New challenge to file-sharing designers

By Lyle Denniston
on Jun 27, 2005 at 1:12 pm

The Supreme Court’s unanimous (but in some ways divided) ruling on the use of copyright laws to try to stop the massive sharing over the Internet of music and movie files posts a significant legal warning to software designers, but does not turn them into complete copyright outlaws.

Given some ingenuity, both in software design and in marketing tactics, it is conceivable that digital file-sharing technology – available free — may yet be quite legal. Justice David H. Souter’s opinion for the Court, in fact, provides a reliable guide to avoiding copyright liability for such software. It apparently was written in that way to try to avoid the risk of stifling ingenuity in software design.

The technology alone, Souter made clear, does not by itself run afoul of the copyright laws. The chief characteristic of download-and-share software is that it enables the use of the Internet to reach files, some of which may be copyrighted works. If that were all that a software company did, according to the opinion, legal fault would not yet exist – especially, if it crafted the design in such a way as to filter out copyrighted material. In addition, the mere fact that the developer knows someone may or even will use the software to purloin copyrighted files, the Court made clear, is not sufficient, either.

What counts most of all, it is apparent, is that a software developer promote the use of the product explicitly to stimulate computer users to use the product solely or at least primarily as a copyright-infringing mechanism. The Court, while not finally deciding that there was contributory infringement by the software developers in this case, found what it called “unmistakable” proof that an “unlawful objective” did exist.

Souter’s opinion cites three specific pieces of telling evidence. First, he noted that Grokster and StreamCast set out, in the beginning, to pick up where Napster had left off, satisfying a demand for those who explicitly wanted to download copyrighted works. Second, he said, there was no attempt to design any filtering tools to reduce the amount of infringement by end-users. And third, he found, the two companies made money by selling advertising space, then directing those ads to the screens of computers using their software. “The more their software is used, the more ads are sent out and the greater the advertising revenue,” according to the opinion. While cautiously suggesting that this evidence “would not justify an inference of unlawful intent,” Souter said its import “is clear” in the record of this case.

The opinion went on to stress that, beyond an unlawful intent on the part of the developer, copyright liability exists only if there also is factual proof that the software is used in the end to pirate copyrighted files. That exists in this case, Souter noted, on “a gigantic scale.” Thus, the Court overturned summary judgment in favor of the software developers, and sent the case back for a trial.

One notable legal point about the decision is that the Court’s most significant prior ruling on copyright and new technology remains intact, despite the urging of the copyright owners and, indeed, despite the urging of three members of the Court to reduce its protection for new technology that might be used for infringement. That precedent, of course, is Sony Corp. of America v. Universal City Studios, in 1984.

Souter’s opinion says explicitly that the Court would leave any review of Sony’s scope for another day. This means that new technology will not be illegal just because it is capable of being used for infringement. What makes the Internet file-sharing technology potentially illegal here, according to Souter, is evidence going beyond its basic characteristics or awareness of how it may be used, and revealing “statements or actions directed to promoting infringement.”

Justice Ruth Bader Ginsburg, joined by Chief Justice William H. Rehnquist and Justice Anthony M. Kennedy, said in a separate opinion that the Court should reinterpret the Sony decision more strictly, to insist on firmer evidence that software can and will be used for a significant amount of legal use. Justice Stephen G. Breyer, joined by Justices Sandra Day O’Connor and John Paul Stevens, answer that critique with a strong defense of Sony, as is. Thus, the two positions neutralize each other, and Sony stands, unrevised.