July 13, 2014

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Balancing Tests in the Grokster Briefs

The biggest issue in the Grokster case is whether the Supreme Court adjusts or clarifies its precedent from the Sony Betamax case. The fate of Grokster itself is much less important than what ground rules the Court imposes on future innovators.

The core of the Betamax opinion is this oft-quoted passage:

The staple article of commerce doctrine must strike a balance between a copyright holder’s legitimate demand for effective – not merely symbolic – protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses.

There are two ideas here: the need to balance the interests of copyright holders against the interests of others, and, following from this need for balance, immunity from contributory infringement for devices sufficiently capable of noninfringing use. Grokster often argues from the immunity language. The studios often argue from the balance language, asserting that Grokster’s reading of the immunity language is inconsistent with the balance language. Many of the briefs filed on Monday take this latter angle.

What’s interesting is that most of those briefs, though relying heavily on balance arguments, seem to miss an important aspect of Betamax’s balance language. They do this by setting up a balancing test between the interests of copyright owners and the interests of Grokster. But that’s not quite the balance that Betamax is talking about.

The Betamax court would balance the interests of copyright holders against those of “others freely to engage in [noninfringing] areas of commerce.” Here “others” refers not only to the maker of the challenged product (here, Grokster) but to everybody who benefits from the product’s existence. This includes users who benefit from noninfringing uses of the product, musicians or publishers who use the product to disseminate their work, users who will benefit from not-yet-discovered uses of the product, developers of future noninfringing products who learn from seeing the product in operation, and so on. These benefits are often diverse, diffuse, and difficult to foresee, which is why the Betamax court was cautious about imposing liability for infant technologies.

I’ve read most of the briefs filed in Monday’s group. Of these, I’ve seen only three that seem to understand this point about what interests need to be balanced. These three come from the video store dealers; a group of professors (Kenneth Arrow et al.); and IEEE-USA. These briefs differ in their ultimate conclusions, which is not surprising. Understanding which interests need to be balanced is only a starting point for analysis.

Comments

  1. Cypherpunk says:

    Interesting quote from the betamax case that you linked to:

    “The record and the District Court’s findings show (1) that there is a significant likelihood that substantial numbers of copyright holders who license their works for broadcast on free television would not object to having their broadcast time-shifted by private viewers (i. e., recorded at a time when the VTR owner cannot view the broadcast so that it can be watched at a later time); and (2) that there is no likelihood that time-shifting would cause nonminimal harm to the potential market for, or the value of, respondents’ copyrighted works. The VTR’s are therefore capable of substantial noninfringing uses.”

    The interesting part is that “therefore”. My reading of Betamax is not so much that these other uses allowed the VTR manufacturers to escape liability; but that the key point is that even the primary usage that the plaintiffs objected to, time-shifting, was in fact not infringing. The court goes on to say,

    “Private, noncommercial time-shifting in the home satisfies this standard of noninfringing uses both because respondents have no right to prevent other copyright holders from authorizing such time-shifting for their programs, and because the District Court’s findings reveal that even the unauthorized home time-shifting of respondents’ programs is legitimate fair use.”

    Even unauthorized time-shifting, which is the whole basis for the plaintiff’s case, is legitimate fair use. Everything else flows from this.

    This is what distinguishes Sony from the present case. Unlike the case of unauthorized time-shifting, where the court carefully considered and rejected the argument that it had negative financial impact on the copyright holders, unauthorized file sharing almost certainly does have significant financial impact. There’s no chance that the court will find that online piracy is fair use! Yet that is essentially what the court found to be true in the case of Betamax time shifting, that the so-called infringing activity was in fact fair use.

    The principle source of “substantial noninfringing uses” in the case of Betamax was the most common usage, the taping of TV shows for later watching. This difference from the case of P2P file sharing could easily allow the court to distinguish the Sony case and come up with a different result. Just quoting “substantial noninfringing use” without looking at the rest of the Sony decision produces a misleading impression about the line of reasoning used in that case.

  2. hungerburg says:

    hello devils advocate :)

    timeshifting is but an example, read: satisfies the standard – it only got mentioned specifically, because sony did advertise it as a feature of the vtr; it cannot be construed as the single deciding factor in that case. so this time, the court doesnt have to find “online piracy” fair use, just like it didnt have to find building libraries of copyrighted works by vtr enthousiasts then fair use neither – do grokster ads promise unfeathered access to mgm movies?

    so, the court in sony ruled, that timeshifting, although a copy is made, does not infringe on the plaintiffs copyrights – as it is fair use. therefore…

    the likes, the court in grokster may rule, that transferring iso images of redhat linux via grokster or calling a buddy over skype, which uses the kazaa infrastructure, is not infringing on anybodies copyrights. therefore…