March 27, 2005

Hear no evil, see no evil, file-share no evil?

By: Tim Lee

Few people today realize that in 1984 the “record” button on your VCR came within one vote of going the way of the eight-track player. In the early 1980s, Hollywood took Sony to court, arguing that its Betamax VCR would allow rampant piracy. In a 5-4 decision, the Supreme Court ruled for Sony. The court held that although the “record” feature could be used for copyright infringement, it could also be used for legitimate purposes. For example, a consumer might record a television program while she was at work and watch it when she got home in the evening. Because VCR’s had “substantial non-infringing uses,” the court held, Sony could not be held liable for the copyright infringement of its users.

In addition to enriching the lives of working soap opera fans everywhere, the case set a precedent that has been central to subsequent legal battles at the intersection of copyright and technology. On Tuesday, the Supreme Court will consider how the Betamax standard should be applied in the Internet age when it hears the case of MGM v. Grokster. The lead defendant in the case, Grokster, runs one of a new breed of peer-to-peer file sharing programs that the music and movie industries charge are abetting the widespread theft of their products.

Grokster and its co-defendants rose from the ashes of the 2001 Napster decision, which shut down the Napster file-sharing system for failing to control piracy on its networks. In its 2001 decision, the Ninth Circuit held that because Napster had a centralized index of songs available for download, it could and should make a good-faith effort to control piracy. Napster, acknowledging that the vast majority of file trading on its servers was illegal and that controlling piracy would be prohibitively expensive, shut down the original Napster service and has since reinvented itself as a legitimate music-download service.

The programmers who developed Grokster sought to avoid Napster’s fate by eliminating Napster’s Achilles Heel–the centralized file index. The Grokster network does not have centralized servers directing users to the files they want. Instead, each user’s computer contacts other computers on the network directly, transferring files without any direct involvement by Grokster’s servers. Grokster has argued that, because it has no knowledge of what files are traded and no ability to filter them, it cannot be held liable as Napster was for infringement.

That’s a plausible argument, and last year, the Ninth Circuit bought it. The Supreme Court should not be so gullible. In accepting Grokster’s argument, the Ninth Circuit misapplied the “substantial non-infringing use” standard, giving too much credence to Grokster’s fatuous examples of non-infringing uses, and failing to appreciate that Grokster’s peer-to-peer “technology” is little more than a technological gimmick to evade liability for the copyright infringement of its users.

Indeed, “peer to peer technology” is something of a misnomer. In reality, the entire Internet operates on a “peer to peer” design. The TCP/IP protocols that form the plumbing of the Internet make no distinction between clients and servers. Every computer on the Internet can communicate with every other computer on an equal basis. There is, therefore, nothing especially innovative about developing a “peer to peer” application.

It’s also important to note that in the Betamax decision, the court considered whether the “record” function of the VCR–not the VCR as a whole product–had “substantial non-infringing uses.” When applying that standard to Grokster, then, the courts must look not at the program as a whole, but at the specific features that distinguish it from other file-distribution systems. If Grokster’s “no server” architecture makes it more efficient or offers more features than Napster’s server-based approach, then Grokster can cite the Betamax precedent in its defense. However, if the clear purpose of its architecture is to evade liability for the copyright infringement that it expects to occur on its networks, it’s hard to claim with a straight face that its architecture has “substantial non-infringing uses.”

The sophistry of Grokster’s position can be seen by comparing the Grokster program to BitTorrent, another peer-to-peer file-sharing program. BitTorrent, like Napster and Grokster, allows users to swap files among themselves. But unlike Napster and Grokster, BitTorrent administrators decide which files are traded over their networks. There are thousands of BitTorrent communities on the Internet, each with different policies concerning the files they will distribute. Unlike Grokster, many BitTorrent communities deal only in legitimate files. And unlike Grokster, if copyrighted files are found on a BitTorrent network, copyright holders can ask the network’s administrator to remove the files.

The BitTorrent technology offers virtually the same functionality as Grokster. Running a BitTorrent service requires very little bandwidth and there are BitTorrent communities that allow anyone to upload and download any files they like. Indeed, it is hard to think of a “substantial non-infringing use” of Grokster that is not also available on a BitTorrent network. About all that distinguishes Grokster from BitTorrent (aside from its tendency to be bundled with spyware) is that it was deliberately designed to make piracy difficult to police.

Grokster argues that a ruling against it will stifle innovation, but Grokster’s “innovation” appears to consist solely in finding novel ways to evade copyright law. The Supreme Court should not be taken in by such gimmicks.

Tim Lee is science and technology editor of Brainwash and a staff writer at the Cato Institute. His website is

Shares 0