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The evolution of copyright : Napster and the challenges of the digital age Belcredi, Carmen 2001

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THE EVOLUTION OF COPYRIGHT: N A P S T E R A N D T H E C H A L L E N G E S O F T H E DIGITAL A G E By CARMEN BELCREDI  B.A., York University, 1997 L L . B . , Q u e e n ' s University, 2 0 0 0 A T H E S I S S U B M I T T E D IN P A R T I A L F U L F I L M E N T O F THE REQUIREMENTS FOR THE D E G R E E OF MASTER OF L A W S In THE FACULTY OF GRADUATE STUDIES (Faculty of Law) W e accept this thesis as conforming to the required standard  T H E UNIVERSITY O F BRITISH C O L U M B I A October  2001  © C a r m e n Belcredi, 2001  UBC  9/26/01 5:44 P M  Special Collections - Thesis Authorisation Form  In p r e s e n t i n g this thesis i n p a r t i a l f u l f i l m e n t of the requirements f o r an advanced degree a t t h e U n i v e r s i t y o f B r i t i s h C o l u m b i a , I a g r e e t h a t t h e L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and s t u d y . I f u r t h e r a g r e e t h a t p e r m i s s i o n f o r e x t e n s i v e copying, o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s may b e g r a n t e d b y t h e h e a d o f my department o r by h i s o r h e r r e p r e s e n t a t i v e s . I t i s understood that copying or p u b l i c a t i o n of this thesis f o rf i n a n c i a l gain s h a l l not be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n .  Department o f The U n i v e r s i t y o f B r i t i s h Vancouver, Canada  Columbia  Date  http://wwvv.library.ubc.ca/spcoll/thesauth.html  Page 1 of 1  ABSTRACT  T h e N a p s t e r c a s e has created a frenzy of controversy a n d c o n f u s i o n . T h e P e e r to P e e r t e c h n o l o g y d e v e l o p e d by N a p s t e r creator S h a w n F a n n i n g , h a s forced the courts, the legislature, corporations, a n d individuals to r e c o n s i d e r the u s e of the Internet.  P e e r to peer networks create new c h a l l e n g e s for the application of  copyright law. H o w e v e r , t h e s e c h a l l e n g e s are not that different from t h o s e w h i c h copyright law h a s e v o l v e d to a c c o m m o d a t e in the past.  Copyright law is intended to b a l a n c e the interests of the creators a n d the public to promote the p r o g r e s s of s c i e n c e a n d useful arts.  The premise  behind  copyright protection is to e n s u r e that people continue creating, a n d that the public c o n t i n u e s to enjoy t h o s e creations, through the m e c h a n i s m of rewarding the creators with a temporary  monopoly over their works.  T h i s b a l a n c e of  interests is f u n d a m e n t a l to the interpretation of copyright law by the United S t a t e s C o n g r e s s a n d the C o u r t s .  T h i s thesis f o c u s e s on the application a n d interpretation of copyright law through a c a s e study of the law in the United S t a t e s , in particular the N a p s t e r c a s e . Although  it now a p p e a r s that the Internet c a n be subject to s o m e form of  regulation with the aid of technological innovation to enforce the regulation, the Courts  in  the  Napster  case  have  consideration attributed to copyright law.  misinterpreted  the  previous  judicial  In e s s e n c e , the f u n d a m e n t a l principle  of the b a l a n c i n g of interests h a s b e e n lost.  W e are now left with a n u n e q u a l  b a l a n c e in favor of large m e d i a c o n g l o m e r a t e s .  It c a n be a r g u e d that the m e d i a c o n g l o m e r a t e s have u s e d N a p s t e r a s a n e x a m p l e of their power to control the technology of peer to peer networking a s a m o d e l of distribution.  N a p s t e r d e m o n s t r a t e s that peer to peer is a n effective w a y  of sharing information with an extremely large amount of p e o p l e .  T h i s h a s the  m u s i c industry s c a r e d , resulting in their legal battle to shut d o w n the N a p s t e r technology.  T h e c l a i m s of copyright m i s u s e raise a w a r e n e s s of the n e e d for regulation a n d a r e a s s e s s m e n t of copyright application in a digital a g e . regulation.  T h e r e is a n e e d for  H o w e v e r , any attempts at further application of law a n d regulation to  the Internet c o n c e r n i n g copyright protection should c o n s i d e r the intent of the constitutional founders of the United S t a t e s -- copyright law is intended to protect the interests of both the artists, a n d the public.  TABLE OF CONTENTS  ABSTRACT  II  ACKNOWLEDGEMENTS  v  C H A P T E R I -- I N T R O D U C T I O N  1  CHAPTER  -- T O P R O M O T E T H E P R O G R E S S O F S C I E N C E AND USEFUL ARTS: COPYRIGHT  I. II. III. CHAPTER  5  THE EVOLUTION OF  LAW  5 9  HISTORY THE EVOLUTION OF COPYRIGHT LAW THE P2P TECHNOLOGY  10  I -- C O P Y R I G H T L A W A N D T H E D I G I T A L W O R L D : NAPSTER AS AN EXAMPLE OF THE  17  C H A L L E N G E S O F APPLYING TRADITIONAL DOCTRINE  I. II. III. IV. C H A P T E R IV  THE N A P S T E R C A S E - INTRODUCTION THE NAPSTER CASE - BACKGROUND INTERPRETATION OF COPYRIGHT LAW T H E UNITED S T A T E S C O U R T O F A P P E A L S  - THE B A L A N C E OF INTERESTS:  CONTROL  OF  17 18 22 59 62  T E C H N O L O G Y IN A D I G I T A L W O R L D  COPYRIGHT MISUSE COMMERCIALIZATION THE MUSIC INDUSTRY CHAPTER V  REGULATION:  RESTORING THE  62 68 74 BALANCE  83  OF COMPETING INTERESTS  I. II. III. IV. BIBLIOGRAPHY  REGULATION INTERNET REGULATION THE EVOLUTION OF T E C H N O L O G Y CONCLUSION  84 92 96 99 101  iv  ACKNOWLEDGEMENTS  I w o u l d like to a c k n o w l e d g e P r o f e s s o r s W e s P u e a n d Ruth B u c h a n a n for providing me with their insight a n d g u i d a n c e . Their c o m m e n t s a n d e n t h u s i a s m w a s instrumental in the d e v e l o p m e n t of the content of this thesis. S p e c i a l thanks to my family a n d friends, w h o provided me with i m m e a s u r a b l e support a n d understanding throughout the entire p r o c e s s of writing this thesis, especially Nicole, Karim, A n d r e a , M o n i c a , Jill a n d Doruk.  v  I INTRODUCTION  T h e N a p s t e r c a s e provides an e x a m p l e of the application of copyright law to the Internet. S i n c e the w i d e s p r e a d u s e of the Internet b e g a n , the idea of application of law h a s b e e n a point of contention.  In particular, the protection of copyright  h a s c a u s e d a lot of c o n c e r n s about application a n d enforcement.  T h e inherent  characteristic of information transfer a n d replication threatens the protection of ideas and expressions.  T h e a d v a n c e of technology a s s o c i a t e d with Internet  applications further complicated the application of copyright law to the realm of Cyberspace.  T h e P e e r to P e e r ( P 2 P ) technology d e v e l o p e d by N a p s t e r creator  S h a w n F a n n i n g h a s created a s e n s e of urgency surrounding the i s s u e of Internet regulation.  T h e N a p s t e r judgement, A&M Records,  Inc. v. Napster,  Inc., 114 F. S u p p . 2d 8 9 6  (N.D. C a l . 200), aff'd in part and rev'd in part, 2 3 9 F. 3d 1004 ( 9  th  Cir. 2 0 0 1 ) ,  s u c c e s s f u l l y applied traditional copyright law of the United S t a t e s to the Internet. T h e application of copyright  doctrine, a l o n g s i d e the continued  technological  growth a n d d e v e l o p m e n t of the Internet, h a s e n a b l e d the application of law a n d the policing of copyright infringing file trading. of copyright to P 2 P , there  However, despite the application  is question about the interpretation  of that law,  1  particularly q u e s t i o n s surrounding the implications of its application with r e s p e c t to the intent of copyright law a n d a s e n v i s i o n e d by the United S t a t e s constitution.  T h i s t h e s i s will a r g u e that although  copyright  doctrine  is being applied  to  C y b e r s p a c e , the original intent of copyright protection h a s b e e n lost in the p r o c e s s . Copyright law in the United S t a t e s is evolving.  T h i s t h e s i s will f o c u s o n  the law in the United States. T h i s is primarily for the simple fact that the United S t a t e s holds a strategic place in the d e v e l o p m e n t of the Internet, a n d application of law to C y b e r s p a c e . t e c h n o l o g i c a l innovation.  the  T h e catalyst for the evolution of copyright is  A n examination  of this evolution  will  show  that  copyright law has g o n e b e y o n d the intent of its enactment. T h r o u g h e x a m i n a t i o n of the application of copyright law to P 2 P , in particular the interpretation of law by the court in the N a p s t e r c a s e , this thesis will s h o w that copyright protection h a s e x c e e d e d the original intent of United States copyright legislation.  B y e x a m i n i n g the i s s u e s raised in the N a p s t e r c a s e it will be s h o w n that copyright law h a s b e e n s u c c e s s f u l l y applied to P e e r to P e e r ( P 2 P ) technology, h o w e v e r the regulation a n d application of the law h a s created a n i m b a l a n c e of interests in favour of the large m e d i a c o n g l o m e r a t e which hinders the public interest factor of copyright protection.  T h e examination of the i s s u e s raised by N a p s t e r will  d e m o n s t r a t e the evolution of copyright doctrine, in particular, by the attempt to apply the c o m m o n law a n d statutory enactment's to meet the rapidly c h a n g i n g n e e d s resulting from technological innovation a n d growth.  2  First this t h e s i s will d i s c u s s the historical intent of copyright  protection  as  intended by the inclusion of a n intellectual property provision in the United S t a t e s constitution.  S e c o n d , the N a p s t e r c a s e will be e x a m i n e d in detail to demonstrate the evolving doctrine of copyright law. In particular the jurisprudence a n d legislative attempts of C o n g r e s s will be d i s c u s s e d in relation to the attempt to meet the c h a n g i n g n e e d s that t e c h n o l o g i c a l innovation p l a c e s on the application of copyright law.  Third, the c o n c e p t of copyright m i s u s e which is b a s e d o n antitrust law, will be u s e d to d e m o n s t r a t e the resulting i m b a l a n c e of interests that h a s o c c u r r e d from the application a n d enforcement of copyright law to the Internet. ultimately led to a constraint o n the a c c e s s to technology.  T h i s has  S u c h a constraint  hinders the public interest, which w a s intended to be an integral part of the b a l a n c e which copyright law w a s e n a c t e d to protect.  Fourth, the i s s u e of regulation will be e x p l o r e d . Clearly, there is a n e e d for s o m e kind of regulation to protect copyright interests in C y b e r s p a c e .  H o w e v e r , the  b a l a n c e of interests that w a s e n v i s i o n e d by the constitutional provision protecting intellectual property rights n e e d s to be a c h i e v e d . T h e r e is a delicate b a l a n c e of power that s h o u l d be maintained to stimulate continued creative efforts  and  e x p r e s s i o n s of individuals.  The  T h i s is what copyright is intended to protect.  3  current application a n d interpretation of copyright a n d the actions of C o n g r e s s h a v e led to the disruption of this b a l a n c e . T h e application of copyright law to the digital realm calls for a n e w type of regulation, o n e that will mirror the original p h i l o s o p h y underpinning copyright protection.  4  II TO  PROMOTE THE THE  I.  HISTORY OF  P R O G R E S S OF SCIENCE AND EVOLUTION OF COPYRIGHT  ARTS:  LAW  COPYRIGHT  The United States constitution Intellectual  USEFUL  contains a provision that explicitly  protects  Property rights, vesting power in the federal government  "[t]o  promote the progress of science and useful arts, by securing for limited time to authors and inventors the exclusive right to their respective writings discoveries."  and  1  The introductory phrase "[t]o promote the progress of science and useful arts...", is the main explanation of the purpose of copyright.  2  The primary purpose of  copyright is not to reward the author, but rather to secure "the general benefits derived by the public from the labors of authors."  A s interpreted in Mazer  v.  Stein , the purpose is 3  "The economic philosophy behind the clause empowering Congress to grant patents and copyrights is the conviction that encouragement of individual effort by personal gain is the best way U.S. C o n s t , art. I, § 8 cl. 8. Nimmer, Melville B. and David Nimmer, Nimmer on Copyright. Lexis Publishing York., a t § 1.03[A]. Mazerv. Stein, (1954), 347 U.S. 201, 219. 1  2  2001  New  3  5  to advance public welfare through the talents of authors and inventors in "Science and useful Arts".  The grant to individual authors of the limited monopoly of copyright is founded on the dual premise that the public benefits from the creative activities of authors, and that copyright monopoly is a necessary condition for the full realization of such creative activities.  Implicit in this rationale is the assumption that in the  absence of such public benefit, the grant of a copyright monopoly to individuals would be unjustified.  This reasoning is in line with the pervading public policy  against according private economic monopolies in the absence of overriding countervailing considerations.  4  The copyright system grants a limited, temporary monopoly to a specific individual.  Copyright law embodies four democratic safeguards.  5  A guarantee  that all works will enter the public domain once the copyright term is expired. A collection of the purposes that consumers could consider "fair use", such as limited copying for education or research. The principle that after the "first sale" of a copyrighted item, the buyer could do whatever he or she wants with the item, except distribute unauthorized copies for profit.  And the idea that copyright  protects specific expressions of ideas, not the ideas themselves.  Copyright protection can be viewed as a bargain between the public and the creators. The creators get a limited monopoly for a short period of time, and the  4  Nimmer, supra note 1, at §1,03[A]  6  public gain a c c e s s to those protected works a n d free u s e of the facts, d a t a , a n d i d e a s within t h e m .  T h e protection of copyright s t e m s from the c o n c e r n that  without the g u a r a n t e e of a w a y to profit from creative work, too f e w p e o p l e would actually e m b a r k on creative e n d e a v o r s . However, creativity a l s o d e p e n d s on the u s e , criticism, supplementation, and consideration of previous works.  Therefore,  creators s h o u l d enjoy a monopoly right just long e n o u g h to provide a n incentive for more creation, but after the expiry of the term of the m o n o p o l y the work s h o u l d be part of the "public d o m a i n " , a s c o m m o n property.  6  T h e intent behind the first legislation dealing with copyright in the U . S . w a s to protect t h e s e creative interests, while balancing the idea of the public g o o d , or the public interest. J a m e s M a d i s o n introduced the copyright a n d patent c l a u s e to the Constitution. government ,  M a d i s o n argued that copyright w a s o n e of t h o s e few acts of  in which  the  "public  good  fully  c o i n c i d e s with the  claims  of  individuals." T h e intent behind the inclusion of copyright in the Constitution w a s f r a m e d in terms of progress a n d learning, a s well a s literacy a n d the n e e d for a n informed citizenry.  7  " W h e n P r e s i d e n t G e o r g e W a s h i n g t o n d e c l a r e d his support for the Copyright A c t of 1790, he proclaimed that copyright would enrich political culture by "convincing t h o s e w h o are entrusted with public administration that every valuable end of government is best a n s w e r e d by the enlightened c o n f i d e n c e of the public; a n d by t e a c h i n g the people t h e m s e l v e s to know a n d value their own rights; to d i s c e r n a n d provide against invasions of them; to distinguish  Vaidhayanathan, Siva, "Copyrights and Copywrongs", http://www.msnbc.com/news/594462.asp7cp1-1 (06/08/01) Vaidhavanathan, ibid. Vaidhayanathan, ibid.  5  6  7  7  between oppression authority."  and  the  necessary  exercise  of  lawful  In consideration of the intent of the constitutional enactment, the S u p r e m e Court h a s stated: " T h e m o n o p o l y privileges that C o n g r e s s m a y authorize are neither unlimited nor primarily d e s i g n e d to provide a s p e c i a l private benefit. Rather, the limited grant is a m e a n s by which an important public p u r p o s e m a y be a c h i e v e d . It is intended to motivate the creative activity of authors and inventors by the provision of a s p e c i a l reward, a n d to allow the public a c c e s s to the products of their g e n i u s after the limited period of exclusive control has e x p i r e d . " 8  It is the task of C o n g r e s s , a s a s s i g n e d by the Constitution, to define the s c o p e "of the limited m o n o p o l y that should be granted to authors or inventors in order to give the  public appropriate  access  to their product."  9  T h i s task  involves  b a l a n c i n g the interests of the creators in the control and exploitation of their works, a n d the c o m p e t i n g public interest of free flow of ideas, information, a n d commerce.  This  1 0  balance was  Representatives.  examined  by the Judiciary  Committee  of the  House  of  In a report a c c o m p a n y i n g the revision of the Copyright A c t in  1909 it stated: "The e n a c t m e n t of copyright legislation by C o n g r e s s under the terms of the Constitution is not b a s e d upon any natural right that the author has in his writings...but upon the ground that the welfare of the public will be s e r v e d a n d progress of s c i e n c e and useful arts will b e promoted by s e c u r i n g to authors for limited p e r i o d s the e x c l u s i v e rights to their writings... " 1 1  9 10  11  Sony Corporation of America v. Universal Studios Inc., 464 U.S. 417 (U.S.S.C.), at 429. Sony, at 429. Sony, at 229. H.R. Rep, No. 222, 6 0 Cong., 2d Sess., at 7 (1909) th  8  The report then went on to provide Congress with some direction with respect to what must be considered when a copyright law is enacted. "In enacting a copyright law Congress must consider...two questions: First, how much will the legislation stimulate the producer and so benefit the public; and second, how much will the monopoly granted be detrimental to the public? The granting of such exclusive rights, under the proper terms and conditions, confers a benefit upon the public that outweighs the evils of the temporary monopoly." 12  The maintenance of this balance is key to providing copyright protection which is in the spirit of the Constitutional enactment protection "the progress of Science and useful Arts".  II.  13  THE EVOLUTION OF COPYRIGHT LAW  Over the years copyright law has evolved through both case law and legislation. The need for copyright to evolve as a result of technology is not a new issue. The need for copyright protection stems from technological innovation.  14  With  the invention of the printing press we were first faced with the need to protect works as a result of the new technology allowing the more efficient and accessible reproduction of works.  H R . Rep., ibid, at 7. U.S. Cont. art. 1, supra, note 1. For example, the development and marketing of player pianos and perforated rolls of music preceded the enactment of the Copyright Act of 1909; innovations in copying techniques gave rise to the statutory exemption for library copying embodied in §108 of the 1976 revision of copyright law; the development of the technology that made it possible to retransmit television programs by cable or by microwave systems, prompted the enactment of the complex provisions found in 17 U.S.C. § 111 (d)(2)(b) and §111 (d)(5) (1982ed), see Sony, supra, note 8, at 430. 12  1 3  14  9  "Copyright protection became necessary with the invention of the printing press and had its early beginnings in the British censorship laws. The fortunes of the law of copyright have always been closely connected with freedom of expression, on the one hand, and with technological improvements in means of dissemination, on the other. Successive ages have drawn different balances among the interest of the writer in the control and exploitation of his intellectual property, the related interest of the publisher, and the competing interest of society in the untrammeled dissemination of ideas." 15  With this in mind, current technological advancements require that Copyright law be extended to the digital realm of the Internet. The law applied in the Napster case is evidence of the continuing evolution of common law and legislation to ensure copyright phenomena. delicate  protection  However, as with the technological innovation of the past, the  balance between  maintained.  in light of new and challenging technological  the  copyright  holder and the  public  must  be  The Napster decision illustrates, in my view that an imbalance of  interests, in favour of the copyright holder has emerged.  III.  THE P 2 P TECHNOLOGY  To understand the need for the application of copyright law to new media and the implications of such application, it is important  to understand where  the  technological innovation came from and how P 2 P technology works. Generally, the interconnected quality of a P 2 P network allows speedy, high volume, sharing of files. These characteristics pose a challenge for copyright law in terms of both application and enforcement.  15  Sony, supra, note 8, at F N 12. 