April 24, 2014

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Entertainment Industry Pretending to Have Won Grokster Case

Most independent analysts agree that the entertainment industry didn’t get what it wanted from the Supreme Court’s Grokster ruling. Things look grim for the Grokster defendants themselves; but what the industry really wanted from the Court was a ruling that a communication technologies that are widely used to infringe should not be allowed to exist, regardless of the behavior and intentions of the technologies’ creators. The Court rejected this theory.

Last week the Senate Commerce Committee held a hearing (a video stream is available) on the Grokster aftermath. This was a chance for witnesses representing various interests to put their official spin on the Grokster ruling. All of the witnesses praised the ruling and asked Congress to wait and see what develops, rather than legislating right away. But different witnesses put different spins on the ruling.

The entertainment industry line was presented by Mitch Bainwol of the RIAA, Fritz Attaway of the MPAA, and Gregory Kerber of Wurld Media (a music distribution service). Their strategy was essentially to pretend that the Court did give the industry what it wanted, and that P2P technologies were now presumptively illegal unless they had cut licensing deals with the industry. They didn’t argue this directly, but the message was clear. For example, they tried to draw a line between “legitimate” P2P technologies and others, where legitimacy was apparently achieved by signing a licensing deal with major recording or movie companies.

For example, in response to concerns from Mark Heesen of the National Venture Capital Association about venture capitalists’ fears of financial ruin from investing in even well-intentioned communication technology companies, Mr. Kerber said this:

It’s very clear how you get investment. The rules are there. We’re a P2P – we’re a real peer-to-peer – it’s centrally controlled, we can control that … we can respect the copyright holder’s wants during – through a contractual process.

And the way that investors realize that is when we go out and get deals with the record labels, movie studios; and … the venture capitalists do their due diligence, they call and they find out that … the content owner of these assets [says] yes, we will allow this to be transferred and distributed and sold … within – on the network.

So … it’s very, very clear. If you have a contract with a major label, indy label, movie studio, publisher, what they have said is, we will allow the content to be sold in this manner across our network. So I’m a little confused by – there’s an absolute clear path for an investor to understand what’s right and wrong in the process.

It’s a simple message. Investing in technologies that have been blessed by the entertainment industry: right; investing in other technologies: wrong.

But it’s not what the Court said. The Court rejected the proposition that P2P or other communication technologies can exist only at the pleasure of the entertainment industry.

Despite this, we can expect to hear more of this rhetoric of “legitimacy”. And when P2P technologies continue to exist and be popular, we can expect calls for legislation to control the scourge of “illegitimacy”.

Comments

  1. paul says:

    Once there is a sufficient population of entertainment-industry-approved download services (some of them nominally peer-to-peer) that will be another business constituency to stand up and complain about how its economic interests are being damaged by unsanctioned entrepeneurs.

    (P2P with strict central control is a really remarkable business model — people paying a company so that it can use their disk space and bandwidth to service requests by other paying customers. It puts even some of the more fanciful plans for distributed computing to shame.)

  2. Ima Fish says:

    I just love the irony in all of this. First the Supreme Court has held that in some circumstances P2P companies can be liable for the actions of their users. Fast forward a couple weeks, and the Senate and Congress are working to exempt gun manufacturers from the actions of their users.

    And this is from the party that is allegedly pro life (unless convicted, of course). But yet apparently protecting life is not as worthy as protecting Brittany Spears’ income.

  3. Trya Gainfish says:

    Ima, this unanimous supreme court ruling was made by a court that had two ultra-conservatives, two moderate conservatives, three ultra-liberals, and two complete moderates (Kennedy an O’Connor). They all voted for the decision that was made–not one dissented. I think this ruling is more of one based on current legislated law rather than what each individual judge thinks is right and wrong. Believe me, if it were based on right and wrong, there would be a more interesting division among the members of the court. I don’t think it would divide along conservative/liberal lines, but rather along viewpoints of technology and IP rights. Many conservatives, especially the most conservative of the conservatives dislike the DMCA as much as most liberals do. I, speaking as a conservative, see the DMCA as an abridgement of freedoms and giving too much power to a very few people for too long of a time. So don’t go making this a Republican vs. Democrat issue. Most non-politician conservatives detest this type of control just as most liberals do. Case in point, Rush Limbaugh is a prominent critic of the DMCA and is slightly critical of the Grokster ruling.

    The difference between gun manufacturers and Grokster is this: it was shown in court that Grokster was encouraging swapping of copyrighted material and no one can show that gun manufacturers are encouraging their users to use their guns to commit crimes. Furthermore, what will stop the government from revoking the other amendments in the Bill of Rights if the right to keep guns is abridged by the government?

  4. Tom Poe says:

    Hmmmm. The .ram files show up as zero, and heesen.pdf shows up as not able to be loaded by gv, pdf viewer, whatever, on my FC1 distribution. Could it be that Open Source and worldwide standards are not accepted by our government’s senate commerce committee? Or, is it just me, and there’s a secret something Linux users use to get at .pdf files put out by our government’s senate commerce committee?

  5. Ima Fish says:

    “it was shown in court that Grokster was encouraging swapping of copyrighted material and no one can show that gun manufacturers are encouraging their users to use their guns to commit crimes.”

    You’re missing the point. The feds are moving to make gun manufactures completely exempt. It does not matter if they intend how their guns are used. In other words, gun manufactures will receive more protection than P2P companies. Which is another way of saying that the feds value the alleged protection of copyrights more than human life.

