also from copyrighted material. But if one thinks about it there was no way or network to mass dristribute it.

Even if there was no P2P network people will still find ways to share copyrighted material via email, private networks, etc.

What shall the software and multimedia makers do? Well its time to adapt. The old ways of selling material isnt working and cant work anymore efficently. These companies should look into new ways in selling their product. Lower prices and make revenue a different way is probally the best way. I believe the software industry would be the easiest for adaptation. With online registration and activation of software. The media industry will just have to look into new ways. I dont know what to say. Its still going to happen no matter who gets sued and what these companies are sueing for are for all the wrong reasons.
Posted by NEND (11 comments )
Reply Link Flag
i dont think so
there has never been a federal judgement
that has made file sharing legal. Los Angeles
isn't even the where the 9th circut is and any
federal judgement would have to be made in San Francisco. On the contrary a judgement was made
in the 6th circut in Nashville and the outcome
was the opposite, artist / publishers need to
be compensated for streaming ie. Performance
exclusive rights; Anyone whose music is on this filesharing site has everyright to issue a cease and desist letter; and if it isn't responded to you can file suit for copyright infringement in
FEDERAL (not state) court.
Posted by (1 comment )
Reply Link Flag
But There's A Catch...
About two months ago, I saw that I'd have the ability to LEGALLY download movies onto my computer using a cable modem. Originally, it sounded like a great idea.

I downloaded and paid for the software to download movies. Considering I have a cable modem, I thought that the download time would be quick. WRONG!

With a cable modem, my download speed is around 3MB per second (timed by an internet speed check). Using the program to download a movie, it connected at 6K. YES! 6K!!! And the download time was 9 hours!?!?! The download completed, after seven and a half hours.

Now here's what I found out.
A friend of mine was also doing the same thing, downloading movies legally, paying for the sites, etc. Then his cable modem locked up, and it wouldn't connect more than 3K. He contacted the cable company and it seems as though they had an apparent "block" on certain sites and/or downloading files over a certain size. He had to ask cable to "unblock" his modem, which they did, and he hasn't had a problem since. I'm wondering if this is a consistent problem showing up.

If internet based companies like "ezmp3s.com" or "downloadshield.com" are giving people the opportunities to pay for the software and download files legally, why are the cable companies having such a difficulty with it?

I mean, if it's legal, it should work. Right?
Posted by (2 comments )
Reply Link Flag
Another Option
Good point.

I've been a subscriber to Rhapsody thru Optimum Online for the past few years. One of the things I had been hoping for is to see newer music there. But, the "newest" music that shows up is usually around 3-4 months old, or shows up "unavailable for listening or downloading". However it may contain a lot of older pressings like what you're looking for.

Of course, you'd have to download the software, register, etc. Then, you'd have to pay for each track that you want to burn (I think it's $.99 for new tracks and $.69 for older tracks). Plus, you can set up a playlist to listen online as well. And I can guarantee you, that the songs are in CD-quality sound.

Hope this helps.
Posted by (2 comments )
Reply Link Flag
A different POV...
I'm going to have to agree with the record and movie production companies on this. Think about it...what if you were a writer and instead of getting profits from every book distributed, you lose profits because someone has been making copies of it and is out giving it away for free. I'm sure anyone in this situation would be angry, wealthy or not. Most of all we should all remember that stealing is wrong, be it walking into a store, or onto someone's property and taking something, or downloading free copywrited content off the internet.
Posted by dfire351 (1 comment )
Reply Link Flag
But think about this
I agree
BUT as a prominent user of PAID FOR downloaded music I find the music industry's reaction to the issue has only exacerbated the problem.
I have paid for and downloaded several hundred titles to my PC.
I am due to upgrade my PC but I can't take those tracks I paid for to my new PC... $$$ wasted...
My only solution is to work around the encryption and make (technically) illegal copies that I can take with me.
I paid the artist their royalties - and I am sure the record comanies got their cut too...
I feel it is important to "toe the line", otherwise record companies will not be able to support new talent. Where will our "variety" in music go then?
Also I think that many people focus on the millions earnt by the big artists and forget about those who are struggling to get by...
But rather than encryption (which is easily worked around) and over-paranoid behavior, the music industry would best try an approach that limits minors from accessing file-sharing software similar to the restrictions that are already in place to limit access to porn sites.
If you can't provide a credit card - you aren't old enough to make the appropriate choices - no access to the software.
Mull it over...
Posted by Ozzzzz (6 comments )
Link Flag
Brainwashed
You must be brain dead and believe all the crap you see on Tv the only losers here are us the consumers forced to pay and play their game...
Posted by akita96th (144 comments )
Link Flag
my opinion about the Judgement
After the judgement, these tools are legal but persons use the tools wrongly to share copyrighted materials.

