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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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« Hackers, Lawyers, Society and the INDUCE Act (IICA) | Main | Felten's INDUCE Act Hearings Blog Party »

July 22, 2004

Copyright Office on INDUCE Act (IICA): It isn't Strong Enough

Posted by Ernest Miller

Today, the Senate Judiciary Committee is holding a hearing concerning the Inducing Infringement of Copyrights Act (IICA, née INDUCE Act) (Protecting Innovation and Art while Preventing Piracy). The first witness is Marybeth Peters, Register of Copyrights, US Copyright Office. As I expected, she has come out as a strong proponent of the INDUCE Act, outdoing even such stalwart proponents of copyright maximalism as the RIAA. Read her 22-page statement and be amazed as she calls for Congress to overturn the Betamax decision: Statement of Marybeth Peters on S. 2560 [PDF].

Both C|Net News (Antipiracy bill gains new ally) and Techdirt (Copyright Office Endorses INDUCE Act) have more.

For my analysis of important parts of the statement, read on...

Overall the statement is wildly unbalanced, lending nary any credit whatsoever to the opposing side's arguments, "There should be no question that such services should be liable for the copyright infringement they encourage and from which they profit." Well, actually, that is one of the main questions, isn't it? Whether services that cannot control their users and have substantial non-infringing uses should be illegal. The Copyright Office apparently doesn't believe that control or substantial non-infringing uses should count for anything.

The introduction to the statement also brings out the old trope that the courts are "confused" when the truth of the matter is that the courts are trying to keep from opening the door to massive abuse of copyright law by the copyright interests. We can agree that P2P infringement is a bad thing, but disagree as to the proper remedy. That is what courts are trying to do. In many ways, they are much less confused than Miss Peters who doesn't see the other side of the argument at all.

History of Secondary Liability

A great deal of the next section of the statement goes into the history of contributory and vicarious liability and stresses the importance of secondary liability doctrine. This is all well and good, but Miss Peters is going to pull a bait and switch that I'll get to later. Of course, secondary liability is an important part of law. No one is questioning that. However, there are very legitimate questions as to how far secondary (and tertiary) liability should extend.

Of course, using easily distinguishable cases to make your argument shows how dangerous vague extension of secondary liability can be:

As another court explained, in finding a supplier of “time-loaded” cassettes liable for infringement facilitated by those cassettes:
Regrettably, in copyright litigation, enforcement efforts seem ineffective. Misappropriation may often needlessly succeed. Thus, liability for contributory infringement is particularly appropriate here. Given the apparent division of labor in the counterfeit recording industry, the actions of contributory infringers make possible the wide dissemination of the infringing works.
As I will explain, a similar phenomenon is occurring in the digital environment, as proprietors of services that use peer-to-peer technology rely on a “division of labor” strategy that enlists millions of consumer to become distributors of infringing copies, thereby attracting more users and advertisers who generate revenue for these companies, but which is designed to leave the proprietor without legal liability. [footnote omitted]
But how similar is the P2P phenomena to the case Miss Peter's cites (A&M Records, Inc. v. General Audio Video Cassettes, Inc., 948 F. Supp. 1449, 1455 n.4 (C.D. Cal. 1996)? Not very, actually. First, that case was argued and prepared essentially pro se, without an attorney. Though that would likely have made little difference in the outcome, it probably would have balanced the case a bit in the opinion. The case was about a manufacturer of "time-loaded" tape cassettes, which are cassettes of specific lengths (instead of standard 45, 60 and 90 minutes, they might be 47:33, 58:10 and 71:30 minutes). Obviously, these are very useful for commercial piracy. But the defendent was not simply charged with selling tapes, he was specifically implicated in the crimes of specific infringers. In one case, the infringer would send the defendent a commercial tape, the defendent would time it, tell the infringer the time, and then the infringer would order hundreds of tapes with that specific length. The defendent also spoke of his knowledge of the purpose of tapes with an employee. Sounds like specific knowledge of specific infringement with a specific customer. A far cry from what is happening with P2P.