10  a) M P 3  T e c h n o l o g i e s like N a p s t e r c a n be traced back to 1987, w h e n the M o v i n g Picture E x p e r t s G r o u p set a standard file format for the storage of audio recordings in a digital format.  T h i s format is called M P E G - 3 , more c o m m o n l y k n o w n today a s  M P 3 files, w h i c h are created by "ripping".  Ripping software provides the m e a n s  to c o p y a c o m p a c t disk (CD) directly onto a computer's hard drive. T h i s p r o c e s s c o m p r e s s e s the a u d i o information o n the C D into the M P 3 format. c o m p r e s s e d format  An MP3  allows for e a s y a n d rapid transfer of the file from  one  c o m p u t e r to another through e-mail, file transfer protocol ( F T P ) , a n d particularly P 2 P networks.  b) P 2 P  T h e N a p s t e r c o d e is b a s e d on a P 2 P m o d e l . N a p s t e r is not the s o l e P 2 P m o d e l , there are m a n y m o d e l s , s o m e more pure than others.  T h e m o r e pure the P 2 P  m o d e l , the m o r e difficult to control in t e r m s of locating the infringer for the p u r p o s e of enforcement. In G e n e r a l , P 2 P technologies allow individual c o m p u t e r u s e r s to o p e n their hard drives directly to one another, allowing others to s e a r c h for a n d s w a p files between computers without recourse to more traditional W e b d a t a b a s e s a n d s e r v e r s . T h e purity of the P 2 P network is related to h o w direct the c o n n e c t i o n between the computers sharing information is. Both N a p s t e r a n d  11  G n u t e l l a will be d e s c r i b e d to illustrate the evolution of P 2 P t e c h n o l o g i e s , a n d highlight the difficulties the technology has raised for application of law.  i.  NAPSTER  Background  T h e N a p s t e r c o d e w a s c o n c e i v e d a n d written by a 19-year-old n a m e d S h a w n Fanning.  S p a w n i n g from a d i s c u s s i o n a m o n g his friends about the difficulty in  finding M P 3 files on the Internet, F a n n i n g w a s hit with the idea of a P 2 P network that would eliminate the tedious s e a r c h online to find large libraries of m u s i c .  He  d r o p p e d out of college and dedicated all of his time to the d e v e l o p m e n t of the Napster code.  B y combining the features of existing p r o g r a m s , w h i c h include  instant m e s s a g i n g of Internet R e l a y C h a t , the file sharing functions of Microsoft W i n d o w s a n d the a d v a n c e d s e a r c h i n g a n d filtering capabilities of various s e a r c h e n g i n e s he d e v e l o p e d the N a p s t e r c o d e .  The Napster  Technology  T h r o u g h the u s e of Napster's M u s i c S h a r e software, users c a n m a k e their M P 3 files w h i c h are stored on their personal hard drives available to be s e a r c h e d a n d downloaded  by other  N a p s t e r u s e r s ; and a N a p s t e r u s e r c a n s e a r c h  d o w n l o a d files from other N a p s t e r users via the Internet.  and  N a p s t e r provides  12  technical support for the indexing a n d s e a r c h i n g of M P 3 files through u s e of a central server.  A l s o available to N a p s t e r u s e r s , through the N a p s t e r central  server are chat rooms, where m e m b e r s c a n meet to d i s c u s s c o m m o n interests a n d information about its s e r v i c e a n d s p e c i a l n e w artists p r o g r a m .  All that is n e e d e d to gain a c c e s s to the N a p s t e r service, is to d o w n l o a d the free M u s i c S h a r e software onto a computer.  W h e n first using Napster, the u s e r is  required to provide a user n a m e a n d p a s s w o r d . information related to a g e , s e x , a n d location.  It is a l s o optional to provide  T h e u s e r then h a s the option of  selecting what files a n d directories to s h a r e with other N a p s t e r u s e r s .  Napster  u s e r s c a n select what directories a n d files to m a k e available to the N a p s t e r community, a u s e r m a y also select not to s h a r e any files or provide a c c e s s to their hard drive to any other users. T h e M u s i c S h a r e software s e a r c h e s the u s e r s library a n d verifies that the available files are properly formatted, if the files meet the n e c e s s a r y format requirements the n a m e s of those M P 3 files are u p l o a d e d from the user's c o m p u t e r to the central N a p s t e r server. T h e actual content of the files r e m a i n s on the user's computer, the only data that the N a p s t e r central server c o n t a i n s are the file n a m e s a n d n a m e s of the users. T h e u s e r s n a m e s a n d the n a m e s of their files b e c o m e part of a collective directory w h i c h c a n then be s e a r c h e d by a n y o n e using the N a p s t e r s y s t e m .  T h e collective directory is  fluid, it t r a c k s u s e r s w h o are c o n n e c t e d in real time, displaying only file n a m e s w h i c h are immediately a c c e s s i b l e .  13  A N a p s t e r user c a n locate M P 3 files in two w a y s . T h e first is through the N a p s t e r s e a r c h function.  T o s e a r c h for a M P 3 file available from other u s e r s  currently  c o n n e c t e d to the N a p s t e r service, the user enters either the n a m e of a s o n g or a n artist a s the object of the s e a r c h .  T h i s request is then transmitted to a  N a p s t e r server, which c o m p a r e s the request to the collective directory  listing.  T h e N a p s t e r s e r v e r then c o m p i l e s a list of currently available M P 3 files, w h i c h c o r r e s p o n d with the s e a r c h request, and transmits the list to the requesting user. T h e N a p s t e r s e r v e r d o e s not s e a r c h the content of the file, it only performs a text s e a r c h of the file n a m e s and index.  T h e s e c o n d s e a r c h m e c h a n i s m of the  N a p s t e r s y s t e m is through its hotlist function.  A N a p s t e r user c a n select other  u s e r s a n d a d d t h e m to their "hotlist". W h e n logged onto the N a p s t e r s y s t e m , the user c a n s e e if t h o s e individuals on their hotlist are also logged onto the s y s t e m . It the hotlist user is online, their particular library c a n b e a c c e s s e d , s e a r c h e d a n d d o w n l o a d e d from.  A g a i n , the N a p s t e r server only stores the n a m e s of the files,  the contents of the hotlisted user's M P 3 library are not stored o n the N a p s t e r system.  T o transfer a file, the N a p s t e r user clicks on the desired file a n d c h o o s e s to "download".  T h e N a p s t e r server software obtains the Internet a d d r e s s of the  requesting u s e r and the Internet a d d r e s s of the user with the available files (the host user). T h e N a p s t e r server then c o m m u n i c a t e to hot u s e r s Internet a d d r e s s to the requesting user. T h e requesting user's computer u s e s this information to establish a connection with the host user and d o w n l o a d s a c o p y of the contents  14  of the  M P 3 files from o n e c o m p u t e r to the other over the  Internet.  The  d o w n l o a d e d file c a n then be a c c e s s e d a n d listened to through the u s e of the N a p s t e r software play function, or through other software.  T h e file c a n a l s o be  transferred onto a n a u d i o C D if the u s e r h a s a c c e s s to the e q u i p m e n t w h i c h is d e s i g n e d for that p u r p o s e , c o m m o n l y referred to a s a "burner". T h e quality of the s o u n d recording is only slightly d i m i n i s h e d a s a result of the transferring b e t w e e n a u d i o to digital to M P 3 format.  ii.  GNUTELLA  Background  Justin F r a n k e l adopted the P 2 P technology of Gnutella from the N a p s t e r c o d e . F r a n k e l a l s o wrote the original W i n a m p M P 3 player under his c o m p a n y Nullsoft. Nullsoft w a s then taken over by A m e r i c a O n L i n e ( A O L ) . W h i l e working at A O L , F r a n k e l r e c o g n i z e d Napster's s u c c e s s a n d briefly turned technologies.  his mind to P 2 P  H e a n d a few fellow p r o g r a m m e r s created the original v e r s i o n of  G n u t e l l a , c h a n g i n g the N a p s t e r P 2 P c o d e by removing the n e e d for a central server.  S o o n after the initial d e v e l o p m e n t of G n u t e l l a , A O L shut d o w n the  project, but by that time the G n u t e l l a c o d e w a s already s p r e a d i n g freely on the Internet. After the shut d o w n of the G n u t e l l a project by A O L , G e n e K a n took o v e r the d e v e l o p m e n t of the project.  K a n d e v e l o p e d a Unix v e r s i o n of the p r o g r a m ,  15  and  a l s o created the  first Gnutella portal, w h e r e  developers could  share  information a n d individuals could d o w n l o a d the software.  The Gnutella  Technology  G n u t e l l a is a l s o a P 2 P technology, b a s e d on the N a p s t e r c o d e .  What makes  G n u t e l l a noteworthy for this d i s c u s s i o n is the fact that G n u t e l l a is a pure P 2 P network. T h e b a s i c idea behind G n u t e l l a is the s a m e a s Napster, to facilitate the trading a n d sharing of information a m o n g u s e r s thorough a c c e s s to e a c h u s e r s hard drive. W h a t m a k e s the Gnutella service different is the fact that it d o e s not u s e a central server.  T h e G n u t e l l a software c a n be d o w n l o a d e d from the Internet for free. software then provides the u s e r with the m e a n s to s e a r c h for files.  The  Gnutella  differs from N a p s t e r in how files are s e a r c h e d a n d located. W h e n using G n u t e l l a to locate a file, the u s e r a s k s the network if a file exists through the software's s e a r c h options. T h e request is then sent out to all the c o m p u t e r s on the network. E a c h c o m p u t e r then seriates its internal drives a n d a n s w e r s y e s or no to the s e a r c h request. W h e n the d e s i r e d file is found, the user then c o n n e c t s directly with the c o m p u t e r that contains the d e s i r e d file.  T h u s , unlike Napster, the  G n u t e l l a software allows the s e a r c h i n g a n d d o w n l o a d i n g of files without the u s e of a central server. T h i s difference is very important with r e s p e c t to the i s s u e of locating a n d policing a P 2 P network.  16  Ill C O P Y R I G H T L A W A N D T H E DIGITAL W O R L D : NAPSTER AS AN EXAMPLE OF THE CHALLENGES OF APPLYING TRADITIONAL  I.  DOCTRINE  T H E N A P S T E R C A S E - INTRODUCTION  T h e N a p s t e r c a s e r a i s e s various i s s u e s dealing with the e x t e n s i o n of law to P 2 P networks.  I will illustrate that the application of law in the N a p s t e r c a s e is the  result of a n o n g o i n g evolution of copyright law, in both the c o m m o n law a n d legislated law, towards a result that is inconsistent with the " b a l a n c e " of individual rights  and  public rights  intended  by the  U . S . founding  fathers.  Napster  specifically d e a l s with contributory infringement, vicarious copyright infringement, the d e f e n s e s of fair u s e a n d substantial non-infringing u s e , the application of the A u d i o H o m e R e c o r d i n g A c t , a n d the Digital Millennium Copyright Act. t h e s e a s p e c t s of copyright discussed.  law's application to  E a c h of  P 2 P t e c h n o l o g i e s will  be  W h i l e the law c a n be applied to the Internet, in my view,  the  regulation of the Internet through the application of law should be r e c o n s i d e r e d .  17  II.  THE NAPSTER CASE - BACKGROUND  a) t h e P J A A  The RIAA  1 6  copyrights.  is a c c u s i n g N a p s t e r of contributory a n d vicarious infringement of their T h e joint motion for a preliminary injunction by the R I A A a n d the  represented record c o m p a n i e s  1 7  c a n be f r a m e d by the following statement:  " H u n d r e d s of t h o u s a n d s of copyrighted w o r k s o w n e d by plaintiffs are being infringed - r e p r o d u c e d a n d distributed - every day by u s e r s of d e f e n d a n t N a p s t e r ' s s y s t e m - infringements that N a p s t e r actively e n a b l e s a n d e n c o u r a g e s , a n d from w h i c h it directly benefits." 18  T h e R I A A c l a i m e d that N a p s t e r w a s created with the intent of facilitating unlawful copying of M P 3 f i l e s .  19  T h e R I A A also found, b a s e d on statistical a n a l y s i s , that  "every single N a p s t e r user s a m p l e d w a s e n g a g e d in s o m e copyright infringement while u s i n g t h e N a p s t e r s e r v i c e . "  20  T h e e c o n o m i c v a l u e g a i n e d by the N a p s t e r  service is found in its quantity of users.  1 6  " T h o s e millions of u s e r s are critical to  Mission Statement of the Recording Industry Association of America: "The Recording Industry Association of America is the trade group that represents the U.S. recording industry. Our mission is to foster a business and legal climate that supports and promotes our members' creative and financial vitality. Our members are the record companies that comprise the most vibrant national music industry in the world. RIAA ® members create, manufacture and/or distribute approximately 90% of all legitimate sound recordings produced and sold in the United States. In support of our mission, we work to protect intellectual property rights worldwide and the First Amendment rights of artists; conduct consumer, industry and technical research; and monitor and review state and federal laws, regulations and policies...." <http://www.riaa.com>  Represented Record Companies include: A & M Records, Inc., Geffen Records, Inc., Interscope Records; Sony Music Entertainment, Inc., M C A Records, Inc., Atlantic Recording Corp., Island Records, Inc., Motown Record C o . , Capitol Records, Inc. United States District Court, Northern District of California - San Francisco Division, C a s e No. C-99-5183 M H P , Notice of Joint Motion and Joint Motion of Plaintiffs for Preliminary Injunction; Memorandum of Points and Authorities, July 26, 2000 at 1. 1 7  1 3  18  N a p s t e r -- they form the b a c k b o n e of Napster's b u s i n e s s a n d translate directly into current e c o n o m i c value.  T h e y already have attracted m a n y millions of  dollars in investment to N a p s t e r . "  21  from irreparable harm a s a result of  T h e plaintiffs claim that they are suffering Napster's e n o r m o u s popularity.  The RIAA  further c l a i m e d that N a p s t e r is attempting to usurp the plaintiffs ability to enter the  online m u s i c market  by giving a w a y the  plaintiffs  property.  Surveys  c o n d u c t e d by the plaintiffs s h o w e d "that significant n u m b e r s of N a p s t e r u s e r s report buying fewer C D s a s a result of their downloading the m u s i c for free on Napster."  22  A l s o noted to be of importance by the R I A A a n d the plaintiff record  c o m p a n i e s is " a devaluing of m u s i c , a s N a p s t e r t e a c h e s a generation of m u s i c c o n s u m e r s that artists a n d copyright o w n e r s d o not d e s e r v e to b e paid for their work, a n d that creative efforts are free for the t a k i n g . "  b)  The  23  Napster  N a p s t e r r e s p o n s e highlighted  a n u m b e r questions regarding  how  this  t e c h n o l o g i c a l a d v a n c e should be treated by the law. T h e impact of the N a p s t e r c o d e a n d P2P t e c h n o l o g i e s are c o m m e n t e d o n , stating " N a p s t e r ' s o n e - t o - o n e file sharing a n d Internet directory s e r v i c e h a s ignited a revolution.  By enabling  individual Internet u s e r s to a c c e s s a n d s h a r e data, N a p s t e r e m p o w e r s individuals rather than centralized institutions to distribute information...the w h o l e Internet  1 9  2 0  2 1  2 2  Notice Notice Notice Notice  of of of of  Joint Joint Joint Joint  Motion Motion Motion Motion  of of of of  Plaintiffs, Plaintiffs, Plaintiffs, Plaintiffs,  Ibid, Ibid, Ibid, Ibid,  at at at at  2. 3. 3. 4. See Jay Report pp.3,  15-20  19  c o u l d be re-architected by Napster-like technology."^  4  T h i s statement highlights  s o m e of the wider implications of the N a p s t e r c a s e which will be e x p l o r e d in m o r e detail in the following chapters.  N a p s t e r r a i s e d the i s s u e that to be liable for either contributory or v i c a r i o u s liability of copyright infringement, there must be primary i n f r i n g e r s .  25  plaintiffs to obtain injunctive relief, direct infringement must be s h o w n .  2 6  F o r the Napster  a r g u e d that the A u d i o H o m e R e c o r d i n g A c t , had b e e n judicially interpreted to include the right of a c o n s u m e r to create p e r s o n a l M P 3 files.  In the  Diamond  27  c a s e , w h i c h will b e d i s c u s s e d in m o r e detail below, it w a s d e t e r m i n e d that "the p u r p o s e of [the] A c t is to e n s u r e the right of c o n s u m e r s to m a k e a n a l o g or digital audio  recordings  of  copyrighted  music  for  their  private,  noncommercial  u s e . . . p r o t e c t s all n o n c o m m e r c i a l copying by c o n s u m e r s of digital a n d a n a l o g musical recordings."  28  N a p s t e r a l s o looked at the legislative history of the A u d i o  H o m e R e c o r d i n g A c t to determine the intent of c o n g r e s s a n d n o t e s c o m m e n t s m a d e by S e n a t o r D e C o n c i n i w h o stated " A s n e w a n d improved t e c h n o l o g i e s b e c o m e available, s u c h clarification  in the  law b e c o m e more  important."  29  N a p s t e r a l s o noted that the v o l u m e of copying has no bearing on the intent of the A H R A to protect u s e r s and allow c o p y i n g a n d sharing for n o n c o m m e r c i a l u s e r s . " T h e r e is nothing in the l a n g u a g e of the A H R A , or any p r e c e d e n t under it,  2 3  Notice of Joint Motion of Plaintiffs,  Ibid,  at 5.  United States District Court, Northern District of California: San Francisco Division, Opposition of Defendant Napster, Inc. to Plaintiffs Motion for Preliminary Injunction, July 26,2000, at 1. Opposition of Defendant Napster, ibid, at 1. Opposition of Defendant Napster, ibid, at 5. 27 RIAA v. Diamond Multimedia Sys., /nc.,(1999), 180 F. 3d 1072 (9 Cir.). Opposition of Defendant Napster, supra, note 24, at 5. 2 4  2 5  2 6  th  2 8  20  s u g g e s t i n g that c o n s u m e r s ' n o n c o m m e r c i a l copying is permissible if only a few c o n s u m e r s do it."  30  N a p s t e r u s e d the United States S u p r e m e Court d e c i s i o n of Sony  31  to provide a  U n d e r the Sony  d e f e n c e to the c l a i m s of the R I A A a n d record c o m p a n y plaintiffs.  d e c i s i o n , " a s long a s a technology is c a p a b l e of substantial non-infringing u s e s , a provider  making  infringement,  a  technology  available  cannot  be  liable  e v e n w h e r e it may have e n c o u r a g e d infringing  t e c h n o l o g y m a y in fact have b e e n u s e d for infringing activity."  32  for  copyright  uses and  Napster claimed  that under the Sony doctrine, "it is e n o u g h to s h o w a single potential infringing  u s e of s o c i a l or c o m m e r c i a l i m p o r t a n c e . "  33  the  non-  Napster users can use  N a p s t e r ' s software a n d s e r v i c e s in w a y s that fall under the definition of "fair use" . 3 4  N a p s t e r c l a i m e d that the b a s i c fact that users of the N a p s t e r s e r v i c e are  e n g a g e d in n o n c o m m e r c i a l activities "weighs strongly in favour of finding their  Opposition of Defendant Napster, ibid, at 6. Opposition of Defendant Napster, ibid, at 8. 31 Sony, supra, note 8, addressed the sale of a video cassette recording device which was capable of recording copyright protected material. The U.S. Supreme Court held that there was no infringement by offering the device for sale because the product is widely used for legitimate, unobjectionable purposes. 2 9  3 0  Opposition of Defendant Napster, supra, note 24, at 8. Opposition of Defendant Napster, ibid, at 9. In the case of Campbell v. Acuff-Rose Music, Inc., 510 U.S. 576 (1994) the court laid out the factors to be considered when determining fair use. These factors include: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purpose; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. 3 2  3 3  3 4  21  u s e a s fair.'  E x a m p l e s of w a y s N a p s t e r c a n be u s e d to constitute a fair u s e  include s p a c e s h i f t i n g  III.  36  and sampling . 37  INTERPRETATION OF COPYRIGHT LAW  T h e i s s u e s r a i s e d in the N a p s t e r c a s e provide a framework to d e m o n s t r a t e the interpretation of copyright law with respect to n e w t e c h n o l o g i e s . W h i l e it will be s h o w n that copyright law is applicable to the Internet, I will a r g u e that caution s h o u l d be e x e r c i s e d in applying the law. Further, it is my position that the intent of copyright protection h a s b e e n lost a n d misinterpreted in the N a p s t e r c a s e a n d the s u b s e q u e n t action by the United S t a t e s C o n g r e s s .  T h e i s s u e s r a i s e d in N a p s t e r pertain to injunctive relief.  T h i s is important  b e c a u s e the d e c i s i o n is not c o n c l u s i v e , h o w e v e r it is illustrative of the direction that the courts are taking w h e n applying copyright doctrine to the Internet.  a)  Primary Infringement  N a p s t e r r a i s e s the i s s u e that to be liable for either contributory or vicarious liability of copyright infringement, there must be primary infringers.  