The Motion Picture Association of America plans to file copyright infringement lawsuits against about 230 individuals today, according to a New York Times story by Laura M. Holson.

Rumor has it that studio heads had long wanted to do this but former MPAA chief Jack Valenti had refused to go along with it. Now that Valenti has been replaced by Dan Glickman, it’s not surprising to see the suits starting.

Lately the movie industry has had more of a scorched-earth attitude toward the copyright wars than the music industry has. If the movie people start filing lots of infringement suits, perhaps the music people will back off a bit and file new suits.

Today, MIT’s LAMP system goes back on line, with a new design. LAMP (“Library Access to Music Project”) streams music to the MIT campus via the campus cable TV system. Any student can connect to LAMP’s website and choose a sequence of songs. The chosen songs are then scheduled for playing on one of sixteen campus TV channels.

According to MIT, transmission of music via LAMP is legal because it is covered by music licenses that MIT has purchased in connection with the campus radio station. In other words, LAMP is just like another set of sixteen campus radio stations that happen to be controllable by MIT students across the Web. I don’t know whether this legal argument is correct, but it sounds plausible and MIT appears to stand behind it.

You may recall that LAMP launched last year but was shut down a few days later when copyright owners argued that LoudEye, which had sold MIT digital files to use in that incarnation of LAMP, did not have the legal right to sell those files for such uses.

Now LAMP is back, with the original design’s efficient digital back end replaced by a new setup in which an array of low-end CD jukeboxes are controlled by special computers. This allows LAMP to get its music from ordinary CDs, as many radio stations do.

From an engineering standpoint, the new design of LAMP is overly complex, fragile, and inefficient. That’s not surprising, because lawyers must have had a big impact on the design.

LAMP is a great example of regulatory arbitrage – the adoption of otherwise-inefficient behavior in order to shift from one legal or regulatory regime to another. There’s one set of copyright rules for radio stations and another set for webcasters. LAMP transmits music over the cable-TV system, rather than the more efficient Internet system, in order to stay on the radio-station side of the line. There’s one set of rules for direct access to digital music on CDs and another set of rules for copies stored on hard disks. LAMP uses CDs in jukeboxes, rather than more efficient hard-disk storage, in order to stay on the CD side of that legal line.

We’re going to see more and more of this kind of regulatory arbitrage by engineers. Copyright law is getting more complicated and is accumulating more technology-specific rules, so there are more and more legal lines across which designers will want to step. At the same time, technology is becoming more powerful and more flexible, giving designers an ever wider menu of design options. The logical outcome is a twisting of technology design to satisfy predetermined legal categories rather than engineering efficiency.

Last week the Department of Justice issued a report on intellectual property enforcement. Public discussion has been slow to develop, since the report seems to be encoded in some variant of the PDF format that stops many people from reading it. (I could read it fine on one of my computers, but ran into an error message saying the file was encrypted on the rest of my machines. Does anybody have a non-crippled version?)

The report makes a strong case for the harmfulness of intellectual property crimes, and then proceeds to suggest some steps to strengthen enforcement. I couldn’t help noticing, though, that the enforcement effort is not aimed at the most harmful crimes cited in the report.

The report leads with the story of a criminal who sold counterfeit medicines, which caused a patient to die because he was not taking the medicines he (and his doctors) thought he was. This is a serious crime. But what makes it serious is the criminal’s lying about the chemical composition of the medicines, not his lying about their brand name. This kind of counterfeiting is best treated as an attack on public safety rather than a violation of trademark law.

(This is not to say that counterfeiting of non-safety-critical products should be ignored, only that counterfeiting of safety-critical products can be much more serious.)

Similarly, the report argues that for-profit piracy, mostly of physical media, should be treated seriously. It claims that such piracy funds organized crime, and it hints (without citing evidence) that physical piracy might fund terrorism too. All of which argues for a crackdown on for-profit distribution of copied media.

