News

Supreme Court Will Decide the Fate of File-Sharing

(December 10, 2004) - The Supreme Court today agreed to review a federal appeals court decision that turned back the music industry's attempt to shut down peer-to-peer file-sharing services. (MGM v. Grokster, Ltd.) Judges on the U.S. Court of Appeals for the Ninth Circuit had ruled in August 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 Ninth Circuit judges found that the software distributed free by such services as Grokster and StreamCast is different from the original Napster - which the same court shut down three years earlier. 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. According to the Ninth Circuit, the makers of P2P software cannot, therefore, be held responsible for what the industry says are overwhelmingly illegal uses. Instead of shutting down valuable technology that is capable of "significant noninfringing uses," the court said that copyright owners must go after those they believe are actually engaged in illegal conduct.

In its appeal to the Supreme Court, the recording industry argued that the Ninth Circuit decision, if not reversed, would essentially mean the end of copyright "in the digital era." Unless Grokster "and those like them can be held accountable, copyright will soon mean nothing on the Internet, and the incentives on which our copyright system rests will be imperiled."1 The industry's petition to the Supreme Court was supported by eleven friend-of-the-court briefs, from groups ranging from states to writers', publishers', and musicians' associations.

Despite this seemingly overwhelming support for the industry, not everybody in the artistic and publishing worlds agrees with the music companies' dramatic rhetoric about P2P file-sharing. A study released earlier this week by the Pew Internet & American Life Project reported that "the vast majority" of artists and musicians "do not see online file-sharing as a big threat to creative industries." On the contrary, "artists and musicians are more likely to say that the Internet has made it possible for them to make more money from their art than they are to say it has made it harder to protect their work from piracy or unlawful use."2

Earlier studies have also found that despite industry claims, declines in CD sales in recent years cannot be attributed to file-sharing. A survey by professors at Harvard Business School and the University of North Carolina, released in March 2004, concluded that downloads from file-sharing "have an effect on sales which is statistically indistinguisable from zero."3

Examples of important and legitimate uses of file-sharing software were noted by the ACLU and American Library Asssociation in a friend-of-the-court brief to the Ninth Circuit. They include 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, said the ALA and the ACLU,

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.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. Petition for a Writ of Certiorari in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., No. 04-480 (S.Ct. Oct. 8, 2004), pp. 1, 3.

2. Mary Madden, Artists, Musicians, and the Internet (Pew Internet & American Life Project, Dec. 5, 2004), p. ii.

3. See "The Progress of Science and Useful Arts": Why Copyright Today Threatens Intellectual Freedom, and sources cited there. The Harvard-UNC study is Felix Oberholzer and Koleman Strumpf, The Effect of File Sharing on Record Sales: An Empirical Analysis, p. 1, http://www.unc.edu/~cigar/papers/FileSharing_March2004.pdf. .

4. 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), p. 35.