From Monday’s New York Times: The Court of Online Opinion Has Its Say on File Sharing. This is the third piece in the Times this weekend about the Supreme Court’s soon-coming Grokster decision. The article quotes Prof. Felten briefly:

Mr. Snyder’s instructor at Princeton, Prof. Edward W. Felten, a frequently read blogger, was less enthusiastic. At his Web log, freedom-to-tinker.com, Professor Felton predicted that the court would leave the whole issue muddy.

“The Supreme Court’s Grokster decision won’t provide us with a broad, clear rule for evaluating future innovations, so the ball will be back in Congress’s court.”

It’s certainly hard to read the High Court’s tea leaves, but I’d be very surprised if the entertainment industries won a clear-cut victory here (although one should never underestimate the technological cluelessness of the justices).

In the end, a remand to the lower courts – or a muddy decision of cross-current opinions – wouldn’t be so bad, would it? I argue in “Darknet” that while we’re likely to see setbacks at the federal and state level in the next five to 10 years – Congress will surely become a battleground once this ruling comes down – the contours of our digital future will really be decided by society. And that will take a very long time, as today’s young people begin interacting with media in very different (and less deferential) ways than their parents did.

Time is on our side. So, I’m rooting for the law to stay out of the way.

Alex, and others reporting on the Supreme Court arguments in the Grokster case, noticed that the justices seemed awfully interested in active inducement theories. Speculation has begun about what this might mean.

News.com is running a piece by John Borland, connecting the court discussion to last year’s ill-fated Induce Act. The Induce Act, which was killed by a unanimous chorus of criticism from the technology world, would have created a broad new category of liability for companies that failed to do enough (by vaguely defined standards) to prevent copyright infringement.

(The news.com piece has a terrible headline: Court mulls P2P ‘pushers’. This fails to convey the article’s content, and it drops the loaded word “pushers”, which appears nowhere in the article. The headline writer seems to acknowledge that the word doesn’t fit, by putting it in scare-quotes, which only highlights the fact that nobody is being quoted. Don’t blame John Borland; the headline was probably written by his editor. This isn’t the first time we’ve seen a misleading headline from news.com.)

There’s a big difference between the Induce Act and the kind of narrow active inducement standard that was suggested to the court. Indeed, the main advocate to the court of an active inducement standard was IEEE-USA, which testified against the Induce Act. Here, as always, the details matter. A decision by the court to adopt an active inducement standard could be very good news, or very bad news, depending on the specifics of what the court says.

The worst case, in some respects, is probably the one Fred von Lohmann mentions in the article, in which the court endorses the general idea of an inducement standard, but doesn’t fill in the details. If that happens, we’ll be stuck with years and years of litigation to figure out what the court meant. Regardless, it seems likely that after the court announces its decision, Congress will consider Induce Act II.

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.

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

Earlier this week, Grokster and StreamCast filed their main brief with the Supreme Court. The brief’s arguments are mostly predictable (but well argued).

There’s an interesting observation buried in the Factual Background (on pp. 2-3):

What software like respondents’ adds to [a basic file transfer] capability is, at bottom, a mechanism for efficiently finding other computer users who have files a user is seeking….

Software to search for information on line … is itself hardly new. Yahoo, Google, and others enable searching. Those “search engines,” however, focus on the always-on “servers” on the World Wide Web…. The software at issue here extends the reach of searches beyond centralized Web servers to the computers of ordinary users who are on line….

It’s often useful to think of a file sharing system as a search facility married to a file transfer facility. Some systems only try to innovate in one of the two areas; for example, BitTorrent was a major improvement in file transfer but didn’t really have a search facility at all.

Indeed, one wonders why the search and file transfer capabilities aren’t more often separated as a matter of engineering. Why doesn’t someone build a distributed Web searching system that can cope with many unreliable servers? Such a system would let ordinary users find files shared from the machines of other ordinary users, assuming that the users ran little web servers. (Running a small, simple web server can be made easy enough for any user to do.)

On the Web, file transfer and search are separated, and this has been good for users. Files are transferred via a standard protocol, HTTP, but there is vigorous competition between search engines. The same thing could happen in the file sharing world. In the file sharing world, the search engines would presumably be decentralized. But then again, big Web search engines are decentralized in the sense that they consist of very large numbers of machines scattered around the world – they’re physically decentralized but under centralized control.

Why haven’t file sharing systems been built using separate products for search and file transfer? That’s an interesting question to think about. I haven’t figured out the answer yet.