Darknet

Will the Supreme Court justices see the light in Grokster?

The big news of the past day, of course, was Tuesday's Supreme Court hearing in MGM v. Grokster.

In past months, I've expressed alarm at the Supreme Court's willingness to wade into these waters, possibly upsetting the 1984 Betamax ruling -- called the Magna Carta of the digital age -- that set the table for a generation of technological innovation.

Perhaps I was too harsh in my expectation that the Court would almost automatically side with the large entertainment industry interests at the expense of millions of users at the grassroots level. We'll see -- a decision is expected around June. Here's some press coverage:

Wired News: File Sharing Has Supreme Moment.

San Jose Mercury News: Justices wary of barring tools for file-sharing.

EFF docs in the case.

Seth Finkelstein's Infothought: meta-Grokster.

Ernest Miller: Remind Me of the Reason for the DMCA Again?

And here: New York Times Editorial Board Blows It on Grokster.

And here: More Editorial Board Takes on Grokster.

And all throughout Copyfight. Plus lots more.

Because this is the most important digital rights case to come before the Supreme Court, I'll reprint the Mercury News' article here for posterity:

WASHINGTON - In the most important copyright case in two decades, the U.S. Supreme Court appeared skeptical of letting entertainment companies sue distributors of file-sharing software that allows people to illegally download copyrighted songs and movies for free over the Internet.

The closely watched case, MGM vs. Grokster, pits the titans of Hollywood against Silicon Valley and the high-tech industry.

Four of the nine justices expressed specific concerns during oral arguments Tuesday that such lawsuits could stifle technological innovation. Technology industry lawyers have made the same arguments and were encouraged by the court's reaction.

Justice Stephen Breyer cited the printing press, the Xerox copying machine and the videocassette recorder as once-controversial technologies whose later revolutionary impacts might never have been realized if inventors had faced lawsuits over possible illegal uses. Justices Anthony Kennedy, Antonin Scalia and David Souter worried about a chilling effect on innovators if the court allowed companies like Grokster to be sued for how others used their inventions.

``Why isn't it a foregone conclusion . . . the iPod developer is going to lose his shirt?'' Souter asked the attorney representing the entertainment industry, Donald Verrilli Jr.

The court's decision, which probably won't come until June, could have broad implications for the entertainment and technology industries.

Hollywood's losses

The entertainment industry argued it is losing billions of dollars as sites like Grokster surge in popularity and technological advances allow thousands of songs to be stored on portable players such as Apple Computer's iPod. Grokster's software allows computer users to find and trade songs, TV shows, movies and video games.

Lawyers for Hollywood said at least 90 percent of Grokster's downloads -- approximately 2.6 billion a month -- are of copyrighted songs and movies, which users obtain illegally for free. Verrilli called the software ``an intentionally built infringement machine.''

Several justices Tuesday questioned the entertainment industry's arguments and five specifically raised the possibility of sending the case back to a lower court.

The companies -- Grokster and StreamCast Networks -- dispute Hollywood's statistics and also argue that there is enough legal use of their services to allow them to continue operating. Their attorney, Richard Taranto, asked the justices why peer-to-peer file sharing should be singled out when personal computers, modems and other technology also facilitate the illegal duplication and distribution of copyrighted songs and movies. The entertainment industry is backed in the case by the federal government and the attorneys general of 39 states.

Tech firms such as Intel, their trade associations and groups of computer scientists, venture capitalists and intellectual-property experts have weighed in on the side of Grokster and StreamCast, saying suits against file-sharing software distributors would discourage inventors.

They warned the court against altering guidelines it set in a narrowly decided 1984 case about liability developers have for potential misuse of their products. In that case, the court found that Sony, maker of the Betamax VCR, was not liable if people used its product to violate copyrights if the product was also ``capable of substantial non-infringing uses.'' Those rules have become known as ``the Magna Carta of the technology age'' because they laid the legal groundwork for the technology boom that began in the 1990s. Grokster and StreamCast have based their defense on that ruling.

Lower courts in California, relying on the Betamax case, have absolved Grokster and StreamCast, which features the Morpheus file-sharing software, of liability when people use the software to find and download copyrighted music or movies from other people's computers.

