Bittorrent, Grokster , and Why Entertainment and Internet Lawyers
JOURNAL OF
VOLUME 10 INTERNET LAW NUMBER 11 MAY 2007
EDITED BY DLA PIPER RUDNICK GRAY CARY BitTorrent, Grokster, and Why Entertainment and Internet Lawyers Need to Prepare for the Fair Use Argument for Downloading TV Shows
By Charles B. Vincent
If a man has good corn, or wood, or boards, or pigs, satellite signal. The ability to watch digital versions of to sell, or can make better chairs or knives, cru- television shows and movies on one’s computer is merely cibles, or church organs, than anybody else, you the next step on the evolutionary visual media ladder.3 will find a broad, hard-beaten road to his house, As the means to obtain these files through software or though it be in the woods. online distributors continue to improve in their efficiency —Ralph Waldo Emerson, 18551 and availability, the copyright holders of these works will Continued on page 7 he Emerson quote has been paraphrased and morphed over time into its better-known pithier counterpart: Build a better mousetrap, and the world will beat a IN THIS ISSUE T 2 path to your door. Modern computer technology BITTORRENT, GROKSTER, AND WHY has not diminished the applicability of Emerson’s simple ENTERTAINMENT AND INTERNET LAWYERS observation. In the music industry, consumers initially NEED TO PREPARE FOR THE FAIR USE ARGUMENT FOR DOWNLOADING TV SHOWS ...... 1 purchased vinyl LPs, progressed toward cassettes, and By Charles B. Vincent recently turned to compact discs before the digital sound file emerged as the modern way of listening to music. HOW WELL DO YOU KNOW YOUR INTERNET MARKETING PARTNERS? ...... 3 Likewise, many watched television by adjusting their By Tom Hughes antennas long before anyone began paying for a cable or INTERNET LAW IN THE COURTS ...... 20 By Evan Brown
DEVELOPMENTS IN INTERNET LAW—EUROPE ...... 24 Charles B. Vincent received a JD from Widener University School of Law By Patrick Van Eecke and Maarten Truyens in 2007. Mr. Vincent externed as the Wolcott Fellow for Vice Chancellor Donald F. Parsons, Jr., in the Delaware Court of Chancery in 2006-07 and will serve as a clerk for Justice Henry duPont Ridgely in the Delaware Supreme Court in 2007-08. While at Widener, Mr. Vincent was one of the Articles Editors for Volume 32 of The Delaware Journal of Corporate Law . The author gratefully acknowledges the assistance of Amy Yeung, Thomas Uebler, and Josh Meyeroff for their helpful comments.
Electronic copy available at: http://ssrn.com/abstract=979741 May 2007 JOURNAL OF INTERNET LAW
BitTorrent, Grokster, and Why Entertainment and or her high-speed internet connection and cable service, Internet Lawyers Need to Prepare for the Fair Use the fact that cable and premium shows are not “free” in Argument for Downloading TV Shows the sense that the user has to pay for the subscription may Continued from page 1 alter the fair use analysis presented. Where appropriate, however, this article will distinguish this point. continue enforcing their copyright through litigation. For This article presumes that anybody with access to a the copyright holders of television shows, however, the high-speed Internet connection can obtain, with minimal path to protecting the creative work may not be as well- effort, the software necessary to download large files, such as beaten as one may hope. copies of television shows or movies, which can be watched Downloading media through the Internet is now com- and stored on one’s computer. The next section of this arti- monplace.4 Due to the rapid development of technological cle provides a brief overview of torrent technology, which is infrastructure, however, torrent downloading technology the current and most prolific downloading method used to has abruptly decreased the time required for one to obtain obtain large files today. Because the Supreme Court’s 2005 large media files. As a result, downloading such files has decision in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, gone from impractical to commonplace, and “television Ltd.11 has solidified certain obligations on behalf of these shows [now] represent the fastest-growing type of files types of distributors in the context of confronting the digital downloaded online.”5 For example, in 2005, one television music piracy problem, this article explores these obligations fan admitted that it took him seven hours to download and its implications on the purveyors of torrent technology. an hour-long episode of a recent season finale that he had The next part of this article assesses the fair use doctrine as missed using his high-speed Internet connection and the it may apply to those programs that facilitate distribution “latest file-sharing software.”6 In 2006, Apple’s iTunes’ of digital copies of broadcast television show (referred to Web site stated that a comparable 45-minute show would as distributors) and the end users 12 who download them. take 15-20 minutes to download with a high-speed Internet Because of the nature of broadcast television, litigation connection.7 Other Web sites simply host the video and against the peer-to-peer downloading programs may be suc- stream the content in sections, allowing the user to watch it cessful for the reasons explained, whereas litigation against without downloading, which would yield practically instan- the end users may be distinguishable from the programs taneous viewing gratification.8 As the technology contin- and prove to become futile. Some practical considerations ues to improve, copyright holders for these shows should be and litigation strategies are explored in the article, and it concerned about rising levels of potential infringement. concludes with the hope that these copyright holders will One outcome, however, is clear: People now consume use the online television consumer base to develop a more digital American television in mass quantities.9 While marketable and profitable product. the original peer-to-peer downloading programs, such as the all-familiar Napster, were found to have encouraged HOW INTERNET DOWNLOADING copyright infringement by providing unfettered access to MAY DISPLACE THE RERUN digital music files, media downloads now present a novel question as to whether the newer peer-to-peer networks At the beginning of this century, anyone with a high- (such as BitTorrent) or other unofficial content providers speed Internet connection and a computer with a large or resources providing access to digital video files face the hard drive could find and download almost any song that same infringing concerns. The surface answer, of course, is they wanted for free. Most did so through programs like yes, but the distribution of television shows, and particu- Napster without hesitation based on casuistic entitlement larly broadcast television shows,10 raises legal issues that reasons or the belief that “everyone was doing it.”13 Just five can and will be distinguishable from those raised in the years later, a similar downloading mentality has entered music piracy cases. the television show market.14 Before exploring whether This article purposely leaves open the question of downloading television shows garners the same types of whether the same analysis could apply to downloaded infringement considerations, a brief summary of modern cable and premium channel television shows, such as orig- downloading is necessary. For purposes of basic foundation inal programming from MTV or HBO, as well as syndicat- only, this article focuses on the principal downloading pro- ed shows, which typically are aired originally on broadcast grams that evolved beginning in the early 2000s.15 television and now appear on other broadcast or cable Napster was the first widely used peer-to-peer net- channels. Although the question of fair use may hinge on working system on the Internet.16 Napster allowed any user whether the service is paid for by the end user and may of its program to connect to its centralized server, which be mooted by the fact that a homeowner has bundled his regularly indexed the combined shared files of any other
7
Electronic copy available at: http://ssrn.com/abstract=979741 JOURNAL OF INTERNET LAW May 2007
user then connected to its system.17 Thus, if a user, or peer, his file, other end users searching for the same file or files wanted to download a file, Napster’s search engine would will automatically download the incomplete parts obtained provide a link to another user, or peer, who had that file. Its from that user’s computer; and this entire tit-for-tat process software then facilitated the peer-to-peer download. helps to maximize uploading and downloading efficiency.27 Ultimately, Napster’s centralized server, coupled with Downloading speed also becomes a function of how many its refusal to take sufficient remedial measures to remove users have the file or its component parts on their computers: access to infringing materials, proved its undoing.18 T o The more people who share, the faster the download.28 T h e emulate Napster’s success without these same crippling popularity of Cohen’s program, as one reporter puts it, has liability concerns, the next generation of peer-to-peer “transform[ed] the Internet into the world’s largest TiVo.”29 downloading applications modified the way in which their By means of an example for clarity, assume first that the users could obtain the files that they sought.19 file to which the end user (A) seeks has 1,000 parts com- Grokster was one such successor program. Unlike prising the whole. If this file were to be downloaded using Napster’s method of indexing its combined user database Napster’s or Grokster’s peer-to-peer program, A would down- to promote easy searching, Grokster’s search engine simply load each of the thousand parts in order from a single peer passed the request to other connected users.20 Upon finding (B) sharing it. The speed to which A could get the file would a peer with the desired file, Grokster’s decentralized program depend on the bandwidth available from A’s and B’s Internet thereafter allowed the end user to download the file from connections.30 Trying to obtain this same file using torrent that peer and search the rest of that peer’s shared directory. technology allows A to download each of the 1,000 parts in The absence of keeping a list of infringing files and