February 8, 2023

Archives for March 2005

Grokster: The Case is Submitted

Greetings Freedom to Tinker readers! I’m Alex Halderman, one of Ed Felten’s grad students at Princeton. I’d like to thank Ed for the opportunity to be a regular contributor to this site.

On Tuesday I had the privilege of attending the MGM v. Grokster oral arguments along with several students from Ed’s Information Technology and the Law seminar. The class spent weeks discussing the Grokster case, and our field trip to Washington afforded a rare opportunity to witness the legal process in person instead of just on paper. We camped overnight outside the court to secure seats for what proved to be a fascinating argument. Some of the students have posted commentaries [1, 2, 3] and photographs [1,2,3,4], of which this is my favorite.

It was difficult to tell what the Justices were thinking, since their questions deeply probed the arguments from both sides of the case, but I was left with the impression that they are leaning towards a revision or reinterpretation of secondary liability law. None of their questions directly addressed Grokster’s argument that the matter should be deferred to Congress, and Justice Scalia emphasized that the case certainly wouldn’t hinge on stare decisis. In contrast, what a new liability test might look like was a recurring theme.

MGM argued that businesses centered on infringement should not be seen as engaged in “substantially unrelated areas of commerce” as required by the Betamax test. Several Justices questioned whether this reading would make it too easy for copyright holders to intimidate creators of new technologies. Justice Breyer wondered whether the creators of the iPod, the VCR, or the Guttenberg press would have feared liability under such a test, Justice Scalia asked whether new technologies would need to be given a decade or more to prove their non-infringing uses before such a standard could be applied, and Justice Souter worried about the fate of lone innovators without access to expensive legal guidance (the “guy in his garage”). Clearly, Grokster’s council and amici have done a commendable job explaining these issues to the Court, and I’m relived to say that the worst-case outcomes, such as a complete replacement of the bright line protections for innovation afforded by the Betamax test, no longer seem likely.

On the other hand, some of the Justices were no more receptive to Grokster’s interpretation of the Betamax defense, under which products “merely capable of substantial non-infringing use” would not be subject to liability. Justice Ginsberg called this an overly simplistic reading of Sony and pointed out that the decision continues for 13 pages of nuanced discussion after the phrase cited by Grokster. She also emphasized differences between Grokster’s product and the Betamax: the primary use of the Betamax was found to be non-infringing, but the district court in the present case established that at least 90% of Grokster’s traffic infringed.

What most surprised me was that several Justices repeatedly asked about a standard barely mentioned in the main briefs from either side: a so-called “active inducement” test. Inducement is a concept borrowed from patent law under which parties can be held liable for encouraging others to misappropriate protected intellectual property. Tests based on active inducement were discussed in the U.S. Government’s amicus brief (filed in support of MGM) and in the IEEE’s amicus brief (filed in support of neither party). The Induce Act, debated in Congress last summer, would have created a test based on an inducement theory, but it was widely criticized for giving copyright holders too much control over new technologies and making it too easy for them to bring frivolous lawsuits. IEEE, which opposed the Induce Act, says its model of an inducement test would require a much higher standard of proof involving evidence that parites committed overt acts of encouragement, not merely that they failed to do all they could to prevent illegal copying.

Several questions about inducement came from Justice O’Connor, who cast the deciding vote in the Betamax case. She asked MGM’s lawyer whether inducement was a way to resolve the case. Along with Justice Scalia, she seemed skeptical of Grokster’s attempt to separate out its past actions that could be seen as inducing infringement. Those acts do apply to the current case, Scalia insisted, because they were what developed Grokster’s current clientele. Scalia also wondered whether an active inducement standard would go far enough. Couldn’t a successor build a product identical to Grokster, he asked, but escape liability by being careful not to induce? Both MGM’s counsel, Donald Verrilli, and Paul Clement, speaking for the Government, responded that inducement would not be a sufficient remedy. Creators of future file sharing products would be careful not to leave a paper trail documenting their inducement, Verrilli warned.

Despite these objections, I think it is plausible that the Court will craft a narrow active inducement test resembling the IEEE proposal. This is likely for several reasons. Such a test would be neutral with respect to technology, thus creating a precedent applicable to much more than peer-to-peer file sharing. It would be responsive to the worries of technologists by clearly defining how innovators would need to act to avoid liability, yet it would also allow the courts to hold Grokster accountable because of its past encouragement of infringement. Inducement would function as a parallel category of liability complementing Sony, so the Court could leave the celebrated Betamax test intact. With both rules in place, defendants would need to demonstrate substantial non-infringing uses of their products and refrain from overtly encouraging infringement. Perhaps the most attractive feature of an inducement test is that both the Government, which sided with the content industry, and the pro-technology IEEE support it in some form. This is the closest thing to a compromise that we have seen in the case. Neither Grokster nor MGM would be wholly satisfied with a narrow inducement test, but it could potentially cure the most imminent harms cited by the copyright owners while causing minimal collateral damage to innovation.

Now the waiting begins. We’ll find out what the Justices were really thinking in a few months when the Court issues its decision.

