Separating "consumer rights" from copyright

Separating "consumer rights" from copyright

Summary: My condolences to those affected by yesterday's terrorist attacks in London. Funny that words escape a guy who regularly runs well past editorial limits, but my thoughts go out to those affected by this tragedy.

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TOPICS: Legal
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My condolences to those affected by yesterday's terrorist attacks in London. Funny that words escape a guy who regularly runs well past editorial limits, but my thoughts go out to those affected by this tragedy.

I've been a busy bee this week, spending Microsoft dollars on a business trip to Mountain View. So, I've been a bit quiet. Quiet, however, doesn't mean I haven't been doing anything blog-related.

I've been poring over last week's Supreme Court ruling relating to Grokster and Streamcast. This case was a re-examination of whether companies who make products with the potential to infringe on copyright should be held liable. As everyone knows, the Justices came down hard on Grokster and Streamcast because there was clear proof of an intent to encourage infringing uses, an action that was ruled illegal and thus not subject to the protections (uncontested in this ruling) of 1984's Sony vs. Universal Studios ruling.

What struck me as particularly important, however, was the current ruling's explanation of the point of the "fair use" doctrine established in that precedent setting battle, the one that officially legalized sale of the VCR. Many in online forums have talked about "fair use" as if it were a fundamental "right," and thus a means by which to prevent content companies from using technology to prevent the copying of their products.

I always thought that was nonsense, because why would a case designed to prevent content companies from hindering the rollout of new technology by other companies be used as basis to prevent content companies from rolling out their own technology. But I'm just the crazy guy shouting through a paper towel tube on the street corner (or the blogging pages at ZDNet). It's generally agreed that Supreme Court Justices aren't so crazy.

The "fair use" doctrine was designed to strike a balance between the constitutionally-sanctioned inducement to create offered by copyright law and the technical innovation which may be discouraged by too rigorous an application of it.  As Justice Souter stated, writing the opinion of the Court:

The more artistic protection is favored, the more technological innovation may be discouraged; the administration of copyright law is an exercise in managing the trade-off.

In other words, "fair use" has a specific goal, which is the maximization of benefits derived from both artistic creativity and technological innovation, which on occasion can run at cross-purposes. This isn't a question of rights, but a question of utility. Does "fair use" as interpreted contribute to a better economic balance, or favor one interest at too great an expense of the other? If an interpretation leads to a state of affairs where the conflicting interests are not well balanced, then that is an incorrect interpretation.

In fact, Justice Breyer, in his "partial" dissent (he agree with the ruling, but disagreed with particulars of arguments made by other justices), almost implied that the fuzzy Sony standard would be better than a strictly-interpreted one, given that a resulting lack of flexibility might imperil a proper balance. After detailing ways the market might alleviate the problem of rampant media piracy on its own, Breyer stated:

...the added risks that modification (or strict interpretation) would impose upon technological innovation, leads me to the conclusion that we should maintain Sony, reading its standard as I have read it

Furthermore, Breyer mentions technological solutions to the problem of piracy, without once stopping to consider if a right is being infringed (thus undermining the notion that rights are what matter here):

Further, copyright holders may develop new technological devices that will help curb unlawful infringement....Other technology can, through encryption, potentially restrict users' ability to make a digital copy

Equally notable in this case was the new standard of proof by which to prove intent to encourage infringing use. Besides Grokster's and Streamcast's efforts to attract known infringers (previous customers of Napster) and failure to attempt to filter copyrighted media, the mere fact that they had a business model almost entirely based on widespread infringement served as contributory proof:

As the record shows, the more the software is used, the more ads are sent out and the greater the advertising revenue becomes. Since the extent of the software's use determines the gain to the distributors, the commercial sense of their enterprise turns on high-volume use, which the record shows is infringing.

Though the justices note that (t)his evidence alone would not justify an inference of unlawful intent, the presence of such a business model certainly provides motive. When combined with other aspects of their business history (pursuit of infringers, lack of filtering technology), this contributed to proof as surely as large life insurance policies on mysteriously-deceased family members might contribute to a murder conviction.

That's interesting, and in my opinion, will practically end the file exchange software business given the difficulty of finding business models which wouldn't have a high illegal trade component. Of course, as other ZDNet bloggers have pointed out, that might serve to drive file trading software deeper into the open source bayous.

