News

Appeals Court Upholds File Sharing; Vindicates Legitimate Uses of Peer-to-Peer Technology

(August 20, 2004) - In a resounding defeat for the music industry, a federal appeals court yesterday turned back copyright owners' attempt to shut down peer-to-peer file-sharing services. Affirming a lower court decision, the appellate judges said that even assuming 90% of the material exchanged via online file-sharing is copyright-protected, that still leaves hundreds of thousands of legitimate uses, ranging from public domain works to music that artists voluntarily offer for free downloading in order to spark the interest of fans.

The judges found that the software distributed free by such services as Grokster and StreamCast is different from the original Napster - which the same Ninth Circuit Court of Appeals shut down three years ago. There is no centralized index of available files, and the companies do not control how their millions of customers around the world use their products. They cannot, therefore, be held responsible for what the industry says are overwhelmingly illegal uses.

The decision is important because it recognizes both the many "significant noninfringing uses" of peer-to-peer technology, and the value of technological change to art and culture. "We live in a quicksilver technological environment with courts ill-suited to fix the flow of internet innovation," the judges noted. Indeed, new technology - from the player piano to the photocopy machine and the VCR - "is always disruptive to old markets,"1 yet the answer is not to shut down the technology.

The court was apparently influenced by a friend-of-the-court brief from the American Civil Liberties Union, the American Library Association, and other library groups and online archives, which discussed the many positive uses of file-sharing technology - including both "fair use" of copyrighted works, and downloading of public domain materials such as Shakespeare's plays. Fair use permits all members of the public to copy or borrow for purposes such as commentary, criticism, parody, or scholarship. It also allows copying for personal use in some circumstances, including, quite possibly, making available or listening to portions of songs.2

Examples of important and legitimate uses of file-sharing software, as noted by the ACLU/ALA brief, include the more than 9,500 public domain books now available through Project Gutenberg; music distributed for free by up-and-coming artists; and material from online political campaigns. Thus, says the ACLU,

despite the blitzkrieg of public relations conducted by plaintiffs, this case is not simply about college students who believe that they should not have to pay for music when they can simply download it from the Internet. Rather, at stake in this case is the fundamental issue of whether citizens can be denied valuable technological tools for sharing information and ideas simply because some may use those tools for improper purposes. ...

Particularly for digital libraries and other entities devoted to public education and the free flow of information, peer-to-peer technology provides the most cost-effective and in some cases the only feasible alternative for accomplishing their mission.3

Having lost this case last year at the district court level, the recording industry has already moved on to more direct methods of trying to stop massive online file-sharing. Suits against hundreds of individuals are now pending in courts around the country. In many of these cases, the defendants probably are guilty of infringement. But, as the Electronic Frontier Foundation points out, a copyright system that "makes criminals out of" millions of music lovers, badly needs reconstruction. The EFF proposes a variety of creative solutions that would protect peer-to-peer technology while actually providing more revenue for artists.4

Update: On June 28, 2005, the Supreme Court reversed the Ninth Circuit decision and held that Grokster and StreamCast could be liable for unlawfully inducing copyright infringement. See "Two Defeats - and a Silver Lining."

NOTES

1. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., No. 03-55894 (9th Cir. Aug. 19, 2004), slip opinion at 11746.

2. On fair use, see "The Progress of Science and Useful Arts": Why Copyright Today Threatens Intellectual Freedom, and sources cited there. In March 2004, a Canadian court ruled that "the mere fact of placing a copy [of a music file] on a shared directory in a computer where that copy can be accessed via a P2P service does not amount to distribution" in violation of Canadian copyright law. BMG Canada Inc. et al. v. John Doe et al., 2004 Fed. Ct. Trial LEXIS 321, *21 (Ottawa, Mar. 31, 2004).

3. Brief Amici Curiae of the American Civil Liberties Union, the American Library Association, et al. in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., Nos. 03-55894 & 03-56236 (9th Cir. Sept. 23, 2003), pp. 8-9, 35.

4. "File Sharing: It's Music to Our Ears," http://www.eff.org/share. See also http://www.eff.org/IP/P2P/riaa-v-thepeople.php for a listing of current industry lawsuits. (Both pages accessed 8/20/04.)