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Ernest Miller Ernest Miller pursues research and writing on cyberlaw, intellectual property, and First Amendment issues. Mr. Miller attended the U.S. Naval Academy before attending Yale Law School, where he was president and co-founder of the Law and Technology Society, and founded the technology law and policy news site LawMeme. He is a fellow of the Information Society Project at Yale Law School. Ernest Miller's blog postings can also be found @
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« The Obsessively Annotated Introduction to the INDUCE Act | Main | PIRATE Act + INDUCE Act = ??? »

June 25, 2004

EFF's Mock INDUCE Act Lawsuit

Posted by Ernest Miller

Brilliantly satirizing (is it really satire if its true?) how easily Hollywood (or any copyright holder) could bring a lawsuit under the proposed INDUCE Act, EFF attorneys have drafted a mock lawsuit complaint against Apple (for making the iPod), C|Net (for reviewing the iPod), and Toshiba (for supplying hard drives for iPods).

Read the press release: Will the Inducing Infringement Act Kill the iPod?.
Read the 9-page complaint: Fake Apple Complaint [PDF].
My take on the INDUCE Act here: The Obsessively Annotated Introduction to the INDUCE Act.

The complaint is rock solid and shows how easy it would be for a plaintiff to force an extended court battle:

Because the Induce Act defines "intent" as being "determined by a reasonable person taking into account all relevant facts," it's unlikely that a technology company like Apple would be able to easily dismiss any lawsuit brought against it. It would face the prospect of an expensive trial, with all the attendant legal fees and negative publicity. One such company, SonicBlue, recently fought against a group of copyright holders in court over its ReplayTV and spent close to $1,000,000 per month in legal fees alone. In essence, this means that copyright owners can use the "inducement" theory to inflict an arbitrarily large penalty on any tech company that builds a device they don't like. That's not a pleasant possibility for an innovator to face as he or she tries to launch a new product.
Read on...

The complaint reads like an RIAA wet dream:

8. Before the introduction of portable digital music players, the value of the music files derived from infringing sources was limited by the fact that computer users generally had to be sitting at their computers in order to play and enjoy them. Defendant Apple knew this and hence made the calculated decision to intentionally induce and enhance the attractiveness of infringement by providing these infringers with a device to enhance the rewards of their illegal labors – the iPod.

9. As detailed further in Professor Expert’s report, the iPod would have been much less attractive to consumers had it been incompatible with the music files downloaded from P2P networks and had it not allowed consumer-to-consumer transfers. Professor Expert’s report also makes it clear that the iPod, in turn, enhanced the attractiveness of P2P networks by offering iPod owners expansive storage capability and lightning- fast data transfer, allowing them to listen to any number of infringing music files when away from the computer.

10. Surveys conducted by Professor Expert establish that a majority of iPod owners have used at least some significant portion of their iPods to store and play infringing music files, whether derived from P2P networks or promiscuous hand-to-hand copying. Upon information and belief, Apple was certainly aware of this fact from its own internal marketing research.

Apple’s “Rip, Mix, Burn” Campaign Demonstrates Its Intent To Induce Infringement

11. Apple has directly encouraged music piracy through its “Rip, Mix, and Burn” campaign used to sell both its Macintosh computers and iPod player. There can be no better evidence of inducing infringement than to literally spell out the steps to one’s customers.[emphasis in original]

Read the whole thing. Laugh. Then cry.

Comments (8) + TrackBacks (0) | Category: INDUCE Act


COMMENTS

1. Brad Hutchings on June 25, 2004 01:21 AM writes...

Read the whole thing. Laugh. Then cry.

Then think. As noted in a recent piece by Rob Kasumic, the RIAA has endorsed the iPod and Apple's FairPlay DRM model by licensing music for sale by the iTMS.

Specifically, they have done that with full knowledge of Apple's prior Rip/Mix/Burn campaign, with realization that it would cost the debt of a small island nation to fill an iPod up with music purchased from iTMS, and knowing that in many cases, the thing iTunes allows a user to do with music may very well exceed what the user has a legal right to do. They recognize, however, that this is a better situation than undettered P2P, and promotes better respect for their rights.

The most important point of Kasumic's essay is that copyright owners don't seek to be anal about stopping every violation of their rights, but seek to keep the level of infringement acceptable (or negligable/manageable/palatable/etc.).

Also, the EFF mock complaint is factually bogus on at least one count. Apple's iTMS top customer had spent $29, 500 as of the 1 year anniversary. So item 13 in the complaint that spending $10K is "inconceivable" is in fact false. Item 12 is also suspect. Using the new lossless AAC codec, you could expect to fit 90 - 100 full length CDs onto a 40 GB iPod. Admittedly, I was an early adopter of CDs, but I have 200 sitting in a box that are give aways for anyone who ventures in. I would guess that the elite rich people who can afford an iPod have disproportionately large (um, this is sounding obscene) CD collections.

Maybe a good old fashioned die-in would be a better rhetorical device for opposing the INDUCE Act. Or digging up the House Bankiing Scandal to hound Sen. Boxer. That would be slighly more entertaining.

