Is there a remedy in sight? Hard fought PR campaigns spinned to shame file-sharing youngsters into compliance haven’t worked. Aggressive lawsuits against college kids came off as draconian. Even the landmark legal shutdown of the old Napster wasn’t enough to stop the scourge of online copyright infringement.
Now a new attempt to address the problem is gaining some serious traction in Congress. But if the bill, dubbed the Induce Act, comes to pass, it will impact not only the music business, but also participants in other industries in which copyrighted materials are created, distributed and used (think software and hardware of all sorts). The bill, a version of which has passed the House, would introduce a new standard of copyright infringement liability by holding companies potentially liable for inducing infringement.
The push to pass such a law took on greater urgency after an August Ninth U.S. Circuit Court of Appeals decision that delivered a decisive blow against the recording industry. The Court held that companies providing “peer-to-peer” software and hardware (popular with music file sharing enthusiasts) could not be held to be a contributor to, or vicariously liable for, the infringement committed by people using their products if (1) the companies had no direct ability to stop the acts, and (2) the “product” was capable of substantial or commercially significant non-infringing uses.
The Ninth Circuit decision is one among many by lower courts that have refused to expand third party liability beyond those established by the Supreme Court in a 1984 case between Sony Corp. and Universal City Studios, Inc. involving Betamax recorders. In that case, the Court held that Betamax machines were legal to sell because they were “capable of substantial non-infringing uses,” thus clearing the way for a wave of innovation that brought us CD-ROM players, iPods, and other hardware devices and software.
Foiled in the courts, the recording and film industries are now pinning hopes on the Induce Act, which at press time was looking somewhat browbeaten in the Senate. A forceful coalition of technology companies has summoned lobbying power in an effort to halt or at least alter S.2560, a bill that would arguably make a variety of hardware, content, and software producers and distributors liable for inducing copyright infringement, even though they have no knowledge or control over the acts committed by the infringing parties.
There are many versions of the bill in play, but to some extent they all muddy the once bright line on third party infringement liability by introducing a causation standard as another manner in which to weigh one party's culpability for another party’s infringing activity. In the crosshairs of the original draft on the table at the Senate Judiciary Committee are companies that intentionally induce the infringement of copyrights.
The parameters of “intentional inducement” are where the fight is at. Technology companies are scrambling to stop the train altogether, but are also lobbying for a law that is narrowly tailored to hit specific bad actors rather than entire industries, inventors, and entrepreneurs. Congress is clearly targeting file-sharing networks and the mass distribution of bootlegged digital content. But a careless bill would open the door to lawsuits that could exercise control over legitimate companies outside the music industry.
For example, the current draft would not only make the users of file sharing systems liable for infringement, but conceivably also the manufacturers of the hard drives and memory boards. The proposed bill would even eviscerate a safe harbor found in the Digital Millennium Copyright Act that ISPs have relied upon over the years to protect themselves from third party infringement liability.
Yes, technology companies of various kinds have benefited from the popularity of using computers as jukeboxes, and they have done much to make infringing rather convenient. (Just about every new computer now comes with all the software you need to create a library of bootlegged tunes, for example.) Similarly, manufacturers of blank disks market them to people who want to burn music. So should such companies become liable for infringement? Where do you draw the line between legitimate business and bad actors?
The debate should sound very familiar. Copier machines, VCR recorders, and tape players all raised questions about copyright infringement, yet copyright owners are still alive and kicking. For valid reasons, the entertainment industry asserts that the digital technology in use today is more dangerous and calls for congressional intercession. If they are successful in the case of the Induce Act, software developers and hardware manufacturers and distributors could be hit with lawsuits for running what they argue are legitimate businesses.
On the litigation front, under the terms Congress is considering, copyright owners would find it relatively easy to sue and move beyond summary judgment into the costly discovery phase. At that point, defendants would likely find it easier to settle than to fight. Thus, by reducing the standard for copyright infringement liability, the Induce Act would be boon for lawyers, to be sure. Recording studios would be able to use the threat and costs of litigation as a sword to cause parties, including innovators and entrepreneurs, to capitulate to industry demands.
The better approach is for Congress to adopt legislation that (a) is premised on the Supreme Court's ruling in the landmark Betamax case; (b) is designed to regulate bad actors and unlawful behavior and uses of technology rather than the technology itself; (c) creates a bright line between lawful and unlawful conduct; (d) codifies the concepts of secondary liability for copyright infringement found in current case law; and (e) is narrowly drafted to address only illegal file sharing.
The fight will certainly go on, and Congress will be forced to balance the demands of copyright owners and those seeking to protect a business environment friendly to technological innovation. In the meantime, copyright owners will continue to search for a means of turning the tools of the digital age into genuine profit and innovation.