Napster  a r g u e s that its u s e r s are not infringing copyright, that " n o n c o m m e r c i a l sharing of  Opposition of Defendant Napster, supra, note 24 at 11. Space shifting is the transfer of the content of a C D into MP3 format. It has been held in Diamond that space shifting of works already owned constitutes a fair use, calling it a "paradigmatic noncommercial use". Sampling is simply the ability of a user to listen to a song through the use of Napster services prior to purchasing, or to aid in determining whether to purchase the C D , hence to "sample" the work. 3 6  3  22  m u s i c a m o n g individuals is c o m m o n , legal, a n d a c c e p t e d . "  3 8  F o r the plaintiffs to  obtain injunctive relief, they must s h o w that N a p s t e r u s e r s , by creating a n d sharing  M P 3 files,  copyright.  39  have  engaged  in  direct  infringement  of  the  plaintiffs  T h i s is a n important factor, a s without the direct infringer there c a n  be no related liability.  Direct liability by N a p s t e r u s e r s h a s wider implications for  all individuals w h o u s e P 2 P technology for trading a n d sharing  information.  T h u s , the d e c i s i o n that N a p s t e r u s e r s are directly liable for infringement  can  affect m a n y Internet users.  T h e o w n e r of a copyright has the e x c l u s i v e rights to do a n d to authorize any of the following: (1) to r e p r o d u c e the copyrighted work in c o p i e s or p h o n o r e c o r d s ; (2) to prepare derivative works b a s e d upon the copyrighted work; (3) to distribute c o p i e s or p h o n o r e c o r d s of the copyrighted work to the public by s a l e or other transfer of o w n e r s h i p , or by rental, l e a s e , or lending; (4) in the c a s e of literary, m u s i c a l , dramatic, a n d c h o r e o g r a p h i c w o r k s , p a n t o m i m e s , a n d motion pictures a n d other a u d i o v i s u a l w o r k s , to perform the copyrighted work publicly; (5) in the c a s e of literary, m u s i c a l , dramatic, and c h o r e o g r a p h i c w o r k s , p a n t o m i m e s , a n d pictorial, graphics, or sculptural w o r k s , including the individual i m a g e s of a motion picture or other a u d i o v i s u a l work, to display the copyrighted work publicly; a n d (6) in the c a s e of s o u n d recordings, to perform the copyrighted work publicly by m e a n s of a digital audio t r a n s m i s s i o n . 40  Opposition of Defendant Napster, supra, note 24, at 1. Opposition of Defendant Napster, ibid, at 5. 17 U . S . C . § 1 0 6  23  W h e n claiming infringement, there are two fundamental e l e m e n t s to the Plaintiffs case.  T h e r e must be ownership of the copyright by the plaintiff and c o p y i n g by  the defendant. O w n e r s h i p b r e a k s down into the following parts: (1) originality in the author; (2) copyrightability of the subject matter; (3) citizenship status of the author, s u c h a s to permit a claim of copyright; (4) c o m p l i a n c e with a p p l i c a b l e statutory formalities; a n d (5) if the plaintiff is not the author, a transfer of the rights or other relationship between the author a n d the plaintiff s o a s to constitute the plaintiff the valid copyright c l a i m a n t . 41  T h e r e is no doubt that the R I A A a n d other represented parties are the o w n e r s of copyright, a s well it cannot be a r g u e d that N a p s t e r u s e r s are not c o p y i n g the copyright protected works.  H o w e v e r , it is questionable if this c o p y i n g is actually  infringing upon the plaintiff's copyrights.  With respect to the element of c o p y i n g , there are two s e p a r a t e c o m p o n e n t s which underlie proof of c o p y i n g . First, there is the question of fact a s to w h e t h e r the defendant in creating its work, u s e d the plaintiff's material a s a m o d e l , template, or e v e n inspiration. T h e s e c o n d c o m p o n e n t is whether s u c h c o p y i n g is actionable, i.e. if the defendant's work is substantially similar to the work.  4 1  4 2  plaintiffs  42  Nimmer, supra, note 2, at ss13.01[A]. Nimmer, ibid, at §13.01[B]  24  T h e R I A A c l a i m s that there is no question a s to the direct infringement of N a p s t e r users.  N a p s t e r on the other hand c l a i m s that through the application of the  d e f e n c e of fair u s e , there is no direct copyright infringement by its u s e r s .  b)  Fair U s e  N a p s t e r relied heavily on the d e f e n c e of fair u s e . A n important factor to k e e p in mind is that N a p s t e r a r g u e d the d e f e n c e of fair u s e on behalf of it u s e r s , the a l l e g e d direct infringers.  T h e r e c a n be no third-party liability w h e r e the a l l e g e d  direct infringers are e n g a g e d in fair u s e . T h e application of fair u s e by the court in N a p s t e r is e v i d e n c e of the i m b a l a n c e that has b e e n created through  the  interpretation a n d re-interpretation of this d e f e n c e . In particular, the c h a l l e n g e of applying law to technological innovation like P 2 P networks h a s created p r o b l e m s with the interpretation and s u b s e q u e n t application of the law.  T h e intent of the  constitutional foundation of copyright protection h a s b e e n e r o d e d a n d n a r r o w e d its application.  A f u n d a m e n t a l factor of consideration is the fact that N a p s t e r facilitates the transfer a n d s h a r i n g of a n extremely high v o l u m e . If the i s s u e only o c c u r r e d on a m o r e individual level, i.e. friend A s e n d i n g friend B a file, there w o u l d be no r e a s o n to write this t h e s i s b e c a u s e the fair u s e doctrine w o u l d apply.  However,  the m a g n i t u d e of the v o l u m e of sharing a n d transfers that t a k e s p l a c e c r e a t e s a n i s s u e , not drastically unlike any other i s s u e that copyright law h a s h a d to adjust  25  to in the past, but n e w in the s e n s e that it o c c u r s at high s p e e d s at a n exponentially  growing  volume,  and  across  borders,  making  undetectable a n d i m p o s s i b l e to enforce at a n individual level.  it  almost  T h e s e inherent  factors s t e m m i n g from the characteristics of the Internet are what create difficulty in the e x p a n s i o n of traditional doctrine to the digital realm. T h e interpretation of the fair u s e doctrine in N a p s t e r d e m o n s t r a t e s this difficulty.  i.  Background  T h e d e f e n c e of fair u s e w a s a c o m m o n law d e f e n c e , intended to allow the courts to avoid the application of copyright law in a w a y that would create a n i m b a l a n c e of rights.  T h e fair u s e d e f e n c e allows "courts to avoid rigid application of the  copyright statute w h e n , on o c c a s i o n , it would stifle the very creativity w h i c h that law is d e s i g n e d to f o s t e r . "  43  T h e Copyright A c t of 1976 e x p r e s s e d statutory  recognition of the d e f e n c e of fair u s e .  4 4  § 107 Limitations on e x c l u s i v e rights: Fair u s e Notwithstanding the provisions of section 1 0 6 a n d 1 0 6 A , the fair u s e of a copyrighted work, including s u c h u s e by reproduction in c o p i e s or p h o n o r e c o r d s or by any other m e a n s specified by that s e c t i o n , for p u r p o s e s s u c h a s criticism, c o m m e n t , n e w s reporting t e a c h i n g (including multiple c o p i e s for c l a s s r o o m use), s c h o l a r s h i p , or r e s e a r c h , is not an infringement of copyright. In determining w h e t h e r the u s e m a d e of a work in any particular c a s e is a fair u s e the factors to be c o n s i d e r e d shall include 4 5  43  Iowa State Univ. Research Found., Inc. v. American Broadcasting Cos.,(1980) 621 F.2d 57 (2d Acuff-Rose Music, Inc., supra, note 34, at 577.  Cir); Campbell v. 17 U . S . C . § 107  4 4  17 U . S . C . § 1 0 6 and 106A address the exclusive rights in copyrighted works, and the rights of certain authors to attribution and integrity, respectively. 4 5  26  (1) the p u r p o s e a n d character of the u s e , including whether s u c h u s e is of a c o m m e r c i a l nature or is for nonprofit e d u c a t i o n a l purposes; (2) the nature of the copyrighted work; (3) the a m o u n t and substantiality of the portion u s e d in relation to the copyrighted work a s a w h o l e ; a n d (4) the effect of the u s e upon the potential market for or v a l u e of the copyrighted work. T h e fact that a work is unpublished shall not itself bar a finding of fair u s e if s u c h finding is m a d e upon consideration of all the a b o v e factors.  The  legislative intent behind the enactment  of the fair u s e provision  was  "intended to restate the present judicial doctrine of fair u s e , not to c h a n g e , narrow, or e n l a r g e it in any w a y . "  4 6  T h e H o u s e Report a c c o m p a n y i n g that  a m e n d m e n t stated that the fair u s e doctrine is a n "equitable rule of r e a s o n " , a n d a s s u c h there is no real definition of the concept, thus e a c h c a s e raising the question of fair u s e must be d e c i d e d on its own f a c t s .  47  T h e Copyright A c t lists a n u m b e r of factors to be c o n s i d e r e d w h e n a s s e s s i n g whether a particular u s e of a copyright protected work s h o u l d be c o n s i d e r e d to be a fair u s e . S e c t i o n 107 d o e s not define fair u s e , it d o e s not provide a rule that c a n be applied in the determination of whether a particular u s e is "fair".  The  r e a s o n s behind the provision of factors, rather than a strict rule or definition, are related to the n e e d to maintain flexibility in the application of copyright law to particular situations.  46  T h e factors contained in S e c t i o n 107 are a n e x a m p l e of  Harper & Row, Publishers, Inc. v. National Enters.,(1985), 471 U.S. 539 at 549.  27  what s h o u l d be c o n s i d e r e d w h e n determining fair u s e , the factors listed are p r e c e d e d by the w o r d s "shall include", a n d the u s e of the term "including" is defined in § 1 0 1 a s "illustrative a n d not limitative". exhaustive.  49  In Campbell  v. Acuff-Rose  Music,  48  Inc.  50  T h e s e factors are not the court reiterates the  factors to be c o n s i d e r e d a s stated in § 1 0 7 a n d further e x p l a i n s that t h e s e factors are "to be e x p l o r e d , a n d the results w e i g h e d together, in light of the p u r p o s e s of copyright".  51  With respect to the factor of " p u r p o s e a n d character of u s e " ,  N a p s t e r s u b m i t s that the " n o n - c o m m e r c i a l nature of N a p s t e r ' s u s e r s ' activities w e i g h s strongly in favor of a finding their u s e is fair."  ii.  52  Interpretation  T h e fair u s e provision h a s b e e n interpreted  by the court to include " s p a c e  shifting" a n d " s a m p l i n g " . S p a c e shifting is the transfer of the content of a C D into M P 3 format.  S a m p l i n g , is the ability of a u s e r to listen to a s o n g through the u s e  of N a p s t e r s e r v i c e s prior to p u r c h a s i n g , or to aid in determining w h e t h e r to p u r c h a s e the C D , h e n c e to " s a m p l e " the work. T h e Ninth Circuit h a s held that s p a c e shifting or works already o w n e d constitutes a fair u s e , a s s u c h u s e is "paradigmatic n o n c o m m e r c i a l p e r s o n a l u s e " .  5 3  * ' H.R. Rep. No. 94-1476, p 66 (1976). Nimmer, at § 13.05[A]. 17 U . S . C . § 1 0 1 states that the terms "including" and "such as" are illustrative and limitative. 49 Castle Rock Enter, v. Carol Pub. Group, /nc.,150 F.3d 132, 141 (2d Cir. 1998) 50 Campbell, supra, note 34. 4 8  51  Campbell, ibid, at 578.  5 2  Opposition of Defendant Napster, supra, note 24, at 11.  28  T h e court rejected Napster' argument that its u s e r s a r e e n g a g i n g in fair u s e o n the b a s i s that it is n o n c o m m e r c i a l p e r s o n a l u s e . B e e z e r J , for the 9 Court  of A p p e a l  stated  that  "direct  economic  benefit  t h  Circuit  is not required  to  d e m o n s t r a t e a c o m m e r c i a l u s e . Rather, repeated a n d exploitative c o p y i n g of copyrighted w o r k s , e v e n if the c o p i e s are not offered for s a l e , m a y constitute a commercial u s e . "  5 4  Church  w h e r e it w a s held that a c h u r c h that c o p i e d religious text for its  of God , 55  T h e court relied o n Worldwide  Church of God v.  Philadelphia  m e m b e r s "unquestionably profit[ed]" from the unauthorized "distribution a n d u s e of [the text] without having to a c c o u n t to the copyright holder." T h e N a p s t e r court further stated that " c o m m e r c i a l u s e is demonstrated by s h o w i n g that repeated a n d exploitative unauthorized c o p i e s of copyrighted works w e r e m a d e to s a v e the e x p e n s e of p u r c h a s i n g authorized c o p i e s . "  T h e r e is e v i d e n c e that the c o n c l u s i o n of the 9  5 6  t h  circuit court is q u e s t i o n a b l e . T h e  P 2 P s e r v i c e for m a n y u s e r s is a method to explore a n d gain a c c e s s to n e w g e n r e s a n d n i c h e s of m u s i c . O n this b a s i s it d o e s perform a " s a m p l i n g " s e r v i c e , w h e r e u s e r s c a n listen, explore, a n d then determine whether they w o u l d like to p u r c h a s e the C D .  In d e f e n c e , N a p s t e r argued that the i n c r e a s e in c o p y i n g to  M P 3 format is a sign of the d i s p l a c e m e n t of the u s e of the audio c a s s e t t e for the s a m e p u r p o s e s . N a p s t e r a l s o found in its s u r v e y s that t h o s e w h o s p a c e shift by  Diamond, supra, note 27, at 1079.  A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, at para 5. Worldwide Church of God v. Philadelphia Church of God, 222 F. 3d 1110, 1118 (9 Cir. 2000) th  Napster, supra, note 54, at para 24.  29  using N a p s t e r buy a s m u c h or more m u s i c than previously.  W i t h respect to t h e  u s e of N a p s t e r for s a m p l e s o n g s , N a p s t e r c l a i m e d that s u c h a u s e is a n a l o g o u s to visiting a listening station or borrowing a C D from a friend, to d e c i d e w h e t h e r to p u r c h a s e . T h e r e is e v i d e n c e that this d o e s in fact occur,  "[o]ver 84 % of  N a p s t e r u s e r s report downloading m u s i c files to s e e if they want to b u y the work."  c)  58  The S o n y Doctrine  A key judicial interpretation of copyright law a n d its application to n e w t e c h n o l o g y is Sony Corp. of America  v. Universal  Studios.  59  T h e Sony c a s e is instrumental  to m y d i s c u s s i o n of the protection of copyright in a digital a g e . Sony dealt with m a n y of the s a m e i s s u e s which the N a p s t e r c a s e d i d .  It provides a g o o d  e x a m p l e of the e x t e n s i o n of copyright principles to a n e w technology, w h i c h at the onset s e e m s to b e a major impediment to the protection of copyrights, but in turn d e v e l o p s a n e w a r e a of c o m m e r c e a s well a s the ability of the public to enjoy the copyright protected works.  T h e Sony  Court explicitly interpreted  copyright law to maintain the delicate  b a l a n c e b e t w e e n the m o n o p o l y right that copyright grants to the holder, a n d t h e intent of that protection to b e in the public interest. This line of r e a s o n i n g s h o u l d h a v e a l s o b e e n a fundamental consideration in the N a p s t e r c a s e .  5 7  5 8  Sony is the  Opposition of Defendant Napster, supra, note 24, at 12. Opposition of Defendant Napster, ibid, at 13.  30  first major judicial d e c i s i o n a d d r e s s i n g the c h a l l e n g e s which t e c h n o l o g y p l a c e s on the law. Sony  held  At its most simplistic, the S u p r e m e Court of the United S t a t e s in that the  s a l e of  home  videotape  recorders  do  not  constitute  contributory infringement of television program copyrights.  In Sony, U n i v e r s a l S t u d i o s brought action against S o n y C o r p o r a t i o n alleging that s o m e individuals had u s e d the B e t a m a x video tape recorder to record s o m e of its copyrighted  works  which  had  been  exhibited  on  commercially  sponsored  television. U n i v e r s a l S t u d i o s c o n t e n d e d that t h e s e individuals had infringed their copyright.  Furthermore, U n i v e r s a l S t u d i o s maintained that S o n y C o r p . w a s liable  for copyright infringement allegedly committed by B e t a m a x c o n s u m e r s b e c a u s e of the marketing of the B e t a m a x . T h e r e w a s no relief sought against a n y of the B e t a m a x c o n s u m e r s , instead d a m a g e s a n d equitable accounting of profits from S o n y C o r p . , a s well a s an injunction against the manufacture a n d marketing of the B e t a m a x w a s sought.  After reviewing the law on contributory a n d vicarious infringement of copyright, the S u p r e m e Court in Sony, looked to Patent law for an a n a l o g y a n d e x t e n d e d the "staple article of c o m m e r c e doctrine" to copyright law, a n d defined "fair u s e " . T h e Patent A c t e x p r e s s l y defines the c o n c e p t of infringement a n d the c o n c e p t of contributory  infringement.  With respect to contributory  infringement,  it is  confined to the k n o w l e d g e of a s a l e of a c o m p o n e n t e s p e c i a l l y m a d e for u s e in c o n n e c t i o n with a product that might be u s e d in connection with other patents.  59  Sony, supra, note 8. 31  T h e A c t a l s o e x p r e s s l y provides that the s a l e of a "staple article or c o m m o d i t y of commerce  suitable  infringement  for  substantial  noninfringing  use"  is  not  contributory  60  T h e staple article of c o m m e r c e doctrine directs that w h e n there is a c h a r g e of contributory infringement b a s e d entirely on the s a l e of an article of c o m m e r c e that is u s e d by the p u r c h a s e r to infringe a patent, it m a y be in the public interest to h a v e a c c e s s to that article of c o m m e r c e . A finding of contributory infringement would give the patentee effective control over the s a l e of that item, effectively holding that the disputed article is within the m o n o p o l y granted to the p a t e n t e e .  61  T h u s , contributory infringement c a s e s dealing with patents h a v e a l w a y s b e e n cautiously a p p r o a c h e d by the court to e n s u r e that the patentee d o e s not extend his or her m o n o p o l y b e y o n d the limits of the rights granted by the p a t e n t .  62  With respect to the application of the article of c o m m e r c e doctrine a n d copyright law the court stated: W e r e c o g n i z e there are substantial differences b e t w e e n the patent a n d copyright laws. But in both a r e a s the contributory infringement doctrine is g r o u n d e d on the recognition that a d e q u a t e protection of a m o n o p o l y m a y require the courts to look b e y o n d a c t u a l duplication of a d e v i c e or publication to the products or activities that m a k e s u c h duplication p o s s i b l e . T h e staple article of c o m m e r c e doctrine must strike a b a l a n c e b e t w e e n a copyright holder's legitimate d e m a n d for effective -- not merely s y m b o l i c -protection of the statutory monopoly, a n d the rights of others freely to e n g a g e in substantially unrelated a r e a s of c o m m e r c e . A c c o r d i n g l y , the s a l e of copying equipment, like the s a l e of other 35 U . S . C . § 2 7 1 ( c ) . Sony, supra, note 8, at 441.  Sony, ibid., at 441.  32  articles of c o m m e r c e , d o e s not constitute contributory infringement if the product is widely u s e d for legitimate, unobjectionable purposes. Indeed, it n e e d merely be c a p a b l e of substantial noninfringing u s e s . 6 3  The  court  then  found that the  potential  u s e of the  B e t a m a x for  private,  n o n c o m m e r c i a l "time shifting" in the h o m e , satisfied the substantial noninfringing u s e required for the article of c o m m e r c e doctrine. "It d o e s s o both (A) b e c a u s e r e s p o n d e n t s h a v e no right to prevent other copyright holders from authorizing it for their p r o g r a m s , a n d (B) b e c a u s e the District Court's factual findings reveal that e v e n the unauthorized h o m e time-shifting legitimate fair u s e . "  of r e s p o n d e n t s ' p r o g r a m s is  6 4  T h e inclusion of the market a s a factor in determining fair u s e is recognition of the intent of copyright to create incentives for creative effort. T h e n o n c o m m e r c i a l u s e of a work that is copyright protected m a y h a v e the effect of impairing the holder of the copyright from the rewards that are intended by s u c h protection. H o w e v e r , " a u s e that h a s no d e m o n s t r a b l e effect upon the potential market, for, or the v a l u e of, the copyrighted work n e e d not be prohibited in order to protect the author's incentive to create.  T h e prohibition of s u c h n o n c o m m e r c i a l u s e s  w o u l d merely inhibit a c c e s s to ideas without any countervailing b e n e f i t . "  With respect to Napster, this i s s u e is debatable.  65  O n the individual level of the  N a p s t e r user, the d o w n l o a d i n g of a s o n g d o e s not s e e m to result in a c o m m e r c i a l  63  6 4  65  Sony, ibid., at 442. Sony, ibid., at 442.  Sony, ibid.,  at 450-451.  33  u s e of the P 2 P network.  H o w e v e r , w h e n there are 60 million u s e r s d o w n l o a d i n g  M P 3 files, there m a y be c o m m e r c i a l interests to consider. A l t h o u g h this is the c a s e , w h e n considering the fair u s e d e f e n c e , the question to be a d d r e s s e d is that of the individual u s e r b e c a u s e it is the individual u s e r w h o must be liable for primary infringement to give w a y to the ability to argue third party liability. A t the individual level, the argument of c o m m e r c i a l interests is difficult to rationalize.  