Recent P2P Decisions

The next section of statement analyzes secondary liability in the context of recent P2P network decisions, such as in the Napster, Aimster [PDF] and Grokster cases. The conclusion of Peters' statement here was that (of course) Grokster was wrongly decided:

In my view, the Grokster decision was wrongly decided, and I hope the Ninth Circuit corrects the errors in the district court’s decision. The court employed an unnecessarily cramped view of existing secondary liability doctrines, creating a much narrower test of “knowledge”, “material contribution” and “right and ability control” than
any case before it, including the Ninth Circuit’s decision in Napster. It also misapplied the Sony decision to an inaccurate characterization of the defendants as mere providers of software, comparing them to maker of a VCR, when their services were functionally the equivalent of Napster and Aimster. Most importantly, the Grokster decision fails to see the forest for the trees; it essentially ignores defendants’ intent to establish and create a network of massive infringement – by enlisting ordinary consumers to engage in piracy – upon which they have built their business.
This is the pot calling the kettle black. The Grokster court certainly did see both the forests and the trees and was not about to level the forest of innovation in order to get at the Grokster tree. What Peters sees as a "cramped" decision, many others see as a well-crafted and narrow opinion that doesn't radically extend secondary copyright liability. Perhaps Peters has the ability to see another person's intent, but the court wisely refrained from making that assumption itself. An aside: Peters claims that the Napster and Grokster decisions are in conflict, but if that is true then Grokster will be overturned on appeal.

How is Sony to be distinguished?

There is also no dispute that the use of these services constitutes copyright infringement – unlike the Sony case which held that the principal use of the VCR was a fair use. It is also undisputed that the defendants who operate these services rely on the copyright infringement as a draw to attract users, thereby attracting advertisers. These facts make the comparison to Sony remarkably inapt.
But there is dispute that using P2P services is copyright infringement. After all, if the only use of these systems was infringement, there wouldn't be any question that these systems should be illegal. Peters now claims that VCRs are fair use. I question whether, if the VCR were introduced today, she would make the same argument. Call me cynical.

Peters also makes the argument that if the VCR was like P2P it would be illegal:

In my view, if the VCR had been designed in such a way that when a consumer merely turned it on, copies of all of the programs he recorded with it were immediately made available to every other VCR in the world, there is no doubt the Sony decision would have gone the opposite way.
So, the big problem is the sharing default? Change that and everything is cool? That ought to be easy enough ... but somehow I doubt that Peters would actually be satisfied. In any case, if you are downloading and sharing materials which are authorized for sharing, why not have the default. Is Peters saying that downloading infringing material is okay, it is the subsequent sharing that is bad? Really, I don't understand her point here.

The INDUCE Act

In explaining what the INDUCE Act does, Peters does her bait and switch:

As you explained in your floor statement, Mr. Chairman, this provision draws from patent law and federal criminal law.
Indeed, it does, but it changes them. We generally don't hold people guilty of inducement unless they have specific knowledge of a specific crime with a specific individual, or if their actions had no substantial non-criminal uses. The last part remains, but what the INDUCE Act does is get rid of all the specificity of the former standard and replaces it with a "reasonable person" test, which is essentially a guess at what people intend.

She muddies the waters of this standard in distinguishing Sony:

You have noted that the concept of liability for “inducement” was not at issue in Sony, as the Court made clear that no evidence existed that the defendant in that case “intentionally induce[d] its customers to make infringing uses of respondents’ copyrights, nor does it supply its products to identified individuals known by it to be engaging in continuing infringement of respondent’s copyrights.” [footnote omitted]
There was no evidence of specific inducement. The court was not addressing whether there was some sort of subjective evidence that a reasonable person might imagine there was intent, which is the standard under the INDUCE Act.