After that,In order to reduce illegal file sharing.Here are some method to reduce the share,however, it is impossible to reduce to zero .

The copyright holders should
1. Set different permissions for different kind of consumers around the world. The holders can use different price tag to sell their products.

2. Make a special lock on copyrighted files, consumer who downloads it from these File-swapping tools have to pay coins to get a key to unlock the files.

3. Arrange some events for consumers to look how their artists work with their album, After that the problem will deduced tend to zero.
Posted by polarhei (1 comment )
Reply Link Flag
get a clue
the record co just need to make a deal with share co or they will lose in the end sometime things get so big u cant turn back this is one of those things i think the courts should make it were the record co get paid a resonable amount by the share co then every bodys happy but what going to happen the record co are going to lock down an not give a inch an then when it does not go there way in the big court they will lose big money thats why i say get a clue get together with the share co an make a deal...
Posted by lovemonster37 (1 comment )
Reply Link Flag
History repeating itself
I am amused by the discussion about this story and the music industry in particular.
The music industry finds itself in the same situation that the movie industry found itself in during the early 1980s. A piece of technology came along and threatened their sales and their industry. Do buggy whips and automobiles sound familiar to anyone? The introduction of affordable VCRs and tapes drew the same reaction from the movie industry and later the affordability of satellites drew a reaction from HBO and Showtime as has in the music industry. The key for the music industry is to compete with the technology or encrypt their property or die. It really is that simple. Today the big bad music industry cant sue a company for providing a software program that allows a person to conduct both legal and illegal downloading. Look at a car manufacture that sells 100,000 cars in the US. They can be assured that during that same year a percentage will be used illegally, i.e. drunk driving, selling illegal drugs, robbing a bank or store of some kind. But who? There is no way to know and therefore no way to hold the seller of the car liable. The companies that provide the software that enables people to share files are not conducting an illegal act and therefore cannot be held liable. The Judge has it right  these companies that provide file-sharing software can close up shop right this minute and the legal and illegal downloads will continue. But here is my question to someone who is more intelligent then I am  I can go to a public library and check out a copyrighted book. I pay nothing or little for that right and I keep it for a time using up the intellectual property inside that book. How is this different then file sharing? As long as I am not making money on the downloaded file am I not simply borrowing your song? Further if I listen to a song on a radio am I still not consuming the intellectual copyrighted material? How is this legal but file sharing is not. I have a message to the music industry - develop technology like the satellite programmers did and block content or your industry will die. You can sue children for downloading your copyrighted song but the public will get tired of this fast and ultimately you may find plenty of artists with songs and nowhere to sell them.
Posted by gearjam (1 comment )
Reply Link Flag
Finally... an intelligent argument...
Bravo Robert
I agree with everything you say - except for 1 point.
Encryption is not the (only) key...
I ONLY download PURCHASED music, BUT I am constantly burning different compilations to listen to in my car or elsewhere.
The music that I download IS protected by DRM. The only drawback is that (for many titles) I am limited by the number of times I can copy that title.
I believe that, once I have legally paid for a title, I have the right to listen to it wherever and whenever I like. The artist got paid. The record company got paid. So why the over-zealous application of DRM.
I have found ways around the problem. Thats not to say I am acting illegally. I refuse to "share" my titles. I don't give or sell my tracks to anyone.
But the application of DRM only acts to frusrate those whose intention was to act legally in the first place.
There are many ways to get around even the most stringent encryption - just visit slysoft.com for an example.
Their software, like that of the peer-to-peer developers CAN be used illegally if the user has the intention or the will.
OR I can mod my X-Box, copy the music to it (the X-Box makes a duplicate WMA file minus the DRM controls) then FTP the files back to my PC - presto.
Like I say - encryption is only a part of the solution (and easily worked around if you have the time and the will).
I seems to me that by far the most prominent users of P2P sharing are those under the age of 18.
Why not make it as difficult for them to join such networks as it is to join a commercial porn site? You need a credit card - even if nothing is charged - just to verify that you are adult enough to understand the implications.
Just something to think about.
Thanks for your great post. I wish more ppl had the well rounded view that you have expressed.
Posted by Ozzzzz (6 comments )
Link Flag
somethings got to give
I dont have much sympathy for the industry, as an average family with 4 kids in today economy who can always afford the movies and cd's, It rediculius how much money entertainers make, 5,6,8 million a movie? come on. somethings got to give. the people Who deserve more money dont get get it nurses, firemen, police teachers etc.(I'M a nurse) and we work hard for that money, I used to work 12 Hour in a ER without breaks sometimes B/C we were so busy!
Posted by MamaBelladonna (1 comment )
Reply Link Flag
Sitting on the fence
I am in 2 minds about the current file sharing debate.