W h e n determining fair u s e the n e e d to b a l a n c e the interests at play is a key factor.  " C o n g r e s s h a s plainly instructed us that fair u s e a n a l y s i s calls for a  sensitive b a l a n c i n g of interests.  T h e distinction  b e t w e e n "productive"  and  "unproductive" u s e s m a y be helpful in calibrating the b a l a n c e , but it cannot be wholly d e t e r m i n a t i v e . "  66  T h e u s e of the B e t a m a x to c o p y a program m a y have  productive a n d unproductive u s e s a n d effects.  O n e to be c o n s i d e r e d is the u s e  of the B e t a m a x for time shifting, w h i c h m a y result in a benefit of i n c r e a s e d v i e w e r access.  T h e Sony c a s e is a g o o d e x a m p l e of the application of the Copyright A c t to a n e w t e c h n o l o g y through consideration of the intent of copyright protection a n d its s u b s e q u e n t interpretation through statute a n d c a s e law.  In Sony  the  court  applied doctrine to the n e w technology of the video c a s s e t t e recorder in a w a y that the interests at play r e m a i n e d b a l a n c e d a l o n g s i d e the public interest in t e c h n o l o g i c a l innovation. T h i s type of reasoning is consistent with the application  Sony, ibid., a f 4 5 5 .  34  of copyright to protect and b a l a n c e the interests of the creator and the public, and s h o u l d h a v e b e e n followed in the N a p s t e r c a s e .  d)  Interpretation by the C o u r t in N a p s t e r  T h e District C o u r t rejected the e x a m p l e s of fair u s e provided in d e f e n c e by Napster. " T h e court finds that s p a c e shifting a c c o u n t s for a de minimis portion of N a p s t e r u s e a n d is not a significant a s p e c t of defendant's b u s i n e s s . "  67  T h e Court  found that, a s a result of Napster C D p u r c h a s e s a m o n g college students are likely to d e c l i n e .  T h e Court c o n s i d e r e d the e v i d e n c e submitted by N a p s t e r that  C D s a l e s actually i n c r e a s e to be u n r e l i a b l e .  68  T h e r e w a s conflicting e v i d e n c e  p r o d u c e d by N a p s t e r and the R I A A to demonstrate the effect of N a p s t e r on the market.  R e s e a r c h w a s performed by a n u m b e r of professionals, a n d the C o u r t  p l a c e d more faith on the R I A A r e s e a r c h .  It m a y be true that C D p u r c h a s e s  a m o n g c o l l e g e students are likely to d e c r e a s e . H o w e v e r a n u m b e r other factors s h o u l d a l s o be c o n s i d e r e d . T h e fact C D p u r c h a s e s are declining cannot wholly be attributed to Napster.  W h e n a s s e s s i n g c o n s u m e r c h o i c e s , other i s s u e s like  quality, trends, and e c o n o m i c s must a l s o be c o n s i d e r e d .  Further, this r e a s o n i n g diverges from that e s t a b l i s h e d by the S u p r e m e C o u r t in Sony.  A n a n a l o g y c a n be m a d e with Napster and the B e t a m a x , in terms of the  fundamental  characteristics  67  Sony, ibid., at 7.  6 8  Sony, ibid, at 15.  that  the  new  technology  possesses  and  the  35  c h a l l e n g e that they p o s e . In Sony the court looked b e y o n d the immediate effects of the t e c h n o l o g y to s e e the p o s s i b l e long-term benefits that the t e c h n o l o g y could bring to both copyright holders a n d c o n s u m e r s .  If Sony h a d b e e n d e c i d e d in  reverse, the V C R a n d the video industry m a y have b e e n n o n existent.  The  t e c h n o l o g y that U n i v e r s a l S t u d i o s attempted to q u a s h turned into a f u n d a m e n t a l s o u r c e of capital. N a p s t e r should be regarded in the s a m e way.  T h e Court a l s o m a k e s reference to the fact that the plaintiffs a r e vulnerable to N a p s t e r in that it h a s the intention of entering into the digital d o w n l o a d market, a n d that d o w n l o a d i n g on N a p s t e r m a y a l s o disrupt the plaintiffs' efforts b e c a u s e it d o e s not involve a n y restrictions.  69  promotional  In s o m e r e s p e c t s this is  recognition by the Court of the potential for P 2 P technology to o p e n n e w markets for distribution a n d c o n s u m p t i o n .  H o w e v e r , the effect of t h e d e c i s i o n restricts  w h o c a n participate in the n e w market, creating a n i m b a l a n c e of interests a n d competition. T h e s e interests will b e d i s c u s s e d in depth in the following chapter.  e)  T h i r d Party Liability - Contributory a n d V i c a r i o u s Infringement  T h e R I A A maintained that the law of contributory a n d vicarious infringement w a s just a s a p p l i c a b l e to N a p s t e r a s it is to a n y other c o m p a n y , " a n d the m e r e fact that [infringement  is] clothed in the exotic w e b b i n g of the Internet d o e s not  d i s g u i s e its illegality."  6 9  7 0  70  T h e Internet c r e a t e s a n environment that is constantly  S o n y , ibid, at 1 6 - 1 7 . J o i n t M o t i o n of Plaintiffs, s u p r a , note 18, at 4 .  36  c h a n g i n g a n d uncertain, the application of third party liability to N a p s t e r r a i s e s c o n c e r n s of the over extension of liability.  Background  W h e n the Copyright A c t w a s legislated into e x i s t e n c e , there w a s no provision dealing with contributory infringement.  Contributory infringement a r i s e s from  the  intent of C o n g r e s s to allow copyright to be influenced by the parallel field of patent l a w .  71  T h e S u p r e m e Court in Sony states:  T h e a b s e n c e of s u c h e x p r e s s l a n g u a g e in copyright statute d o e s not preclude the imposition of liability for copyright infringement on certain parties w h o have not t h e m s e l v e s e n g a g e d in the infringing activity. F o r vicarious liability is i m p o s e d in virtually all a r e a s of the law, a n d the concept of contributory infringement is merely a s p e c i e s of the broader problem of identifying the c i r c u m s t a n c e s in w h i c h it is just to hold one individual a c c o u n t a b l e for the actions of another. 72  T h e Patent A c t e x p r e s s l y defines the concept of infringement a n d the c o n c e p t of contributory infringement.  T h e concept of contributory infringement is confined to  the k n o w l e d g e of a s a l e of a c o m p o n e n t e s p e c i a l l y m a d e for u s e in c o n n e c t i o n with a product that might be u s e d in c o n n e c t i o n with other patents.  Sony, supra, note 8, at 435. Sony, ibid, at 435.  37  Contributory  Infringement  T h e r e a r e two t y p e s of contributory infringement.  First, p e r s o n a l c o n d u c t that  forms part of or furthers the infringement, a n d s e c o n d , contribution of m a c h i n e r y or g o o d s that provide the m e a n s to infringe.  1. participation in the infringement A party " w h o , with k n o w l e d g e of the infringing activity, i n d u c e s , c a u s e s , or materially contributes to the infringing c o n d u c t of another, m a y b e held liable a s a 'contributory infringer'."  T h u s , if there is k n o w l e d g e that the work in question  73  constitutes a n infringement, then o n e w h o c a u s e s another to infringe will himself be liable a s a n infringer.  74  A contributory infringer h a s b e e n d e s c r i b e d by the  S u p r e m e C o u r t a s o n e w h o " w a s in a position to control the u s e of copyrighted w o r k s by others a n d h a d authorized the u s e without copyright o w n e r . "  2.  p e r m i s s i o n from the  75  providing the m e a n s to infringe  G e n e r a l l y , o n e w h o provides a copyrighted work to another, w h o then wrongfully c o p i e s from that work m a y b e liable a s a contributory infringer.  Gershwin Publishing Corp. v. Columbia Artists Management, Inc., (1971),  H o w e v e r , if  443 F.2d 1159 at  1162 (2 Cir.). / Nimmer, supra, note 2, at §12.04[A][2]. 75 Sony, supra, note 8, at 437. nd  7 4  38  during this p r o c e s s there w a s a lack of k n o w l e d g e regarding the other party's intended illegitimate u s e there m a y b e no liability.  76  Sony  T h e i s s u e of contributory infringement w a s important in Sony,  b e c a u s e if the  plaintiffs h a d b e e n s u c c e s s f u l in their claim that off-the-air video taping for private u s e constituted copyright infringement, the m o n u m e n t a l p r o b l e m s of e n f o r c e m e n t against individual h o m e u s e r s would h a v e rendered s u c h a d e c i s i o n largely m e a n i n g l e s s , u n l e s s the manufacturers a n d sellers of the m a c h i n e s a n d t a p e s required to e n g a g e in s u c h h o m e taping w e r e infringers.  Vicarious  held liable a s contributory  77  Liability  V i c a r i o u s liability exists w h e n two e l e m e n t s a r e present.  First, t h e d e f e n d a n t  must p o s s e s the right a n d ability to s u p e r v i s e the infringing conduct. that defendant  must  have " a n obvious a n d direct financial  exploitation of copyrighted materials".  interest  Second, in the  T h e s e two e l e m e n t s a r e independent of  o n e another a n d must b e d e m o n s t r a t e d to render the defendant vicariously liable.  78  Nimmer, supra, note 2, at §12.04[A][2][b]. Nimmer, supra, note 2, at §12.04[A][2][b].  39  T h e r e a s o n i n g behind the provision for vicarious liability a r i s e s from the context of landlords of p r e m i s e s w h e r e infringement t a k e s place.  T h e H o u s e Report  from the 1909 e n a c t m e n t e x p l a i n s the codification of that c a s e law: T h e committee has c o n s i d e r e d a n d rejected a n a m e n d m e n t to this s e c t i o n intended to e x e m p t the proprietors of an establishment, s u c h a s a ballroom or night club, from liability for copyright infringement committed by an independent contractor, s u c h a s a n o r c h e s t r a leader. A well-established principle of copyright law is that a p e r s o n w h o violates any of the e x c l u s i v e rights of the copyright o w n e r is an infringer, including p e r s o n s w h o c a n be c o n s i d e r e d related or vicarious infringers. T o be held a related or vicarious infringer in the c a s e of performing rights, a defendant must either actively operate or s u p e r v i s e the operation of the p l a c e w h e r e i n the p e r f o r m a n c e s occur, or control the content of the infringing p r o g r a m , a n d expect c o m m e r c i a l gain from the operation a n d either direct or indirect benefit from the infringing p e r f o r m a n c e . T h e committee h a s d e c i d e d that no justification exists for c h a n g i n g existing law, a n d c a u s i n g a significant e r o s i o n of the public performing right. 79  With respect to the claims that S o n y w a s liable for contributory a n d vicarious copyright infringement, the S u p r e m e Court found no b a s i s for s u c h allegations. A  "contributory  infringer"  must  copyrighted w o r k s by others.  be in a position to control the  u s e of  the  " T h e only contact between S o n y a n d the u s e r s of  the B e t a m a x that is d i s c l o s e d by this record occurred at the m o m e n t of s a l e " .  8 0  If  S o n y w e r e to be held liable for vicarious infringement it would h a v e to be on the b a s i s that "it sold equipment with constructive k n o w l e d g e of the fact that its c u s t o m e r s m a y u s e that equipment to m a k e unauthorized c o p i e s of copyrighted  Nimmer, ibid, at §12.04[a][1]. H. Rep., pp 159-60. Sony, supra, note 8, at 437. 40  material.  There is no precedent in the law of copyright for the imposition of  vicarious liability on such a theory."  81  After reviewing the law on contributory and vicarious infringement of copyright, the Supreme Court in Sony, looks to Patent law for an analogy. The Patent Act expressly defines the concept of infringement and the concept of contributory infringement.  With respect to contributory infringement, it is confined to the  knowledge of a sale of a component especially made for use in connection with a product that might be used in connection with other patents.  The Act also  expressly provides that the sale of a "staple article or commodity of commerce suitable for substantial noninfringing use" is not contributory infringement.  82  The staple article of commerce doctrine directs that when there is a charge of contributory infringement based entirely on the sale of an article of commerce that is used by the purchaser to infringe a patent, it may be in the public interest to have access to that article of commerce. A finding of contributory infringement would give the patentee effective control over the sale of that item, effectively holding that the disputed article is within the monopoly granted to the patentee.  83  Thus, contributory infringement cases dealing with patents have always been cautiously approached by the court to ensure that the patentee does not extend his or her monopoly beyond the limits of the rights granted by the patent.  81  8 2  83  84  84  Sony, ibid, at 439. 35 U.S.C. §271(c). Sony, supra, note 8, at 441. Sony, ibid., at 441.  41  With respect to the application of the article of c o m m e r c e doctrine a n d copyright law the court stated: W e r e c o g n i z e there are substantial differences b e t w e e n the patent and copyright laws. But in both a r e a s the contributory infringement doctrine is grounded on the recognition that a d e q u a t e protection of a m o n o p o l y m a y require the courts to look b e y o n d actual duplication of a d e v i c e or publication to the products or activities that m a k e s u c h duplication possible. T h e staple article of c o m m e r c e doctrine must strike a b a l a n c e b e t w e e n a copyright holder's legitimate d e m a n d for effective - not merely s y m b o l i c -protection of the statutory monopoly, and the rights of others freely to e n g a g e in substantially unrelated a r e a s of c o m m e r c e . Accordingly, the s a l e of copying equipment, like the s a l e of other articles of c o m m e r c e , d o e s not constitute contributory infringement if the product is widely u s e d for legitimate, unobjectionable purposes. Indeed, it need merely be c a p a b l e of substantial noninfringing u s e s . 8 5  Contributory  Infringement  and  Napster  In r e s p o n s e to the plaintiffs' claims of contributory infringement, N a p s t e r stated that the law did not apply. "The law is clear that merely providing a one-to-one file sharing t e c h n o l o g y with a real-time s e a r c h a b l e index d o e s not constitute third-part infringement. If this w e r e infringement, then an I S P could be found liable simply for permitting users to s e a r c h for a n d transfer files, w h e r e the I S P w a s s h o w n to have a n g e n e r a l i z e d k n o w l e d g e that m a n y of t h o s e works m a y b e c o p y r i g h t e d . " 86  N a p s t e r c l a i m e d that it had no specific k n o w l e d g e that any particular u s e of a file through its s y s t e m w a s unauthorized.  Sony, ibid., at 442. Opposition of Defendant Napster, supra, note 24, at 16.  42  "Napster cannot know, any more than a photocopier or video recorder manufacturer, which uses of its system are fair or not..."even apart from fair use, Napster cannot know the copyright status of users' files...song titles cannot be used to distinguish authorized files form others because many song titles are used by multiple artists or....there may be multiple copies of the same work -- some may be authorized to be shared and others not." 87  Napster further argued that for contributory infringement to be found there is a requirement of substantial participation in a specific direct infringement. Napster recognized that "substantial participation might exist if Napster were given actual notice and failed to take remedial action...but every time Napster has received actual notice of infringement at a specified location, Napster has blocked the conduct by terminating the user account."  88  The claim of Napster having knowledge of the copyright infringements of its users was centered in the fact that "Napster users overwhelmingly use Napster to engage in music piracy, and very little e l s e . " Ingram O k i n  90  89  A study performed by Professor  found that "every single Napster user sampled was offering at  least some pirated music for others to download" and that "over 87% of the files actually selected for downloading by Napster users have been conclusively confirmed to be infringing."  91  The plaintiffs claimed that these facts were not new  Opposition of Defendant Napster, ibid, at 18-19. Opposition of Defendant Napster, ibid, at 19. Opposition of Defendant Napster, ibid, at 8. Professor Ingrma Olkin is a Professor of Statistics and Education, and the past Chair of the Department of Statistics, at Stanford University, he was commissioned by the plaintiffs to design a statistical methodology where he could reliably estimate the level and proportion of infringements on Napster. Two questions were sought to be answered: 1) what percentage of Napster users are engaged in some level of music piracy while logged onto Napster 2) what percentage of the M P 3 music files actually being downloaded by Napster users are infringing? S e e Opposition of Defendant Napster, ibid, at 9. Opposition of Defendant Napster, ibid, at 9. B /  8 8  8 9  9 0  9 1  43  to Napster. S h a w n F a n n i n g , the N a p s t e r creator testified that the primary r e a s o n for d e v e l o p i n g the N a p s t e r c o d e w a s to "put an e n d to the frustration of his college r o o m m a t e in finding a n d downloading M P 3 m u s i c f i l e s . "  92  T h i s position is  further reaffirmed in documentation of the d e v e l o p m e n t of the N a p s t e r b u s i n e s s plan through statements m a d e by N a p s t e r co-founder S e a n P a r k e r writing to c o founder  John Fanning.  The document  specifically stated that " U s e r s will  understand that they are improving their e x p e r i e n c e by providing  information  about their t a s t e s without linking that information to a n a m e or a d d r e s s or other sensitive d a t a that might e n d a n g e r them (especially s i n c e they are e x c h a n g i n g pirated m u s i c ) . "  93  T h e claim of N a p s t e r having k n o w l e d g e of the infringing activity w h i c h o c c u r s through the u s e of its service is further supported by the plaintiffs through c l a i m s that N a p s t e r e x e c u t i v e s have u s e d the service t h e m s e l v e s to d o w n l o a d pirated music.  9 4  Furthermore, during an e-mail e x c h a n g e between N a p s t e r c o - f o u n d e r  S h a w n F a n n i n g a n d one of Napster's chat r o o m moderators c o m m e n t s w e r e m a d e about admitting k n o w l e d g e of "illegal" M P 3 files being transferred through the u s e of Napster.  Specifically, after one N a p s t e r moderator wrote to a u s e r  referring to N a p s t e r being about "free music", another moderator sent a n e-mail to S h a w n F a n n i n g a s k i n g him what w a s the most appropriate thing to do. T h e email stated "admitting that w e k n o w N a p s t e r is u s e d for the transfer of illegal M P 3 files might not be the best thing to d o . . . . I m e a n . . . o b v i o u s l y p e o p l e are going to  9 2  9 3  Opposition of Defendant Napster, ibid, at 9. Opposition of Defendant Napster, ibid, at  10.  44  u s e it for that p u r p o s e . . . b u t ... w e might not want to actually s a y w e  know  t h a t . . . * s h r u g * just s e m a n t i c s I g u e s s . . . b u t e h . . . . being s u e d c a n be a bitch..." In r e s p o n s e S h a w n F a n n i n g replied that it w a s a g o o d point that moderators s h o u l d "try to avoid d i s c u s s i o n s similar to this....you should all be a w a r e of what y o u say".  The  9 5  plaintiffs  also  submitted  infringements  that  occur  on  environment,  and  support  that its  Napster  system.  (including  materially  contributed  " N a p s t e r provides  software,  servers,  the  indexing,  to  the  location, search  functions, moderators, and staff) that e n a b l e u s e r s to a c c e s s e a c h others' c o m p u t e r hard drives s o that the infringements c a n take p l a c e . "  96  T h i s argument  follows the line of r e a s o n i n g that without the N a p s t e r support a n d software, the infringements w o u l d not occur.  N a p s t e r provides the m e a n s of w h i c h t h e s e  w i d e s p r e a d infringements c a n occur.  Vicarious  Liability  and  Napster  W i t h respect to the Plaintiffs c l a i m s that N a p s t e r is vicariously liable for copyright infringement of its u s e r s (if it is c o n s i d e r e d to be an infringement), it w a s a r g u e d that both the right a n d the ability to control the infringing activity a n d a direct financial interest in the infringing activities must be found.  Napster defended  itself by stating that it w a s unable to actually control what g o e s on through the  9 4  9 5  Opposition of Defendant Napster, ibid, at 13. Opposition of Defendant Napster, ibid, at 13-14.  45  use of its service. "The control issue turns on whether Napster can identify and prevent particular instances of infringement in its service. The answer is clearly no. A s an initial matter, Napster can not have known the use to which a shared file is put, and thus cannot control whether a use is fair or not.  On this basis  alone, Napster cannot control and distinguish between legal or illegal user conduct."  