Without any solid business backing it, though, I expect that such software will face difficulties. The less technical majorities who populate the consumer software market are less willing to search for software, and lacking a Grokster or Streamcast to help them, are less likely to use it should they find it. Likewise, escaping by way of an open source back door certainly won't encourage content companies to spend time catering to users of open source software, which could be a particular problem in a DRM future that "DVD Jon" has more trouble cracking.

Personally, I was swayed by the opinions penned by Souter and Ginsburg, as well as the partial dissent authored by Breyer. On the one hand, there is recognition that the digital world is different than the analog world of the VCR:

The tension between the two values is the subject of this case, with its claim that digital distribution of copyrighted material threatens copyright holders as never before, because every copy is identical to the original, copying is easy, and many people (especially the young) use file-sharing software to download copyrighted works

...The argument for imposing indirect liability in this case is, however, a powerful one, given the number of infringing downloads that occur every day using the StreamCast's and Grokster's software.

On the other hand, the advent and subsequent success of legal download alternatives have cut into the illegal trading business, as Breyer notes:

...advances in technology have discouraged copying by making lawful copying (e.g. downloading music with the copyright holder's permission) cheaper and easier to achieve.

Furthermore, Breyer also notes that technological protections have grown more powerful, thus arguing that the market is sorting itself out without the need for redefinition of the Sony precedent.

Either way, should a new case require closer examination of the Sony case, I feel more confident that the Justices are asking the right sort of questions, as well as approaching it with the right mindset. Copyright law has a point -- the encouragement of economic goods -- and the Justices don't plan to lose sight of it.

Topic: Legal

John Carroll

About John Carroll

John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup.

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32 comments
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  • "The encouragement of economic goods"

    I don't think you pursued your headline thought far enough John.

    Consumer "rights" (read [i]power[/i]) are a force in society that is only growing by the day. Legislation and laws most often follow the practices and attitudes of society rather than lead them.

    The present model of capitalism in the early 21st century is based almost wholly upon consumerism - the consumer sets the limits of the market and the speed (or lack) of growth. Its is rapdily becoming evident that Westerb society is becoming dangerously obessed with economic growth fuelled by consumer spending. If that (cheap now) money stops whizzing around a whole lot of businesses and institutions will come crashing down.
    It becomes a vicious cyle - a self fulfilling prohecy if you will. More goods must be produced to meet increasing demand for consumption which means that more is consumed and more power flows from the manufacturer to the consumer - who then demands more goods..etc etc.

    Some industries are slower to pick up on this that others............and the content industry appears to be one of them. They can see the chasm yawning but don't fully appreciate the depth or breadth of it.

    There is a large and growing consumer demand for content that is cheap, highly portable and "new". Content companies think they can meet this demand within their prestn business models...

    Consumers are saying otherwise.

    Sure..the big lobby money in the US comes from establihed groups of businesses and they definitely have the legislators ear.........[i]at the moment[/i]

    Ultimately though in a democracy the power lies with the numbers......and those numbers are growing inxcreasingly impatient with the actions of content companies....

    Prediction: Within 10 years copyright law will be completely unrecognisable from what it is today.

    Content companies can get in front of the consumer on that....

    or be run over.
    Dave F_z
    • Two "established groups of businesses"

      The trade-off of rights John is talking about is between the content companies and the electronics companies.

      The Congress of the US has shown no compunction in attacking the large proportyion of the population that is trading files regularly.
      The model for how government is approaching the problem is the proposal to let content companies destroy pc's on suspicion of copyright theft.
      That is the way government sees its role.

      The Congress stops sort of giving the powers of an authoritarian government to the content industry only because the same abilities that facilitate file sharing are also a major support of electronics companies.
      Congress has to stop short to ask whether another significant industry would be severely damaged.

      The consumer? Those are the people who supply the money to the content and electronics companies. They are permitted to do only what will benefit industry, in this case two industries.

      You are supposed to pay, not to exercise "rights". If rights that limit the companies are found to exist, they can be removed by a clarification of existing law.

      Will that change? Maybe, but only when the good of industries which employ millions and produce substantial money for valuable causes in the eyes of politicians are less important than the views of the comparatively small number of people who care about these issues.

      If numbers counted, the 25% to 40% of the US population that regularly dowbnloads would be considered worthy of response. They aren't.