the their order of availability from any and all users sharing the inability to bar illegal file sharing between users precluded file, which could number in the thousands or more.31 I f A Grokster, at first, from the copyright infringement aspects wanted to get a file and user B had 70 percent downloaded, that imputed liability to Napster.21 How the Supreme Court user C had 80 percent, and user D had 100 percent, A’s com- combated this tacit facilitation of piracy will be discussed in puter would download from both B, C, and D simultaneously. the next section, but competitive peer-to-peer downloading Any part of the file that A obtains that one of the other users technology programs continued to adapt as copyright chal- does not already have will be uploaded from A’s computer to lenges were being brought against Grokster. that computer while A is downloading. This simultaneous Taking Grokster’s decentralized peer-to-peer network data exchange permits large quantities of data to be trans- idea to a completely different level, Bram Cohen in 2001 ferred at once, at higher speeds, using less bandwidth and designed BitTorrent, a content distributing program where arriving with fewer errors than was possible under programs an end user could download parts of the same file (com- like Napster or Grokster.32 Files that could take hours to plete or otherwise) from multiple users simultaneously.22 download using the traditional methods of legitimate pro- Rather than download the actual file, as a user would do grams like iTunes may only take minutes over BitTorrent with Grokster or Napster, BitTorrent’s users download a depending on the popularity of the file.33 This technology torrent, or “a small file which contains metadata about the has been adapted by several major software companies and files to be shared, and about the tracker, the computer that some movie and entertainment studios as the “next genera- coordinates the file distribution.”23 The torrent provides tion protocol for moving data around the Web.”34 The faster the BitTorrent software with the information needed to download speeds and popularity of torrent technology have search out and download the requested file to that user’s transformed file downloading from smaller digital music files computer.24 While BitTorrent has its own search engine to larger video files such as television shows. for torrents, torrents can also be found by searching on Due to this type of programming transfer, BitTorrent other third-party search engines.25 and similar programs face similar problems with the misuse Although the process of downloading through torrent of torrent technology. At the very least, the ease of data technology is much more complex and, in detail, unnec- exchange appears to facilitate faster piracy of much larger essary to explain for purposes of this article, the torrent files with Napster-type afterthought of legal consequences. essentially permits a user to download sought-after files from Further, torrent technology introduces yet another caveat any user who has any part of those files, regardless of com- in the copyright infringement jurisprudence in that the pleteness.26 In other words, a BitTorrent end user would not end users also become distributors by virtue of how the be downloading the entire file from one peer like he or she data is exchanged. Taking the copyright lessons devel- would from using the aforementioned Napster and Grokster oped by Napster and Grokster, however, companies like programs; instead, the end user would simply download BitTorrent are taking affirmative steps to reduce the from any and all users who have any piece of the file (or transfer of unlicensed media and other infringing files. program). Simultaneous to the end user’s downloading of To combat piracy through torrent technology on its site,
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BitTorrent, for example, has taken affirmative steps to program, liability could be avoided upon the mere showing remove links directing its users to torrents of unlicensed that Grokster did not have “reasonable knowledge of specif- copyrighted materials.35 The result of BitTorrent’s efforts ic infringement” resulting from the use of its software, that to curb piracy has produced lucrative benefits; over the is, actual knowledge of specific acts of copyright infringe- past couple years, BitTorrent has announced partnership ment due to the nature of the software.44 Essentially, the with various entertainment studios to distribute copy- Ninth Circuit shielded Grokster from contributory liability righted material legitimately through its service.36 because the nature of its program prevented Grokster from These partnerships, among other things, will work to actually knowing whether its users were downloading increase the number of legitimate uses for torrent technol- copyrighted media. To parallel, the Ninth Circuit also held ogy. As the next part of the article explains, these efforts and that Grokster could not materially contribute to their user’s legitimate uses may effectively shield BitTorrent and other infringement because of the program’s decentralized search torrent technology programs from the same liability Napster function, thereby creating a shield from vicarious liability.45 and Grokster faced in their respective copyright litigations. The endorsement of willful blindness, which had otherwise been permitted to impute liability on similarly situated ANALYSIS: GROKSTER AND ITS defendants in the Seventh Circuit in another music copy- EFFECT ON DISTRIBUTORS OF right infringement case,46 created the necessary circuit split DIGITAL MEDIA for a Supreme Court review.47 Not surprisingly, the Supreme Court granted certiorari .48 Much has been and will continue to be written on In vacating the Ninth Circuit’s ruling, the Supreme Grokster and its effect on third-party copyright liability.37 Court acknowledged that the case proceeded under the This part briefly explains the Grokster holding, but forgoes practical theory of contributory or vicarious liability. 49 The any substantive analysis of the contributory and vicarious Supreme Court also rephrased the threshold of liability infringement issues in order to focus on why BitTorrent’s under these circumstances: “One infringes contributorily technology and business model likely prevent it from by intentionally inducing or encouraging direct infringe- facing what this article terms “Grokster -liability.” ment, . . . and infringes vicariously by profiting from direct infringement while declining to exercise a right to stop THE RISE AND FALL OF GROKSTER or limit it.”50 The inducement rule, as explained by the Supreme Court in Grokster , adopts an actual or construc- In 2003, copyright holders in the motion picture and tive knowledge-plus test when determining liability, 51 music recording industries brought a copyright infringe- focusing primarily on the distributor’s intent to foster or ment action against various distributors of software that deter copyright infringement: enabled its users “to exchange digital media via a peer- In sum, where an article is “good for nothing else” to-peer transfer network,” including Grokster.38 Although but infringement, there is no legitimate public the district court acknowledged that the defendants “may interest in its unlicensed availability, and there is have intentionally structured their businesses in an effort no injustice in presuming or imputing an intent to to avoid secondary liability for copyright infringement, infringe.52 while benefiting financially from the illicit draw of their wares,” it granted partial summary judgment for the defen- [W]here evidence goes beyond a product’s char- dants on issues of contributory and vicarious infringe- acteristics or the knowledge that it may be put to ment.39 The district court held that Grokster could not infringing uses, and shows statements or actions be liable for contributory infringement because it had no directed to promoting infringement, Sony ’s staple- actual knowledge of specific acts of infringement,40 nor article rule will not preclude liability.53 could it be held liable for vicarious infringement because their software did not permit them to “supervise and [O]ne who distributes a device with the object of control the infringing conduct.”41 promoting its use to infringe copyright, as shown by The Ninth Circuit affirmed, holding the defendants clear expression or other affirmative steps taken to were not liable under either contributory copyright infringe- foster infringement, is liable for the resulting acts of ment or vicarious copyright infringement theories.42 I n infringement by third parties.54 reaching these conclusions, the Ninth Circuit agreed with the district court’s finding that the software in question [M]ere knowledge of infringing potential or of actual was capable of “substantial or commercially significant infringing uses would not be enough here to subject noninfringing uses.”43 Because of the legitimate uses of the a distributor to liability. Nor would ordinary acts