Permalink to Comment

2. Ernest Miller on June 25, 2004 02:09 AM writes...

Brad, this mock lawsuit was only meant to show how the INDUCE Act could be used, not to show that Hollywood would indeed sue Apple. The point was to show what Hollywood could do with the INDUCE Act if they chose not to license to Apple. A small company coming to market with an iPod-like device could easily be put out of business before they get a chance with this law.

Yes, Hollywood isn't 100% anal about piracy (they obviously realize there will always be some, no matter how draconian the law is), but why should the level of acceptable infringement be determined by Hollywood? Shouldn't the rest of society have a say in how much innovators should be burdened because of Hollywood's fears?

With regard to your quibbles about the bried, give me a break. It wasn't meant to be a fully drafted brief. In any case, it wouldn't violate any laws to have a mistake like that in a brief - we have rather lose claim construction guidelines. Additionally, briefs are meant to be advocacy, not memos that weigh both sides of the issue equally. At worst, EFF would only be asked to amend the brief and say something along the lines that very few people would spend that amount of money and Apple knew it. In any case, one person, or even a handful of people spending that much when the vast majority don't hardly invalidates the argument. If it did, great! Because you'll never be able to prove secondary liability for infringement because even the old Napster would have been able to come up with a handful of users who never used Napster for anything but legal uses.

As for your second pont about the amount of music you can get on an iPod, sheesh. Again, I would wager that the vast majority of users don't store lossless codecs at the present time. Maybe they will in the future, but then again, the hard drive space is growing rapidly too.

Permalink to Comment

3. Brad Hutchings on June 25, 2004 02:57 AM writes...

So you're saying we should take this brief as we take Stallman's stupid preachy distopian story about what society will be like if information doesn't want to be free? Meaning as stupid, preachy, over-the-top hyperbolic pseudo-hypothetical? And here I thought this was part of a debate over the INDUCE Act. Excuse me for not cheering with all the other fanboys. If 20 people spent 3 minutes looking at this brief, we could fisk it as easily as you did Hatch's speech spending whatever number of hours you did. Good for the goose, good for the gander.

Here's what I am starting to love about the INDUCE Act. The hysterical objections will be testable, as it will pass. Instead of role-playing about what suits they think would likely be brought, EFF et al ought to be role-playing about how they will defend gross infringers, I mean, innovators.

Permalink to Comment

4. Brad Hutchings on June 25, 2004 03:03 AM writes...

Point 8 is also incorrect. CD Burners were in vogue before the iPod. Are you sure EFF didn't hiire SCO's attorneys to draft this?

Permalink to Comment

5. Ernest Miller on June 25, 2004 05:19 AM writes...

Brad,

I'm terribly sorry that you don't seem to understand the concept of a cautionary example of the breadth of the law. Sure, Apple won't actually be sued, but companies like Apple easily could.

But you're right, this is probably overblown hyperbole. Hollywood would never, ever abuse the law by claiming a major consumer electronics company fully intended people to infringe copyright and destroy Hollywood (Sony v. Universal). Hollywood would never, ever abuse the law by claiming a digital, portable music player, very much like the iPod should be illegal (RIAA v. Diamond). Hollywood would never, ever launch a major lawsuit against the maker of a DVR with a 30-sec skip button and force the manufacturer to close its doors simply through legal bills (MPAA v. Replay). And, of course, we all know that broadly written laws will never, ever be abused by anyone (Lexmark, Garage Door Opener Case).

Really, I think it is wonderful that you keep pointing out the flaws in the brief. Presumably, because they are likely to be very similar to the sorts of arguments that the RIAA is likely to use, you will wield your fine legal mind against the ideas when the RIAA uses them, if the law ever passes.

Permalink to Comment

6. seaan on June 25, 2004 10:51 PM writes...

As someone who makes their living in areas closely related to DRM (I worked for a company when they competed for the DIVX DVD design in the mid-90's), I appreciate some of Brad's earlier comments about the potential value of DRM. But here he seems to be stuck in some kind of naïve utopia.

Sure, the media companies don't want to eliminate the sale of their good to consumers. But they do want to control it, or failing that to delay unfavorable trends (like music without physical media). History is replete in the last century with examples of how incumbent copyright holders have tried to stifle technology that later benefited them greatly, most recently the VCR. The difference is that since 1992 or so (Digital-Home-Recording-Act), the copyright holders have gotten enough influence in the government to actually get their wishes granted.

If something came out like the VCR came out today (even before the INDUCE act), it is very unlikely to succeed unless current copyright holders have no objections – for example: Replay TV being sued into the Stone Age on dubious legal premises. The products the media companies have wanted are almost universally failures- for example: DIVX DVD and Sony hard-drive music players. Yes the market will eventually correct things, but when congress interferes it can take a very long time. Let me know when high quality digital recorders are finally available for non-commercial use (killed-off, or greatly delayed by the 1992 DHRA - you will note that even today's MP3 players avoid the ability to directly record audio because of the legal quagmire congress provided).

