Peer-to-Peer (P2P) File Sharing

(assignment developed by Stefan Juzkiw)

Introduction: Copyright Basics

Ö Two copyright holder rights are at issue in peer-to-peer file sharing: (1) the right "to reproduce the copyrighted work in copies or phonorecords" and (2) the right "to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending." 17 U.S.C. 106(1), (3).

Ö Concentrate your attention on Section 2.8 and 2.9 in Copyright Basics, which describes "What is the Fair Use Doctrine?" and the legal basis for this doctrine.

Overview of Peer-to-Peer Copying and The Napster Case

• Read the Berkman Center for Internet & Society's Module on Peer-to-Peer Copying

Liability for Software Developers

• P2P Software developers and innovators have three secondary liability theories to worry about: (1) contributory liability, (2) vicarious liability or (3) inducement.

In Sony v. Universal Studios, the Supreme Court held that the manufacturers of VCRs were not liable for contributory copyright infringement because VCRs have significant non-infringing uses, including "time-sharing" (copying a television program for later viewing) under the "fair use" doctrine, even though the VCRs were sometimes used for illegal copying purposes.

In A&M Records, Inc. v Napster, Inc., 239 F.3d 1004 (9th Cir. 2001), the Ninth Circuit found a likelihood of success on plaintiffs' claim that Napster was contributorily liable for infringement committed by its users -- notwithstanding Sony -- because Napster had "actual, specific knowledge" of users' infringement and materially contributed to it.  The Ninth Circuit found a likelihood of success on plaintiffs' claim that Napster was vicariously liable because Napster financially benefitted from the infringement (or, anyway, might benefit sometime in the future), and had the power to locate and delete references to infringing material listed on its search indices, and to terminate users' access to the system, but didn't do it.

In MGM v. Grokster, 380 F.3d 1154 (9th Cir. 2004), the Ninth Circuit held that Grokster was not contributorily liable for its users' infringement, because Grokster merely provided the underlying technology, but did not otherwise facilitate the infringement and had no power to stop it.  

• Read MGM v. Grokster, 545 U.S. 913 (2005).

• Read Remedying Grokster.

• Should P2P software developers have an affirmative duty to bar participation of users who engage in the transmission of infringing files? What about an affirmative duty to use filtering tools that prohibit copyrighted material from coming up in search results?

Liability for Users

• The Recording Industry Association of America (RIAA) engages in lobbying and anti-privacy efforts on behalf of the artists, publishers and record companies. The RIAA routinely patrols the Internet searching for pirated files, sends cease-and-desist letters to apparent copyright violators and also initiates lawsuits on behalf of its membership.

• Communications between two computers in a peer-to-peer network can remain relatively anonymous or pseudonymous. Transactions are not easily observable by a third party because communications take place directly between the two computers without passing through a central network. Read pages 11 to 16 of London-Sire Records, Inc. v. Doe 1, 542 F.Supp.2d 153 (D.Mass. 2008), to understand the five factor balancing test for issuing a subpoena on an ISP to match the IP number with an internet userÌs name. Under prong (1) the plaintiffs have to show an actual distribution took place, but the court concludes where the defendant has completed all necessary steps for a distribution, a reasonable fact-finder may infer the distribution actually took place. Further, under prong 2, 3, and 4 -- "the narrow tailoring" factor -- the court does not permit disclosure of any information regarding the defendantÌs internet usage (which the court says could depend on Internet Service ProviderÌs privacy policy). These concepts are important in the context of the Capitol Records v. Thomas case discussed next because this makes it difficult for RIAA to discover which copyrighted files were electronically transferred to others. RIAA uses a 3^rd party investigator, MediaSentry, to function as an undercover user of P2P networks. MediaSentry looks at which files you have available in your shared folder.

• Read pages 8 to 37 of Capitol Records v Thomas, 2008 U.S. Dist. LEXIS 84155 (D. Minn. Sept. 24, 2008).  The court held that "making available" copyrighted files in a shared folder is not a distribution under copyright law. The law requires an actual file copy transfer to take place. Merely because the defendant has "completed all the steps necessary for distribution" does not necessarily mean that a distribution has actually occurred. It is a "distribution" that the statute plainly requires. However, a minority of courts find a distribution for "making [copyrighted files] available." On Pg. 41 to 43, the Judge implores Congress to amend the Copyright Act to avoid the "oppressive" award of statutory damages for file-sharing users.

Is Voluntary Collective Licensing the Solution?

• Read A Better Way Forward: Voluntary Collective Licensing of Music File Sharing

• Read the Unlimited Music downloads for £99.99 news article. Napster (recently acquired by Best Buy) and Rhapsody also offer unlimited subscription plans for $10 to $15 per month.

• Compare voluntary collective licensing of "all-you-can-eat music" with new technology called "digital fingerprinting" which encodes file information that can expose copiers or prevent a file from being copied or technology that makes a file expire after a period of time (known as "digital rights management"). The music industry argues that collective licensing destroys profits because CDs albums include only one or two hits songs which you can download from iTunes for only $0.99 a song. About a 16% royalty fee is paid to the record labels. Metallica, Red Hot Chili Peppers, Linkin Park, Green Day, and Kid Rock, to name only a few, have all pulled their tracks from iTunes because they fear it is killing album sales. Read More Artists Steer Clear of iTunes.