Today, the Senate Judiciary Committee is holding a hearing concerning the Inducing Infringement of Copyrights Act (IICA, née INDUCE Act) (Protecting Innovation and Art while Preventing Piracy). The first witness is Marybeth Peters, Register of Copyrights, US Copyright Office. As I expected, she has come out as a strong proponent of the INDUCE Act, outdoing even such stalwart proponents of copyright maximalism as the RIAA. Read her 22-page statement and be amazed as she calls for Congress to overturn the Betamax decision: Statement of Marybeth Peters on S. 2560 [PDF].
Both C|Net News (Antipiracy bill gains new ally) and Techdirt (Copyright Office Endorses INDUCE Act) have more.
For my analysis of important parts of the statement, read on…
Overall the statement is wildly unbalanced, lending nary any credit whatsoever to the opposing side’s arguments, “There should be no question that such services should be liable for the copyright infringement they encourage and from which they profit.” Well, actually, that is one of the main questions, isn’t it? Whether services that cannot control their users and have substantial non-infringing uses should be illegal. The Copyright Office apparently doesn’t believe that control or substantial non-infringing uses should count for anything.
The introduction to the statement also brings out the old trope that the courts are “confused” when the truth of the matter is that the courts are trying to keep from opening the door to massive abuse of copyright law by the copyright interests. We can agree that P2P infringement is a bad thing, but disagree as to the proper remedy. That is what courts are trying to do. In many ways, they are much less confused than Miss Peters who doesn’t see the other side of the argument at all.
History of Secondary Liability
A great deal of the next section of the statement goes into the history of contributory and vicarious liability and stresses the importance of secondary liability doctrine. This is all well and good, but Miss Peters is going to pull a bait and switch that I’ll get to later. Of course, secondary liability is an important part of law. No one is questioning that. However, there are very legitimate questions as to how far secondary (and tertiary) liability should extend.
Of course, using easily distinguishable cases to make your argument shows how dangerous vague extension of secondary liability can be:
As another court explained, in finding a supplier of “time-loaded” cassettes liable for infringement facilitated by those cassettes:
Regrettably, in copyright litigation, enforcement efforts seem ineffective. Misappropriation may often needlessly succeed. Thus, liability for contributory infringement is particularly appropriate here. Given the apparent division of labor in the counterfeit recording industry, the actions of contributory infringers make possible the wide dissemination of the infringing works.
As I will explain, a similar phenomenon is occurring in the digital environment, as proprietors of services that use peer-to-peer technology rely on a “division of labor” strategy that enlists millions of consumer to become distributors of infringing copies, thereby attracting more users and advertisers who generate revenue for these companies, but which is designed to leave the proprietor without legal liability. [footnote omitted]
But how similar is the P2P phenomena to the case Miss Peter’s cites (A&M; Records, Inc. v. General Audio Video Cassettes, Inc., 948 F. Supp. 1449, 1455 n.4 (C.D. Cal. 1996)? Not very, actually. First, that case was argued and prepared essentially pro se, without an attorney. Though that would likely have made little difference in the outcome, it probably would have balanced the case a bit in the opinion. The case was about a manufacturer of “time-loaded” tape cassettes, which are cassettes of specific lengths (instead of standard 45, 60 and 90 minutes, they might be 47:33, 58:10 and 71:30 minutes). Obviously, these are very useful for commercial piracy. But the defendent was not simply charged with selling tapes, he was specifically implicated in the crimes of specific infringers. In one case, the infringer would send the defendent a commercial tape, the defendent would time it, tell the infringer the time, and then the infringer would order hundreds of tapes with that specific length. The defendent also spoke of his knowledge of the purpose of tapes with an employee. Sounds like specific knowledge of specific infringement with a specific customer. A far cry from what is happening with P2P.
Recent P2P Decisions
The next section of statement analyzes secondary liability in the context of recent P2P network decisions, such as in the Napster, Aimster [PDF] and Grokster cases. The conclusion of Peters’ statement here was that (of course) Grokster was wrongly decided:
In my view, the Grokster decision was wrongly decided, and I hope the Ninth Circuit corrects the errors in the district court’s decision. The court employed an unnecessarily cramped view of existing secondary liability doctrines, creating a much narrower test of “knowledge”, “material contribution” and “right and ability control” than
any case before it, including the Ninth Circuit’s decision in Napster. It also misapplied the Sony decision to an inaccurate characterization of the defendants as mere providers of software, comparing them to maker of a VCR, when their services were functionally the equivalent of Napster and Aimster. Most importantly, the Grokster decision fails to see the forest for the trees; it essentially ignores defendants’ intent to establish and create a network of massive infringement – by enlisting ordinary consumers to engage in piracy – upon which they have built their business.
This is the pot calling the kettle black. The Grokster court certainly did see both the forests and the trees and was not about to level the forest of innovation in order to get at the Grokster tree. What Peters sees as a “cramped” decision, many others see as a well-crafted and narrow opinion that doesn’t radically extend secondary copyright liability. Perhaps Peters has the ability to see another person’s intent, but the court wisely refrained from making that assumption itself. An aside: Peters claims that the Napster and Grokster decisions are in conflict, but if that is true then Grokster will be overturned on appeal.
How is Sony to be distinguished?
There is also no dispute that the use of these services constitutes copyright infringement – unlike the Sony case which held that the principal use of the VCR was a fair use. It is also undisputed that the defendants who operate these services rely on the copyright infringement as a draw to attract users, thereby attracting advertisers. These facts make the comparison to Sony remarkably inapt.
But there is dispute that using P2P services is copyright infringement. After all, if the only use of these systems was infringement, there wouldn’t be any question that these systems should be illegal. Peters now claims that VCRs are fair use. I question whether, if the VCR were introduced today, she would make the same argument. Call me cynical.