I have been very conscious about NOT using peer to peer programs like LimeWire, and have always PURCHASED my music on-line (and advocated the same to my kids - "if it is free, its not legal")... BUT
I have found this process very unfulfulling.
I have copied all of my legally purchased CDs to my hard drive so that I can make my own compilations - it doesn't seem to matter what CD I own, there are always a few songs (at least) that I don't enjoy, so why not make compilations of those that I do enjoy... right?
But those in the "music industry" who are so over-zealous about copy protection are shooting themselves in the foot.
If I purchase music on-line, I am limited to only burning that music (say) 3 times... then it is blocked...
Even CDs nowadays are turning up with so called "copy protection".
I have PAID for my right to listen to this music. The artist AND the record companies have received their royalties.
I am NOT sharing my music with others - but when I am driving in my car, I don't want to spend time (and risk lives) constantly swapping disks in and out of my CD player...
And who are they kidding anyway... as quickly as they can invent a new method of "copy protection", someone can invent a way to circumvent it... don't take my word for it, just visit someone like slysoft.com and see.
I have had to resort to using software like that written by SlySoft in order to do what I should be reasonably allowed to do with my legally purchased music.
Talk about paranoia...
If the music (and movie) industry really wants to reduce the amount of file-sharing of copyright material that is going on they are going to really need to re-think how they are currently approaching the issue.
Also, with producers of software that allow file-sharing now "in the clear", the onus is now upon US (the computer users) to ensure our kids aren't downloading anything illegal... sounds simple enough - except that I have to pay for software like Spector Pro and Net Nanny to ensure that this doesn't happen, and then spend countless hours monitoring my kids access to the Net...
I have 4 computers in my household. Thats 4 x Spector Pro (see www.software4parents.com) and 4 x NetNanny to have a hope in hell...
I have DONE all of that. It has cost me $$$ PLUS endless hours of monitoring... and kids being kids always seem to find a way to circumvent this. Now they just share music through the download facilities built-in to Windows Messenger (or MSN Messenger)...
It seems to me that the problem is self-induced, and that the music industry itself needs to accept its share of the blame.
Over-inflated salaries for (top) performers, actors, executives and games developers means that the final product is too expensive for the average Joe...
If you can't make a new movie without a budget of $50M+ then you obviously have a problem. If you can't make a new game for x-box or PS2 for less than $10M then you obviously have a problem...
I recently found that my kids had installed LimeWire on our household computers. When I searched the hard drives, I found over 1,200 ILLEGALLY downloaded tracks that I subsequently had to delete (much to my kids dismay - the software said it was legal - and who are kids to read and understand the "fine print")!
But is it my fault?
I wonder....
Posted by Ozzzzz (6 comments )
Reply Link Flag
I "Balance" Things
If I "illegaly download" a file typically I'll buy something legally from the same artist. Just my way of not totally taking from the artist.
Posted by hahne59 (33 comments )
Reply Link Flag
Re: I "Balance Things"
I think that "balancing" is a wonderful idea. This whole situation, and whether it's ethically right (not necessarily "legally right"), is very hazy to me. Some countries have "legalized" prostitution and cocaine/heroine use, etc. I doesn't mean it's THE RIGHT THING TO DO. Until I got personal convictions about downloading artists' music, I used Morpheus, then Kaaza. But like many others, my copying goes way back to my childhood, when I'd turn on my favorite radio stations and record the songs onto cassette, especially after calling and requesting songs (which greatly helps the morale of a child not treated well). However, I never tried to sell copies. Even while using Kaaza, my only purpose for the songs I downloaded was to help me get through chores or to drive (especially!) out to Memphis every other week (I live in Jacksonville, AR and was going to John Casablancas in Memphis), not to mention that suicidal daily commute to work. Even with that, I STILL deleted over 1000 songs AND the Kaaza software during a 3 Day revival at a local church (not first time I'd deleted a collection due to a conscience conflict). A CD with very comforting or captivating songs played in my car makes a world of difference for me. I have driving anxiety (probably because of all the blasted stupidity on the road from other drivers!), and a CD really helps. Still, I'm not sure if it's right or not. I just want to enjoy songs for myself, or to use mp3's of artists I KNOW, not off-artists with completely unfamiliar songs, to embellish a picture show! Am I doing wrong with that, even if I make copies of the picture shows to GIVE, NOT SELL, to people the CD/DVD album concerns (copying slideshow of my sister's wedding pictures for her; fan club activities pics to others within the club, etc)? All those legal statements that make a 10 page term paper look like a paragraph don't clarify whether or not I can integrate an mp3 of Star Wars soundtrack songs with my festival and activities picture shows that only I and maybe others in our local club may have merely for reminiscing 20 years ago.
Posted by Lavenderrose73 (1 comment )
Link Flag
Music Download Services that you pay for
Is it legal if you pay a monthly fee for downloading music for services like Yahoo Music Engine, Napster, etc?
Posted by christinej10 (1 comment )
Reply Link Flag
Music Download Services you can pay for?
I have only know of one paying service that you could join and pay for, however it was $9.95 the first three months then $14.95 every month there after until you decided that the service was not for what you thought it was.

What types of service are out there that are available and that they don't cost that much each month and also .99c for each song that you download off the net. If they would be able to get a program that was affordable and the songs were only like .49c to .59c per song per download then it might not be so bad but when they are .99c plus any applicable sales taxes that may apply, that is nothing but absorbant. I am sure speaking for myself that people would not mind paying a reasonable price, but not a membership and also 14.95 per month as well.

emt2
Posted by emt2 (1 comment )
Link Flag
they should not be sued
i think that the record people should back off i they dont fiuind procted music in there system they should not be sued because its legal as long as you dont download procted music or others i even if they not with the record compannies they dont have to psy for legal site because as long as you pay for it its legal and it procteds you from law suits sterm cast did not do nothing the users can sue the record companyes for un law ful because the did not download procted files lets put it this way if they did download procted music its illegal if they use a p2p network to download music and all and the music is not procted is legal because its no tprocted i dont no whoes stupis but if it is procted files its illeagl if not if the files are not procted they can not be sued because they are no tprocted files
Posted by 09jhill123 (2 comments )
Reply Link Flag
Down loaded music
I would like to say if downloaded music is illegal then so is VCR recordings because your taping newly released movies. This also goes for DVD recording machines. If your going to say downloading music is illegal than go after these other company also for their VCR and DVD recording machines. Its not fair to say one or the other is illegal especially when Billions of people been purchasing DVD and VCR recorders this effects the purchasing of movies also. Some people just wait for the movie to come on cable before purchasing the movie this way they can just record it with their VCR or DVD recorder.
Posted by Byrdie63 (1 comment )
Reply Link Flag
 

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