97  Napster also used a comparison between its service and that of an ISP, stating that "an ISP has no affirmative duty to police its users, and cannot be expected to monitor individual users until put on notice by the copyright holder of particular alleged infringing materials."  98  Thus, asking Napster to supervise and police its  service to exclude every copyrighted file where authorization has not been given would be impossible. universe.  "Napster cannot identify all the copyrighted music in the  Indeed, Plaintiffs cannot even identify the works in which they claim  rights, and have refused, despite repeated requests, to give Napster a list of those recordings."  99  In sum, Napster stated that "were Napster or any other ISP  required affirmatively to identify and exclude all copyrighted materials, there could be no file sharing, and indeed, no World Wide W e b . "  100  Opposition of Defendant Napster, ibid, at 16. Opposition of Defendant Napster, ibid, at 20. Opposition of Defendant Napster, ibid, at 20. Opposition of Defendant Napster, ibid, at 21. The Plaintiffs needed two teams of over 50 people and thousands of hours just to determine the status of 1150 works they selected at random from Napster. The Plaintiffs also admitted that they failed to reach closure on 10 percent of those songs, and there were some errors on others. In determining copyrights in sound recordings it is tricky, detailed, and individualized. More importantly, there are millions of MP3 files - no 1150 - shared on Napster. M 0  9 7  9 8  9 9  1 0 0  Opposition of Defendant Napster, ibid, at 21.  46  Vicarious Liability consists of two elements. The first requires that there be a direct financial interest in the occurrence of these infringing activities. The second requires that there is a right and ability to supervise the infringing activity.  The plaintiffs claimed that Napster had a direct financial interest, and benefits economically from the infringing activities of its service. "It already has translated into a cash infusion of over $13 million from venture capital...Napster's current value (even with this lawsuit pending) has been pegged at figures ranging from $60-80 million to $150 million."  101  What makes this claim even more interesting  is the fact that as of the date the case was heard, Napster had not earned revenues.  The RIAA claimed that this fact is irrelevant because of Napster's  decision to focus on new user acquisition which in turn would bring in future revenues, as well as the fact that Napster has been pursing ideas of how to turn Napster into a money maker.  102  Thus, "with essentially every Napster user  engaged in music piracy while on Napster, Napster's current value, and future plans for exploiting its user base, are directly -- indeed, solely - attributable to the infringement of plaintiffs' music that it enables and encourages."  103  The plaintiffs submitted that Napster has both the right and ability to supervise its users to determine if infringements are taking place and to take appropriate action to stop the infringing activity from occurring. Napster specifically reserves  1 0 1  1 0 2  Opposition of Defendant Napster, ibid, at 18. Opposition of Defendant Napster, Ibid, at 19.  47  "the right to refuse service and terminate accounts in their discretion, including, but not limited to, if Napster believes that user conduct violates applicable law or is harmful to the interests of Napster, its affiliates, or other users, or for any other reason in Napster's sole discretion, with or without c a u s e . "  104  Napster has in fact  terminated users and the power to discipline users is also given by Napster to its moderators, who screen messages and decide which ones to pass on to other members. This argument is further developed through the standard that where a defendant is in a position to police infringing conduct, the failure to do so gives rise to vicarious liability.  Court  105  Interpretation  An injunction may be granted to a party who demonstrates either probable success on the merits and the possibility of irreparable harm, or that there are serious questions of hardship and that hardship tips in the favour of the party seeking the injunction. The District Court found that there was prima facie case of direct infringement of copyright by users of the Napster software and system, opening Napster to the possibility of being held liable for both contributory as well as vicarious infringement of the plaintiffs' copyrights. The District Court rejected all defences put forth by Napster.  Opposition of Defendant Napster, Ibid, at 20. Opposition of Defendant Napster, ibid, at 20-21, clause required by users to agree to upon becoming a member of the Napster community. Opposition of Defendant Napster, ibid, at 21. 1 0 4  1 0 5  48  With respect to claims of contributory infringement the District Court found that "any potential non-infringing use of the Napster service is minimal or connected to the infringing activity...the substantial or commercially significant use of the service was, and continues to be, the unauthorized downloading and uploading of popular music, most of which is copyrighted." 106  The District Court held that Napster did indeed have knowledge of the infringing activity, and distinguished the Napster service from an ISP, leaving Napster with little possibility of defence. However, the 9 Circuit Court of Appeal, corrected th  the reasoning of the District Court in part. The 9 Circuit stated th  "...absent any specific information which identifies infringing activity, a computer system operator cannot be liable for contributory infringement merely because the structure of the system allows for the exchange of copyrighted material. To enjoin simply because a computer network allows for infringing use would, in our opinion, violate Sony and potentially restrict activity unrelated to infringing use. We nevertheless conclude that sufficient knowledge exists to impose contributory liability when linked to demonstrated infringing use of the Napster system". 107  Thus, the injunction was modified. The modification will be discussed below. In reference to vicarious copyright infringement the District Court found that Napster has a direct financial interest in the infringing activity through its intent to make money off the service in the future. It was also found that Napster has the right and ability to supervise the infringing activity.  108  Thus, the District Court  found that "because plaintiffs have shown a reasonable likelihood of success on the merits of their contributory and vicarious copyright infringement claims, they  Opposition of Defendant Napster, ibid, at 18. Napster, supra, note 54, at para. 51.  Napster, ibid, at 31.  49  are entitled to a presumption of irreparable h a r m . "  1 0 9  T h e preliminary injunction  w a s granted to the plaintiffs. Specifically the District Court stated that the " D e f e n d a n t is hereby preliminarily E N J O I N E D from e n g a g i n g in or facilitating others in c o p y i n g , d o w n l o a d i n g , uploading, transmitting, or distributing plaintiffs' copyrighted m u s i c a l c o m p o s i t i o n s a n d s o u n d recordings, protected by either federal or state law, without e x p r e s s p e r m i s s i o n of the rights o w n e r . " 110  After this d e c i s i o n c a m e d o w n , N a p s t e r filed s u c c e s s f u l l y for a stay while waiting for a p p e a l .  T h e effect of this injunction would shut d o w n the N a p s t e r s e r v i c e . a r g u e d that the enforcement of the  injunction  would  in effect  It c a n be  establish a  p r e c e d e n t that would shut d o w n the u s e of any P2P type s e r v i c e or network.  In  my view, the effect of the r e a s o n i n g in the District Court is inconsistent with the b a l a n c e of copyright interests. B y protecting the m o n o p o l y rights of the R I A A , a t e c h n o l o g y is being controlled to the detriment of the public interest.  It is noted  that the injunction granted by the District Court w a s d e e m e d to be too narrow on a p p e a l , h o w e v e r the effect of the injunction is ultimately the s a m e .  f)  The A H R A  T h r o u g h c a s e law, N a p s t e r argued that the A H R A  h a s b e e n interpreted  include the right of a c o n s u m e r to create p e r s o n a l M P 3 files. In the  to  Diamond  111  c a s e it w a s determined that "the p u r p o s e of [the] A c t is to e n s u r e the right of  109 110  Napster, ibid, at 38. Napster, ibid, at 39.  50  c o n s u m e r s to m a k e a n a l o g or digital audio recordings of copyrighted m u s i c for their  private,  noncommercial  use...protects  all n o n c o m m e r c i a l  c o n s u m e r s of digital a n d a n a l o g m u s i c a l r e c o r d i n g s . "  112  copying  by  N a p s t e r a l s o looked at  the legislative history of the A H R A to determine the intent of c o n g r e s s a n d notes comments  m a d e by S e n a t o r D e C o n c i n i w h o stated " A s n e w a n d i m p r o v e d  technologies important."  113  b e c o m e available, s u c h clarification  more  N a p s t e r a l s o noted that the v o l u m e of copying h a s no bearing o n  the intent of the A H R A to protect noncommercial users. precedent  in the l a w b e c o m e  under  users a n d allow copying a n d sharing for  "There is nothing in the l a n g u a g e of the A H R A , or a n y  it, suggesting  that c o n s u m e r s '  p e r m i s s i b l e if only a f e w c o n s u m e r s d o it."  noncommercial  copying  is  114  T h e Sony d e c i s i o n provided the catalyst for the reconsideration a n d interpretation of copyright by C o n g r e s s , leading to the e n a c t m e n t of the A u d i o H o m e R e c o r d i n g A c t of 1992, ( A H R A )  1 1 5  which w a s a d d e d a s C h a p t e r 10 to Title 1 7 . T h e Sony  c a s e w a s e v i d e n c e of the need for C o n g r e s s to a d d r e s s the c h a n g i n g n e e d s of copyright in light of technology.  T h e b a s i c methodology that the A H R A w a s f o u n d e d upon is to provide " a n equitable solution that p r o m i s e s e v e r y o n e a s h a r e in the benefits of the digital  111  Diamond, supra, note 27.  112  Diamond, ibid, at 5. Diamond, ibid, at 6. Diamond, ibid, at 8.  113 114  1 1 5  Audio Home Recording Act of Oct. 28, 1992, Pub. L. No. 102-563.  51  audio revolution".  116  It a p p l i e s to all t e c h n o l o g i e s , s u c h a s Digital a u d i o T a p e ,  Digital C o m p a c t C a s s e t t e s , a n d M i n i - D i s c s .  1 1 7  T h e central p u r p o s e of the A H R A  is to r e s o l v e this d e b a t e [over h o m e copying], by creating a n a t m o s p h e r e of certainty to p a v e the w a y for the d e v e l o p m e n t a n d availability to c o n s u m e r s of n e w digital recording t e c h n o l o g i e s a n d n e w m u s i c a l r e c o r d i n g s .  118  T h e A H R A a c h i e v e s three g o a l s . First, it allows m a n u f a c t u r e s to sell digital a u d i o r e c o r d e r s a n d a u d i o p h i l e s to u s e t h e m for h o m e taping, subject to regulated b o u n d a r i e s . In g e n e r a l , the law i m p l e m e n t s a c o p y i n g control s y s t e m that allows the original w o r k s to be c o p i e d without limit but prevents c o p y i n g of c o p i e s . S e c o n d , the A H R A c o m p e n s a t e s the affected parties for r e v e n u e they might l o s e d u e to h o m e taping, it e s t i m a t e s f u n d s to w h i c h m a n u f a c t u r e s a n d importers of digital a u d i o r e c o r d e r s a n d t a p e s must contribute, a n d that will b e distributed to recording artists a n d copyright o w n e r s . Third, it affords immunity to h o m e t a p e r s w h o m a k e c o p i e s without direct or indirect c o m m e r c i a l motivation. T h i s immunity a p p l i e s to both digital a n d a n a l o g r e c o r d i n g s .  119  T h e A H R A c o m e s from a history of d e b a t e a n d question about the status of h o m e taping for private u s e .  T h i s question w a s particularly c o n c e r n e d with  whether h o m e c o p y i n g implicates the copyright owner's reproduction right a n d whether s u c h c o p y i n g is defensible a s fair u s e .  1 1 6  1 1 7  1 1 8  1 1 9  S. Rep. (AHRA), p 10. H. Rep. (AHRA), p. 12. S. Rep. (AHRA), p 51. Nimmer, supra, note 2, at § 8B.01[C],  52  T h e legislative intent behind the 1976 a m e n d m e n t to the Copyright A c t , a n d the inclusion of the c o m m o n law d e f e n c e of fair u s e in the statute provides the b a s i s on w h i c h the Sony c a s e w a s determined, a s well a s the e n a c t m e n t of the A H R A . T h e H o u s e Report contained the following: In approving the creation of a limited copyright in s o u n d recordings it is the intention of the C o m m i t t e e that this limited copyright not grant a n y broader rights than are a c c o r d e d to other copyright proprietors under the existing title 17. Specifically, it is not the intention of the C o m m i t t e e to restrain the h o m e recording, from b r o a d c a s t s or from t a p e s or records, of recorded p e r f o r m a n c e s , w h e r e the h o m e recording is for private u s e a n d with no p u r p o s e of reproducing or otherwise capitalizing c o m m e r c i a l l y on it. This practice is c o m m o n a n d unrestrained today, a n d the record p r o d u c e r s a n d performers would be in no different position from that of the o w n e r s of copyright in r e c o r d e d m u s i c a l c o m p o s i t i o n s over the past 20 y e a r s . " 1 2 0  Interpretation of the A H R A by the Court  In RIAA  v. Diamond  Multimedia  Systems  Inc., 180 F. 3d 1072 ( 9  w a s d e t e r m i n e d that the p u r p o s e of the A H R A  th  Cir. 1999), it  is "to e n s u r e the  right of  c o n s u m e r s to m a k e a n a l o g or digital audio recordings of copyrighted m u s i c for their  private,  non  c o m m e r c i a l u s e . . . p r o t e c t s all n o n c o m m e r c i a l c o p y i n g  c o n s u m e r s of digital  and analog musical recordings."  consistent with the intent of copyright protection.  121  This  In Diamond,  by  r e a s o n i n g is the appellants  brought a n action to enjoin the manufacture a n d distribution of a d e v i c e , alleging that it did not meet the requirements for digital audio recording d e v i c e s under the  H.R. Rep. No. 487, 92d Cong., 1 Sess. 7. Diamond, supra, note 27, at 1079. st  53  AHRA.  T h e appellants a l s o s o u g h t p a y m e n t of the royalties o w n e d by the  a p p e l l e e a s the manufacturer a n d distributor of the d e v i c e . T h e court held that b e c a u s e the d e v i c e could not m a k e c o p i e s from the t r a n s m i s s i o n s , but instead, could only m a k e c o p i e s from a computer hard drive, it w a s not a digital a u d i o recording d e v i c e a n d therefore not within the ambit of the Act.  T h e d e f e n d a n t s in Diamond  manufactured a n d distributed a d e v i c e c a l l e d the  R i o . R i o could store approximately o n e hour of digital m u s i c on its flash m e m o r y card w h e r e digital audio files c a n be d o w n l o a d e d a n d p l a y e d . T h e actual d e v i c e could not m a k e duplicates of any digital audio file it stores, nor c o u l d it transfer or upload a file to a c o m p u t e r or the Internet.  T h e R I A A brought suit o n the b a s i s that the manufacture a n d distribution of the R i o did not meet the requirements under the A H R A b e c a u s e it d o e s not e m p l o y a S e r i a l Copyright M a n a g e m e n t S y s t e m ( S C M S ) , which r e c e i v e s , s e n d s , a n d acts upon information about the generation a n d copyright status of the files it plays, (see §1001)  T h e R I A A a l s o sought payment of royalties o w e d by D i a m o n d a s  the manufacturer a n d distributor of a digital audio recording d e v i c e , (ss 1003).  T h e Diamond  d e c i s i o n is instrumental in setting the standard a n d the b a s i s for  the interpretation a n d application of the A H R A .  T h e Court provided r e a s o n i n g to  e s t a b l i s h that under the c i r c u m s t a n c e s the R i o is not a "digital a u d i o recording  54  d e v i c e " under the Act. A "digital audio recording d e v i c e " is defined by the A H R A §1001(3) a s : A n y m a c h i n e or d e v i c e or a type c o m m o n l y distributed to individuals for u s e by individuals, w h e t h e r or not included with or part of s o m e other m a c h i n e or d e v i c e , the digital recording function of w h i c h is d e s i g n e d or marketed for the primary p u r p o s e of, a n d that is c a p a b l e of, making a digital audio c o p i e d recording for private u s e . . .  A "digital a u d i o c o p i e d recording" is defined a s " in §1001(1) of the A H R A : A reproduction in a digital recording format of a digital m u s i c a l recording, whether that reproduction is m a d e directly from another digital m u s i c a l recording or indirectly from a t r a n s m i s s i o n  A "digital m u s i c a l recording" is defined in §1001(5)(a) of the A H R A : A material object (i)  in w h i c h are fixed, in a digital recording format, only s o u n d s , and material, statements, or instructions incidental to t h o s e fixed s o u n d s , if any, a n d  (ii)  from which the s o u n d s a n d material c a n be p e r c e i v e d , r e p r o d u c e d , or otherwise c o m m u n i c a t e d , either directly or with the aid of a m a c h i n e or d e v i c e .  T h u s , to be a digital audio recording d e v i c e , the R i o must be able to reproduce, either "directly" or "from a t r a n s m i s s i o n " , a "digital m u s i c r e c o r d i n g . "  122  T h e court determined, through c o m p a r i s o n of the R i o to a c o m p u t e r hard drive, that the R i o is not a recording d e v i c e under the A H R A . "[A] hard drive is a material object in which o n e or more p r o g r a m s are fixed; thus, a hard drive is e x c l u d e d from the definition of digital m u s i c recordings. T h i s provides confirmation that the R i o d o e s not record "directly" from "digital m u s i c recordings", a n d therefore c o u l d  Diamond,  supra, note 27 at  1076.  55  not b e a digital audio recording d e v i c e u n l e s s it m a k e s c o p i e s "from transmissions"." 123  Prior to the Diamond the A H R A .  d e c i s i o n , there h a d only b e e n o n e d e c i s i o n w h i c h d i s c u s s e d  T h e Court d i s c u s s e d the legislative history of the A H R A to provide  s o m e insight into h o w a digital a u d i o recording d e v i c e s h o u l d b e interpreted. In a S e n a t e Report d i s c u s s i n g the A H R A , it w a s clearly stated that the definition of a digital m u s i c a l recording d e v i c e only e x t e n d s to the material objects in w h i c h s o n g s a r e normally fixed, t h e r e c o r d e d c o m p a c t d i s c s , digital a u d i o t a p e s , a u d i o c a s s e t t e s , long-playing a l b u m s , digital c o m p a c t c a s s e t t e s , a n d m i n i - d i s c s  124  .  T h u s , there is no b a s i s on which to determine that s o n g s fixed o n c o m p u t e r hard drives c a n b e included.  Furthermore, the p u r p o s e of the A H R A "is to e n s u r e the right of c o n s u m e r s to m a k e a n a l o g or digital audio recordings of copyrighted m u s i c for their private, noncommercial u s e . "  1 2 5  T h e R i o m a k e s c o p i e s to render the m u s i c portable, or  " s p a c e shift" those files that already reside on a user's hard d r i v e .  126  T h u s the  Court d e c i d e s that " a d e v i c e falls within the A c t ' s provisions if it c a n indirectly c o p y a digital m u s i c recording by m a k i n g a c o p y from a t r a n s m i s s i o n of that recording. B e c a u s e the R i o cannot m a k e c o p i e s from t r a n s m i s s i o n s , but instead, c a n only m a k e c o p i e s from a computer hard drive, it is not a digital audio recording d e v i c e . "  1 2 7  123  Diamond, ibid, at 1076  1 2 4  S. Report. 102-294 (1992) at note 36. S. Report 102-294 (1992) at 86.  1 2 5  125  127  Diamond, supra, note 27, at 1079. Diamond, ibid, at 1081.  56  g)  T h e Digital M i l l e n i u m C o p y r i g h t A c t  In 1998, C o n g r e s s p a s s e d the Digital Millenium Copyright A c t . T h e D M C A 1998 "is d e s i g n e d to facilitate the robust d e v e l o p m e n t a n d world-wide e x p a n s i o n of electronic c o m m e r c e , c o m m u n i c a t i o n s , r e s e a r c h , development, a n d e d u c a t i o n in the digital a g e . "  1 2 8  In its d e f e n c e , N a p s t e r c l a i m e d that it satisfied the conditions for eligibility under the Digital Millennium Copyright A c t ( D M C A ) s a f e harbor provision. U.S.C.  U n d e r 17  § 5 1 2 . S e c t i o n 512 of the D M C A a d d r e s s e s the liability of online s e r v i c e  a n d Internet a c c e s s providers for copyright infringements occurring online.  In submitting this argument, N a p s t e r argued that it is an Internet S e r v i c e P r o v i d e r for the p u r p o s e s of the s a f e harbor provision. S u b p a r a g r a p h 512(k)(1)(a) of the D M C A provides: A s u s e d in s u b s e c t i o n (a), the term "service provider" m e a n s a n entity offering the t r a n s m i s s i o n , routing, or providing of c o n n e c t i o n s for digital online c o m m u n i c a t i o n s , between or a m o n g points s p e c i f i e d by a user, of material of the user's c h o o s i n g , without modification to the content of the material sent or r e c e i v e d .  S u b p a r a g r a p h 512(k)(1)(b) provides: A s u s e d in this section, other than s u b s e c t i o n (a), the term 'service provider' m e a n s a provider of online s e r v i c e s or network a c c e s s , or the operator of facilities therefore, a n d includes an entity d e s c r i b e d in s u b p a r a g r a p h (a). 