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incident to product distribution, such as offering evidence that 90 percent of the files were infringing, customers technical support or products updates, Grokster permitted transfer of about 10 percent of non- support liability in themselves. The inducement infringing files, a number similar to the 9 percent that rule, instead, premises liability on purposeful, culpa- the Court found authorized in Sony Corp. of America v. ble expression and conduct, and thus does nothing Universal City Studios, Inc. , 61 the previous case where the to compromise legitimate commerce or discourage Supreme Court had addressed this issue.62 Drawing such an innovation having a lawful promise.55 arbitrary line in the sand, Justice Breyer suggested, would The Supreme Court found compelling the plaintiffs’ create inconsistency among the courts and uncertainty evidence that Grokster’s business model contemplat- for defendants.63 Rather than require future defendants in ed capturing Napster’s former market of copyright a similar action to focus on some percentage of validity, infringers. Grokster’s software also intentionally pre- Justice Breyer proposed two alternative courses of action: cluded Grokster administrators from discovering any one against the end user and the other toward developing specific acts of infringement. The Court also identi- new technology to deter unlawful infringement.64 The fied that Grokster’s advertising profits hinged on resulting effects may continue to encourage lawful copying the number of times its program ran. Finding that through specific services such as iTunes or other programs 90 percent of Grokster’s users were operating the pro- encompassing such downloading services like Walmart. gram for infringing purposes and that Grokster’s adver- com. 65 Perhaps with torrent technology’s wider function- tising revenue was based on user activity, the Court ality in mind, Justice Breyer added this statement in a reasoned that Grokster geared its revenue stream and concluding paragraph about the success of digital online thereby profited primarily from the illicit uses of its pro- commerce: “And more advanced types of non -music-ori- gram.56 Finding that the evidence beyond distribution ented P2P networks have also started to develop, drawing “shows a purpose to cause and profit from third-party in part on the lessons of Grokster.”66 acts of copyright infringement,” the Supreme Court vacated the Ninth Circuit’s ruling.57 In essence, the THE EXTENT OF GROKSTER LIABILITY Supreme Court rejected Grokster’s willful blindness, or FOR BITTORRENT “purposeful, culpable expression and conduct” toward its pirate end user base, and opened the liability door The Grokster opinion begs the question of whether the for the copyright-holder plaintiffs. As stated at the next generation peer-to-peer distributors, such as BitTorrent, outset of the case, “one who distributes a device with face the same type of Grokster liability.67 At least two com- the object of promoting its use to infringe copyright, mentators believe that the answer is no.68 BitTorrent’s busi- as shown by clear expression or other affirmative steps ness model and deliberate efforts to curb downloading of taken to foster infringement, is liable for the resulting copyrighted torrents tend to support this conclusion. acts of infringement by third parties.”58 Liability against the distributor primarily depends on Not surprisingly, the concurring opinions added com- whether “he or she actively seeks to advance the infringe- plexities to the underlying holding. Justice Ginsburg’s ment.” 69 Napster (and Grokster by implication) strived concurrence explains why there remained a question to allow “amateur and unknown artists to share their of fact precluding summary judgment as far as the level music on this new medium,” 70 but the widespread piracy of commercially significant uses inherent in Grokster’s facilitated by these programs created a “staggering” amount program: of copyright infringement,71 rendering their legitimate Liability under our jurisprudence may be predicated use argument implausible. In comparison, BitTorrent has on actively encouraging (or inducing) infringement actively sought to stem the amount of pirated media avail- through specific acts (as the Court’s opinion devel- able through its technology and search engines by remov- ops) or on distributing a product distributees use to ing links to such torrents.72 Its relationships with various infringe copyrights, if the product is not capable of entertainment studios to distribute licensed entertainment “substantial” or “commercially significant” uses.59 content and its ability to track its clientele through the Because the district court had concluded that there were end user’s IP address 73 also may preclude it from having the “substantial noninfringing uses for Defendants’ software” same “purposeful, culpable expression and conduct” that without finding any fair use or “little beyond anecdotal evi- the Supreme Court found in Grokster’s business model.74 dence of noninfringing uses,” Justices Ginsburg, Roberts, BitTorrent’s efforts to promote legitimate electronic com- and Kennedy found summary judgment premature.60 merce and technological development seem to encompass In contrast to Justice Ginsburg’s opinion, Justice the sort of innovative technology that the Grokster court Breyer’s concurrence identified that, notwithstanding encourages. In short, BitTorrent’s business strategy and
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program attributes may free it from Grokster liability because and character of the use, including whether such use is of a they appear to address each of the infringement concerns commercial nature or is for nonprofit educational purposes; that the Supreme Court in Grokster contemplated. (2) the nature of the copyrighted work; (3) the amount If a court opts to follow Justice Ginsburg’s concurrence and substantiality of the portion used in relation to the and draw a line between infringing and noninfringing copyrighted work as a whole; and (4) the effect of the use uses, it may still determine that BitTorrent has a greater upon the potential market for or value of the copyrighted percentage of valid uses than the mere 10 percent found work.”82 In 1984, the Supreme Court addressed this doc- in Grokster or Sony , given its various licensing agreements trine in Sony Corp. of America v. Universal City Studios, with media studios and software developers.75 On this Inc. ,83 which involved the rights of copyright holders of point, one may argue that broadcast television download- television shows against then-novel technology, the VCR.84 ing and distribution qualifies as a substantial noninfringing In Sony, the issue was whether a television viewer using a use. For BitTorrent and other torrent technology programs, VCR to record shows broadcast over the public airwaves this issue ultimately represents a question of fact, requiring in the privacy of his home was a fair use of the copyrighted a similar analysis to that in Sony , because the ability to works under the Copyright Act. Although the Ninth and download a television show and watch it on a computer Seventh Circuits have analyzed the fair use argument for is likely the substantive equivalent of being able to “time- downloading music files,85 the nature of digital television shift” a television program by recording it on a VCR. 76 A calls for an analysis similar to that employed in Sony . distributor or end user may also raise fair use as an affirma- Accordingly, this part attempts to reconcile Sony ’s approach tive defense to a charge of direct infringement similar to to each of the four factors with regard to the VCR with the how this issue was raised in Napster .77 In either case, the modern way of obtaining television shows through torrent court would have to determine where broadcast television technology. Substantively, both the private recording with downloading falls within the fair use spectrum. a VCR or private downloading would allow the end user to view the program in the privacy of his home. ANALYSIS: FAIR USE AND THE Two commentators have made divergent arguments DIGITAL TELEVISION DOWNLOAD concerning P2P television sharing and fair use.86 This part takes a more nuanced position than either, arguing Generally, consumers must purchase rights in the that the factors in digital television cases balance more media in order to obtain a personal copy, such as in the in favor of fair use for the end user, but against fair use for case of movies or videos. Unique to television, however, the distributor whose purposes encompass commercial or consumers need not purchase these same rights in order profit-making motives (commercial distributors). By impli- to obtain a personal copy; innovations such as the VCR, cation, noncommercial distributors, which would primarily DVR, or TIVO have given consumers the ability to tem- include end users who are uploading by virtue of the tor- porarily retain these rights without additional remunera- rent technology, would qualify under the fair use statute.87 tion to the network. Advertising revenue through product As a general matter, this section operates on the placement or commercial spots78 generates income, par- assumption that the home computer today can function in ticularly in the case of broadcast television, but in the case the same manner as, if not better than, a VCR did when of cable, satellite or pay cable receives the benefit of a sec- Sony was decided in 1984. This assumption is, at the least, ondary income stream by charging its viewers. Assuming a reality to early-users on the technology bellcurve. For first that the copyright holder of the television show example, Hewlett-Packard (HP) offers a laptop that prom- differs from the copyright holder of the commercials aired ises to record a television show “every time it airs” and during the show and second that commercials are edited “even record two shows or series at the same time while out of the downloaded program, the digital distribution of also watching a previously recorded third show.”88 Trying a broadcast television show creates a multitude of issues.79 to distinguish those end users who record on their person- This part focuses on the fair use doctrine as it applies to al computers by virtue of specific software from those who those end users who download television shows.80 download the same file through torrent technology would produce incongruent and inconsistent results; hence, this THE FAIR USE ARGUMENT FOR DIGITAL article treats them the same. TV SHOWS Purpose and Character of the Use Congress has codified the fair use doctrine as an equi- The first factor in the fair use evaluation concerns the table rule of reason.81 When applicable, the fair use statute use of the original work. As identified in Napster, this factor requires a court to consider four factors: “(1) the purpose “focuses on whether the new work merely replaces the object
