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Tuesday, June 28, 2005
Grokster = More Fair Use Cases?
Grokster | Posted by Fred von Lohmann at 12:26 PM
One potential consequence of the MGM v. Grokster ruling may be an uptick in courts deciding fair use cases involving personal, noncommercial activities like "time-shifting" and "space-shifting."
A variety of new digital technologies are advertised and promoted for uses that the technology vendors believe to be fair uses. For example, Time Trax promotes its technology for recording satellite radio, Mercora for recording music from webcasts, and Sling Media for transmitting your TiVo'd TV shows to yourself over the internet. All maintain that these personal, noncommercial, nontranformative uses of copyrighted works fall within the scope of fair use. No court, however, has ever weighed in on these (or virtually any other) personal digital fair uses.
If these innovators are wrong on the fair use score, however, are they all liable for inducement? To put it another way, the Supreme Court's Grokster ruling may put "fair use technology companies" in the position of having to litigate, and win, the fair use question on behalf of their customers in order to resist an inducement charge. That's an expensive burden to foist on these companies.
Notice that this is different from the situation that technology companies face when addressing contributory infringement claims. According to the Supreme Court in the Betamax case, it is enough if any use satisfies the "capable of substantial noninfringing uses" test (whatever that may mean).
So what happens if you are sued for inducement, and a court decides that your advertised use is not actually a fair use? Do statutory damages wipe out both the product and the company?
In other words, is it inducement if you reasonably, but incorrectly, believed that the use for which you promoted your product was covered by fair use (or any other copyright exception)? Hopefully the courts (or Congress) will find or fashion a safe harbor like this. But till then, like a Russian doll, a nested fair use case may be discovered in many an inducement case.
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Comments
Fred, I'm not sure I'm on your program. Let's start with the maxim that I tell all of my students and repeatedly stress to entrepreneurs:
"NEVER BUILD A BUSINESS BASED ON FAIR USE"
I say this because fair use is such a unpredictable and inconsistently-applied doctrine that I never assume I can predict how a judge will rule. Thus, a business built on fair use is built on an inherently precarious foundation.
If you accept my exhortation, then I don't think Grokster changes the equation.
Eric.
Posted by: Eric Goldman at June 28, 2005 03:02 PM
The premise of Fred's comment ignores one of the key messages from the unanimous Court yesterday, namely that copying for what EFF likes to call "personal use" is in fact infringing. The Court was very clear that the copying as to which Grokster's secondary liability was at issue was in fact massively infringing. EFF and its allies have been arguing for years not only that courts should resist imposing secondary liability for file-"sharing", but also that they should excuse the underlying copying of millions of "sharers" as fair use. Justice Souter's opinion for the Court reflects an impatient, unanimous rejection of that view, and lower courts will accordingly be even less inclined than they have been to accept it. Accordingly, it seems overly optimistic, at best, to be dwelling on the next line of defense after Grokster, the "I reasonably believed it was fair use" argument. The value of shares in that particular market took a dive yesterday, and will not soon recover.
Posted by: Charles Sims at June 28, 2005 09:52 PM
Are you sure we arn't looking at the distribution angle? Personal use is one thing, but p2p distribution chains are a different quantum of action. If I want to rip a CD that I bought to my computer for my personal use, I can still do that. I can even burn copies of this CD or songs from it to new CDs for my personal use in my mp3 sterio in, say, my car.
Fair use shouldn't be part of a business plan, except that IP has been so far restricted that rather than having fair use seperate what was infringement from not being infringement, the IP holders have pushed until "fair use" is almost required for any use other than the "official" use.
The Court said Grokster could be liable for the copying that occurred over the network. But I don't think you can extend that to personal use copying as a violation of copyright.Posted by: Joel at June 29, 2005 10:06 AM
Fair use should not be part of a business plan? What about the Betamax VCR itself? Or VHS recorders? Or TiVo? Or email and web site postings?
On page 14 of Grokster the Court said: "Although Sony's advertisements urged consumers to buy the VCR to . .record favorite shows. . or . .build a library . . of recorded programs, id., at 459 (Blackmun, J., dissenting), neither of these uses was necessarily infringing, id., at 424, 454-455."
The Court seemed to recognize that but for this "uncertainty" qualification (citing to pages in the Betamax opinion that did NOT say that "librarying" was either legal or illegal)they would indeed have a hard time justifying why the rule they announced should not apply to the Betamax VCR and its lawful progeny.
Fred is correct that -- despite Mitch Bainwol's protestation that he himself burns CDs and downloads the songs to his iPod, and the MPAA's that it is not "targeting" TiVo -- fair use is now the ballgame. The status of products that support "grey areas" -- e.g., recording a work that you are explicitly authorized to render but not explicitly authorized to record -- is not a question of "piracy." It is one of home recording and fair use.
Posted by: Bob Schwartz at June 29, 2005 11:20 AM