    And I live in the midwest, so I’ve hunted in the past and know plenty of people who continue to hunt. Other than NRA nuts, no one hunts with a hand gun. And those NRA nuts do it solely to prove it can be done for political reasons, not for practical reasons.

    The sole practical purpose to kill humans. It’s small and can be hidden and brought out suddenly. You don’t ever have to hide a gun from an animal. That’s simply asinine. Thus, despite what you think, I think intent can be shown. Do you really think the multi million dollar hand gun industry produces nothing more than expensive paper weights?!

  6. Mike says:

    Ima, I have even better irony. The SAME Supreme Court that strengthened property rights for copyright owners in Grokster weakened them 10 days earlier in Kelo for land owners. Besides the obvious difference that Grokster covered intellectual property and Kelo dealt with real property, how to explain the apparent contradiction, except to say that both decisions ultimately favor corporate interests over those of the ‘unaffiliated’ public?

  7. Stephen Cochran says:

    “no one can show that gun manufacturers are encouraging their users to use their guns to commit crimes”

    Everytime someone says this, I have to bring up the issue of fingerprint resistant finishes on guns, especially handguns. Riddle me this, Batman: How is advertising a fingerprint resistant finish NOT an obvious “inducement” to use that gun, rather than a non-fingerprint resistant gun, to commit your crime?

  8. Niel says:

    You would think that on such a controversial issue there would be at least one dissenting vote. The fact it was unanimous indicates either collaborative subversion in the supreme court or, more likely, their ruling was not as general as is being interpreted. The extra liberties being taken by the recording industries are frustrating and likely to inspire more backlash than cooperation. Where there is a will there will always be a work-around. If the recording industry wants to make any headway they will have to work towards a common solution. So far their confrontational approach is more an indication of their lack of creativity than anything else. Shame on them for a step back in diplomacy!

  9. John Mitchell says:

    Even those who are most directly impacted by infringing reproductions — the music and video retailers — are fortunate that the Supreme Court did not give the copyright owners a big win. In their brief (see http://interactionlaw.com/id5.html), video retailers argued that protection for the reproduction rights from infringing reproductions over the Internet should not extend to control over the channels of reproduction over the Internet, because those are channels that fall beyond the scope of exclusive rights under the Copyright Act. Luckily, the Supreme Court left wide open the possibility that copyright owners will stop trying to control the entire channel and, instead, begin to license thousands of competing retailers (i.e., entities forming the direct relationship with the consumer) to offer downloads, charging the same wholesale price to all and letting the retailers compete on which codecs, media players, operating systems, financial terms, warranties, bundled products, distributed computing technologies, strategic relationships, and retail prices are most compelling. Once they begin to do that, we will doubtless see more legitimate and superior consumer offerings begin to supply the demand. As yet, there is little indication that copyright owners have wised up, but at least the Supreme Court set the stage such that their shareholders will demand they start making money licensing downloads through all comers, without trying to control, own or micromanage the competition.

  10. Messenger says:

    Let’s see…Grokster can be sued. They already were being sued! The case was abruptly ruled in favor of the defendants under summary judgement. The plaintiffs were really stunned. Usually, the Justices won;t even accept a case under summary. So they merely ruled the case back to court.

    The entertainment industry has won almost nothing, since this case goes back for more discovery and a real trial in district court.

    Perhaps even under the vague standards proposed by the Justices, these companies may not be found guilty.

    Their decision only unleashes more uncertainty and yet another chance for Grokster and StreamCast to present real evidence about their intentions.

    The way the industry blindly touts around the Kerbers of the wurld, I wouldn’t be surprised if they lose at the end of the day. Last I checked, there is increasely more and more legitimate, authorized, authentic, and certified content, both to purchase and free to download on Grokster and Morpheus.

    Legitmate, legal and authorized will be the buzz words for sure, but I don’t believe the RIAA hyping of iMesh, Wurld’s Peer Impact, or Mashboxx.

  11. pesky says:

    Grokster stepped over the line in the sand, they knew it, and the justices knew it. If they hadn’t tried to emulate napster (amazingly similar names) they probably would have gotted away with it for longer, and if they had flooded the service with other non-restriced content, then they probably would still be in business.

    The justices made a reasonable decision, and consumers have made it clear that twenty dollars is just too much to pay for a cd. I think that this will swing back the other way at some point, fair use will be invoked, the digital rights management issue will force some decision.

    How can a media company tell me that I have to purchase content that I have already purchased? (at full price)

    I have used this example before, but here goes:
    Ipod has a 20,000 song capability, at a dollar a song for downloaded music that make any Ipod worth 20.000 dollars or thereabouts.

    How can you carry around 20,000 dollars on a lanyard on your neck or arm? It just doesn’t make any sense. So it could be construed that the Ipod is encouraging infringement, since no one in their right minds would do that, and the only way not to would be to “copy” songs that are copyrighted.

    The media moguls are having a fit, since really expensive movies become dvd’s in a week, thanks to the ridiculous $10 or more price tag for seeing a movie at a theater. A night out with the family goes for like $60.00 with popcorn and drinks. Who can pay that for 1 1/2 hours of a so so movie?

    With the internet becoming broadband, soon artists will be able to release their own work on a website, collect fees, and skip the middleman, in truth the media outlets are doomed, and this is the last gasp of trying to make money off of an old business model. I’ll be really sorry to see them go. (not)

  12. Morgan W. says:

    I’ve made better audio than that attached to the Commerce Committee’s RealVideo available at http://www.lockup.org.