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of the original creation or instead adds a further purpose or the same way as someone who initially posts and dispenses different character.”89 It also requires the court to determine the original torrent. Thus, against the distributor, the court whether the “allegedly infringing use is commercial or non- will likely favor the copyright holder on this factor. commercial.”90 There is no doubt that the court would find that the digital version of the show merely replaces the origi- The Nature of the Copyrighted Work nal broadcast version, and one only has to look at the HP The second factor focuses on the nature of the copy- advertisement described above to see the functional identity. righted work; in this case, a broadcast television show. Thus, whether downloading via a torrent infringes the rights While the music copyright litigation found online distri- of the copyright holder of the digitized show depends on bution of music to be commercial in nature because end whether the use is commercial or not. The analysis differs users would be “get[ting] for free something they would slightly for the end user and the distributor. ordinarily have to buy,” 97 the nature of broadcast televi- As applied to the end user, the Sony court focused sion differs because the end user would ordinarily be able on the technology of the VCR, in that it permitted an to obtain the program for free by turning on the television. end user to time-shift the original airing of the program In Sony, the nature of television as something a viewer for private use.91 In identifying this key aspect, the court “has been invited to witness in its entirety free of charge” deduced that the end user’s choice to watch a previously helped tip the balance in favor of fair use.98 Because the aired show “must be characterized as a noncommercial nature of television has not substantively changed, a court nonprofit activity.”92 As a result, nobody today gives a should have little problem glossing over this factor. second thought to the implications of recording a show An end user should have little problem succeeding on a personal VCR. on this factor so long as he can prove that he would have Similarly, the private recording or downloading of been able to view the show otherwise. The product has a television show via torrent technology or otherwise not changed; rather, downloads of broadcast shows are should not differ in result. Had the end user recorded the merely delivered in a different medium. Sony ’s holding show on his VCR, DVR, or other computer program, he still applies to broadcast television shows obtained by would have had the same copyrighted program (perhaps the end user, and accordingly, the court should balance with commercials, but this part assumes that question this factor in the end user’s favor. Likewise, this factor away). Whether the end user recorded the program would also favor both the commercial and noncommercial himself or had a friend record the show for him and let distributor’s position for the same reasons. him borrow the tape therefore is of no consequence: The The copyright holder’s argument on this factor program could have been seen regardless of the method strengthens, however, with regard to cable or premium employed to time-shift it. In other words, by downloading channel shows because they are not free like broadcast the file, the end user essentially uses torrent technology television. In these cases, the end user or distributor must analogous to the Sony method of time-shifting the aired be able to show that he already paid for these services in program. Distinguishing the two technologies would oper- order to be able to argue this factor successfully. ate to elevate form over substance. Against the end user, the court would likely favor the end user rather than the The Portion Used in Relation to the Whole copyright holder under this analysis. The third factor, dealing with the amount of the Whether this characterization also favors the distribu- original work copied, may have different results depending tor would depend on the court’s evaluation of commercial on whether the entire broadcast show is available or just use. Given that the Internet permits millions of users to clips of it. The nature of television, however, permits the consume and digest information online,93 the court would full copying of a copyrighted work.99 Likely, then, it would first have to analyze whether the online distribution of not matter if the end user downloaded the entire broad- broadcast television shows qualifies per se.94 While the cast of Katie Couric’s first nightly news appearance or just commercial distributor’s best argument may be that he is one segment, to give an example.100 Wholesale copying simply “time-shifting” the program for others, the court of broadcast television, as compared to wholesale copying may have difficulty aligning private home usage with the of music101 would probably favor fair use for both the end widespread nature of the Internet.95 Further, the commer- user and the commercial and noncommercial distributor. cial distributor will have to address how his act would not violate the copyright holder’s exclusive right to distribute The Effect of Use Upon the Market the work.96 Those end users who distribute by virtue of The nature of television arguably makes this last the tit-for-tat downloading process, however, may have a factor the most important one in this fair use analysis. more compelling argument that they are not distributing in Regardless of how the court decides the first three factors,
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this factor weighs heavily in favor of fair use for the end the increases in downloads of other shows through torrent user and heavily against fair use for the commercial dis- technology may have the same effect, especially in con- tributor. The Sony court predicated its analysis of this text of niche markets, such as the international television factor on the effect of the intended use on the copyright market.114 Regarding DVD sales, the copyright holder holder’s potential market,102 that is, the economic conse- would have to show that post-broadcast DVD sales of the quences of copying.103 If the intended use is for a commer- work are affected in order to succeed. Unlike music, where cial gain, the copyright holder is given a presumption in sales have been established for many years, sales of televi- favor of present or future market harm. 104 If the intended sion shows on DVD are a relatively recent phenomenon use is for a noncommercial gain, the copyright holder must that continues to increase.115 With the networks offering demonstrate by a preponderance of the evidence that the same product (the show) for sale on their site, the “ some meaningful likelihood of future harm exists.”105 I n copyright holder also has to contend with the argument other words, “[f]air use, when properly applied, is limited that its own individual sales through legitimate channels to copying by others which does not materially impair the may be having the same effect on the market.116 marketability of the work which is copied.”106 Finally, it would be difficult for the copyright holder to argue that personal downloading of broadcast television The End User’s Effect on the Marketability shows harms the potential marketability when the net- of the Product works are simultaneously encouraging the end user to view For the end user arguing fair use, the burden is on the same product online, albeit on their own terms. To the the copyright holder to show that the end user’s down- extent that the copyright holder may argue that down- load will harm the marketability of the work. While the loading threatens the viability of marketing the show on nature of music and economic sales data has allowed the television, one commentator points out that an analogous copyright holder to make this showing quite easily in those argument was made for the digital video recorder and that litigations, 107 the nature of broadcast television makes it advertising revenue still increased.117 Thus, downloading much more difficult. Three interconnected reasons arguably by the end user has a more likely effect of increasing, not favor the end user’s fair use argument. decreasing, the marketability of the work. The end user First, the ability to download and watch the show at who distributes by virtue of the tit-for-tat process will be the end user’s convenience is the functional equivalent to able to apply most, if not all, of these same arguments, par- recording the show on a VCR and watching it at a later ticularly given the fact that the same process could occur, time. As in Sony, the court accepted the district court’s albeit slower, if one end user recorded the show on a VHS rejections of the copyright holder’s arguments that the tape and subsequently mailed it to another end user.118 ability to time-shift a program by recording it on a VCR The analysis for the end user may differ slightly for for later private use would adversely affect the copyright television shows on non-broadcast channels. Downloading holder’s market.108 The same argument could be made suc- necessarily circumvents the cable or premium channel’s cessfully for those who time-shift by downloading, particu- subscription revenue stream, whereas downloading a larly if the end user can show that some copyright holders broadcast show without commercials only circumvents would find nothing objectionable about the practice.109 the broadcaster’s revenue through commercial advertise- Second, downloading necessarily increases the show’s ment.119 The marketability of the work could be negatively exposure, which would have a positive effect on the affected for both in that the networks may be less inclined copyright holder’s market, reflected by either an increase to accept a copyright holder’s offer for syndication; how- in market share or in DVD sales of the show.110 This fac- ever, the increase in syndication viewership and DVD tor would balance in favor of the end user regardless of sales of television shows suggest the opposite result.120 whether the copyright holder approved of the ability to download or not.111 Regarding market share, the most Distributors’ Effect on the Marketability recent example of this type of online exposure resulting of the Product in positive results for the copyright holder comes from the Unlike end users, distributors create a separate mar- television show The Office . Early ratings for the show were ketability concern that may balance the fair use scale “iffy” until it began to be offered via iTunes;112 the combi- against them. Without dispute, the sale of advertising, nation of this broader online campaign and subsequently particularly commercials, and product placement helps to moving The Office to Thursday nights appears to be posi- subsidize the concept of free television.121 The more popu- tively correlated with the fact that The Office is the second lar the show, the more money the network can command highest rated show in the 18-49 demographic.113 While from advertisers hoping to secure positive association and this particular example comes from a legitimate download, increased sales from its consumer base.122 Likewise, the