      You wrote:
      Sure..the big lobby money in the US comes from establihed groups of businesses and they definitely have the legislators ear.........at the moment

      Ultimately though in a democracy the power lies with the numbers......and those numbers are growing inxcreasingly impatient with the actions of content companies....
      Anton Philidor
  • Flaws

    There are a lot of flaws in the high court's decision, and fundamentally, it should have aligned itself with the circuit court's findings. I agree that copyright infringement on such networks is a bad thing, but punishing the network (and technology) is not going to solve the issue. It should be up to the copyright holders to find and punish the individual infringers, especially the ones who serve such content from their computers. Would that be a burden on the recording industry? Hell yes, but they are the ones responsible for the content. Let them find the idiots serving 500 songs from their PC. The court didn't need to do what it did, and now the content people are just going to become more and more brash about new technologies.

    The Supreme Court dropped the ball on this issue, and have opened Pandora's Box. Just another reason to license more and more content under Creative Commons licenses.
    opensourcepro
    • Victims

      "It should be up to the copyright holders to find and punish the individual infringers, especially the ones who serve such content from their computers."

      But isn't that like saying it should be up to the victims of burglary to hunt down the burglars? After all, aren't I responsible for my own property?

      Not to equate burglary (stealing) with copyright infringement or physical property with intellectual property, but addressing the attitude that the victims should be required to solve their own crimes.

      Carl Rapson
      rapson
      • Doesn't copyright say that?

        Doesn't it say that the holder is responsible for protecting their copyright? Isn't it just like how a trademark holder has to bring infringers to court and prove they violated the trademark.

        That is the whole problem I have had with the RIAA and MPAA. They want the taxpayers to solve their problems when it is their responsibility.
        Patrick Jones
        • I will agree...

          ...that it should be up to the copyright holders to identify instances of infringement. But I don't think it should be up to the copyright holders to "punish" the infringers, as the OP said. Isn't it up to the courts to mete out punishment? Do we really want RIAA "police" punishing music downloaders?

          I also don't think it's out of line for copyright holders to attempt to influence legislation that makes penalties for infringement more severe. After all, when it comes right down to it, the RIAA and MPAA are made up of people, and people have the right to petition their government. We can disagree with the penalties that the copyright holders are requesting, but we can't deny them their right to approach their own government.

          Carl Rapson
          rapson
          • True..

            they would need to bring those infringers to court for punishment.

            Personally, I don't think companies should be seen in the same light as people when it comes to our government. I think that is where our government has gotten off track by treating businesses as "people." But that is just my opinion, which I reserve the right to change at any given moment :) I think it would be interesting to change it so that businesses could not hold copyrights, only patents and trademarks. That would help the artists since they would retain their copyrights and it would reduce copyrights in time since a business never dies but a person does.
            Patrick Jones
          • Some agreement

            "I think it would be interesting to change it so that businesses could not hold copyrights, only patents and trademarks."

            I agree 100% with this. In fact, I don't even think a copyright holder should be able to transfer the copyright to another, individual or company. If an artist (for example) doesn't want to take advantage of the limited "monopoly" provided by a copyright, then the material should become public domain. But if an artist does copyright the material, then the copyright should be rigorously enforced.

            "Personally, I don't think companies should be seen in the same light as people when it comes to our government."

            I'm not sure I agree with this. People are people, regardless of whether or not they are involved with a business. And a business is made up of people, not automatons (despite what people say about Microsoft). Businesses as entities pay taxes and provide jobs, and so have just as much stake in the country as individuals do. What I will agree with is that businesses should not have MORE influence on government than individuals do. I'm not sure how to solve that, though.

            Carl Rapson
            rapson
          • One solution...

            "What I will agree with is that businesses should not have MORE influence on government than individuals do."

            Would be to not let businesses "donate" to politicians or political organizations. You may even have to limit their donations to just charities. But then what do you do with organizations like the Wildlife Federation, Free Software, BSA, etc. How would they be classified and would they be allowed to make donations.

            I do like the idea about copyrights not being transferrable. I would probably extend this to patents in some way, but that is a can of worms I do not want to open today :)
            Patrick Jones
    • Re:

      [i] I agree that copyright infringement on such networks is a bad thing, but punishing the network (and technology) is not going to solve the issue.[/i]

      Maybe not, but the ruling at least deprives the entities that egregiously facilitate infringement of the full benefits of capital markets, which is a start.

      [i]but they are the ones responsible for the content. Let them find the idiots serving 500 songs from their PC.[/i]

      That's the issue, they can't (as the Supremes accept), and the software has been designed to make that as hard as possible. Again, remember the Supremes are looking for BALANCE. Digital technology has knocked that too far out of balance, so a naive interpretation of the Sony ruling isn't justified.
      John Carroll
    • Another question

      "Let them find the idiots serving 500 songs from their PC."