The attempt pass INDUCE is a continuation of the trend where congress is willing to handout great power to the media companies in the name of preventing piracy. The EFF brief clearly shows how media companies can use INDUCE to even more easily pick-and-choose which technologies will be brought to market. Are you comfortable with the idea that some big media companies (with whom you might even compete against in different divisions) could casually file a suit that could eliminate your product from the market (unless you go to great and costly legal measures to defend yourself)?

By the way, the other examples in this trend are pretty clear: allowing extremely large damages in non-commercial infringing suits (settle for $3000 regardless of innocence, or we take you to court where you might risk being liable for millions of dollars); DMCA take down notices that shortcut normal court procedures, and mandated technology that limits consumer choices (digital recording, DVD video output, and seemingly FCC regulations for the broadcast flag). Why should we as a society grant copyright holders the ability to bypass normal legal procedures? The apparent answer is gullible (and/or bribable) politicians.

Permalink to Comment

7. cypherpunk on June 27, 2004 08:16 PM writes...

I want to make a quick comment about the example Seaan uses, that Hollywood tried to stop VCRs and later made a lot of money over them.

It's surprising when companies who spend enormous amounts of money trying to predict the future (i.e. which products will be successful) manage to completely misjudge whether a technological development will be good or bad for them. Of course the future is uncertain and everyone makes mistakes. Nevertheless, on such an important issue, it is interesting and perhaps instructive that Hollywood made such an enormous blunder.

Putting ourselves into Hollywood's shoes at the time, would we have been smarter? Would we have predicted that the VCR would turn into a gold mine, allowing us to extend the lifetime of new releases and recycle old ones? Were people predicting that, but Hollywood stubbornly refused to listen? I don't know. I don't see such reasoning in the court case. My guess is that the answer was no, that no one seriously argued that Hollywood should support VCRs because they would make enormous profits off of them. No one was that visionary. No one predicted the future in that much detail.

As a reminder of how hard the future can be to predict, let's imagine that Sony had gone the other way, and that VCRs had to be redesigned somehow so that they could not be used for home recording. Now, who here can predict the alternative future, given that outcome? What would have happened? Would there have been no home market for movies? Would Hollywood have gone bankrupt without the infusion of money they received in our world?

Or is it possible that in fact there would have been home movie rentals, just like today, but using some technology different from our VCRs? Is it possible that Hollywood would have made just as much money in that world as in ours? Is it possible that Hollywood would have made even more money, somehow?

I don't see how we can rule that out. Just as no one predicted the enormity of the home VCR market, just as no one predicted the vastness of the Internet, I don't think anyone can predict what would have happened if Sony had gone in Hollywood's favor. The future is far too uncertain.

So I would suggest that this example really doesn't show what people think it does. It's possible that Hollywood was entirely rational in opposing VCRs. It's possible that they would have made even more money if they had won the case. It's possible that Hollywood actually knew its own business interests better than outsiders.

And most especially I think it's an enormous mistake to draw the conclusion that whenever Hollywood opposes a new technology, it will turn out to be a mistake for them. It's not even clear that this was the case in Sony, because we can't say what would have happened otherwise. And it certainly isn't something that you can elevate to a general principle, with any hope of success.

Permalink to Comment

8. seaan on June 28, 2004 11:19 PM writes...

As often happens, I agree with Cypherpunk's comments in general theory, but disagree in practice. Perhaps I'm being overly influenced by Jessica Litman's Digital Copyright, but in that book she identified quite a few times where incumbent industries predicted new technology would be the death of their industry (Piano Rolls, Movies, Radio, Cable TV, and the VCR just from memory). In most cases, often after years of administrative gridlock, the incumbent's requests were shot down. Later the new technology proved to be very beneficial to the old technology.

OK, that is an over-simplified view. In fact some of the times congress did take action that might have "saved" the incumbents - most notably when they set terms for radio broadcasting and cover-songs. It may also be true that there are some counter-examples where the new technology really did threaten the industry, and congress rightfully restricted it -- I can't think of any examples of this though.

In short, we have lots of examples where the predicted doom did not come to pass, despite the inaction of congress. Can you show counter-examples? I'm easy - give an example where either congress did not take an action and it resulted in the destruction of a class of copyright holders; or alternatively where congress did take action against a technological threat that we now perceive would have destroyed a copyright protected industry?

Meanwhile we have lots of counter-examples from the last few years where congress did intervene, and bad things happened. It is hard to measure the actual loss (to either current or prospective copyright holders) but it is real and substantial. To take an example from my previous post, cheap digital recorders are easy to make but are not generally available. Every time my early music group wants to record our own concert, we have to resort to expensive professional level gear - all because some idiotic congressmen back in 1992 decided that people don't produce their own music (resulting the in the SCM limitation put on consumer digital audio recorders). This destroyed a whole class of consumer gear (DAT, etc.) and puts a barrier in the way of garage-bands; all to the benefit of entrenched copyright incumbents.

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