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broadcast popularity of a show helps the copyright holder litigation necessary against other programs employing eventually market it for syndication, allowing them to col- Cohen’s torrent technology or otherwise distributing copy- lect from an indefinite profit stream. 123 While the value of righted works. Not surprisingly, this type of litigation has a commercial advertisement has a somewhat limited shelf already begun.128 Success will largely depend on the extent life,124 the ability to control the means from which an end to which the service or distributor fosters infringement by user can see the work undeniably effects how the copy- providing access to copyrighted torrents. If charged with right holder can gauge its relative market, such as through contributory or vicarious copyright infringement, these the Nielson Ratings System. In turn, this ability directly businesses may first have to explain the steps they have affects marketability of the product. taken to discourage willful infringement, such as self-mon- Based on this part’s assumption that the downloaded itoring or removal of potentially infringing files or links television show has the commercials edited out, the end to them following notice of infringement.129 If they are user is essentially watching the copyrighted show without unable to make this showing or otherwise refuse to comply what makes the show free in the first place. In many ways, with these types of notices, Grokster liability may apply and this downloaded version would be the functional equiva- injunctive relief or damages may be available. lent of what the user would see if he were to purchase the In addition to these distributors, copyright holders DVD of the show. 125 Notwithstanding any product place- may find additional claims to be had against end users ment the copyright holder may have used in the show who attempt to profit at the copyright holder’s expense itself, the show’s sponsors are necessarily deprived of the by downloading, saving, and then reselling the work on a end market for which they had paid a premium to reach. bootleg DVD.130 A search on eBay for any number of copy- Further, the broadcast network, either as licensee or copy- righted shows on DVD may reveal deals that are, to put right holder, is deprived of being able to gauge its audi- it colloquially, too good to be true when compared to the ence base. Thus, torrent technology and other Web sites retail price. Concerted efforts by the copyright holder to provide the end user with a choice from where to obtain determine whether the end user is profiting by distributing the digital media, something that the end user would not bootleg copies of a show as opposed to reselling a purchased be able to do otherwise because it would only have been copy may also have cost benefits that outweigh pursuit of available on that broadcast channel.126 This conclusion end users that initially requires obtaining a subpoena to would apply regardless of whether the distributor provided determine the identity of a John Doe end user.131 Further, links to these torrents through its torrent search engine or the actual damages based on that user’s past sales records if the files were posted directly on a third party Web site.127 may exceed the statutory damages available in these cases. Unlike the end user whose broadcast viewing or digital Although fair use may favor the end user for broad- download helps increase the show’s exposure and market- cast television shows, the shelf life of fair use is likely to ability, the commercial distributor, for the aforementioned be limited in time for the end user. Torrents for broadcast reasons, will be unlikely to rebut the presumption of pres- television shows that have since been cancelled or those ent or future market harm. Additionally, the noncommer- of past seasons of current broadcast television shows may cial distributor, such as a fan who posts the video on Web have more of an effect on marketability of the work than sites like YouTube, Neufstream.com, or Fanpop.com, faces just downloading a current show one may have missed the same infringement problems. and otherwise not available on an official or licensed Web In deciding how to pursue an infringement issue with site. For shows with a continuing storyline, such as ABC’s fair use in mind, the copyright holder will have a slightly Lost, the argument for fair use for downloading the older different litigation strategy than he would if he was pro- shows would be that it increases viewership and exposure tecting his music copyright. Against the end user, the fair for the current show. The copyright holder, on the other use argument presents a formidable defense that may be hand, should be able to demonstrate more easily the harm difficult to overcome. Against the distributor, however, that this form of downloading could bring if the show was arguing fair use will likely end in the same judgment as it to be taken to syndication. Considering that a legitimate has in the music litigation cases. alternative for catching up, so to speak, exists through the online purchase of the show through a service like iTunes, EVALUATION: PRACTICAL framing this argument in terms of how the download CONSIDERATIONS IN TELEVISION affects these sales may tip the scale in favor of the copy- DOWNLOADING LITIGATION right holder on any fair use argument raised. Litigation may not be the only solution to this To curb piracy further and promote torrent technol- problem. The copyright holder may wish to work with ogy’s legitimate uses, the entertainment industry may find distributors like BitTorrent to funnel its online audience
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base in such a manner that it is able to gauge use online. to control how its consumer base views its programming. This ability to track its user’s online habits, much like The diversity of torrent technology programs that allow Amazon tracks its customer’s purchasing habits,132 would an end user to obtain the digital version of the television produce more effective advertising results. As the ability file, however, intrudes on the copyright holder’s exclusive to gauge its users viewing and purchase habits contin- right to distribution. ues to develop, the copyright holder should be able to It may be in the copyright holder’s financial interest extrapolate more specific data on its customer base, which to pursue a litigation strategy to deter these programs from would, in turn, attract future advertisers catering to those distributing the file or the end user from downloading markets. Others have commented on the economics of them. In the case of the former, the copyright holder has this type of focused advertising in the online world and the Grokster opinion in his arsenal to recover on various its effects on the current television advertising model.133 infringement claims. These technology programs, howev- Having multiple outlets for distributing the work may give er, may employ strategies that put Grokster liability beyond the copyright holder a more representative understanding the copyright holder’s reach. Against the distributor, and of its demographics and help increase the marketability also against the latter end user, the litigation will likely of the work. Further, a rational consumer would view or require the court to make a fair use analysis. In certain purchase content through a legitimate source rather than cases, the end user may prevail in a fair use argument based attempt to obtain the show through illegal channels.134 on the reasoning of Sony . In others, the copyright holder Anticipating that some level of piracy will always will be successful. Regardless, the copyright holder may occur, the copyright holder may wish to increase product have a competing interest to work with the distributor in placement in the show itself. This form of advertising is order to better serve the consumer base. Fostering these undoubtedly a double-edged sword with its consumers,135 relationships, in the same vein that the torrent technol- but the results often speak for themselves. 136 As online ogy programs have succeeded in developing legitimate and viewership continues to grow, copyright holders will successful strategic partnerships, may have a better overall invariably increase product placement as a secondary rev- result for these particular copyright holders and their spon- enue stream. The ability to market the show more effec- sors. In short, the potential for the copyright holder to tively to these consumers will benefit both the copyright use torrent technology necessitates a consideration of the holder and the show’s sponsors. value added benefit that could have consumers beating a The copyright holder of a television show needs to path toward the copyright holder and its sponsors. consider the effect of suing its core constituency. As Justice Breyer suggests in his concurring opinion in Grokster , this NOTES legal option is a viable alternative to developing more technological remedies that work to deter infringement at 1. Jack Hope, “A Better Mousetrap,” American Heritage , Oct. 1996, at 90. 2. Id. the first instance.137 The Recording Industry Association 3. See, e.g. , Saul Hansell, “New Service from Amazon Offers Downloadable of America (RIAA) and the Motion Picture Association Films,” NY Times , Sept. 8, 2006, at C2 (reporting that Amazon.com has of America (MPAA) have both been successful in their available for purchase a line of digital products, including television shows 138 and movies, to compete with similar digital media available from compet- lawsuits against end users infringing on their products. ing distributors such as Apple’s iTunes). See also Ben Hirschler, “Gates: As pointed out by one commentator, the results of these Internet to Revolutionize TV in 5 Years,” Reuters , Jan. 27, 2007, available actions have been mixed. 