      But when P2P networks are distributed, with no central servers, how can that be done? That's one of the bragging points of those who like to download music -- there is no one party that can be identified and held responsible, so therefore it should be allowed because it can't be stopped.

      In effect, you're saying that copyrights aren't enforceable because of technology.

      Carl Rapson
      rapson
  • The doctrine of first sale

    When I purchase a car, I own that car. I have the right to that particular instance of that car to use,modify ( pimp my ride ),combine, dispose or resell without having to seek permission from the car builders, vendors etc.

    It's called the doctrine of first sale
    http://www.google.com/search?q=doctrine+of+first+sale
    and has been recognized time and again by the US courts that it also applies to instances of copyrighted works.

    When you purchase some physical media ( book, CD, DVD etc ) which contains an instance of a copy of a copyrighted work, you own that instance of media. You also have the right to use that media to access that particular instance of a copy of a copyrighted work. You can dispose of that instance of media in which ever way you choose. Therefore your free to sell or pass on that instance of media to someone else, along with the right for the recipent to view it.

    The doctrine of first sale has even been used to challenge End User License Agreements...
    http://en.wikipedia.org/wiki/First_sale_doctrine#The_first-sale_doctrine_and_computer_software

    It's time to
    Acknowledge the doctrine of first sale and private use!
    http://itheresies.blogspot.com/2005_05_01_itheresies_archive.html
    David Mohring
    • Question

      "You can dispose of that instance of media in which ever way you choose. Therefore your free to sell or pass on that instance of media to someone else, along with the right for the recipent to view it."

      But what about the case where a COPY of the media is made and then given away? Is that covered by the doctrine also?

      Carl Rapson
      rapson
      • Not the same thing

        ---But what about the case where a COPY of the media is made
        and then given away? Is that covered by the doctrine also?---

        That's a different issue, covered by copyright laws, not the
        doctrine of first sale. The doctrine of first sale gives you control
        over the copy that you have purchased and now own. It does
        not give you the right to reproduce and distribute that content,
        that lies with the copyright holder.

        I don't think the original poster was trying to imply that this was
        the case. I think his point was more that consumers do have
        rights that extend well beyond fair use, rights that are often
        ignored and that are constantly under threat from corporations
        who see reducing our rights as an easy path to higher profit.
        tic swayback
  • Standard of proof

    Nice article John, well thought through, and I'd like to see more
    of ZDNet's blogs follow this example, of presenting a complete
    argument, rather than just a fragment of a thought.

    That said, one issue I'd argue with you is the question of the
    standard of proof necessary from this ruling. You seem to feel
    it's been clearly established. I think just the opposite is true,
    and we're in for some lengthy court battles to establish
    precedent. What exactly constitutes intent or promotion? Where
    is the line drawn? What if an executive of a Grokster-like
    company knows deeply in his heart that his business is based
    upon copyright infringement, but he never commits that to
    paper (or e-mail)? Does this then become a "thought-crime"?
    Does the court have to read the minds and hearts of a
    company's top executives to determine their real motivations?

    As far as things going to open source, I think this is a good
    thing. Sleazy companies like Grokster are really just exploiting
    the work done by others for their own profit. Let's take the
    profit motive out of it, thus freeing us from the parasites. I
    think you will still see a strong effort made to continue the
    development of such technologies. The RIAA and MPAA have
    both publicly acknowledged the potential for a system like
    BitTorrent--they know their future business will be reliant on
    such a system, so no, it's not going to fade into some dark
    backwater.

    As for "fair use", I agree that many around here use it as a battle
    cry without understanding what it means and what it does not
    mean. While it is not a "fundamental right", it is codified into US
    law, and is not some imaginary concept. You are right that it is
    part of a delicate balance, and I can forgive the fair use
    crusaders because they are constantly being besieged by the
    likes of the very wealthy and powerful RIAA/MPAA who would
    like nothing better than to take away all consumer rights,
    tipping the balance forever in their own favor. The DMCA has
    been particularly harmful to the balance. While there are some
    useful aspects of the law, it has been exploited far too much by
    too many looking to fix the market in their own favor.
    tic swayback
    • Re: standard of proof

      [i]we're in for some lengthy court battles to establish precedent. What exactly constitutes intent or promotion? Where is the line drawn?[/i]

      To a certain extent, you're right. The ruling is a bit like an "I know it when I see it" standard. In this case, evidence of pursuit of infringers, failure to make blocking attempts, and a business model based on infringement all served as proof. So, we have a motive (the business model) plus specific actions which lead one to conclude malicious intent.

