Canadian copyright activists debate meaning of U.S. Grokster decision

Both sides in the Canadian file-sharing debate say the recent MGM v. Grokster decision in the U.S. bodes well for them, despite its lack of immediate applicability to the legal landscape here. The Supreme Court of the United States released on June 21 its decision against the file-sharing service Grokster Ltd., accepting arguments by Metro-Goldwyn-Mayer Studios Inc. that the landmark Sony case had been misapplied by a lower court. The Supreme Court ruled that under some circumstances, third parties can be found to be contributing to copyright infringement even if their service or product has non-infringing uses. The decision for MGM has been widely seen as a victory for copyright holders struggling to mitigate the effects of file sharing on sales, though some public interest advocates say the ruling isn’t nearly as ground moving as it appears. In the case, MGM managed to get overturned a lower court ruling in favour of Grokster that said the company couldn’t be found guilty of contributing to copyright infringement on the grounds that its popular P2P application was used by millions to trade billions of copyrighted songs. The lower court applied the influential Sony decision to arrive at its conclusion. In that case, a move to shut down sales of Sony’s Betamax VCR technology was rebuffed in 1984 when it was decided by the Supreme Court that a VCR would be used mostly to timeshift programs, deemed a fair use of copyrighted material, and also had significant non-infringing uses. The lower court in Grokster applied that ruling to MGM’s case against Grokster, saying that because file-sharing has numerous non-infringing uses, the same principle should be applied. The Supreme Court heard in MGM’s appeal that Sony was improperly applied to the case since the service and application were specifically marketed as a Napster replacement after that P2P service was shut down by the courts. Grokster’s marketing material and internal documents showed that the company hoped to trade on the popularity of file sharing that had sprung up around Napster and convince users to switch to its service, which was advertising supported. The court noted, for instance, that: "Grokster and StreamCast are not, however, merely passive recipients of information about infringing use. The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement." The Supreme Court agreed with MGM, and remanded the case back to the lower court because it found when clear inducement to infringe copyright was demonstrated, as it felt was evident with Grokster, third parties could be culpable for copyright infringement. The Canadian Recording Industry Association’s (CRIA) Graham Henderson says the ruling, despite its immediate inapplicability in the very different legislative and legal environment here, is a victory for the recording industry. He says the result is better than the industry could have predicted. "Looking back at the prognostications, I don’t recall anybody suggesting this was going to be 9-0 shellacking of Grokster. But, that’s what this amounts to." He says the decision sends a clear message to all file-sharing proponents that the end is nigh, and expresses hope that P2P services will begin filtering content and promoting material that has been expressly approved by copyright owners for free distribution. "Let’s get back to normal, here. Let’s have file-sharing services that offer people the opportunity to, in an authorized manner, share their content…Anybody who thinks that everything would be shut off tomorrow – guess again. A lot of indie acts and a lot of established acts, some of who are in the twilight of their careers, are more than happy to offer their content for free. It helps them touring. It helps them develop an audience. There’ll be a ton of stuff. It’s not going to go away. But then there’s going to be those artists who say no, no, I would actually prefer to get paid thank you very much. And then there may be some who want to do a bit of both. So, I think that’s the world where we’re moving to…and you’ll get to a world that’s kind of sane instead of this weird upside-down world that we live in. This is a terrible mind-altering decision for the pro-P2P people…Anybody for whom the real agenda was to hobble record companies and film and television companies, to bring down the man, this is going to be very, very bad news." While the decision is a U.S. one, and so has little official weight in Canada, Henderson notes that the Betamax case has been influential worldwide, and is often cited in both the arguments before and decisions of senior Canadian courts, including the Supreme Court of Canada, and often makes an appearance in government background papers and research. "At the end of the day, important landmark decisions like Sony Betamax and now like MGM/Grokster – these are decisions which, depending on the persuasiveness of their reasoning, are taken seriously because the assumption is that nine justices of one of the most sophisticated courts in the world don’t just make decisions willy nilly. A lot of hard work and effort and thought has gone into it. So, it’s considered to be persuasive. Yes, absolutely, I would expect their reasoning, their thinking, to become part of the fabric of the business environment, and our legal environment up here…I think that it is a very clear signpost along the way to the return to normalcy." Public interest advocate and lawyer Howard Knopf, however, says the decision isn’t so groundbreaking as painted by the recording industry. Knopf authored a brief on behalf of Sharman Networks Limited, which supported Grokster in the case. Speaking in his personal capacity, Knopf notes that: "This is a real step in the road to a complete victory for the technology community. The Sony Betamax rule still stands, despite the entertainment industry’s efforts to the contrary. There is a lot of really good P2P software already out there that will easily meet the Supreme Court’s new active inducement test. The entertainment industry will proclaim victory but this is really a big setback in their war against file sharing technology. It’ll be hard for them to ask for Congressional intervention when they just ‘won’ 9-0." In terms of Canada, Knopf points out the irony that the U.S. decision is the assumption that the impugned software was being extensively used by end users for infringing purposes. "In Canada, that’s not the case because our levy scheme, put in place at CRIA’s insistence, makes downloading from the Internet legal, as long as it’s for private use and done on an audio recording medium." Knopf’s assertion of the legality of downloading, however, is contentious. Henderson argues that in the wake of the Federal Court of Canada’s ruling that the private copying levy is not applicable to devices such as iPods, only cassette tapes and CD-Rs are subject to the Copyright Board of Canada’s earlier decision that downloading to blank audio recording media is covered by the private copying regime. "For them to carry on with this ridiculous idea that downloading is somehow legal, but uploading is not, it’s wishful thinking. And, it’s misleading." The private copying case is currently being considered by the Supreme Court of Canada for possible appeal (CNM, Feb. 17/05). Another advocate in favour of copyright laws weighted to users, University of Ottawa professor Michael Geist, has been writing extensively since the Grokster decision in agreement with Knopf. He holds that future P2P services will be able to convince courts that they are not intended to be used for copyright infringement, and rely on the non-infringing uses principle set down in Sony and thus be protected. CRIA’s Henderson, however, disputes that notion. "I think it’s pretty clear that Sony Betamax has been radically revised from the perspective of the digital age…This decision has radically shifted the playing field. And, if you get new services, I think a very clear signal has been sent that people for whom the clear intent is to expropriate other people’s property, the handwriting’s on the wall. Now, they can try to disguise their intent, which basically means they’ll be liars. They will do it in such a way to try to disguise what they’re doing, but at that point it starts to become a little farcical and ridiculous doesn’t it? We know what’s going on, and I think that the law will keep up with them."

Canadian copyright activists debate meaning of U.S. Grokster decision

News | 07/08/2005 4:00 am EDT

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