Solum: A Legal Engineering Failure

A few minutes ago, Doug Lichtman put up a post bemoaning the legal standard for inducement adopted by the Court:

MGM won on paper today, but my first reading of the opinion makes me wonder whether the victory will have any bite outside of this specific litigation. Intent-based standards, after all, are among the easiest to avoid. Just keep your message clear -- tell everyone that your technology is designed to facilitate only authorized exchange -- and you have no risk of accountability.

I disagree with Doug about the normative question--but I agree with his reading of the Opinion of the Court, which brings me to "legal engineering." Each of the important P2P filesharing cases has involved a failure of "legal engineering"--the legal design of the P2P business. In the Napster case, the failures were the most egregious--with "smoking gun" memos indicating that the purpose of Napster was to faciliate copyright infringement. In Grokster, the failures were almost as bad. Here is an excerpt from the Opinion of the Court:

It is undisputed that StreamCast beamed onto the computer screens of users of Napster-compatible programs ads urging the adoption of its OpenNap program, which was designed, as its name implied, to invite the custom of patrons of Napster, then under attack in the courts for facilitating massive infringement. Those who accepted StreamCast’s OpenNap program were offered software to perform the same services, which a factfinder could conclude would readily have been understood in the Napster market as the ability to download copyrighted music files. Grokster distributed an electronic newsletter containing links to articles promoting its software’s ability to access popular copyrighted music. And anyone whose Napster or free file-sharing searches turned up a link to Grokster would have understood Grokster to be offering the same filesharing ability as Napster, and to the same people who probably used Napster for infringing downloads; that would also have been the understanding of anyone offered Grokster’s suggestively named Swaptor software, its version of OpenNap. And both companies communicated a clear message by responding affirmatively to requests for help in locating and playing copyrighted materials.

If there had been good "legal engineering," then Napster or Streamcase or Grokster might well have prevailed in court. Of course, product promotion is a business decision, and it is possible that a deliberate choice was made--pay the price of increased liklihood of legal liability in order to market more effectively by emphasizing copyright infringement. But one wonders whether effective marketing strategies that were more subtle might have been available--if anyone had bothered to try.

Comments

[David Manheim]

The most interesting quote, I thought, specifically excluded using this as a precedent for any future case: "Further, the District Court and the Court of Appeals did not sharply distinguish between uses of Grokster’s and StreamCast’s software products (which this case is about) and uses of peer-to-peer technology generally (which this case is not about)."

[Matthew Goeden]

If *good* legal engineering is the answer, then Bit Torrent will probably be the proving ground for it. After all, Bit Torrent is probably the number one "enabler" for "stealing" copyrighted movie and Bit Torrent basically has zero promoting/intention marketing. (haha -- does word of mouth marketings count?!?!)

After a brief reading of the opinion myself, I think that the marketing evidence of stealing the Napster users was far to highlighted/relied upon. Wanting to somebody's users who happend to predominantly conduct illegal activity doesn't impute that you are marketing your "illegal" capabilities.

Anyways, I understand that the rest of the marketing evidence is fairly compelling as to the(promoting)intent of Grokster, etc.

If that (all about promotion/intent) is how SCOTUS wants to take it, so be it.

[Bob]

I found it hard to rationalize Grokster within the Sony case because Sony showed that most uses were not infringing whereas in Grokster it was completely the opposite. Add on top of that the each of these companies was grossing millions of of primarily it's users who were, let's face it, for the most part infringing.

Regarding legal engineering, I think that software such as BitTorrent may be there. It would be very difficult to prove the 'intent/inducement' element with software that has no marketing, no real revenue stream, and no position on what the software should be used for..The websites who host the torrent files, that's a different story.

Unfortunately the argument to the Record Houses to come up with a commercially viable alternative does not hold legal water and is not a defense to either of the 2 claims. I'm still disgusted by the fact that whether you buy the CD or the MP3 you still pay $18 for the entire album.

Despite this, they will have to do something, because while the Grokster's of the world left the so called 'smoking gun' the other P2P networks out there probably have not left the legal equivalent to hold them liable.