      We don't have strict standards for what constitutes sufficient proof in a murder conviction, either. We just have evidence, and someone has to decide whether that is sufficient. I think that's the same standard offered by the Supremes, and further, that's ALL we could expect, because you can't make a strict bullet-point list of what constitutes proof. That would be too limiting, particularly in pursuit of an abstract goal of balance between competing creative interests.

      This ruling does, at least, say there are certain things which remove the protections of the Sony case. The Supremes felt that wasn't sufficiently clear, and so they made it obvios in big, bold letters.

      [i]What if an executive of a Grokster-like
      company knows deeply in his heart that his business is based upon copyright infringement, but he never commits that to paper (or e-mail)? Does this then become a "thought-crime"?[/i]

      That's why the standard is kept fuzzy. All you have to do is to craft an argument that convinces a judge or jury. Humans determine whether that evidence stands up to scrutiny.
      John Carroll
    • Fair use and fundamental rights

      [i]As for "fair use", I agree that many around here use it as a battle cry without understanding what it means and what it does not mean. While it is not a "fundamental right", it is codified into US law, and is not some imaginary concept.[/i]

      Keep in mind that before Congress codified fair use rights into black-letter law, they had been recognized for a century or so already as a judicial ballance between the Copyright Clause and the First Amendment. All Congress did was put the existing judicial precedent into the statute books.

      If Congress were to strike those clauses tomorrow, the preceding judicial doctrines would still apply, since they are founded entirely in Constitutional law.

      That said, fair use is not really germane to this discussion since private parties aren't obligated to facilitate it. Only when you get into cases where the State is enforcing copyright beyond the bounds of the First Amendment do you get into Fair Use territory, and that's not on the table today.
      Yagotta B. Kidding
  • Read it a few more times, John

    [i]As everyone knows, the Justices came down hard on Grokster and Streamcast because there was clear proof of an intent to encourage infringing uses, an action that was ruled illegal and thus not subject to the protections (uncontested in this ruling) of 1984's Sony vs. Universal Studios ruling.[/i]

    Nope. No proof. The USSC was reviewing a summary judgment where the District Court and the Ninth Circuit ruled that the evidence of intent was not germane.

    What the Court found was that there was enough evidence of intent to fall under [b]old[/b], not new, standards of contributory infringement and they specifically found that the existing standards that are well-established in patent law should be applied.

    The Court now goes back to District Court, where a [b]jury[/b] will hear the evidence of intent to induce infringement (a question of fact, not law; the USSC does not decide questions of fact -- juries do) and decide whether there is in fact proof of intent.

    In other words, you jumped the gun.
    Yagotta B. Kidding
    • Okay, sort of...

      ...from the ruling (second to last paragraph, opinion of the court):

      [i]There is substantial evidence in MGM's favor on all elements of inducement, and summary judgement in favor of Grokster and StreamCast was error. On remand, reconsideration of MGM's motion for summary judgement will be in order.[/i]

      That was after many pages where the court demonstrated what it thought to be CLEAR intent. So, yes, it's been handed down to the lower court to reconsider, but they've also handed them a huge amount of evidence indicating the opinion of the Supremes, and yes, it DID come down hard on Grokster and Streamcast.

      Intent was ruled illegal, and maybe they are going to reconsider the evidence of intent, but that doesn't change the fact that intent was ruled to be enough to remove the protections of the Sony case.
      John Carroll
      • Unprotected

        [i]Intent was ruled illegal, and maybe they are going to reconsider the evidence of intent,[/i]

        No "maybe" about the evidence. Under the Constitution the parties to a civil suit for amounts in excess of $20 are entitled to a trial by jury if they request one. The USSC is not a jury, and cannot make a final determination of the facts.

        [i]but that doesn't change the fact that intent was ruled to be enough to remove the protections of the Sony case.[/i]

        It doesn't "remove the protections" because, as the Court points out, those "protections" are nothing more than a rule stating that potential for infringing use is not itself proof of inducement or vicarious infringement ("Staple item of commerce.") Other actions such as those alleged in [i]MGM[/i] are independent evidence of infringement, same as in patent law.

        No matter how you slice it, though, evidence has to be evaluated by a Finder of Fact before the liability of Grokster and Streamcast can be established.

        The Court explicitly rejected the lower Courts' attempt to read [i]Sony[/i] as offering "protections," which is the same error that you're making above.
        Yagotta B. Kidding