Peters also makes the argument that if the VCR was like P2P it would be illegal:
In my view, if the VCR had been designed in such a way that when a consumer merely turned it on, copies of all of the programs he recorded with it were immediately made available to every other VCR in the world, there is no doubt the Sony decision would have gone the opposite way.
So, the big problem is the sharing default? Change that and everything is cool? That ought to be easy enough … but somehow I doubt that Peters would actually be satisfied. In any case, if you are downloading and sharing materials which are authorized for sharing, why not have the default. Is Peters saying that downloading infringing material is okay, it is the subsequent sharing that is bad? Really, I don’t understand her point here.
The INDUCE Act
In explaining what the INDUCE Act does, Peters does her bait and switch:
As you explained in your floor statement, Mr. Chairman, this provision draws from patent law and federal criminal law.
Indeed, it does, but it changes them. We generally don’t hold people guilty of inducement unless they have specific knowledge of a specific crime with a specific individual, or if their actions had no substantial non-criminal uses. The last part remains, but what the INDUCE Act does is get rid of all the specificity of the former standard and replaces it with a “reasonable person” test, which is essentially a guess at what people intend.
She muddies the waters of this standard in distinguishing Sony:
You have noted that the concept of liability for “inducement” was not at issue in Sony, as the Court made clear that no evidence existed that the defendant in that case “intentionally induce[d] its customers to make infringing uses of respondents’ copyrights, nor does it supply its products to identified individuals known by it to be engaging in continuing infringement of respondent’s copyrights.” [footnote omitted]
There was no evidence of specific inducement. The court was not addressing whether there was some sort of subjective evidence that a reasonable person might imagine there was intent, which is the standard under the INDUCE Act.
Next Peters claims that this standard is not all that bad:
The bill is appropriately tailored to the defendant’s intentions and behavior, rather than the technology it chooses to employ, making the bill technology neutral. It would allow courts to examine all of the circumstances of a particular case to determine whether the defendant had intentionally constructed its business to profit from infringement of others that it induced. Recognizing that an actor’s state of mind can often only be shown by indirect evidence, the definition of “intentionally induce” allows a court to apply an objective, reasonable person standard to the conduct of defendant to determine whether that evidences the requisite intent. The central definition, however, requires that the defendant “intentionally aids, abets, induces or procures” infringement, which is a high level of mens rea that should limit application of this bill only to the most egregious actors.
It is because it is so difficult to show intent that liability for intent has normally been limited to cases where much more specific evidence is noted. As for “objectiveness,” if there were objective evidence you wouldn’t need to rely on a “reasonable person.”
Next, Peters provides some of this evidence:
There is a wide array of evidence that the proprietors of those services induce users to infringe copyright:
Of course, this evidence is circumstantial. It might show intent, it might be coincidental. P2P companies want to attract users. All software developers want to attract users. This is proof of intent of what, exactly? That a P2P company is like every other software company? And again, Peters focuses on the sharealike default. Is this really what sticks in her craw? Is it the fact that software runs in the background? She also doesn’t seem to like encouraging people to share files, whether copyrighted or not. Sharing information – something the Copyright Office doesn’t like as a matter of principle.
Peters also cites the explanation of Fred von Lohmann on how to avoid liability for P2P services (IAAL*: What Peer-to-Peer Developers Need to Know about Copyright Law). First, von Lohmann wasn’t talking to any specific company, he was basically just publishing an op-ed. Second, this is what lawyers do. If this were proof of intent we might as well start locking up every business person in America. This is “objective” evidence of intent. Yeah…
Is the INDUCE Act Overbroad?
Peters then argues that her analysis wouldn’t apply to MP3 players, for example:
These circumstances also help to show why the concerns about the breadth of the bill are misplaced. As Senator Leahy’s floor statement makes clear, those who merely provide copying technology should not be liable under this bill, because they would lack indicators of “intentional inducement” like those found in the peer-to-peer context. For example, the seller of a portable MP3 player does not make it nearly inevitable that the user will commit copyright infringement just by turning the device on. Rather, several additional steps must be taken by the user before any potential infringement takes place. Also, the seller of the portable device is very likely not reliant on building a network like the peer-to-peer service that is trying to sell advertising, and therefore it typically has no need to and does not encourage users to become distributors of copyrighted works.
Well, that isn’t what the copyright industries were saying when the Diamond Rio player was introduced. Funny, Peters doesn’t mention that.
Get Rid of the Betamax Decision
Her next argument is basically that this bill it too protective of the Betamax decision and that Congress might want to get rid of it. Seriously:
While you have carefully crafted this bill to preserve the 20-year-old decision in the Sony case, it may become necessary to consider whether that decision is overly protective of manufacturers and marketers of infringement tools, especially in today’s digital environment. If the Sony precedent continues to be an impediment to obtaining effective relief against those who profit by providing the means to engage in mass infringement, it should be replaced by a more flexible rule that is more meaningful in the technological age, but that still vindicates the Court’s goal to balance effective “and not merely symbolic” protection of copyright with the rights of others to engage in substantially unrelated areas of commerce.
The bill basically makes Sony irrelevant, but that isn’t enough for Peters.
Conclusion
Though the bill may be flawed, let’s not worry about that:
Let me be clear, however, that our concern about its future application should not hold up this bill.
Even the copyright industry isn’t making these arguments. Will anyone in government move to fire this woman?
Want to know more about the INDUCE Act?
Please see LawMeme’s well-organized index to everything I’ve written on the topic: The LawMeme Reader’s Guide to Ernie Miller’s Guide to the INDUCE Act.