Aimster Loses

As expected, the Seventh Circuit Court of Appeals has upheld a lower court’s temporary injunction against the Aimster file-sharing service. The Court’s opinion was written by Judge Richard Posner.

I noted three interesting things in the opinion. First, the court seemed unimpressed with Aimster’s legal representation. At several points the opinion notes arguments that Aimster could have made but didn’t, or important factual questions on which Aimster failed to present any evidence. For example, Aimster apparently never presented evidence that its system is ever used for noninfringing purposes.

Second, the opinion states, in a surprisingly offhand manner, that it’s illegal to fast-forward through the commercials when you’re replaying a taped TV show. “Commercial-skipping … amounted to creating an unauthorized derivative work … namely a commercial-free copy that would reduce the copyright owner’s income from his original program…”

Finally, the opinion makes much of the fact that Aimster traffic uses end-to-end encryption so that the traffic cannot be observed by anybody, including Aimster itself. Why did Aimster choose a design that prevented Aimster itself from seeing the traffic? The opinion assumes that Aimster did this because it wanted to remain ignorant of the infringing nature of the traffic. That may well be the real reason for Aimster’s use of encryption.

But there is another good reason to use end-to-end encryption in such a service. Users might want to transfer sensitive but noninfringing materials. If so, they would want those transfers to be protected by encryption. The transfer could in principle be decrypted and then reencrypted at an intermediate point such as an Aimster server. This extra decryption would indeed allow Aimster to detect infringement, but it would have several enginering disadvantages, including the extra processing time required to do the extra decryption and reencryption, and the risk of the data being compromised in case of a break-in at the server. The opinion hints at all of this; but apparently Aimster did not offer arguments on this point.

The opinion says, instead, that a service provider has a limited duty to redesign a service to prevent infringement, where the cost of adopting a different design must be weighted against the amount of infringement that it would prevent.

Even when there are noninfringing uses of an Internet file-sharing service, moreover, if the infringing uses are substantial then to avoid liability as a contributory infringer the provider of the service must show that it would have been dispropotionately costly for him to eliminate or at least reduce substantially the infringing uses.

And so one more reading of the Supreme Court’s Sony Betamax decision is now on the table.