139 In order to better serve its at http://news.com.com/2100-1041_3-6154009.html (predicting that the convergence of television and the Internet is inevitable and using the customer base and allocate costs more productively, the Olympics as an example of when the current television schematic has television show copyright holder may wish to forgo certain come up short). litigation against end users and instead concentrate on 4. For an excellent chronological summary and analysis of how users shared files or obtained files online and the legal implications, see Craig developing relationships with certain commercial distribu- A. Grossman, “From Sony to Grokster, The Failure of the Copyright tors to drive their end users toward a legitimate download. Doctrines of Contributory Infringement and Vicarious Liability to Resolve the War Between Content and Destructive Technologies,” 53 Buff. L. Rev . 141 (2005). CONCLUSION 5. Dawn C. Chmielewski & Meg James, “TV May Be Free but Not That Free,” L.A. Times , Mar. 1, 2006, at A1. The downloading of television shows, while perhaps 6. Tom Zeller, Jr., “Federal Effort to Head Off TV Piracy is Challenged,” NY Times , Feb. 21, 2005, at C1. in its infancy, is on an upward trend. To prevent the 7. iTunes Store: Download times for purchases (Sept. 13, 2006), http://docs. corresponding level of piracy experienced by the music info.apple.com/article.html?artnum=302719 . This comparison, of course, industry, the copyright holders of television shows, and as may be comparing oranges to apples due to the differing downloading technology and availability of files. specifically explained in this article, the copyright holders 8. See generally David Bauder, “TV Shows Online Increasing,” Pittsburgh of broadcast television shows, need to develop a strategy Post-Gazette , Oct. 25, 2006, at C6 (stating that ABC, CBS, NBC, and
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FOX are all beginning to experiment with putting their popular shows name, this article will distinguish “BitTorrent” and the generic “torrent online through streaming or real time video, with undisclosed success). technology” when appropriate. See also Joshua Chaffin & Aline van Duyn, “Viacom Tells YouTube to 23. Wikipedia, BitTorrent, http://en.wikipedia.org/wiki/BitTorrent (last visited Remove Content,” FT.com , Feb. 2, 2007, at ¶ 3, available at http://www. Apr. 18, 2007). ft.com/cms/s/0e225e60-b2d6-11db-99ca-0000779e2340.html (reporting that Viacom has demanded Google’s YouTube service to remove more than 24. See Cohen, supra n.22, at 2; Choi, supra n.19, at 403. 100,000 video clips after licensing negotiations fell through). 25. See Choi, supra n.19, at 408-409. 9. See Howard W. French, “Chinese Tech Buffs Slake Thirst for U.S. 26. See Cohen, supra n.22, at 2-3 (explaining the technical aspect to this pro- TV Shows,” NY Times , Aug. 9, 2006, at A6 (reporting that increasing cess). See also Wikipedia, BitTorrent , supra n.23 (providing a more general numbers of Chinese Internet users are downloading American televi- explanation). sion shows, “complete with subtitles supplied by teams of volunteers”). 27. See Cohen, supra n.22, at 3-5 (explaining the tit-for-tat process). See also See also Chmielewski & James, supra n.5, at A1 (explaining that Julie Bosman & Tom Zeller, Jr., “Warner Bros. to Sell Movies Using the British downloaders no longer need to wait nine months to see current Software of Pirates,” NY Times , May 9, 2006, at C3 (“[E]veryone down- American shows); Lara Sinclair, “Free-to-Air Copping A Download,” loading a file is simultaneously contributing to its distribution, making it Australian IT , Dec. 14, 2006, http://australianit.news.com.au/articles/ impossible to ‘leech,’ or take without also giving.”). 0,7204,20922899%5e16123%5e%5enbv%5e,00.html (reporting the results of a University of Sydney student’s study that 53 percent of his 800 28. Id. respondents regularly download television shows from the Internet). 29. Clive Thompson, “The BitTorrent Effect,” Wired , Jan. 2005, at ¶ 21, 10. In this article, broadcast television shows refers to shows airing on net- available at http://www.wired.com/wired/archive/13.01/bittorrent.html . work television channels, such as CBS, ABC, NBC, FOX, PBS, or the 30. See David W. Opderbeck, “Peer-to-Peer Networks, Technological CW, which one could watch with just a television set and antenna. Evolution, and Intellectual Property Reverse Private Attorney General 11. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.,125 S. Ct. 2764 Litigation,” 20 Berkeley Tech. L.J. 1685, 1697 (2005). (2005). 31. See Cohen, supra n.22, at 5. 12. This article refers to end users as the consumers who download the file 32. Id. at 2-5; Bagley & Martin, supra n.13, at 1-3. using various downloading technologies. While this article refers to end users with masculine pronouns, there is no implication that males or 33. Brad Stone, “Wal-Mart Plans to Test Online Films,” NY Times , Nov. 26, females would download television any differently, other than perhaps in 2006, at C1. the types of shows downloaded. 34. Bagley & Martin, supra n.13, at 2 (using Sun Microsystems as an exam- 13. Constance E. Bagley & Reed Martin, BitTorrent: Copyrights in ple). See also Stone, supra n.33, at C1 (stating that BitTorrent planned to Cyberspace 7-8 (Harv. Bus. School Online, Sept. 22, 2006). announce that “it has struck distribution deals with eight media partners, including 20th Century Fox, Paramount and MTV Networks”). 14. See, e.g. , Chmielewski & James, supra n.5, at A1 (explaining how some people are using modern file sharing programs to create personal on- 35. Julie Bosman & Tom Zeller, Jr., “Warner Bros. to Sell Movies Using the demand programming). One British downloader reasoned, “If it is free on Software of Pirates,” NY Times , May 9, 2006, at C3. See also Stone, supra everybody’s TV, why worry about it?” Id. n.34, at C1 (reiterating the BitTorrent pledge to “police its network for illegal trading”). 15. Much has been already written on the technology behind Napster and its derivative programs. See Grossman, supra n.4, at 162-220. See also A&M 36. Dawn C. Chmielewski, “BitTorrent Set To Unveil Deals With Studios,” Records Inc. v. Napster, Inc., 239 F.3d 1004, 1011-1012 (9th Cir. 2001) L.A. Times , Nov. 29, 2006, at C2. (describing Napster’s functionality). 37. See, e.g. , Julie E. Cohen, “Pervasively Distributed Copyright 16. Heather S. Hall, “The Day the Music Died: The Supreme Court’s Enforcement,” 95 Geo. L.J. 1, 9 (2006) (arguing that Grokster has effec- Reversal of MGM Studios, Inc. v. Grokster and its Impact on Secondary tively “eroded the certainty afforded by the Sony safe harbor”); Alfred Liability for Copyright,” 35 J.L. & Educ . 387, 387 n.1 (2006). C. Yen, “Third-Party Copyright Liability After Grokster ,” 91 Minn. L. Rev . 184, 189 (2006) (analyzing Grokster and arguing that it “created an 17. Napster , 239 F.3d at 1012. The Napster case provides a succinct expla- improved framework for future construction of third-party copyright lia- nation of how Napster provided search and downloading capability bility”); Tiffany A. Parcher, Comment, “The Fact and Fiction of Grokster between its users. and Sony : Using Factual Comparisons to Uncover the Legal Rule,” 54 18. See Napster , 239 F.3d at 1022 (“The record supports the district UCLA L. Rev. 509 (2006) (making factual comparisons between the court’s finding that Napster has actual knowledge that specific Sony and Grokster cases). infringing material is available using its system, that it could block access to the system by suppliers of the infringing material, and that 38. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 259 F. Supp. 2d it failed to remove the material.”). Several commentators have dis- 1029, 1031 (C.D. Cal. 2003), aff’d , 380 F.3d 1154 (9th Cir. 2004), vacat- cussed Napster’s business model and provide better explanations as to ed , 125 S. Ct. 2764 (2005). Although there were three distributor defen- how it created liability for the indirect copyright infringement claims dants in this case, this article refers to them collectively as “Grokster.” plaintiffs brought against the company. See, e.g., Grossman, supra 39. Id. at 1046. n.4, at 195-200 (discussing the knowledge element); John M. Moye, 40. Id . at 1035, 1043. Comment, “How Sony Survived: Peer-to-Peer Software, Grokster, and Contributory Copyright Liability in the Twenty-First Century,” 41. Id . at 1045. 84 N.C. L. Rev. 646, 662-664 (2006) (summarizing the Napster 42. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 380 F.3d 1154, case). 1160 (9th Cir. 2004), vacated , 125 S. Ct. 2764 (2005). 19. See Bryan H. Choi, Note, “The Grokster Dead-End,” 19 Harv. J.L. 43. Id . at 1161. In making this conclusory statement, the District Court and & Tech . 393, 395-398 (2006) (contrasting the Aimster and Grokster Ninth Circuit primarily relied on undisputed evidence in the form of dec- programs that gained popularity after Napster and explaining how they larations asserting the program provided movie trailer downloads, public exploited the legal loopholes in the knowledge element that the Napster domain materials, free songs or other noncopyrighted works, among oth- decision had seemingly created). ers. SeeGrokster , 259 F. Supp. 2d at 1035. 20. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 125 S. Ct. 2764, 44. Grokster , 380 F.3d at 1162-1163. 2771 (2005). 45. Id . at 1163. 21. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 380 F.3d 1154, 1163-1165 (9th Cir. 2004), vacated , 125 S. Ct. 2764 (2005). 46. See In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003). 22. See Bagley & Martin, supra n.13, at 2 (describing Cohen’s techno- 47. See Brandon Michael Francavillo, Comment, “Pretzel Logic: The Ninth logical innovation and how its open source code prompted further Circuit’s Approach to Contributory Copyright Infringement Mandates technological innovation). See generally Bram Cohen, Incentives Build that the Supreme Court Revisit Sony,” 53 Cath. U. L. Rev . 855 (2004) Robustness in BitTorrent(2003), http://www.bittorrent.org/bittorrentecon. (discussing the split created by both cases). pdf (describing how BitTorrent works). Because BitTorrent is a brand 48. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 543 U.S. 1032 (2004).