Those courts said Grokster and StreamCast were different from services offered by Napster, which was effectively shut down in 2001 for copyright infringement.

A federal judge ruled that Napster, the pioneering file-sharing service, controlled a central index of songs available for downloading and knew that copyrighted material was available for free downloading. Grokster and StreamCast provide software that simply connects people and their computers, lower courts have ruled.

Those courts found that unlike Napster, neither Grokster nor StreamCast had any involvement in the search and transfer of files among users of its software. They found that the makers of the file-sharing technology could not be held liable for acts of infringement by those who use the software, because it, like the Betamax, is capable of other significant legitimate uses.

Breyer suggested Tuesday the 1984 Betamax ruling was a good one. ``The country seems to have survived that standard,'' he said. ``This is innovation.''

But Justice Ruth Bader Ginsburg said the 1984 decision was not as clear as Grokster said it was. And Scalia said the court would not decide the case based on precedent.

Souter asked Taranto, the attorney for Grokster and StreamCast: ``Why isn't this a case of willful ignorance'' when the companies argue they don't know what files are being shared by its users?

Pioneering technology

Still, Scalia echoed Souter's worries about the impact of allowing copyright-infringement suits on new technologies.

``What I worry about is the suit that just comes right out of the box as soon as a company starts,'' Scalia said.

Gary Shapiro, president of the Consumer Electronics Association, said after the hearing that he found it ``exhilarating'' that the justices were concerned about the potential stifling of innovation.

Shapiro was among about two dozen supporters of Grokster marching outside the court building Tuesday, carrying signs with slogans such as ``Don't Stop Innovation'' and ``Keep Your Hands off My iPod.'' Nearby, about two dozen musicians and songwriters jammed on guitars or carried signs that read, ``Feed a Musician. Download Legally'' and ``Thou Shalt Not Steal -- God.''

Tech innovation vs. Hollywood

The San Jose Mercury News previews the Supreme Court hearing Tuesday in MGM v. Grokster, the most important digital rights case to come before the court since Eldred two years ago. Excerpt:

Now the entertainment industry wants to change the rules of the game. It has asked the Supreme Court to revise the Betamax standard so that only companies whose technologies' ``primary use'' is legitimate can be shielded from being hauled into court.

The distinction may sound trivial, but Silicon Valley companies say it could jeopardize their ability to create the next big thing.

That's because no one knows exactly what consumers will do with any new technology. If companies risk being sued for developing, say, the next iPod, they might choose to play it safe, according to Lawrence Lessig, the Stanford University law professor who has written extensively about copyright in the digital age.

``The practical effect of the rule that they're trying to get the court to adopt would be to impose extremely high costs on innovation,'' said Lessig. ...

Venture capital firms have already begun to avoid certain types of investments deemed too legally risky, said Hank Barry, a partner at VC firm Hummer Winblad Venture Partners who served as the CEO of the original Napster.

``Not only at the venture level, but at the entrepreneurial level, what this has done is make people very reluctant to invest in these sorts of technologies,'' said Barry. ``The problem is that when you're in a start-up, even if you're right, it doesn't matter. Because you can't afford to litigate. And if you're an investor, you don't want all your money to go to litigation.'' ...

Is it illegal to podcast copyrighted music?

New Communications Forum: Podcast Music Licensing Not as Financially Daunting as Bloggers Surmise.

Podcasts, podcasts everywhere - but is your podcast already illegal? That was the discussion opened on the Silicon Valley Watcher site earlier this month. However, while the article titled "Why Your Podcast is Probably Already Illegal" brings up the important issue of podcast music licensing, its quoted music license fee calculations were inaccurate.

It is true that podcasters, in order to play popular music in their podcasts, must pay a fee for the right to play these tunes. If you are a podcaster playing popular tunes in their entirety during your podcast but have not paid for a music license then, yes, your podcast may already be illegal. However, the article's quote that the cost to obtain a license is more than $750 is over-inflated. ...

Cory on Hollywood, DRM and more

Here's author Cory Doctorow of the Electronic Frontier Foundation at Etech yesterday:

The Hollywood studios are conniving to create a global network of regulatory mandates over entertainment devices. Here they call it the Broadcast Flag; in Europe, Asia, Australia and Latinamerica it's called DVB Copy Protection Content Management. These systems purport to solve the problem of indiscriminate redistribution of broadcast programming via the Internet, but their answer to the problem, such as it is, is to require that everyone who wants to build a device that touches video has to first get permission.

If you want to make a TV, a screen, a video-card, a high-speed
bus, an analog-to-digital converter, a tuner card, a DVD burner
-- any tool that you hope to be lawful for use in connection with
digital TV signals -- you'll have to go on bended knee to get
permission to deploy it. You'll have to convince FCC bureaucrats
or a panel of Hollywood companies and their sellout IT and
consumer electronics toadies that the thing you're going to bring
to market will not disrupt their business models.

That's how DVD works today: if you want to make a DVD player, you
need to ask permission from a shadowy organization called the
DVD-CCA. They don't give permission if you plan on adding new
features -- that's why they're suing Kaleidascape for building a
DVD jukebox that can play back your movies from a hard-drive
archive instead of the original discs. ...

A thousand dollars' worth of ten-year old DVDs are good for just what they
were good for ten years ago: watching. You can't put your kid
into her favorite cartoon, you can't downsample the video to
something that plays on your phone, and you certainly can't
lawfully make a hard-drive-based jukebox from your discs. ...

DRM has exacted a punishing toll wherever it has come
into play, costing us innovation, free speech, research and the
public's rights in copyright. And likewise, DRM has not stopped
infringement: today, infringement is more widespread than ever.
All those costs borne by society in the name of protecting
artists and stopping infringement, and not a penny put into an
artist's pocket, not a single DRM-restricted file that can't be
downloaded for free and without encumbrance from a P2P network. ...

Lessig calls for copyright law remix

A short post by ZDNet's Chris Jablonski reports on Larry Lessig's call for copyright law reform at Etech, the O'Reilly Emerging Technology Conference in San Diego that I decided not to attend at the last moment. Writes Jablonski:

Remixing culture is nothing new. Throughout history people have been doing it in "ordinary ways," mainly with text. This is how cultures are made, Lessig said. But now, new technologies have changed the ordinary ways so does that mean that our freedoms change as well? It comes down to either reforming the law or reforming the technology, and since 1998 Congress decided to reform the latter to conform to 18th century law, according to Lessig. To wage the war, he advised four things we can do:

• Connect to lawmakers waging the war against new technology and speak their language

• Teach them about how powerful it is by showing them what kids do with the technology

• Change/update the idea of intellectual property

• Punish those who don't get it (and join iPac).

Here is Phil Windley's take:

Free culture is not about getting free access to people’s copyrighted works against their wishes. Its about building a world where culture can be shared. We have to state our opposition to “piracy” (in quotes) and change the debate from one about piracy to one about culture.

We need to teach kids about the ways we use bits of our culture for expression and why its important. We’re asking for changes to intellectual property, not its end. It must be updated to the needs of the technology. We demand to retain our right to remix. ...

UK gets its own Creative Commons

ZDNet UK: version of the Creative Commons licensing scheme adapted for the UK's legal landscape will be formally launched in London on Wednesday evening [tonight]. The BBC is expected to use the UK Creative Commons licences for its Creative Archive, in which it will throw open its back catalogue of broadcasting material.

Fantastic.

P2P is here to stay

Chris Nolan, the noted politics-media blogger and independent writer, has her latest column out tonight in eWeek: Peer-to-Peer Is Here to Stay.

Opinion: The music and movie industries have been dodging the issues raised by the Grokster case, but they can't evade the future of community-shared media. ...

The delay game is getting a bit thin anyway. A look at Silicon Valley author J.D. Lasica's Darknet: Hollywood's War Against the Digital Generation offers plenty of examples of just how—dependent isn't too strong a word—we are all becoming on the kinds of digital technology that MGM v. Grokster hopes to retrain.

In his book, to be published in May, Lasica profiles a series of innovators and their inventions, and he casts a jaundiced eye over the attempts that Hollywood is making to restrict the use of new technology. Lasica feels strongly that there's a war underway between consumers and copyright holders, between Hollywood and the folks who buy movie tickets.

most people in the recording and movie business don't understand the multilayered effects possible with online digital networks. They think of themselves as creators and all of rest of us as an audience.

That's inaccurate, says Lasica. "More and more of us are taking up the tools of the digital generation," Lasica says. "The Grokster case is a great example of what the mainstream media keep missing. It's not just about piracy, it's about people using digital technologies in the way people want to use them."

Lasica's right on both counts. It's a temporary state of affairs, as Lasica's book—with its biker "Internet TV" broadcasters, its geeky engineers, its earnest clergymen—makes clear simply by talking with normal folks about how technology has entered their lives.

Being a Silicon Valley guy, Lasica isn't letting all this go with the book. He's teamed up with Macromedia cofounder Marc Cantor on something called OurMedia.org which will go public today. ...

Calling itself the "global homepage for grassroots media," OurMedia.org aims to be a place for people to swap and share what they've created. Think of it as blogging with video and audio, only a little better organized than the mishmash of (mostly text-only) sites up today.

On one level, OurMedia is a community site, the sort of thing that a Hollywood studio person or a talented recording engineer might dismiss as amateurish.

But think about what it's going to look like when someone really creative gets their hands around a digital camera or an MP3 player and then distributes their work to that community. Think about what a filmmaker rejected by the studios or other established outlets might do with OurMedia's savvy audience. ...

A week ago, Chris had this: Will Copyright Fight Draw a Crowd?

We'll be doing our darndest to launch Ourmedia on Thursday or Friday. Stay tuned.

Lessig invites readers to rewrite 'Code'

Today's San Jose Mercury News has a story about how author Lawrence Lessig has invited readers to update his seminal book "Code and Other Laws of Cyberspace," first published in 1999.

Further nudging outward the boundaries of online publishing, Stanford University Professor Larry Lessig will put his 1999 book ``Code'' online today and invite Internet users to help him write an updated version.

A noted copyright expert and proponent of free software, Lessig is putting the 297-page treatise about technology, culture and regulation on the Web in the form of a ``wiki,'' a site that can allow people to freely edit its contents. The law professor will take the contributions at http://codebook.jot .com and edit them into a printed version of the book. ...

Lessig is the latest in a string of authors -- often from the technology world -- to open up their writings to the public. Former Mercury News columnist Dan Gillmor published chapters of his book ``We the Media'' online as they were written and sought feedback. And East Bay author J.D. Lasica allowed online readers to edit chapters of his book ``Darknet: Remixing the Future of Movies, Music & Television.'' ...

I'll be eager to see how this latest example of collaborative authorship turns out.

Napster's CEO on roadblocks to a celestial jukebox

Engadget has my interview with Napster CEO Chris Gorog. Excerpt of interest to the IP crowd:

How many years away are we from a true celestial jukebox?

Gorog: The major impediment to a true celestial jukebox in the legal world is the complexity of the rights clearances. This remains an important challenge for everyone involved in the business. The biggest problem, frankly, are the music publishers. It’s just the sheer clumsiness of the way the music publishing organizations are set up.

In the United States, about 50 percent of music publishers’ rights are cleared by one agency, the Harry Fox Agency. The other 50 percent are represented by 50,000 individual music publishers. So this is where it becomes a complex task for anyone to get out there and clear this stuff. We’re trying all kinds of things to make the process simpler. ...

Microsoft to buy darknet company

DG News Service: Microsoft is buying the best-known darknet company of them all.

Microsoft is buying Groove Networks of Beverly, Mass., for an undisclosed sum, it said Thursday. Groove makes collaboration software that can be used by people who are geographically dispersed and is the brainchild of Lotus Notes creator Ray Ozzie.

Microsoft plans to add Groove's products to its Microsoft Office product line. Ozzie, a recognized visionary who helped found Lotus Software , will become Microsoft's chief technology officer, according to a statement from Microsoft.