But when it comes to action items, the report’s target seems to shift away from counterfeiting and for-profit piracy, and toward P2P file sharing. Why else, for example, would the report bother to endorse the Induce Act, which does not apply to counterfeiters or for-profit infringers but only to the makers of products, such as P2P software, that merely allow not-for-profit infringement?

It’s hard to believe, in today’s world, that putting P2P users in jail is the best use of our scarce national law-enforcement resources. Copyright owners can already bring down terrifying monetary judgments on P2P infringers. If we’re going to spend DoJ resources on attacking IP crime, let’s go after counterfeiters (especially of safety-critical products) and large-scale for-profit infringers. As Adam Shostack notes, to shift resources to enforcing less critical IP crimes, at a time when possible-terrorist wiretaps go unheard and violent fugitive cases go uninvestigated, is to lose track of our priorities.

Remember when I suggested that Republicans might be more prone to copyright sanity than Democrats? Perhaps I was on to something. Consider a recent Senate exchange that was caught by Jason Schultz and Frank Field.

Senator John McCain (Republican from Arizona) has placed a block on two copyright-expansion bills, H.R. 2391 and H.R. 4077, because they contain language implying that it’s not legal to fast-forward through the commercials when you’re watching a recorded TV show. McCain says he won’t unblock the bills unless the language is removed. (As I understand it, the block makes it extremely difficult to bring the bill up for a vote.)

Sen. Patrick Leahy (Democrat from Vermont) responded by blasting McCain, saying he had blocked the bill for partisan reasons. Here’s Leahy:

In blocking this legislation, these Republicans are failing to practice what they have so often preached during this Congress. For all of their talk about jobs, about allowing the American worker to succeed, they are now placing our economy at greater risk through their inaction. It is a failure that will inevitably continue a disturbing trend: our economy loses literally hundreds of billions of dollars every year to various forms of piracy.

Instead of making inroads in this fight, we have the Republican intellectual property roadblock.

Do the Democrats really want to be known as the party that would ban fast-forwarding?

The 9th Circuit Court of Appeals ruled today that Grokster (along with other vendors of decentralized P2P systems) is not liable for the copyright infringement of its users. Today’s decision upholds a lower court decision, which had been appealed by a group of music and movie companies.

The Court largely accepted Grokster’s arguments, finding that although the vast majority of Grokster users are infringers, Grokster itself cannot be held liable for that infringement.

The Court found Grokster not liable for contributory infringement, because Grokster did not have the necessary knowledge of specific infringement. In light of the Supreme Court’s 1984 Sony Betamax decision, as elaborated in this appeals court’s Napster decision, the court first determined that Grokster’s software has substantial commercially significant uses other than infringment. As a result, contributory infringement would have required that Grokster have knowledge of specific acts of infringement, at a time when Grokster could take action to stop those acts. But Grokster simply distributes its product to consumers, and has no knowledge of how any particular customer uses the product later. If copyright owners tell Grokster about an act of infringement, after that act has already happened, that is not actionable knowledge because it is too late to stop the infringment.

The court also held Grokster not liable for vicarious infringement, because Grokster does not have the right and ability to control its customers’ infringing activity. Grokster has no practical way to kick users off the system or to police the system’s use. The court also ruled that Grokster cannot be required to redesign its software and force its customers to update to the redesigned version.

The money quote comes near the end of the opinion:

As to the issue at hand, the district court’s grant of partial summary judgment … is clearly dictated by applicable precedent. The Copyright Owners urge a re-examination of the law in light of what they believe to be proper public policy, expanding exponentially the reach of the doctrines of contributory and vicarious copyright infringement. Not only would such a renovation conflict with binding precedent, it would be unwise. Doubtless, taking that step would satisfy the Copyright Owners’ immediate economic aims. However, it would also alter general copyright law in profound ways with unknown ultimate consequences outside the present context.

Further, as we have observed, we live in a quicksilver technological environment with courts ill-suited to fix the flow of internet innovation. The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well-established distribution mechanisms. Yet, history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player. Thus, it is prudent for courts to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude.