One thing that distinguished the Supreme Court debate Tuesday
morning over peer-to-peer (P2P) networks and copyright infringement
liability was that the justices meted out tough questions for both
sides.
By the end of the one-hour hearing, the tough questions were enough to give
both the entertainment and technology industries serious pause as to which
way the court will rule.
The justices repeatedly peppered MGM attorney Donald Verrilli with questions
about how far Hollywood wanted to move the line on secondary copyright
infringement. Far enough to stifle innovation? Far enough to cause inventors
to quit innovating over fear of lawsuits?
That line of questioning pleased technology advocates who want the
court to uphold the principles laid out in the 1984 Sony Betamax Supreme
Court decision. In that decision, on a close 5-4 vote, the court said if a
technology had substantial non-infringing uses, it was immunized from
lawsuits even if some people use the technology for illegal purposes.
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| Click on graphic to follow P2P’s legal journey. |
But P2P pleasure quickly dissipated when the justices accused them of using stolen copyright materials as “seed capital” to build their businesses.
“There were, in short, questions from the court that would provide both
comfort and discomfort to both sides. And any prediction about the outcome
would be hazardous, indeed,” Jeffrey Knowles, a San Francisco intellectual
property attorney who attended the hearing, said in an e-mail comment.
That said, Knowles then ventured a prediction: “I think this court is
prepared to resolve at least some part of the ongoing debate about the
copyright accountability of peer-to-peer file-sharing services — and in the
process add new insight into the Sony Betamax decision’s application in the
digital era.”
Blair Levin, a senior analyst with Legg Mason, was also e-mailing opinions
after the hearing.
“The Supreme Court justices were dissatisfied with the implications of the
extreme positions each side presented, and we believe they likely will try to
develop a way to send the case back to trial on a narrower theory of
infringement,” Levin wrote.
If they do, it will likely be on the issue of “active inducement.” Under
current copyright law, companies can be held liable for secondary copyright
infringement if they actively encourage users to infringe.
Up to this point, that has not been an issue in MGM vs. Grokster. Both a
district court and the 9th Circuit Court of Appeals ruled in favor of
Grokster based on the Sony Betamax standard established by the Supreme
Court.
But when Verrilli told the court the standard that Hollywood uses when
deciding to pursue lawsuits against different types of technology, he said
it wasn’t the percentage of non-infringing uses, but the business model
being developed by a company.
“That’s an inducement argument,” Justice Antonin Scalia shot back.
“On several occasions, the justices’ questions implied that they might be
able to resolve the case without reaching the issues of Sony’s scope,
perhaps on the grounds of active inducement,” Knowles, who has represented
music interests against P2Ps, wrote. “They noted, however, that this would
not go very far in resolving the next case in which, perhaps, the evidence
of such inducement might be absent.”
Levin said a lower court decision on active inducement “would be a better
result for the content industry than a 9th Circuit ruling, but offers less
protection than they are seeking at the Supreme Court.”
He also noted an active inducement case would represent a “more livable
outcome for both the tech and network companies than the test advocated by
the content industry and the government.”
