Tuesday, March 29, 2005

LAW - Supreme Court Hears MGM v. Grokster Arguments

It's been awhile since the last time I posted anything. Life got awfully interesting after the Illinois Bar Exam, but it's finally settled down as I wait for my results. Just as I was running out of things to do around the house, a case I've been watching very closely for years makes headlines once again.

Attorneys from MGM, the federal government, and Grokster argued their cases before the Supreme Court today. Unfortunately, I don't have a transcript of the proceedings. Still, at least one account does reveal some very interesting things.

One point that the author of the account notes is that MGM's attorney may have forever conceded the legality of format-shifting, which is the conversion of a copyrighted work from one form into another. Examples include ripping CD's to MP3, scanning books to PDF, and converting DVD's to DivX. When questioned about how, for example, the inventor of the iPod would be able to know whether or not the device would be legal or not, the MGM attorney responded that there were perfectly lawful uses for the iPod when it was invented, such as ripping the owner's own CD's to digital format and storing them on the iPod.

The author commented that MGM could be forever barred from asserting that ripping CD's to digital format was illegal under the doctine of judicial estoppel, which provides that a party who takes one position in a legal proceeding cannot change its mind and assert a contrary position in subsequent litigation. By arguing that ripping CD's is perfectly legal, MGM might find itself unable to argue that ripping CD's is illegal in a subsequent case.

There are, naturally, some requirements. The big one is that the Court would have to buy MGM's argument and rule in MGM's favor on some issue based on it. According to the author, MGM and the government seem to have taken the position that the legality of Grokster's peer to peer file sharing technology should be based on the company's business model. Apple would not be secondarily liable for copyright infringement with the iPod because the iPod had legal uses when it was invented, while Grokster would be liable because its P2P technology was almost entirely used illegally, or so the argument apparently went.

As far as the judicial estoppel issue goes, if the Court ruled in favor of MGM based on its iPod analogy, MGM could not argue that ripping CD's was illegal in subsequent cases. So win or lose, we might find the Supreme Court establishing format shifting as fair use just like it did with time shifting (recording a show to watch some other time) in the Sony Betamax case.

I wonder if MGM's argument is as simplistic as it sounded though. Contributory infringement, which was the major issue, isn't necessarily tied to Grokster's technology itself. According to Chilling Effects, contributory infringement occurs when the defendant knows that there is actual infringement going on and does something to materially contribute to the infringement. A couple months ago, I was involved with an American Bar Association task force on the Grokster case and we discussed a standard that looked something like MGM's business-model standard. The point is that it doesn't matter what technology Grokster used, so long as it knew that its users were infringing copyrights and materially contributed to the infringement. The technology could have been a P2P network or a website storing Bittorrent tracking files. It could even have been something as low-tech as providing a real-space meeting place for people to come and sell illegally copied CD's. As long as Grokster's actions somehow helped people infringe copyrights, then it would be secondarily liable. This is important because it draws a distinction between simply distributing P2P technology and advertising it as a way to download illegally-copied music. I talked about this distinction in my post on Bittorrent and contributory infringement. I wonder if the MGM attorney made the same distinction. I think that doing so would have helped their case because it would have let the Court focus on something other than the idea of suppressing a technology by reframing the issue as one where Grokster was advertising a tool for stealing music. It would also leave the door open for P2P networks with legal uses. A decision on the legality of P2P as a technology might not do that.

Splitting the issue between Grokster's act of distributing P2P technology and its act of encouraging people to infringe copyrights could also help future developers protect themselves. The Court, the government, and MGM all seem to have missed the fact that Grokster, unlike, say, Apple, really didn't invent anything. P2P file sharing was already out. All Grokster did was repackage, distribute, and advertise a P2P program. This puts it in a very different position than Sony was in with the Betamax. Sony invented the Betamax, so it could argue that it developed the device with an eye toward substantial noninfringing uses. Grokster did no such thing. It knew P2P could be used to infringe and, according to MGM, it encouraged its users to do just that.