Next Peters claims that this standard is not all that bad:

The bill is appropriately tailored to the defendant’s intentions and behavior, rather than the technology it chooses to employ, making the bill technology neutral. It would allow courts to examine all of the circumstances of a particular case to determine whether the defendant had intentionally constructed its business to profit from infringement of others that it induced. Recognizing that an actor’s state of mind can often only be shown by indirect evidence, the definition of “intentionally induce” allows a court to apply an objective, reasonable person standard to the conduct of defendant to determine whether that evidences the requisite intent. The central definition, however, requires that the defendant “intentionally aids, abets, induces or procures” infringement, which is a high level of mens rea that should limit application of this bill only to the most egregious actors.
It is because it is so difficult to show intent that liability for intent has normally been limited to cases where much more specific evidence is noted. As for "objectiveness," if there were objective evidence you wouldn't need to rely on a "reasonable person."

Next, Peters provides some of this evidence:

There is a wide array of evidence that the proprietors of those services induce users to infringe copyright:
Of course, this evidence is circumstantial. It might show intent, it might be coincidental. P2P companies want to attract users. All software developers want to attract users. This is proof of intent of what, exactly? That a P2P company is like every other software company? And again, Peters focuses on the sharealike default. Is this really what sticks in her craw? Is it the fact that software runs in the background? She also doesn't seem to like encouraging people to share files, whether copyrighted or not. Sharing information - something the Copyright Office doesn't like as a matter of principle.

Peters also cites the explanation of Fred von Lohmann on how to avoid liability for P2P services (IAAL*: What Peer-to-Peer Developers Need to Know about Copyright Law). First, von Lohmann wasn't talking to any specific company, he was basically just publishing an op-ed. Second, this is what lawyers do. If this were proof of intent we might as well start locking up every business person in America. This is "objective" evidence of intent. Yeah...

Is the INDUCE Act Overbroad?

Peters then argues that her analysis wouldn't apply to MP3 players, for example:

These circumstances also help to show why the concerns about the breadth of the bill are misplaced. As Senator Leahy’s floor statement makes clear, those who merely provide copying technology should not be liable under this bill, because they would lack indicators of “intentional inducement” like those found in the peer-to-peer context. For example, the seller of a portable MP3 player does not make it nearly inevitable that the user will commit copyright infringement just by turning the device on. Rather, several additional steps must be taken by the user before any potential infringement takes place. Also, the seller of the portable device is very likely not reliant on building a network like the peer-to-peer service that is trying to sell advertising, and therefore it typically has no need to and does not encourage users to become distributors of copyrighted works.
Well, that isn't what the copyright industries were saying when the Diamond Rio player was introduced. Funny, Peters doesn't mention that.

Get Rid of the Betamax Decision

Her next argument is basically that this bill it too protective of the Betamax decision and that Congress might want to get rid of it. Seriously:

While you have carefully crafted this bill to preserve the 20-year-old decision in the Sony case, it may become necessary to consider whether that decision is overly protective of manufacturers and marketers of infringement tools, especially in today’s digital environment. If the Sony precedent continues to be an impediment to obtaining effective relief against those who profit by providing the means to engage in mass infringement, it should be replaced by a more flexible rule that is more meaningful in the technological age, but that still vindicates the Court’s goal to balance effective “and not merely symbolic” protection of copyright with the rights of others to engage in substantially unrelated areas of commerce.
The bill basically makes Sony irrelevant, but that isn't enough for Peters.

Conclusion

Though the bill may be flawed, let's not worry about that:

Let me be clear, however, that our concern about its future application should not hold up this bill.
Even the copyright industry isn't making these arguments. Will anyone in government move to fire this woman?

Want to know more about the INDUCE Act?
Please see LawMeme's well-organized index to everything I've written on the topic: The LawMeme Reader's Guide to Ernie Miller's Guide to the INDUCE Act.

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


COMMENTS

1. Ron Scott on July 23, 2004 12:50 AM writes...

Whether INDUCE is overly broad or not (and I do not disagree with you that it is overly broad) it seems disingenuous of you to claim that p2p companies don't induce copyright violation.

Of course there are fair and legal uses of the p2p networks; but to claim that the major reason for p2p network's existence is not copyright infringement is kind of, well, ignoring the truth, isn't it? If you step out of the complex legal universe you inhabit and think about the man on the street, you will habe to admit that for the vast majority of consumers, copyright violation is the raison d'être of these networks.

Permalink to Comment

2. David Carroll on July 23, 2004 03:44 AM writes...

I've never used Kazaa, but over at their home page I found this statement:

http://www.kazaa.com/us/help/guide_searching.htm#searching1

Sponsored Advertisements

Depending on the keywords you use for your search, you may be provided with a relevant advertisement in advertising areas of the Kazaa application. The keywords and the sponsored advertisements are managed by Altnet, our licensed content partner. The advertisements are displayed on behalf of advertising clients and not necessarily on behalf of any person that may use the searched keyword to identify its service or product.

It sounds to me from this comment that Sharman Networks may be collecting a database of all search terms entered by end-users. If that's true, then an argument can be made that they must be aware of ongoing infringement by end-users. Does this alter their potential liability?

Further, if they offer ads based on keywords that are likely related to infringement (I.e. an ad is tied to the search term "50Cent MP3" or such), then wouldn't they seem vulnerable to a charge or vicarious infringement?

Permalink to Comment

3. Ernest Miller on July 23, 2004 06:39 AM writes...

Ron,

The question is not whether KaZaA is a bad company (I'm certainly no fan) but whether we can craft the right legal rule to balance copyright and the public's interest. Many companies that are doing perfectly legal things (in fields other than copyright) are not nice companies, but we can't simply punish the "bad" companies.

David,

The Napster and Grokster tests rely on a great deal of fact-finding regarding the specific technology. It is certainly possible that the ability to watch search terms could increase liability, but hard to know without more facts.

Permalink to Comment

4. Dave on July 23, 2004 09:21 PM writes...

Every time you get in your car you break the law. You know you do. You speed. You drift through a stop sign. You push the limit when going through a yellow light turning red. So if everytime I get in the car and break the law, aren't the cars to blame? Chevy, Ford, Honda should all be held accountable for my poor judgement. When will they stop this irresposibility? Put governors on all engines! Maximum speed cap of 65mph. Maximum horsepower of 65. This will solve everything! We'll call it the No-Go Act.

If we reacted to every dangerous or potentially illegal situation the way that the INDUCE act is being presented, we would all be living in grass huts and eating bugs. The RIAA is drowning in a sea of technology that they can't control. Their business model is treading water but the waves are too high. It's time they look for an innovative solution rather than cuffing the hands of their customers.

Permalink to Comment

5. JAT on July 23, 2004 10:37 PM writes...

The induce act is fundamentally flawed, and the only reason it persists is m-o-n-e-y, and lots of it. To prove it's flawed, take the logic of the induce act and apply it to any other technology that can be used criminally.

1. guns. guns are legal. guns are supported by many, many of the conservatives supporting the induce act, including mr. hatch. guns are used to perpetrate a vast array of crimes far greater than copyright infrigement. no-one, and i mean no-one is out there lobbying to make gun manufacturers legally and financially liable every time someone perpetrates a criminal act with a gun.

2. cars. vehicular homicide, robberies, illegal street racing. It's not difficult to see how the manufacturer of a fancy sports car is inducing me to drive far faster than the legal limit. Look at that paint job; look at the shiny spedometer that goes up to 160 mpg. Does anyone sue the car company everytime they pull over a speeder? I think not.

The ONLY possible argument that can be made by supporters of the induce act is that the technologies they oppose have no legitimate legal uses. These claims are highly subjective and i'd dare say, completely untrue. Those supporters do not understand the technologies they're legislating. They don't understand that simply because they don't use the technology themselves, there aren't perfectly phenomenal and legal uses, many of which have likely not even been conceptualized yet. They simply understand that if they can prop up a bloated monopoly a little bit longer, maybe they to can make a butt-load of cash.

Short term gain for the minority vs. the long term good of the many. Sounds like a good way to run a countryu.

Permalink to Comment

6. Dave on July 23, 2004 11:24 PM writes...

The interesting thing here is that it might set an interesting precedent that could start the ball rolling on making gun manufacturers responsible for crimes committed with their products...

After all, if it's good enough for simply copying a song, it should be good enough for someone being actually killed...

Permalink to Comment

7. Rick on July 24, 2004 12:32 AM writes...

-- QUOTE --
you will have to admit that for the vast majority of consumers, copyright violation is the raison d'être of these networks.
Posted by Ron Scott on July 23, 2004 12:50 AM
-- ENDQUOTE --

Would you outlaw http://bt.etree.org/ ? That website hosts BitTorrent trackers for legal recordings of music concerts. Entire concerts can be over 1GB if lossless compression is used (almost always). Before BitTorrent, these shows were only available via ftp servers whose lines were always long and downloads painfully slow. Since BitTorrent hit, it has been like night and day. This is USEFUL technology.

Permalink to Comment

8. Jon Temple on July 28, 2004 09:32 AM writes...

I will make this simple.

1. Orin Hatch is and always has been a prostitute for large multi-national businesses. His statements are so ignorant and has no understanding except for the checks he receives to his war chest. Check out the contributors. He is about as Anti-free enterprise, Ant-technology and Ant-American as they come. He is about cash.

3. Marybeth Peters is typical of the other Anti-free enterprise, Anti-American, Pro-multination Corporations and pro Giant government like all of the other Bush/Cheney prostitutes. The female Michael Powell (son of Colin (where did my ethics go) Powell. She is there to help the "John's", that pay the administration for killing technical innovation, market place competition and imagination. She is dirt and typical why this countries economy is so awful and controlled by so few companies that do not compete.

4. The RIAA is an corrupt cartel that has stolen millions from artists, as they do today. They also have been fined many millions for their illegal activities, but it is never mentioned in mainstream media. Mostly they get their big fines for price fixing. Getting their members NOT to competer in the market place, but threaten businesses and force them to over charge for their products. They are an illegal organization. It is against the law for companies to form a "union" so that they price fix, remove competition from the open market place and rip off artists and the public with their monoplistic activities. Check out their gigantic fines and how much they are stealing from you as well as the artists.

5. Artists have never lost one penny from any PNP activity.

6. Without question, PNP activity has incerased sales of music. With the strangle hold and the illegal payola that companies like Clear Channel have, PNPs are the current "FM" radio of the past where you can here artists who are actually talented and sample their works. It must be remembered that the RIAA said the "reel to reel" tape recorder would destroy the music busiess. The MIAA said that VCRs would destroy the movie busniess. Check out the history of both organizations.

7. Ron, you can't tell me that having the ability for humans to hear, doesn't induce priacy. Any recording or listening equipment from turntables, receivers, tape decks, CDs, radios, two cups connected on a string doesn't induce piracy.
You also cannot deny that anyone singing in the street, keeping their window open in their car, going to a friends house. going to the supermarket, going to a store that sells media doesn't induce piracy.
The biggest culprits that induce piracy are the artists themselves. By being artists and being creative, they are screwing things up. If there were no artists, no piracy, no inducements.
Where did the RIAA get the multi, multi millions to lobby prostitutes like Hatch and the administration, which includes the FTC, FCC, patent office? How about the legal bills ? How about their massive fines for their illegal activities and under the table deals.
That is money stolen mostly from artists and the public.
Also, for the ignorant Scott, how many artists are published today as oppossed to 1999, pre-Bush. That is common knowledge. Scott, how much government do you want to have in this country? How much waste do you want spent on stupid litigation? What function does the RIAA and MIAA have except to ripoff artists and the public? If they went away, there would be COMPETITION, and a chance for new artists to make money.

That word induce is so dangerous and gives big government another opportunity to hassle the ones who cannot afford being hasseled. I mean this is not like child pornography, downloading how to make bombs, etc.
I really would like to know the average income of all those where the RIAA used thei resources stolen from artists and the public to sue them? It seems like they love harrasing the elderly and students. How come there are no wealthy people harrased? Look it up. I think your e-mail Scott, just enduced me to pirate a TV show. Oh yes, did you know that taping a TV show to watch later is ILLEGAL !!!!!!. But you want to take away my right to back a CD so that if my eight year old scratches the original, I cannot re-create it.

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