Sony Plans to Emulate Apple, in a Non-Apple-Like Way

Sony says it wants to create a system that does for movies what Apple’s iTunes does for music, according to a CNET story by Stefanie Olsen.

Unfortunately Sony doesn’t seem to understand what Apple did:

“We want to set business models, pricing models, distribution models like (Apple Computer CEO Steve) Jobs did for music, but for the film industry,” Michael Arrieta, senior vice president of Sony Pictures, said at the Digital Hollywood conference here.

What Apple actually did was to think about what customers wanted and then strive to provide it. Customers wanted one-click buying, ownership of songs rather than rental, tranferrability to different devices, and an attractive price. Apple couldn’t provide customers’ dream service, but they got pretty close. Apple realized that it didn’t have carte blanche to choose the business model, pricing model, and distribution model that Apple would like best. This is what is supposed to happen in competitive markets – market pressure forcing companies to give customers what they want.

Compare to Sony’s own digital music strategy, which looked like an attempt to construct Sony’s dream world. Customers didn’t want to live in that world, so they didn’t buy into Sony’s system. If Sony wants a different result this time, it’ll have to change its strategy.

Welcome to Alex Halderman

I’m pleased to announce that Alex Halderman, a second-year graduate student who works with me, now has a byline here on Freedom to Tinker. Alex works on computer security and infotech policy, and has done interesting research on topics such as compact disc copy protection and privacy-enhancing technology. He plans to attend the Grokster oral arguments tomorrow; I hope he will be able to give us a firsthand account of the arguments and the early-morning linewaiting/campout experience. I have also invited him to post on other topics as he sees fit.

A (True) Story for Grokster Eve

Recently I met a promising young computer scientist, whose name I will withhold for reasons that will soon be evident. He has developed a very interesting network software system that would be useful for a great many legitimate applications. I was impressed by his system and wondered why I hadn’t heard of it before.

The reason, it turns out, is that he isn’t sure he wants the public to find out about his research. He says this, even though his work would probably be of interest to many people, and could be useful to far more. The problem, he told me, is that if too many people find out what he has done and realize its value, some of them may start using it for illegal purposes. He doesn’t want that kind of trouble, so he is avoiding bringing his work to the attention of the broader public, publishing it in research venues where a small community of experts will see it, but avoiding any further disclosure.

It’s hard to blame him, given the unsettled state of secondary liability law. If some people start using his system illegally, will he be liable? Will he have to redesign his system to try (probably fruitlessly) to make illegal uses impossible? How many redesigns will be necessary? Will he have to face the same uncertainty that Bram Cohen, creator of BitTorrent, faces? He doesn’t want any of that

Coming: Mobile Phone Viruses

Clive Thompson at Slate has a scary-sounding new piece about cellphone viruses. As phones get smart – as they start running general-purpose operating systems and having complex software interfaces – they will tend to develop the kinds of software bugs that viruses can exploit. And as phones become more capable, virus-infected phones will be able to do more harm.

What will the viruses do after they break in? Thompson predicts that they’ll make expensive calls to overseas pay-services, running up the victim’s phone bill and transferring money to the pay-service owners, who presumably will be in cahoots with the virus authors. That might happen, but I don’t think it’s the most likely scenario.

The best bet, I think, is that cellphone viruses will look like PC viruses. In the PC world, many viruses are written for kicks, with no specific intent to cause harm (though harm often results when the virus spreads out of control). I would expect to see such mostly-harmless viruses in the cellphone world; and indeed that is what we apparently see with the CommWarrior virus described in the article. Other PC viruses aim to spy on the user, or to install a bot on the computer so that it can be commandeered later to send spam or launch denial of service attacks. All of this is likely in the cellphone world.

Will cellphones be able to resist viruses more effectively than PCs do? Thompson suspects they will:

Phone executives like to say that it’s easy for them to contain worms because their networks are gated communities. Verizon and Sprint can install antivirus software on their servers to automatically delete infected multimedia messages before they reach their victims.

The mobile-phone industry could solve the viral problem by developing an open-source, Linux-style cellular operating system. But that’s about as likely as Motorola and Nokia announcing that all your cell phone calls are going to be free.

I’m not as hopeful. Phone execs like to think of their networks as gated communities; but in the smartphone world all of the action is on the smartphone devices, not in the networks themselves, and the providers have less control over smartphone software than they think. Their communities may be gated, but the gates will have well-known holes (that’s how viruses will get in), and there will be plenty of third-party application software coming in and out. A smart device is only useful if it is configurable, and configurability is the enemy of the sort of regimented configuration control that they are invoking. Third-party services and applications provide tremendous value to users, but as users switch to such services the network providers lose control over users’ data.

The open-source argument is pretty weak too. An open-source operating system may have fewer security flaws (and even that is subject to debate) but the claim that it will have no known flaws, or nearly none, isn’t credible.

The more useful smartphones get, the more they will adopt a software structure like that of PCs, with all of the benefits and problems that come with such a structure – including viruses.