1 2 8  S.R. Rep 105-190 1 to 2.  57  First,  N a p s t e r c l a i m e d to  offer  the  "transmission, routing,  or  providing  of  c o n n e c t i o n s for digital online c o m m u n i c a t i o n s " by enabling the c o n n e c t i o n of users' hard drives a n d the t r a n s m i s s i o n of M P 3 files "directly from the Host hard drive a n d N a p s t e r b r o w s e r through the Internet to the user's N a p s t e r b r o w s e r a n d hard  drive".  129  Second,  N a p s t e r stated  that  its  users c h o o s e the  online  c o m m u n i c a t i o n points a n d the M P 3 files to be transmitted with no direction from Napster. transferred  Lastly, the files.  N a p s t e r s y s t e m d o e s not modify  T h u s , b e c a u s e N a p s t e r meets the  the  content  definition  of  of  the  'service  provider', it n e e d only satisfy the five remaining requirements of the s a f e harbor to prevail in its motion for s u m m a r y adjudication.  T h e C o u r t partially a g r e e d with the reasoning that N a p s t e r provided in argument that it is a s e r v i c e provider. Specifically, the Court a g r e e d that the N a p s t e r s e r v e r stores a transient list of the files that e a c h u s e r w h o is logged on to that s e r v e r c a n s h a r e , if a u s e r w a n t s to find a particular file he or s h e c a n s e a r c h the index. A n d the 'hot list' function allows u s e r s to s e a r c h for other u s e r s ' log in n a m e s a n d receive notification w h e n u s e r s with w h o m they might want to c o m m u n i c a t e h a v e connected. exists.  T h e r e is thus a g r e e m e n t that a s e a r c h a b l e directory a n d index  1 3 0  Reply Brief of Appellant Napster, at 3. Motion for summary injunction, at 16.  58  T h e interpretation of the application of the D M C A to the N a p s t e r c a s e c r e a t e s c o n f u s i o n w h e n trying to determine the rights and liabilities which o c c u r on line. O n the o n e h a n d , the law is interpreted in a liberal f a s h i o n , w h e r e the application of traditional  legal doctrine  is e x p a n d e d to  apply to the  new  technology.  H o w e v e r , on the other h a n d the legislation that w a s i m p l e m e n t e d to specifically d e a l with copyright in the digital a g e is interpreted s o strictly a s to forego a n y protection to the  N a p s t e r P 2 P network.  T h i s is e v i d e n c e of the  clarification of w h a t the law is, a n d w h o m it applied to.  n e e d for  It a l s o d e m o n s t r a t e s the  difficulty in creating new legislation to d e a l with c h a n g e s that w e f a c e in the digital a g e .  C h a n g e s now o c c u r s o rapidly, that a strict interpretation of a n y  statute or law in conjunction with it w o u l d b e c o m e outdated by the time it w a s enacted.  IV.  T H E UNITED S T A T E S C O U R T O F A P P E A L S  O n a p p e a l , after a review of the findings of law by the District Court it w a s d e t e r m i n e d that, " T h e s c o p e of the injunction n e e d s modification...Specifically, w e reiterate that contributory liability m a y potentially be i m p o s e d only to the extent that Napster: ( 1 ) r e c e i v e s r e a s o n a b l e k n o w l e d g e of specific infringing files with copyright m u s i c a l c o m p o s i t i o n s a n d s o u n d recordings; ( 2 ) k n o w s or s h o u l d know that s u c h files are available on the N a p s t e r s y s t e m ; a n d ( 3 ) fails to act to prevent viral distribution of the w o r k s . . . T h e m e r e e x i s t e n c e of the N a p s t e r s y s t e m , a b s e n t actual notice a n d Napster's d e m o n s t r a t e d failure to r e m o v e the offending material, is insufficient to i m p o s e contributory liability." 131  Napster, s u p r a note 54, at 14.  59  Further noted by the Court of A p p e a l w a s that N a p s t e r m a y be vicariously liable if it d o e s not police or patrol its s y s t e m to find a n d determine if a n y infringing files are b e c o p i e d a m o n g its users. " T h e preliminary injunction w h i c h w e s t a y e d is o v e r b r o a d b e c a u s e it p l a c e s o n N a p s t e r the entire burden of e n s u r i n g that no " c o p y i n g , d o w n l o a d i n g , uploading, transmitting, or distributing" of the plaintiffs' work o c c u r o n the s y s t e m . "  1 3 2  T h e Court of A p p e a l directed that the injunction  r e m a i n e d s t a y e d until the preliminary injunction could be m o d i f i e d .  133  a) M o d i f i e d I n j u n c t i o n  On  March 5  t h  2 0 0 1 , the United S t a t e s District  Court,  California, modified the original preliminary injunction  Northern  District of  against Napster.  The  preliminary injunction is in effect until final judgement is entered by the p r e c e d i n g court action.  In s u m m a r y the injunction orders Napster, from " e n g a g i n g in, or  facilitating others in, c o p y i n g , d o w n l o a d i n g , uploading, transmitting, or distributing copyrighted s o u n d recordings in a c c o r d a n c e with [the] o r d e r . "  134  T h e preliminary  injunction s e t s out a n u m b e r of p r o c e d u r e s that must be followed by both N a p s t e r a n d the R I A A a n d the record c o m p a n y plaintiffs.  T h e s e p r o c e d u r e s include  instructions to the copyright holders to provide a d e q u a t e notice of the e x i s t e n c e of their copyrighted s o u n d recordings to Napster.  1 3 2  1 3 3  A standard of r e a s o n a b l e  Napster, ibid, at 14. Napster, ibid, at 15.  RIAA v. Napster, Inc., United States District Court, Northern District of California, No. C 9905183 M H P M D L no. C 00-1369 M H P . T h e full text of the Napster preliminary injunction can be found at <http://news.cnet.com/news/0-1005-201-5040043-0.html>, 1 3 4  60  k n o w l e d g e is p l a c e d on N a p s t e r for the p u r p o s e s of policing the N a p s t e r network a n d removing a c c e s s to infringing files.  A l l parties are also ordered to u s e  r e a s o n a b l e m e a s u r e s in identifying variations of the f i l e n a m e s with the obligation to ascertain the actual identity of the w o r k .  1 3 5  In an effort by many members of the Napster network, many of the titles of copyright protected sound recordings have been changed to avoid the filtering technology implemented by Napster to find and remove infringing files. This has caused some problems with the enforcement of the preliminary injunction. Most noteworthy is Aimster. Aimster has developed a system that changes file names into "pig latin". This has in many cases effectively avoided the filter, making many infringing files available over the Napster system.  61  IV THE B A L A N C E OF INTERESTS: C O N T R O L O F T E C H N O L O G Y IN A D I G I T A L W O R L D  I.  COPYRIGHTMISUSE  N a p s t e r put forth the a c c u s a t i o n the plaintiffs are e n g a g i n g in copyright m i s u s e . It is a r g u e d that s u c h e n g a g e m e n t in copyright m i s u s e w o u l d p r e c l u d e any e n f o r c e m e n t of copyrights against N a p s t e r . which  r a i s e s s o m e of the  1 3 6  T h i s is an interesting argument,  p a r a d o x i c a l i s s u e s surrounding  b e t w e e n t e c h n o l o g y a n d corporatization.  the  relationship  The Napster decision demonstrated  the i m b a l a n c e that h a s b e e n created b e t w e e n the copyright holders a n d the public interest.  W h i l e protecting copyright, the effect of the d e c i s i o n hinders  a c c e s s to a n e w technology.  T h e i s s u e of a c c e s s is a problem that must be  a d d r e s s e d to maintain the legitimacy of copyright protection in the e y e s of the public, a s well a s to e n s u r e that the public interest consideration is not lost in favor of corporate interests.  T h e m i s u s e argument is important for various r e a s o n s , s o m e of w h i c h read b e y o n d the 'black letter rule' of copyright law, a n d into public interest i s s u e s . T h e intent of copyright protection is to help promote the growth a n d d e v e l o p m e n t of  62  s c i e n c e s a n d the arts, while at the s a m e time providing the public a c c e s s to the creative or inventive w o r k s .  T h e r e is a delicate b a l a n c e w h i c h  must  be  maintained to e n s u r e that things continue to be created, a n d the public continues to h a v e a c c e s s to the works.  T h e m i s u s e argument r a i s e s i s s u e s of public  interest a n d the a c c e s s of the public to t e c h n o l o g i c a l a d v a n c e m e n t s .  A r g u m e n t s m a d e by N a p s t e r regarding m i s u s e of copyright by the plaintiffs w e r e not treated a s viable a r g u m e n t s by either the District court or the 9 District Court held that  "[ajlleged  T H  Circuit. T h e  antitrust violations by a copyright  plaintiff  generally d o not afford a valid d e f e n s e against a n infringement action a n d ought not to d i s s u a d e a court from granting injunctive relief."  137  H o w e v e r , this finding is  not entirely correct.  A l t h o u g h the court h a s rejected the m i s u s e argument submitted by Napster, c o n s i d e r a t i o n of m i s u s e a n d the effect of the N a p s t e r j u d g e m e n t on the public interest a n d a c c e s s to technology is important w h e n thinking about regulatory i s s u e s , e s p e c i a l l y under t h e s e c i r c u m s t a n c e s given the constitutional intention of Intellectual Property protection. T h e a c c u s a t i o n of m i s u s e highlights the wider i s s u e of p o w e r a n d control over a technology, which c r e a t e s public concerns  surrounding  the  access  to  technological  innovation  interest  and  the  organization of the m e d i a world.  Opposition of Defendant Napster, supra note 24. Napster, District Ct. supra, note 134, at 35.  63  a)  Background  T h e c o n c e p t of m i s u s e has only recently b e e n e x t e n d e d to the realm of copyright law.  Copyright law provides the holder of the copyright with a limited form of  monopoly.  A n attempt to e x p a n d the m o n o p o l y right granted by the Copyright  A c t u n d e r certain c i r c u m s t a n c e s m a y be a violation of antitrust l a w s  1 3 8  .  Such  violations h a v e b e e n held to o c c u r a s a result of a n u m b e r of copyright o w n e r s acting in c o m b i n a t i o n , or alternatively, a s a result of a particular copyright owner's refusal to l i c e n c e certain of his m o r e desirable product u n l e s s tied in with l i c e n s e s of certain of his less d e s i r a b l e p r o d u c t .  139  T h e application of anti trust principles to copyright infringement d e f e n c e s is unclear.  M o s t c a s e s have ruled that no s u c h d e f e n c e m a y be c l a i m e d , on the  b a s i s that o n e w h o h a s entered into an illegal contract d o e s not thereby p l a c e himself outside the protection of the law s o a s to permit others to injure him without i m p u n i t y .  140  H o w e v e r , there are s o m e court w h e r e s u c h relief h a s b e e n  indicated if there is a violation of antitrust laws.  T h e court in Bellsouth  Adv.  & Pub.  Corp. v. Donnelly  Info. Pub.,  Inc. , 141  decided  that no m i s u s e d e f e n s e exists e x c e p t possibly w h e r e there is a n attempt  to  extend the e x c l u s i o n a r y power granted by copyright b e y o n d the protected work  1 3 8  1 3 9  1 4 0  141  Nimmer, supra, note 2, at §13.09[A] Nimmer, ibid, a t § 1 3 . 0 9 [ A ] Nimmer, ibid at §13.09[A] Bellsouth, 719 F. Supp 1551, 1562 (S.D. Fla. 1988), affd, 933 F. 2d 952 (11  th  Cir.  1991)  64  itself.  The 9  Circuit found no e v i d e n c e that the Plaintiffs s e e k to control a r e a s  outside of their grant of monopoly. reproduction  a n d distribution  copyright h o l d e r s .  142  R a t h e r that the Plaintiffs s e e k to control  of their copyrighted  works, e x c l u s i v e rights  of  T h e r e is no d e b a t e that the Plaintiffs h a v e copyright in the  w o r k s , h o w e v e r there is d e b a t e about the effect of the copyright on the public interest.  T h i s is what the court s e e m s to ignore, and should be a d d r e s s e d . It is  particularly important w h e n dealing with a c c e s s to new t e c h n o l o g i e s . T h e stifling of a n e w t e c h n o l o g y before it e v e n r e a c h e s its full capacity is a great l o s s to the public, a n d should be avoided if p o s s i b l e .  T h e interests at play n e e d to be  b a l a n c e d . H e r e , the court weights the interests of the copyright holders to be the first a n d foremost consideration, disregarding the rationale of copyright  law's  existence.  A n a n a l o g y c a n be m a d e with Patent law, which h a s long held that a patentee w h o u s e s his patent privilege contrary to the public interest by violating  the  antitrust laws will be denied the relief of a court of equity in a patent infringement action.  1 4 3  In Lasercomb  America,  Inc. v.  Reynolds™ , 4  the g e n e r a l doctrine underlying intellectual property  the forth circuit reviewed law to c o n c l u d e that " a  m i s u s e of copyright d e f e n s e is inherent in the law of copyright just a s m i s u s e of patent d e f e n c e is inherent Lasercomb  1 4 2  1 4 3  in patent  law."  145  It w a s noted by the court  that uncertainty s u r r o u n d s the application of m i s u s e to  in  copyright  Napster, 9 Cir, supra, note 54, at para 75. Also recognized in statute 15 U . S . C . § 1 1 1 5 ( 7 ) . th  144  Lasercomb, 911 F.2d 970 (4 Cir. 1990)  145  Lasercomb, ibid, at 973.  th  65  h o w e v e r it w a s held to be applicable under the c i r c u m s t a n c e s . e x a m p l e of the flexibility  that is n e c e s s a r y w h e n  interpreting  T h i s is an  and  applying  copyright to n e w t e c h n o l o g i e s .  In Lasercomb,  through a standard licensing agreement, the plaintiff attempted to  forbid the l i c e n s e e a n d all of its e m p l o y e e s from developing any kind of software that would be competitive with the plaintiffs application. T h e e x c l u s i v e licensing provision w a s copyright  m i s u s e b e c a u s e it e x t e n d e d the copyright  holder's  control b e y o n d the s c o p e of copyright by discouraging l i c e n s e e s from d e v e l o p i n g their o w n c o m p e t i n g p r o d u c t s .  146  T h e copyright m i s u s e i s s u e raised in the N a p s t e r opposition is interesting in that it r a i s e s s o m e of the paradoxical i s s u e s surrounding the relationship t e c h n o l o g y a n d corporatization.  between  N a p s t e r c l a i m s that the k n o w l e d g e of software  for creating M P 3 files and actions by the plaintiffs to form partnership with a n d investment in c o m p a n i e s is an important factor to c o n s i d e r with respect to the c l a i m s m a d e against Napster. harming its bottom  "While S o n y M u s i c now c l a i m s that N a p s t e r is  line, S o n y Electronics is s e e k i n g to profit from the  n u m b e r of M P 3 s currently available on the Internet."  vast  147  Lasercomb, ibid, at 978-9. Opposition of Defendant Napster, supra, note 24, at 22.  66  In Practice  Management  Info. Corp.  v. American  Medical  Ass'n ", 14  the Ninth  Circuit held that attempts to u s e the limited m o n o p o l y rights b e s t o w e d o n a copyright holder to control competition in a n a r e a outside the s c o p e of the copyright constitutes m i s u s e .  Practice  Management  found copyright m i s u s e in  attempt to extend the copyright m o n o p o l y in a copyrighted c o d e s y s t e m for m e d i c a l terminology by licensing it to a third party under the condition that the third party w o u l d not u s e competitors products. T h u s , a c c o r d i n g to Napster, the Court t a k e s a broad view of m i s u s e under w h i c h copyrights m a y not b e e n f o r c e d if they a r e being u s e d in m a n n e r that i m p e d e s the "copyright s y s t e m ' s g o a l of promoting the arts a n d s c i e n c e s b y granting temporary m o n o p o l i e s to copyright holders."  149  N a p s t e r supports the claim of copyright m i s u s e by arguing that the "Plaintiffs legal m a n e u v e r i n g against N a p s t e r is less for enforcing Intellectual  Property  rights than to control (1) the flow of competing unsigned artists' m u s i c into the electronic m a r k e t p l a c e , a n d (2) the m e a n s of and b u s i n e s s m o d e l for distributing m u s i c o v e r the Internet."  150  T h u s , the " u s e of anticompetitive litigation a g a i n s t  n e w t e c h n o l o g i e s a n d emerging copyrights,  attempts  artists,  c l o a k e d a s a n effort to  to restrain the breadth  of useful arts  preserve  by limiting the  Practice Management, 121 F. 3d 516, 521 (9 Cir. 1997), as amended 133 F.3d 1140 (9 Cir. 1998) Opposition of Defendant Napster, supra, note 24, at 23. Opposition of Defendant Napster, supra, note 24, at 24. 148  th  ,n  1 4 9  1 5 0  67  distribution of artistic works that the Plaintiffs d o not c o n t r o l . "  151  W h e n examined  in m o r e detail, this a c c u s a t i o n b e c o m e more credible a n d probable.  II.  COMERCIALIZATION  a)  Internet D e v e l o p m e n t  T h e founding ideals of the Internet w e r e centered in the notion of f r e e d o m of information.  H o w e v e r , the Internet has e v o l v e d from a free p l a c e to s h a r e a n d  distribute i d e a s a n d information, into a global marketplace. A s a n e x a m p l e of this evolution, in months the N a p s t e r p h e n o m e n a had e v o l v e d from a liberal network of trading a n d sharing m u s i c a n d i d e a s to the negotiation of b u s i n e s s m o d e l s with m e d i a c o n g l o m e r a t e s in h o p e s of cornering the digital online m u s i c market.  Internet growth c a n be divided into three p h a s e s of development. T h e first p h a s e of the Internet w a s confined to a community if insiders -- scientists a n d s o m e government agencies.  T h e s e c o n d p h a s e centered in the 1 9 8 0 s , w h e n  Internet w a s o p e n e d up to a less s p e c i a l i z e d community.  the  T h i s strengthened the  d e m o c r a t i c a n d o p e n character of the Internet, making it a s p a c e of distributed power w h i c h  limits the  possibility of control  over the acts taking  place  in  Cyberspace.  T h e third p h a s e b e g a n with the establishment of the W o r l d W i d e  Opposition of Defendant Napster, ibid, at 25.  68  W e b in 1 9 9 3 a n d its l a r g e - s c a l e d i s c o v e r y by b u s i n e s s by 1 9 9 5 . T h i s p h a s e is c h a r a c t e r i z e d by attempts to c o m m e r c i a l i z e the Internet.  b)  152  Role of C o n g r e s s  T h e r e h a s b e e n s o m e recognition in the United States C o n g r e s s that there is a n e e d to a d d r e s s the wider i s s u e of corporate d o m i n a n c e in c y b e r s p a c e . T h e N a p s t e r c a s e h a s c a u s e d a clear division b e t w e e n the public interest in having a c c e s s to the technology, a n d the m e d i a corporations s e e k i n g to maintain their control over the m u s i c industry a n d the digital distribution of its product.  The  actions of C o n g r e s s illustrate the evolutionary path that copyright is taking.  It  r e c o g n i z e s that copyright law must be adapted to apply to the digital forum, h o w e v e r it a l s o d e m o n s t r a t e s the i m b a l a n c e of interests that h a v e resulted from s u c h adaptation.  Prior to the N a p s t e r d e c i s i o n , the S e n a t e c l a i m e d that it w a n t e d no part of the controversy.  153  S e n a t e Judiciary C o m m i t t e e C h a i r m a n Orrin H a t c h , R - U t a h , s a i d  explicitly, "I think the courts c a n handle it." T h e committee's ranking D e m o c r a t , Partrick L e a h y , a l s o a d d e d that movie studios w e r e o n c e "terrified" of v i d e o t a p e s , which later turned into a major revenue stream for H o l l y w o o d . "In the e n d , things get sorted out a n d n e w (technologies) offer n e w opportunities for artists a n d  Sassen, Saskia, "On the Internet and Sovereignty", (1998) 5 IJGS 2 at 545. Carolyn Lochhead, "Senate Sidesteps Net Music Dispute: Panel says it will let the courts decide what to do about Napster downloads,", July 12, 2000, San Francisco Chronicle. 1 5 2  1 5 3  69  more c h o i c e s for c o n s u m e r s . . . L e t s not strangle the baby in the H o w e v e r , after the d e c i s i o n of the District Court a n d the 9  t h  cradle."  1 5 4  Circuit Court of  A p p e a l it is n o w questionable if "the courts c a n handle it."  S i n c e the N a p s t e r d e c i s i o n , there has b e e n s o m e m o v e m e n t in the S e n a t e to r e e x a m i n e the N a p s t e r situation a n d the court d e c i s i o n . T h e attention given to the N a p s t e r c a s e by the S e n a t e d e m o n s t r a t e s the importance a n d the impact of the c a s e on copyright a s well a s new t e c h n o l o g i e s .  R a l p h N a d e r , the former  G r e e n Party presidential candidate, h a s b e e n o u t s p o k e n about the implications of the  N a p s t e r d e c i s i o n for  Internet Regulation generally.  Nader sees  an  opportunity for a new global b u r e a u c r a c y , c o m p a r a b l e to the United Nations, W o r l d Intellectual  Property Organization ( W I P O ) .  