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49. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 125 for the copyright holder that is beyond this article. One commentator S. Ct. 2764, 2776 (2005). has already addressed this issue in depth. See Ethan O. Notkin, Note, 50. Id . (citations omitted). “Television Remixed: The Controversy Over Commercial-Skipping,” 16 Fordham Intell. Prop. Media & Ent. L.J. 899 (2006). For purposes of this 51. The “actual or constructive knowledge-plus” test is equivalent to what article, assuming the copyright owner’s work is the show itself and not Professor Yen describes as a fault test. See Yen, supra n.37, at 227. the show with commercials is more realistic than trying to carve out some 52. Grokster , 125 S. Ct. at 2777 (citations omitted). complex scenario where the digital version of the latter is okay whereas the digital version of the former is not. Compare id. at 903 (“[T]hose seek- 53. Id . at 2779. ing to prevent commercial-skipping are hard-pressed to come up with any 54. Id . at 2780. reasonable form of enforcement.”) withIn re Aimster Copyright Litig. , 334 55. Id . F.3d 643, 647-48 (7th Cir. 2003) (“[C]ommercial-skipping, amounted to creating an unauthorized derivative work, . . . namely, a commercial-free 56. See id. at 2772, 2780-2782. copy that would reduce the copyright owner’s income from his original 57. Id . at 2782. This would imply that the court found Grokster had knowl- program, since “free” television programs are financed by the purchase of edge of the illicit uses of its program and, by negative inference, did noth- commercials by advertisers.”) (citations omitted). ing to curb or discourage it. 80. The ability to archive files on one’s computer or on DVD indefinitely 58. Grokster , 125 S. Ct. at 2770. and the economic implications on the copyright holder creates another 59. Id . at 2783 (Ginsburg, J., concurring). substantive issue beyond the scope of this article. Commentators have begun to address this concern in the context of Google’s plan to create a 60. Id . at 2785. massive digital library. See Rebecca Tushnet, “My Library: Copyright and 61. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 the Role of Institutions in a Peer-to-Peer World,” 53 UCLA L. Rev . 977 (1984). (2006). One may argue, for example, that the end user who saves the file 62. Grokster , 125 S. Ct. at 2788-2789 (Breyer, J., concurring). will be less likely to purchase the DVD version, this act may have a more adverse affect the work’s marketability. This article does not reach this 63. See id. at 2783 (“The additional risk and uncertainty would mean a con- issue because it assumes that the end user deletes it from his computer sequent additional chill of technological development.”). after downloading the file and watching it. 64. Id . at 2794-2995. 81. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 448 65. See id. at 2795. (1984) (citation omitted). 66. Id . at 2796. 82. 17 U.S.C. § 107 (2000). 67. For a well-articulated argument on why contributory liability after 83. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984). Grokster will become “the backbone of the law,” see Yen, supra n.37, at 84. The Grokster court focused on Sony ’s “substantial noninfringing uses” 227-239. language. Id . at 442 (“Accordingly, the sale of copying equipment . . . does 68. See Choi, supra n.19, at 410-411; Moye, supra n.18, at 682-692 (calling it not constitute contributory infringement if the product is widely used for a “Pyrrhic victory for the entertainment industry” and analyzing the need legitimate, unobjectionable purposes. Indeed, it need merely be capable of for Congressional involvement). substantial noninfringing uses.”). Grokster’s program, as one that fostered infringement, could not therefore escape liability if “cause[d] and profit[ed] 69. Grokster , 125 S. Ct. at 2787 (Breyer, J., concurring); accord id. at 2770. from third-party acts of copyright infringement.”Metro-Goldwyn-Mayer 70. Bagley & Martin, supra n.13, at 7 (quoting Napster interim CEO Eileen Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 125 S. Ct. 2764, 2782 Richardson in a 2000 conversation with an RIAA representative). (2005). Because Grokster conceded that its users directly infringed on 71. Grokster , 125 S. Ct . at 2772. the copyrights being passed through its program, id . at 2772, the court in Grokster did not have the issue of fair use before it. 72. See supra n.35 and accompanying text; see also Dawn C. Chmielewski, “BitTorrent Set to Unveil Deals with Studios,” L.A. Times , Nov. 29, 85. See A&M Records Inc. v. Napster, Inc., 239 F.3d 1004, 1014-1019 (9th 2006, at C2, available at http://www.latimes.com/technology/la-fi- Cir. 2001) (affirming the district court’s finding that Napster’s users were torrent29nov29,0,1216531.story (“BitTorrent has … agreed to filtering not fair users of copyrighted music); BMG Music v. Gonzalez, 430 F.3d techniques that will enable the pirated content to stay out of the network 888, 890 (7th Cir. 2005) (reaching a similar conclusion with less analysis). and only allow copyrighted material from Paramount to get to consumers 86. See Maria Termini, Note, “Time-Shifting in the Internet Age: Peer-to- who are willing to pay for it.”) (quoting Thomas E. Lesinski, president of Peer Sharing of Television Content,” 38 Colum. J.L. & Soc. Probs . 415, digital entertainment for Paramount Pictures). 433-38 (2005) (finding no fair use); Sheila Zoe Lofgren Collins, Note, 73. John Borland, “P2P Hide-and-Seek,” CNET News.com , July 23, 2003, “Sharing Television Through the Internet: Why the Courts Should Find ¶ 3, http://news.com.com/2100-1025_3-5051627.html (quoting BitTorrent’s Fair Use and Why It May be a Moot Point,” 7 Tex. Rev. Ent. & Sports founder as saying that BitTorrent does not have any anonymity features). L. 79 (2006) (finding fair use). Ms. Collins’s note makes a slight variation on a point that I argue here by stating that the entire downloading issue 74. Grokster , 125 S. Ct. at 2780. becomes moot if downloading is fair use and uploading is found to be 75. See Greg Sandoval, “Paramount, Fox embrace BitTorrent,” CNET News. illegal. See id. at 97 n.122. Although I agree with many of Ms. Collins’s com , Nov. 29, 2006, at ¶ 8, http://news.com.com/2100-1025_3-6139174. points, I have attempted to structure this part to address what she terms html (quoting BitTorrent’s general manager of consumer services as stating the “tenuous” aspects of the television downloading debate, that is, fair that BitTorrent’s research suggests that thirty percent of its users will use use as it applies to distributors. See id. at 103. As a result, this part reaches the service legally by paying for content). See also Ben Fritz, “BitTorrent a slightly different conclusion than does Ms. Collins in her analysis. Cf. at Goes Legit,” Variety , Feb. 25, 2007, available at http://www.variety.com/ 100 (“Uploading a television program only allows downloaders to watch article/VR1117960102.html?categoryid=18 (reporting that BitTorrent has what they would already be allowed to watch for free on broadcast televi- formally launched its digital content store, which combines its peer-to- sion. Put simply, uploading should be legal.”). peer protocol with the ability to obtain licensed media). 87. An open question would be whether distributors who post television 76. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, shows on Web sites like YouTube would fall in the commercial or non- 442-456 (1984). commercial category. See “Fox Subpoenas YouTube after ‘24’ Episodes 77. A&M Records Inc. v. Napster, Inc., 239 F.3d 1004, 1014-1019 (9th Cir. Posted,” Reuters , Jan. 25, 2007, available at http://news.com.com/2100- 2001). 1030_3-6153207.html ; Nicholas Carlson, “Google Turns Over User IDs,” Internetnews.com , Feb. 12, 2007, http://www.internetnews.com/xSP/article. 78. The Superbowl commercials provide the best known example of this php/3659401 . YouTube, however, has announced plans that it may share point. See Stuart Elliott, “Multiplying the Payoffs From a Super Bowl advertising revenue with users who own the full copyright to popular Spot,” NY Times , Jan. 26, 2007, at C2 (stating that a thirty-second spot in videos. See Tim Weber, “YouTubers to Get Ad Money Share,” BBC News , Superbowl XLI costs an average of $2.6 million). Jan. 27, 2007, available at http://news.bbc.co.uk/2/hi/business/6305957.stm . 79. The effects of commercials on the original broadcast and the ability to Whether a distributor who would otherwise receive no commercial ben- edit them out of the digital version create an additional layer of concern efit from this type of distribution would fall into the commercial category
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remains unclear, although the analysis in this article suggests that the 114. See generally Chmielewski & James, supra n.5, at A1 (stating that illegal effect on the work’s marketability may outweigh this factor. downloads of the show “24” have increased by more than 150% in the 88. See HP Entertainment Notebook PC, http://h71036.www7.hp.com/hho/ past year in Britain). cache/309489-0-0-225-121.html (last visited Apr. 18, 2007). 115. See Marc Gunther, “Fox the Day After Tomorrow,” Fortune , May 29, 89. Napster , 239 F.3d at 1015. See also Campbell v. Acuff-Rose Music, Inc., 2006, at 98, available at http://money.cnn.com/magazines/fortune/ 510 U.S. 569, 579 (1994) (finding that this factor requires looking at the fortune_archive/2006/05/29/8378000/index.htm (“Annual sales of TV extent to which the original work is “transformative”). shows on DVD have grown from just about zero in 1999 to nearly $4 bil- lion in 2005.”). This point concedes, however, that the sale of television 90. Napster , 239 F.3d at 1015; Campbell , 510 U.S. at 584-585. shows on VHS tapes are nothing new and the copyright holder may have 91. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 449 data to compare the same VHS sales to DVD sales, which may yield a dif- (1984). ferent conclusion than asserted here. 92. Id . at 442-456. 