A c c o r d i n g to N a d e r , " T h e  technology of the Internet is far a h e a d of any legal framework, framework or global f r a m e w o r k . "  155  a n y ethical  S e n a t o r Orrin H a t c h , has a l s o b e e n v o c a l  c o n c e r n i n g i s s u e s related directly a n d indirectly to Napster. H a t c h h a s stated: "If t h o s e digital ropes through which the new m u s i c will be delivered are significantly narrowed by g a t e k e e p e r s to limit a c c e s s to or divert f a n s to preferred content, a unique opportunity will be lost for both the creators of m u s i c a n d their fans...that is w h y I think it is crucial for policy m a k e r s to vigilant in keeping the pipes wide o p e n . " T h e c o n c e r n s raised by Hatch specifically d e a l with the n e e d to e n s u r e that the distributional power of the Internet is not concentrated in the h a n d s of a few powerful corporations.  T o e n s u r e that there is a c c e s s to the Internet forum,  H a t c h f e e l s that it is important for policy m a k e r s to step in a n d regulate.  1 5 4  The  Lochhead, Carolyn, ibid.  70  impact of this attention by g o v e r n m e n t is uncertain. the wider i s s u e s surrounding the N a p s t e r c a s e .  It is also illustrative of the power  e x e r c i s e d by the state in trying to control the Internet.  c)  H o w e v e r , it is illustrative of  156  R o l e of the C o r p o r a t i o n  N o w that the Internet is in its third stage of d e v e l o p m e n t , corporations will play a significant role in the structure that the Internet will take in the future. Internet h a s b e c o m e a global marketplace.  The  It is a c c e s s i b l e to a n y o n e with a  c o m p u t e r a n d a n Internet c o n n e c t i o n . It is a m a r k e t p l a c e in the traditional s e n s e of e - c o m m e r c e w h e r e people c a n log on a n d p u r c h a s e g o o d s a n d s e r v i c e s , a n d it is a market in a m o r e m o d e r n s e n s e for sharing information a n d i d e a s in w a y that w a s never available before.  T h e N a p s t e r c a s e d e m o n s t r a t e s that this  traditional a n d m o d e r n marketplace c a n c l a s h , creating a p u z z l e of legal rights to  ^ McCullagh, Decian and Nicholas Morehead, "Nader Wants Internet Control", Jan 10, 2001, <http://www.wirednews.eom/news/print/0,1294,41106,00.html> (visited 26/01/01) T h e Napster decision, and its implications for digital distribution of music and the use of P2P networks in general, will have implications which span beyond the borders of the United States. The inherent characteristic of the Internet as a borderless entity where access is not defined by the geographical location of the person surfing the net, will effect all Internet users. This widens the scope of the public interest, to a global public interest. The development of Cyberspace will effect all of us, creating a further imbalance among the media conglomerates and the global on line community. T h e s e interests should also be considered. Both the court's and the Congress ignored the global issues surrounding the application of laws to Internet related activities and technologies. This is an interesting in light of the fact that the Napster decision will have effects beyond the United States. The Napster decision will affect the Internet community, a community which by 2003 will be predominantly located outside of the borders of the United States of America. The neglect by the United States Court's and the senate to acknowledge the global issues associated with the Napster case may be justifiable because both Napster Inc. and the RIAA and represented record companies are located within the jurisdiction of the Untied States. However, when dealing with Internet issues it is important to acknowledge the affects of any decisions made regarding its uses. These affects flow beyond the border of the United States. Napster and the Internet are both parts of a global phenomenon. The decision of the United States courts will impact Cyberspace, as a whole. When dealing with any Internet related issue, consideration must be given to all that are affected. 1 5 6  71  be sorted a n d put into place. Currently, the m e d i a corporations are placing the p i e c e s of the p u z z l e in place, while the public sits back a n d w a t c h e s .  C o r p o r a t i o n s h a v e attempted to u s e the Internet to e x p a n d their market.  The  N a p s t e r c a s e is an e x a m p l e of this g o a l of market e x p a n s i o n , a s it d e m o n s t r a t e s h o w corporations are working to control the t e c h n o l o g y that threatens current  business models.  They  are  attempts  both  to  displace  their  possible  competition a n d control the digital marketplace.  d)  Technology  Technological  innovation  is the  catalyst for  market  growth.  Through  the  d e v e l o p m e n t of n e w m e a n s of c o m m u n i c a t i o n a n d transportation, the world h a s truly b e c o m e a global village w h e r e o n e c a n physically travel the s p a n of the g l o b e in a matter of hours, p u r c h a s e Italian s h o e s in North A m e r i c a , a n d c o n s u m e a " C o k e " in J a p a n .  T h i s idea of global a c c e s s is at the heart of the  Internet a n d the attempt to c o m m e r c i a l i z e .  With the N a p s t e r c o d e , S h a w n F a n n i n g stumbled upon something that the global Internet c o m m u n i t y  is only beginning to understand.  possibilities of peer-to-peer networking  are vast.  T h e implications  T h e data sharing  and  network  created by P 2 P will likely b e c o m e a useful b u s i n e s s m o d e l , for publishing, for m u s i c distribution, a n d for the sharing of ideas a n d information.  72  T h e N a p s t e r c o d e h a s b e e n c l o n e d a n d c o p i e d , and has already b e e n c h a n g e d a n d e x p a n d e d to b e c o m e more powerful, a n d completely d e c e n t r a l i z e d . " P e e r - t o - p e e r computing could be a s important to the Internet's future a s the W e b browser w a s to its p a s t . . . W h i l e the most visible impact of this m o d e l has b e e n in c o n s u m e r environments, peer-top e e r computing has the potential to play a major role in b u s i n e s s computing a s w e l l . " 1 5 7  P e e r - t o - p e e r technology c h a n g e s the idea of the marketplace for on line ecommerce.  C o m p a n i e s have b e e n s p e n d i n g hundreds of millions of dollars to  create a centralized marketplace, founded on the idea that Internet c o m m e r c e relies on the n e e d for a single a n d central destination.  H o w e v e r , Napster, by  independently c o n n e c t i n g c o m p u t e r s a c r o s s the Internet, e n a b l e s the creation of a distributed marketplace.  P e e r to peer allows for the creation of a m a r k e t p l a c e  with no centre a n d no owner, just a s h a r e d group of p a r t i c i p a n t s .  158  J u s t a s the  c o m m e r c i a l i z a t i o n of the Internet s e e m e d to be at its peak, the creation N a p s t e r h a s c h a n g e d the fundamental structure of Internet organization.  of  As a  result, N a p s t e r h a s threatened the big m e d i a c o n g l o m e r a t e s , forcing t h e m into the courts to shut d o w n N a p s t e r with the h o p e s of taking over the t e c h n o l o g y a n d d e v e l o p i n g their own profit making b u s i n e s s m o d e l s b a s e d on P 2 P file sharing.  "The P2P myth" John Borland, Mike Yamamoto and Cory Grace, Oct 26, 2000, <http://news.cnet.com/news/0-1005-201-328711-0.html> (01/02/01), quote by Pat Gelsignerwho is Intel's Chief Technology Officer.  73  III.  T H E MUSIC  INDUSTRY  T e c h n o l o g y a n d big corporate enterprise is s o intertwined that it is s o m e t i m e s difficult to s e e the implications a n d c o n n e c t i o n s between motives a n d c l a i m s . T h e a c c u s a t i o n of copyright m i s u s e brings into question w h e t h e r the  record  labels are trying to shut d o w n N a p s t e r in h o p e s of taking over the t e c h n o l o g y before it d e s t r o y s the control that the five major distribution.  labels h a v e o v e r  music  During the N a p s t e r action a n d after the d e c i s i o n to implement an  injunction, the big five record c o n g l o m e r a t e s h a v e b e e n working to d e v e l o p their own b u s i n e s s m o d e l s .  T h e huge s u c c e s s of N a p s t e r o c c u r r e d almost overnight. N a p s t e r d e b u t e d in late 1999, within a few months it had c l o s e to 20 million u s e r s , a n d in l e s s than two y e a r s there are more than 70 million N a p s t e r m e m b e r s . T h e impact of N a p s t e r h a s b e e n felt throughout the m u s i c industry, partly d u e to the s i z e of the N a p s t e r c o m m u n i t y a n d the s p e e d of its growth.  S o m e a n a l y s t s c l a i m that "[t]he record  c o m p a n i e s h a v e kind of blown it...they've completely lost the ability to train m u s i c listeners into the kind of online c o n s u m p t i o n patterns that w o u l d be beneficial to them."  1 5 9  T h e s u c c e s s of N a p s t e r is b a s e d primarily on the a c c e s s to m u s i c by  its m e m b e r s for no c h a r g e .  "Napster's Real Importance", Bill Burnham Z D N N , May 9, 2000, <http://www.zdnet.eom/filters/printerfriendly/0,6061,2565148-84,00.html> (04/02/01) "Napster traffic figures raise new questions" John Borland, Staff Writer C N E T News.com, Aug 4, 2000, <http://news.cnet.com/news/0-1005-200-2429238.html?tag=prntfr> (04/02/01) 1 5 9  74  Prior to N a p s t e r M P 3 files w e r e available online, however, a c c e s s a n d s e a r c h i n g w a s tedious a n d b o t h e r s o m e .  N a p s t e r created a huge network of m e m b e r s  w h e r e M P 3 files cold easily be s e a r c h e d a n d d o w n l o a d e d by a n y o n e w h o s i g n e d on.  B e f o r e the  R I A A and  record  a c c u m u l a t e d a huge u s e r b a s e .  labels could do anything  Napster  had  T h e fear is that b e c a u s e preliminary a c c e s s to  digital online m u s i c has b e e n free, c o n s u m e r s have d e v e l o p e d u s e r b e h a v i o u r accordingly.  160  T h e idea that m u s i c should be free has infiltrated m a n y online  m u s i c s e e k e r s , a n d m a y create p r o b l e m s w h e n online c o m p a n i e s try to e s t a b l i s h fee-based services.  B y taking N a p s t e r to court, the record c o m p a n i e s are trying  to regain s o m e control over the d a m a g e that N a p s t e r has d o n e to their future Internet related digital distribution.  Similar c l a i m s regarding the recording industry's unwillingness to c o o p e r a t e a n d relinquish rights of their copyrighted w o r k s to u s e in the distribution of digital w o r k s h a v e b e e n m a d e by the National A s s o c i a t i o n of R e c o r d i n g M e r c h a n d i s e r s ( N A R M ) a n d the Digital M e d i a A s s o c i a t i o n ( D M A ) . T h e s e c o n c e r n s a n d c l a i m s are c e n t e r e d a r o u n d the lack of content being m a d e available to 'legitimate' retail stores to offer s e c u r e digital d o w n l o a d s a l e s opportunities.  Retail m e r c h a n t s a n d  online distribution c o m p a n i e s claim that major labels have u s e d the threat of piracy a s a r e a s o n to withhold content from legitimate c o m p a n i e s , while the  In the RIAA claim against Napster there was some mention about the possible devaluation of music as a result of the Napster service. Specifically, that Napster teaches a generation of music consumers that copyright owners and artists do not deserve to be paid for their work and that creative efforts are free for the taking. S e e the Notice of Joint Motion and Joint Motion of Plaintiff for Preliminary Injunction: Memo of Points and Authorities, United States District Court, July 26, 2000.  75  recording industry d e v e l o p e d its o w n b u s i n e s s m o d e l .  A c c o r d i n g to P a m e l a  Horovitz, the president of N A R M , "It would a p p e a r that most of the record c o m p a n i e s a r e viewing retailers a s potential  competitors  that they c a n u s e  grudgingly until they c a n eliminate them, or marginalize t h e m . "  1 6 1  This stance  d o e s not m e a n that N A R M a n d the D M A are in support of Napster, to the contrary they a r e quite against it. Liquid A u d i o C E O G e r r y K e r b y h a s b e e n s a i d "I a m a g h a s t that a b u n c h of thieves like N a p s t e r c o u l d e n d up winning b e c a u s e they h a v e 6 0 million users a n d e n d up with licences...It m a k e s m e feel pretty upset that I've b e e n a boy scout.  It's like making a drug d e a l e r a p h a r m a c i s t  b e c a u s e they sell a lot of drugs."  T h e c l a i m s m a d e by Napster, N A R M a n d D M C are not u n f o u n d e d . T h e range of actions a n d b u s i n e s s d e c i s i o n s m a d e by the big record labels o v e r the past f e w y e a r s c a l l s into q u e s t i o n not only their motives for digital distribution of m u s i c but for overall control of the global m e d i a .  T h e record c o m p a n i e s a r e working  together to q u a s h N a p s t e r Inc. in h o p e s of using the N a p s t e r  peer-to-peer  t e c h n o l o g y to d e v e l o p their o w n b u s i n e s s m o d e l . E v i d e n c e of this intent c a n b e found in the major mergers b e t w e e n large m e d i a c o n g l o m e r a t e s .  It is not only  the question of maintaining power a n d control by the record c o m p a n i e s , it g o e s far b e y o n d that to the control of the m e d i a a s a whole.  King, Brad, "Music Labels Wear 'Kick Me' Sign", Apr 2 2001, <http://www.wired.eom/news/print/0,1294,42788,00.html> (visited 03/04/01)  76  W h i l e the N a p s t e r c a s e w a s unfolding, B e r t e l s m a n n ' s e C o m m e r c e group a n d N a p s t e r Inc. c a m e to a n agreement.  T h i s agreement created w i d e s p r e a d  controversy. It illustrates the m o v e m e n t by large m e d i a corporations to take o v e r the industry. S i n c e 1999, parent c o m p a n y B e r t e l s m a n n A G h a s b e e n developing a digital distribution s u p e r h i g h w a y through its Digital W o r l d S e r v i c e s ( D W S ) division.  T h e g o a l is create the infrastructure to deliver s e c u r e digital m e d i a to  retailers throughout the world.  J o h a n n Butting, the C E O of the D W S division  s a i d with respect to the growth of B e r t e l s m a n n , " B e s i d e s m u s i c , w e a r e moving toward having our first publishing h o u s e online in Q1 of next y e a r . . . w e are already looking into m o v i e s , then g a m e s will c o m e later. looking  into other  business opportunities."  162  Eventually, we'll b e  B e r t e l s m a n n h a s created the  world's largest record conglomerate, with the B M G / E M I merger, cornering nearly 2 3 % of the global m u s i c m a r k e t .  163  A l s o interesting is the interconnection a m o n g  large record a n d m e d i a c o m p a n i e s .  For example, "Bertelsmann buys C D N o w ,  w h i c h h a s a strategic relationship with T i m e Warner, which w a n t s to c r o s s licence m o v i e s with S o n y , which has a subscription service project with U n i v e r s a l called Duet, w h i c h h a s a joint venture called G e t M u s i c with B M G . "  1 6 4  The  e x p a n s i o n of corporate interests is part of the corporate world, h o w e v e r w h e n the e x p a n s i o n of s u c h interests i m p e d e a c c e s s to technology a n d innovation to the  "The Napster Master Plan", Brad King, Nov 25, 2000, <http://www.wired.eom/news/print/0,1294,40261,00.html> (11/30/00) "Bertelsmann Plays Musical Chairs", Chuck Philips, Times Staff Writer, Nov 28, 2000, L A . Times, <http://www.latimes.com/cgi-bin/print.cgi> (05/02/01) "Music Battle Lines Drawn" Brad King, Apr. 4, 2001, <http://www.wired.eom/news/print/0,1294,42819,00.html> (04/04/01) 1 6 2  1 6 3  1 6 4  77  detriment of the public interest, then there is a n e e d to rectify the d a m a g e through regulation if the Courts prove to be insufficient.  S e n a t o r Orrin Hatch has b e e n quite v o c a l in the n e e d to m a k e digital m u s i c a c c e s s i b l e a n d e n s u r e that a few rights holders in the marketplace d o not control it.  A l t h o u g h , S e n a t o r Hatch w a s at o n e time a supporter of Napster, he has  "cautiously b e g a n to back a w a y from his earlier support for N a p s t e r a n d the c o m p u l s o r y l i c e n c e s that would grant digital m u s i c c o m p a n i e s a c c e s s to the labels' c a t a l o g s . "  165  Despite S e n . Hatch's c h a n g e of tune, his r e m a r k s a n d  c o n c e r n s are noteworthy.  S e n . Hatch at o n e time w a r n e d that he w o u l d work to  e n s u r e that online m u s i c d o e s not fall under the control of a few  powerful  distributors. A s stated by H a t c h : "I do not think it is any benefit for artists or fans to have all the new, w i d e distribution c h a n n e l s in the online world controlled by those w h o h a v e controlled the narrower o n e s . . . . t h i s is e s p e c i a l l y true if they a c h i e v e that control by leveraging their d o m i n a n c e in content or conduit s p a c e in an anti-competitive w a y to control the n e w i n d e p e n d e n t m u s i c s e r v i c e s that are attempting to e n h a n c e the c o n s u m e r ' s e x p e r i e n c e of m u s i c . " 1 6 6  T h e active efforts m a d e by the 'big five' record labels, and the m e r g e r s b e t w e e n t h e s e labels a n d other large m e d i a c o n g l o m e r a t e s is something that must be c o n s i d e r e d w h e n thinking about the power a n d control over technology.  The  actions by t h e s e corporations add to the allegation of N a p s t e r that they are working to destroy N a p s t e r b e c a u s e it threatens their place in the digital online  "Music Battle Lines Drawn", ibid. "Hatch Pledges to Keep Online Music Accessible" Elizabeth Wasserman, Jan 10, <http://www.thestandard.net/article/article_print70,1153,21388,00.html> (26/02/01) 1 6 5  1 6 6  2001,  78  market a n d could possibly m e a n the e n d of the control e x e r c i s e d by big record labels in the m u s i c industry.  T h e record labels d e f e n d t h e m s e l v e s with the shield of copyright protection for their artists, h o w e v e r this is a l s o a f a l s e claim. T h e R I A A h a s w o r k e d towards having artists under labels be c o n s i d e r e d a 'work for hire' under s. 2 0 1 (b) of Copyright  The  Act, which states "the e m p l o y e r or other person for w h o m the work  w a s p r e p a r e d is c o n s i d e r e d the author...and unless the parties h a v e e x p r e s s l y a g r e e d o t h e r w i s e . . . o w n s all of the rights c o m p r i s e d in the copyright." ultimately m e a n s that an artist will never regain the rights to their w o r k s .  This Under  normal licensing of copyright the rights to the work are s i g n e d o v e r for 3 5 y e a r s then they g o back to the artists.  A c t i o n s like this demonstrate that the R I A A is  working to e n s u r e that the record labels maintain control of copyrights.  This  unlimited control is in the interests of the record labels, not in the interests of the artists.  T h e granting of a n injunction against N a p s t e r has helped the R I A A a n d affiliated record c o m p a n i e s to delay the growth of P 2 P m o d e l s online, giving them time to d e v e l o p their own b u s i n e s s m o d e l s . T h e application of copyright law is justified. H o w e v e r , it is important to note the implications a n d result of the court d e c i s i o n . T h e law is a p p l i c a b l e , although it m a y n e e d to be c h a n g e d in s o m e r e s p e c t s by the legislature. T h e implications of the application of the law are what n e e d to be examined.  F r o m this perspective the Internet should be dealt with in a different  79  manner.  C o r p o r a t i o n s have the right to m a k e b u s i n e s s d e c i s i o n s a n d to take  action to e n s u r e the continued s u c c e s s of their corporations. W h e n that s u c c e s s is a c c o m p l i s h e d with a motive competitive  to d i s p l a c e other  m a n n e r something must be d o n e .  corporations  in an  anti-  W h e n dealing with Internet  t e c h n o l o g i c a l i s s u e s there is more at stake, the application of rights or of regulations g o e s b e y o n d the interested parties and has an overall effect on the technology, w h i c h given the virtues of c y b e r s p a c e , affect all Internet u s e r s .  T h e integration of multiple corporate interests, and the struggle for control a n d p o w e r is a n interesting p h e n o m e n o n in itself. O n the one h a n d , the production of d e v i c e s to d o w n l o a d a n d p l a y b a c k M P 3 files is rampant.  M o s t of t h e s e d e v i c e s  are c o n n e c t e d , in s o m e way, to the large m e d i a c o n g l o m e r a t e s that h a v e taken N a p s t e r to court to find that the downloading of copyrighted M P 3 files is illegal. If found illegal, w h y w o u l d s o m e o n e p u r c h a s e a n M P 3 p l a y e r ?  T h e r e is a n  inherent contradiction to the actions of the record c o m p a n i e s . A n e a s y a n s w e r is that they c a n control the distribution of the files, and control the m e a n s with which to upload t h e m a n d listen to them. another  interesting  situation.  T h e T i m e W a r n e r / A O L m e r g e r presents  T h e joint c o m p a n y will  have more  Internet  s u b s c r i b e r s than any other I S P , a s well a s the ability to offer them all of the content p r o d u c e d by T i m e W a r n e r ' s m u s i c , film and entertainment divisions. H o w e v e r , a n interesting fact is that A O L e m p l o y e e s created the P 2 P t e c h n o l o g y u s e d in G n u t e l l a " o n e of the most potent piracy tools on the N e t . "  1 6 7  G n u t e l l a is a  "Napster Wildfire" Evan Hansen, John Borland, and Mike Yamamoto, Staff C N E T News.com, May 15, 2000, <http://www.canada.cnet.com/news/0-1005-201-1757865-0.html> (04/02/01)  1 6 7  80  pure P 2 P c o d e , with no central server. T h e o p e n c o d e of Gnutella is o w n e d by no o n e a n d thus possibly untouchable by the law or any form of  regulatory  control.  