116. See David Bauder, “TV Shows Online Increasing,” Pittsburgh Post-Gazette , 93. S e e Lee Rainie & John Horrigan, “A Decade of Adoption: How the Oct. 25, 2006, at C6 (describing how ABC and other networks sell Internet Has Woven Itself into American Life,” Pew Internet & Am.Life their shows through iTunes); Meg James, “CBS Cuts Out Download Project , Trends 2005, 58 (2005), available athttp://www.pewinternet.org/ Middleman,” L.A. Times , Feb. 2, 2006, at 1 (describing how CBS sells pdfs/Internet_Status_2005.pdf (estimating that in this country alone, 128 some of its episodes on its own network). million use the Internet, and on any given day,70 million can be found 117. See Notkin, supra n.79, at 907 (providing data). participating in online activities). 118. See Termini, supra n.86, at 438 (giving this example). 94. See Napster , 239 F.3d at 1015 (finding “repeated and exploitative copying 119. Id . at 437-438. of copyrighted works, even if the copies are not offered for sale” to be a commercial use). 120. See Collins, supra n.86, at 89; Gunther, supra n.116, at 98. 95. See generally Reno v. ACLU, 521 U.S. 844, 870 (1997) (stating that for 121. See Notkin, supra n.79, at 906. First Amendment purposes, the ability to communicate over the Internet 122. See Robert L. Saltzman, “Television News Access to Exclusively Owned allows “any person with a phone line . . . [to] become a town crier with a Sporting Events: A Comparative Study,” 7 Sports Law J. 1, 2 (2000). voice that resonates farther than it could from any soapbox”). 123. See Naomi Mezey & Mark C. Niles, “Screening the Law: Ideology and 96. See 17 U.S.C. § 107(1), (3), (5) (2000); Napster , 239 F.3d at 1014 Law in American Popular Culture,” 28 Colum. J.L. & Arts 91, 175 (“Napster users who upload file names to the search index for others to (2005). See also Eleanor Sasis, “Prime Time Anytime: Wireless Video copy violate plaintiffs’ distribution rights.”). on Demand,” Ent. & Sports Law ., Winter 2006, at 34: Traditionally, a 97. Napster , 239 F.3d at 1015 (citation omitted). show produced for a primetime network is sold to a network at a given license fee. The license fee is typically less than what it costs to produce 98. Sony , 464 U.S. at 449. the show. If the show produces good ratings for the network, the produc- 99. Id . at 449-450 (acknowledging that fair use regarding the time-shifting tion company can make the money back by (1) negotiating for a higher aspect of recording a work broadcast in its entirety invites the end user to license fee after the first deal ends, (2) selling the episodes of the show on record the entire work). syndication and (3) selling the show on DVD. (citation omitted) 100. See “Katie Couric Weighs Anchor,” CBS News , Sept. 5, 2006, http://www. 124. See Termini, supra n.86, at 435-436 (“Advertisers probably are not very cbsnews.com/stories/2006/09/05/eveningnews/main1966506.shtml . Clips of concerned when home viewers skip commercials that are ten, two, or this first broadcast can be found on YouTube. See “Katie Couric’s First even one year old.”). Broadcast,” YouTube, http://youtube.com/watch?v=kaFinbbOmtc (last vis- 125. Id . at 437 (discussing the extra features that commercially produced DVDs ited Apr. 18, 2007). See also Sony , 464 U.S. at 455 n.40 (“Copying a news of television content may include). Although a counterargument may be broadcast may have a stronger claim to fair use than copying a motion made that the end user does not have to watch the commercials in the picture.”). Cf . Scott Kirsner, “Academy Threatens YouTube,” Variety , first place, and can edit them out or have the technology, such as a DVR Feb. 27, 2007, available at http://www.variety.com/article/VR1117960247. edit them out for the end user, this argument precludes the fact that the html?categoryid=13&cs=1 (reporting that the Academy of Motion Picture end user has a choice to watch the commercial. In Sony , for example, the Arts & Sciences has requested that YouTube remove various clips from Court reiterated the district court’s findings that 92% of end users record- the 2007 broadcast of the Academy Awards). ed commercials and only 25 percent fast-forwarded through them. Sony 101. See Napster , 239 F.3d at 1016. Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 453 n.36 102. Sony , 464 U.S. at 451. (1984). See also Termini, supra n.86, at 435-36 (emphasizing this point). 103. Id . at 455 n.40. 126. Cf . Collins, supra n.86, at 87 (arguing that uploading has no negative effect on the “copyright holder’s potential market because downloading 104. Id . at 451. users would be able to watch the program on their television sets for free 105. Id . anyway”) with BMG Music v. Gonzalez, 430 F.3d 888, 891 (7th Cir. 2005) 106. Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 566-567 (“Downloads from peer-to-peer networks such as KaZaA compete with (1985). licensed broadcasts and hence undermine the income available to authors.”). 107. See, e.g. , BMG Music v. Gonzalez, 430 F.3d 888, 890 (7th Cir. 2005) (“As 127. The ability for the distributor to generate his own advertising revenue file sharing has increased over the last four years, the sales of recorded through various banner advertisements or sponsored links also demon- music have dropped by approximately 30%. Perhaps other economic fac- strates a commercial benefit gained at the copyright holder’s expense. tors contributed, but the events are likely related.”). 128. See, e.g. , Caroline McCarthy, “File-sharing Site eDonkey Kicks It,” 108. Sony , 464 U.S. at 452-455. CNET News.com , Sept. 13, 2006, http://news.com.com/2100-1030_3- 6115353.html (reporting settlement of a copyright case against the P2P 109. Cf. id. at 446 (finding that “the record makes it perfectly clear that there client eDonkey). are many important producers of national and local television programs who find nothing objectionable about the enlargement in the size of the 129. See “YouTube Deletes 30,000 Files After a Copyright Complaint,” NY television audience that results from the practice of time-shifting for pri- Times , Oct. 21, 2006, at C4. vate home use”). 130. See Mark Brown, “Music Pirates Find a Haven in eBay Sales,” Denver 110. Collins, supra n.86, at 100. Rocky Mountain News (CO) , May 28, 2005, at 3D (providing examples 111. The unauthorized downloading would require a similar analysis to that of of unreleased or music concerts that are available through eBay in pirated “unauthorized time-shifting” in Sony . See Sony , 464 U.S. at 447-456. form). But see Dan Leroy, “If It’s Live, It’s Probably Already Online,” NY Times , Sept. 12, 2004, at 14CN (reporting that bootlegs of live concerts 112. See Dave Walker, “I Want My iTV,” New Orleans Times Picayune , Feb. 19, and rare recordings often show up on eBay without fear of litigation 2006, at 1. because the “record companies do not own the copyrights to concert 113. Bill Carter, “NBC President Says Ratings Are Gaining Momentum,” NY performances”). Unlike the non-involvement of the record companies in Times , Jan. 18, 2007, at E4. preventing the types of bootlegging Leroy reports, preventing bootlegging
18 May 2007 JOURNAL OF INTERNET LAW
of television shows likely is in the copyright holder’s financial interest 5 minutes getting the song than to pay nothing and spend an hour or because it would necessarily reduce legitimate DVD sales. more trying to get a useable version.” Id . at 102. 131. In many of the reported cases against end users, the first step taken by 135. See Nokin, supra n.79, at 934 (suggesting that “there are debates about the copyright holder is to identify the infringer based on the infringer’s whether certain programs become marketing vehicles or infomercials IP address, which requires first serving the ISP or Web site with a sub- instead of real story-driven programs”). See generally Amit M. Schejter, poena for the infringer’s true identity based on the IP address. See, e.g. , “Art Thou For Us, Or For Our Adversaries? Communicative Action Paramount Pictures Corp. v. Davis, 234 F.R.D. 102, 106-107 (E.D. Pa. and the Regulation of Product Placement: A Comparative Study and a 2005) (explaining how this process was used to uncover the identity of a Tool for Analysis,” 15 Tul. J. Int’l & Comp. L . 89 (2006) (comparing the user who was the “first propagator” of a pirated movie). effects of product placement regulation in five countries with regard to free and commercial speech). 132. See generally Monty Phan, “The Personal Pitch: Online Retailers Seek to Trace the Tastes of Their Customers—nd Often Strike Out Miserably,” 136. See Phil Rosenthal, “ ‘Office’ Makes Pitch to Viewers: Watch and Buy,” Kansas City Star (MO) , June 12, 2005, at I16 (explaining how various Chi. Tribune, Dec. 10, 2006, at B3, available at http://www.chicagotribune. online retailers are beginning to apply past purchases to make recommen- com/news/columnists/chi-0612100083dec10,1,7081235.column (giving an dations, but the various technologies still produce imperfect results). example of product placement for a shredder that resulted in “one of that week’s top placements, according to iTVX, a tracking outfit”). 133. See Notkin, supra n.79, at 914-916 (suggesting that the current scheme of television commercials is highly ineffective); id. at 935 (suggesting an ad 137. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 125 system like Google’s Adword program); Randal C. Picker, “The Digital S. Ct. 2764, 2794-2795 (2005) (Breyer, J., concurring). Video Recorder: Unbundling Advertising and Content,” 71 U. Chi. L. 138. See Justin Hughes, “On the Logic of Suing One’s Customers and the Rev . 205, 219-221 (2004) (suggesting that advertising personalization Dilemma of Infringement-Based Business Models,” 22 Cardozo Arts & would produce more effective results, but alluding to the privacy issues it Ent. L.J. 725, 729-731 (2005). creates). 139. Id . at 765. Professor Hughes implies that the financial gains recovered by 134. See Collins, supra n.86, at 101. As Ms. Collins points out, the ratio- the plaintiffs in these cases compared to the decrease in illegal download- nal consumer has emerged in the context of online music purchases: ing could cause the litigations to “become a profit source for the RIAA” “Generally people seem to be more willing to pay the 99 cents and spend rather than be used as a stick to deter further infringement. See id. at 750.
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