T h e Internet w a s created by technological innovation  under the notion that  information should be free and a c c e s s i b l e . T h i s is the attitude of the c y b e r s p a c e pioneers. W h e n the c o m m e r c i a l potential of the Internet b e g a n to be r e c o g n i z e d , the big corporations m o v e d in a n d b e g a n to c o m m e r c i a l i z e c y b e r s p a c e .  The  b o r d e r l e s s nature of c y b e r s p a c e allows for both the commercialization a n d the growth of free s p a c e to s h a r e information and ideas a m o n g the individuals w h o are c o n n e c t e d around the world.  N a p s t e r demonstrates that the W o r l d W i d e  W e b a n d the W e b browser are not the only m e a n s of organizing a n d exploring c y b e r s p a c e . P e e r - t o - p e e r technologies reorder the e x c h a n g e of information over the Internet a n d c h a l l e n g e the centralized b u s i n e s s m o d e l that e - c o m m e r c e h a s been premised upon.  N a p s t e r directly threatens the e x i s t e n c e of the record  c o m p a n y , it provides for an effective a n d quick m e a n s of distributing a n d sharing m u s i c , while a l s o building a community of m e m b e r s . T h i s threatens the ability of the record labels to distribute their works, a n d ultimately the wider plan of the media  conglomerates  to  corner  the  whole  media  market.  The  N a p s t e r / B e r t e l s m a n n alliance is e v i d e n c e of the quest to take over the global distribution of m e d i a .  T h e r e is a struggle for p o w e r in a n d o v e r C y b e r s p a c e .  C o r p o r a t i o n s s e e k the power to exploit the Internet for monetary gain.  The  N a p s t e r c a s e is an e x a m p l e of the manipulation of the law by the market to  81  control the Internet.  In theory the law is controlled by the state, w h i c h in most  c a s e s b e l i e v e s it h a s the sovereign right to control.  82  V REGULATION: RESTORING THE BALANCE OF COMPETING  INTERESTS  T h e b a l a n c e of Interests intended by the protection of copyright law under the United S t a t e s constitution has b e e n d i s p l a c e d .  T h e Internet has created the  biggest i s s u e of regulatory control a n d application of law that h a s e v e r b e e n seen.  C l e a r l y , there is a n e e d for s o m e kind of regulation regarding copyright  protection a n d the Internet.  T h e N a p s t e r c a s e is e v i d e n c e that the law c a n be  applied to the 'borderless realm' of C y b e r s p a c e .  F o r the most part with the technological innovation that continues to o c c u r at an exponential rate there is likelihood that enforcement m a y be effective.  However,  this application a n d enforcement has re-routed the philosophy behind copyright law.  T h e technological d e v e l o p m e n t surrounding the Internet is s o m e of the  most important that w e have e v e r w i t n e s s e d . T h e Internet is a useful tool for the d i s p e r s i n g of information, the sharing of ideas, the building of c o m m u n i t i e s , a n d consumerism.  T h i s only magnifies the n e e d to create a b a l a n c e of interests to  e n a b l e the maximization of the Internet a s a global and multi faceted tool, a s well a s the Internet's continued growth a n d development.  83  T h e question that must be a d d r e s s e d is how c a n this be a c c o m p l i s h e d ?  To  a n s w e r this question i d e a s of regulation n e e d to be e x a m i n e d to a s s i s t in placing the role of technology, law a n d regulation into perspective and create s o m e g u i d a n c e a s to w h e r e w e should go from here.  I.  REGULATION  T h i s part of the chapter will e x a m i n e the fundamental r e a s o n s and i d e a s behind the c o n c e p t of regulation.  This is important in understanding the question of  regulation  a n d the Internet.  First, a general definition of regulation will be  provided.  S e c o n d , a brief history of the development of regulation will be given.  Third, three i d e a s of regulation will be e x p l a i n e d .  Lastly, the three  general  f r a m e w o r k s of regulation will be explored.  a) B a s i c D e f i n i t i o n o f R e g u l a t i o n  A b a s i c a n d g e n e r a l definition of regulation c a n be s u m m e d up in the following way: " R e g u l a t i o n involves the constitution of a form of authority, whether internal or external, to a c h i e v e ordering in an a r e a of life that h a s c o m e to attention a s s h o w i n g t e n d e n c i e s to disorder, perversity or excess. S u c c e s s f u l regulation involves the c o n s e n t of the regulated a n d h e n c e m u c h effort is devoted to achieving a n d very often to raising s t a n d a r d s . " 168  Clarke, Michael, Regulation: The Social Control of Business between Law and Politics, York: St. Martins Press, 2000), at 3.  (New  84  T h e regulatory p r o c e s s is essentially a political one. In the p r o c e s s of regulation there  is  often  extensive  interaction  between  public  and  private  actors.  " R e g u l a t i o n is h e n c e a continuous a n d d y n a m i c political p r o c e s s : sustaining a n effective regime requires evolving to meet c h a n g i n g c i r c u m s t a n c e s a n d involving n e w regulatees a s they a r i s e . " distribution  1 6 9  It is also important to m a k e note of the  of power in the regulatory  process.  B e s i d e s the power of the  regulator a n d the regulatees, there is also the power of the other interested parties to  consider.  T h i s power  is d e p e n d e n t  effectiveness of their mobilization a n d o r g a n i z a t i o n .  to  a  large extent  on  the  170  b) History of Regulation  T h e rise of regulatory society c a n be explained by looking at three broad p h a s e s . It is important to note that regulatory society a s w e know it today is a relatively m o d e r n construct.  i.  phase one  T h e first p h a s e of the rise of regulatory society is roughly around the time of industrialization up to the e n d of the nineteenth century.  During this time period  political, e c o n o m i c a n d legal institutions b e c a m e linked. Industrialism purged the remnants of feudal distinctions a n d e s t a b l i s h e d the market and freedom of contract for all in it. 1 6 9  1 7 0  Clarke, Michael, ibid, at 4. Clarke, Michael, ibid, at 4.  85  Industrialization u s h e r e d in a key feature of modernity, n a m e l y c o n s t a n t e c o n o m i c c h a n g e a n d a n ever-diversifying division of labour a n d technological innovation, a c c o m p a n i e d by e n d l e s s e x p a n s i o n of wealth a n d prosperity...Individualism became e s t a b l i s h e d a s a central political, e c o n o m i c a n d moral idea: markets w e r e s e e n a s c o m p o s e d primarily of competing individuals w h o w e r e given e q u a l rights before the law a n d w h o s e rights of d e c i s i o n - m a k i n g a n d integrity w e r e increasingly required to be respected, a l o n g with a moral expectation of individual responsibility a n d s e l f - h e l p . 171  T h e s e a s p e c t s of individualism c a m e with a n i n c r e a s e in individual political expression.  A freer market in g o o d s a n d s e r v i c e s led to a greater s o c i a l  c o n s c i o u s n e s s . A l o n g with this n e w a w a r e n e s s of the disparity b e t w e e n rich a n d poor w a s a n m o v e m e n t for c h a n g e , d e m a n d s w e r e increasingly m a d e for rights of full political participation, leading to the right of enfranchisement.  T h e rise of technology, for e x a m p l e mining a n d factories, brought with it safety hazards. working  R e g u l a t i o n w a s introduced to establish s t a n d a r d s to provide s a f e conditions.  The  introduction  of  regulation  is c o n c e r n e d with  the  establishing of s t a n d a r d s w h i c h take a c c o u n t of all parties w h o are eventually a g r e e d a s having a legitimate interest in the regulated a c t i v i t y .  172  T h u s , with the rise of the industrialized state c a m e m a n y other a r e a s w h i c h n e e d e d to be regulated, leading to the e x p a n s i o n of the state at a local level. T h e s e a r e a s included g a s , water, care of criminals, the division of  labour,  s e w a g e , street m a i n t e n a n c e , security, a n d health.  Clarke, Michael, ibid, at 12. Clarke, Michael, ibid, at 13.  86  " B y this point, s e v e r a l feature of m o d e r n society critical to regulation w e r e clear. Economic and technical change were e n d e m i c , w h i c h p o s e d e v e r - n e w h a z a r d s for workers, c o n s u m e r s a n d the wider public from technology, constantly reconfigured the division of labour, a n d generated no only n e w skills, but n e w i d e a s a n d interest groups. T h e a c h i e v e m e n t of the rule of law, that is the subjection of all to the law with e q u a l rights a n d responsibilities a s citizens, a c c o m p a n i e d by enfranchisement, form the b a s i s of the stable, m o d e r n , industrialized d e m o c r a c y which the e x p e r i e n c e of the twentieth century s e e m s to indicate is something c l o s e to a universal in h u m a n societies. T h e s e a c h i e v e m e n t s required the establishment, m u c h against the w i s d o m of past centuries, of the state at local a n d national level, on a n unheard of s c a l e . 1 7 3  ii.  p h a s e two  T h e s e c o n d p h a s e of the rise of the regulatory state is roughly from 1900 to 1960, w h e r e the state e m e r g e d a s a central actor. "It w a s a period that s a w the rise of a statist ideology that portrayed it a s omnicompetent, staffed by experts w h o would g u i d e the society a n d e c o n o m y in all a s p e c t s . " period both the state and the e c o n o m y e x p a n d e d .  1 7 4  During this time  T h e labour structure a l s o  c h a n g e d , a primarily m a n u a l working c l a s s b e c a m e the minority, w h e r e a s there w a s huge growth in the m a n a g e r i a l a n d professional c l a s s e s .  iii.  p h a s e three  T h e third p h a s e is that of contemporary society. It is b a s e d on c o n s u m e r i s m a n d the d e m a n d for security. A society b a s e d on c o n s u m e r i s m brings with it the n e e d for i n c r e a s e d regulation. T h e r e is a n e e d for an i n c r e a s e d a m o u n t of attention on  Clarke, Michael, ibid, at 14.  87  b a s i c safety s t a n d a r d s for workers, c o n s u m e r s , a n d the g e n e r a l public. A l s o , the g e n e r a l complexity of m a n y products m e a n s that c o n s u m e r s cannot be e x p e c t e d to be able to a p p r a i s e the quality of the product t h e m s e l v e s , therefore  a  regulatory provision is n e c e s s a r y . " T h e c o n s u m e r - b a s e d e c o n o m y of affluence is then perforce a regulatory e c o n o m y , in which c o n s u m e r rights prevail a n d the market principle of caveat emptor  is c o m p r o m i s e d . "  increasingly  1 7 5  c) T h r e e i d e a s o f r e g u l a t i o n  W h e n thinking about regulation there are three main i d e a s or m e a n i n g s to consider: regulation a s targeted rules, regulation a s direct state intervention in the e c o n o m y more generally, a n d regulation a s e n c o m p a s s i n g all m e c h a n i s m s of s o c i a l control, by w h o m s o e v e r e x e r c i s e d . simplest w a y  of thinking  about  1 7 6  Regulation a s targeted rules is the  regulation.  Here, regulation  involves  the  promulgation of a binding set of rules to be applied by a body d e v o t e d to this purpose,  1 7 7  a n e x a m p l e of which would be legal regulation.  T h e s e c o n d c o n c e p t i o n of regulation involves direct state intervention economy.  in the  T h i s broader idea of regulation is c o m m o n l y found in the a r e a of  political s c i e n c e , taking into consideration all of the efforts of state a g e n c i e s to  Clarke, Michael, ibid, at 14. Clarke, Michael, ibid, at 15. Scott, Colin, Robert Baldwin and Christopher Hood, eds, Regulation, Oxford University Press, (New York: 1998) at 3. Baldwin, Robert, and Marti Cave, Understanding Regulation: Theory Strategy, and Practice, (New York: Oxford University Press, 1999), at 2. U  4  1 7 5  1 7 6  7 7  88  steer the e c o n o m y .  1 7 8  Regulation has a more broad s e n s e a n d c o v e r s all state  actions d e s i g n e d to influence industrial or s o c i a l b e h a v i o u r ,  179  for e x a m p l e the  s o c i a l welfare state or grants to industry.  i  T h e third i d e a of regulation is that regulation e n c o m p a s s e s all m e c h a n i s m s of s o c i a l control, by w h o m s o e v e r e x e r c i s e d . G o v e r n m e n t institutions are included in this definition, however, this definition a l s o e x t e n d s to m e c h a n i s m s w h i c h are not state i n d u c e d .  A l s o included in this c o n c e p t of regulation w o u l d be s o c i a l  n o r m s a n d the effects of the markets on modifying individual behaviour, for e x a m p l e moral regulation.  d) T h r e e g e n e r a l f r a m e w o r k s o f r e g u l a t i o n  T h e r e are three g e n e r a l frameworks that c a n be u s e d to explain regulation: the public interest/legal a n a l y s e s , the interest-group theory, a n d the public c h o i c e m o d e l . E a c h framework will be d i s c u s s e d .  i.  the public interest/ legal perspective framework  T h e public interest/legal perspective framework a s s u m e s that the state, acting in the public interest, e s t a b l i s h e s a legal framework to realize a specific set of  Scott, Colin, supra, note 176, at 3. Baldwin, Robert, supra, note 177, at 2.  89  regulatory o b j e c t i v e s .  180  T h e public interest c a n be understood from a utilitarian  p e r s p e c t i v e - the greatest overall g o o d .  T h u s , the state translates public  p r e f e r e n c e s into a legal regulatory regime.  ii.  interest-group theory  Interest-group  theorists view regulation a s an e x e r c i s e a m o n g g r o u p s  b e t w e e n g r o u p s a n d the s t a t e .  181  and  G r o u p s are b e l i e v e d to b e the s o u r c e of a n y  regulatory initiatives a n d the regulatory o u t c o m e s are likely to be the result of either a c l o s e working relationship b e t w e e n a dominant g r o u p a n d the state or of c o m p r o m i s e s a m o n g groups.  T h e p e r s p e c t i v e s of interest-group theorists vary from o p e n - e n d e d pluralism to corporatism.  182  T h e pluralist m o d e l f o c u s e s o n the state a s a n a r e n a w h e r e  c o m p e t i n g g r o u p s struggle for power. T h e corporatist m o d e l , on the other h a n d , v i e w s the g r o u p a s acting in partnership with the state. T h e state a n d the g r o u p establish a regime that m a y have the c o n s e q u e n c e of a c l o s e public/private c o operative  regulatory  structure. A n o t h e r p o s s i b l e c o n s e q u e n c e m a y  be  the  e x c l u s i o n of g r o u p s that are not part of the corporatist framework.  Francis, John, G . , the Politics of Regulation: A Comparative Perspective, (Cambridge: Blackwell Publishers, 1993) at 7. Francis, John, G . , ibid, at 8. Francis, John, G . , ibid, at 8.  1 8 0  1 8 1  1 8 2  90  iii.  the public c h o i c e m o d e l  T h e core a s s u m p t i o n of the public c h o i c e m o d e l is that individuals, a s they act in society, s e e k to realize their preference. micro-economic theory.  183  T h i s perspective d r a w s heavily from  T h e f o c u s of the public c h o i c e m o d e l is on  individual, not the group or the state.  the  However, the c h o i c e s m a d e by the  individual h a v e a n impact on the group a n d the state.  T h e rational d e c i s i o n of  the individual d o e s not n e c e s s a r i l y m e a n the rational action by the organization. T h e purported  objectives of large organizations are easily s u b v e r t e d by the  pursuit of the c o m p e t i n g preferences of their respective m e m b e r s u n l e s s the organization is carefully s t r u c t u r e d .  184  T h e N a p s t e r c a s e provides an e x a m p l e of the need for regulation to copyright  interests.  Copyright  protection  is  explicitly  recognized  protect through  constitutional recognition, a n d must be implemented in a w a y that provides a b a l a n c e of interests a m o n g the artists a n d the public. T h e courts a n d legislature have both dealt with the application of legal doctrine to the Internet. T h e N a p s t e r court h a s applied the law in a w a y that is detrimental to the public interests a n d calls for a public interest regulatory a p p r o a c h .  C o n g r e s s , a s m a n d a t e d by  the  constitution, must step in to re establish the b a l a n c e of interests to e n s u r e the protection of copyright, and the m a i n t e n a n c e of the public interest.  Francis, John, G., ibid, at 9. Francis, John, G., ibid, at 9.  91  II.  INTERNET  REGULATION  A l t h o u g h , it is r e c o g n i z e d that there exists a n e e d to regulate the Internet with respect to the protection of copyright, there are wider i s s u e s related to Internet regulation in g e n e r a l . T h e a p p r o a c h e s to Internet regulation c a n be g r o u p e d into four m a i n s c h o o l s of thought.  T h e traditionalist s c h o o l , self-regulatory s c h o o l ,  internationalist s c h o o l and the technology s c h o o l .  a) T h e T r a d i t i o n a l i s t S c h o o l  T h e Traditionalist S c h o o l believes that the Internet d o e s not p o s e any p r o b l e m s which traditional legal doctrine cannot a n s w e r . T h i s s c h o o l of thought c o n c e d e s that the law c a n be either applied a s it would be applied in the 'real' world, or simply e x t e n d e d to apply to Internet i s s u e s . of most states a n d courts.  T h i s a p p e a r s to be the current view  T h r o u g h the extension of the law a n d legislation,  traditional legal a p p r o a c h e s have b e e n applied to the Internet. T h e N a p s t e r c a s e is a n e x a m p l e of s u c h an application.  b) T h e S e l f - R e g u l a t o r y S c h o o l  T h e S e l f - R e g u l a t o r y S c h o o l believes that traditional legal doctrine d o e s not work in C y b e r s p a c e . T h e most dominant s c h o l a r s within this s c h o o l of thought are David P o s t a n d David J o h n s o n . P o s t a n d J o h n s o n argue that the state d o e s not  92  h a v e the ability to i m p o s e s a n c t i o n s a n d law in C y b e r s p a c e b e c a u s e of its b o r d e r l e s s nature, making C y b e r s p a c e almost a-jurisdictional, b e c a u s e p h y s i c a l locations, a n d physical b o u n d a r i e s , are irrelevant in the networked e n v i r o n m e n t of the Internet.  185  T h u s , the Internet should be viewed a s its o w n jurisdiction,  w h e r e laws a n d regulation will d e v e l o p freely within that jurisdiction. " T h e rise of the computer network is destroying the link b e t w e e n g e o g r a p h i c a l location and (1) the power of the local g o v e r n m e n t ' s to assert control over the online behaviour (2) the effects of online b e h a v i o u r on individuals or things (3) the legitimacy of the efforts of a local s o v e r e i g n to enforce rules applicable to global p h e n o m e n a (4) the ability of physical location to give notice of w h i c h s e t s of rules a p p l y . " ' 86  Within the self-regulation s c h o o l of thought is the idea that the Internet h a s d e v e l o p e d its o w n distinct online community. Virtual c o m m u n i t i e s c a n be defined a s " s o c i a l a g g r e g a t i o n s that e m e r g e from the Net w h e n e n o u g h p e o p l e carry on t h o s e public d i s c u s s i o n s long e n o u g h , with sufficient h u m a n feeling, to form w e b s of p e r s o n a l relationships in C y b e r s p a c e " .  1 8 7  With this idea of c o m m u n i t y c o m e s  the c o n c e p t that t h o s e w h o inhabit it s h o u l d regulate C y b e r s p a c e . T h o s e w h o support this i d e a of communities in c y b e r s p a c e a r g u e that t h o s e c o m m u n i t i e s have, a n d will, d e v e l o p appropriate norms a n d v a l u e s to govern the s p a c e s , w h i c h they inhabit.  Post, David, "Anarchy, State, and the Internet: An Essay on Lawmaking in Cyberspace" 1995 J. Online L. art 3 at para 34. Post, David, and David Johnson, "Law and Borders - the Rise of Law in Cyberspace", (1996) 48 Stan. L. Rev. 1367, at 6., <http://www.cli.org/X0025_LBFIN.html> Maltz, Tamir, "Customary Law & Power in Internet Communities", School of Law, University of New South Wales, <http://www.ascusc.Org/jcmc/vol2/issue1/custome.html#introduction> (visited 10/12/00) 1 8 5  1 8 6  1 8 7  93  T h u s , the inherent nature of the Internet g o e s b e y o n d the jurisdiction of the state, and  in  effect  creates  its  own  jurisdiction.  This  C y b e r s p a c e , s h o u l d be left a l o n e to self-regulate.  s e p a r a t e jurisdiction  of  T h e state h a s no p o w e r in  Cyberspace.  c) T h e I n t e r n a t i o n a l i s t S c h o o l  T h e Internationalist s c h o o l of thought is p r e m i s e d on the idea that the Internet s h o u l d be g o v e r n e d through  international  mechanisms.  These mechanisms  include the e s t a b l i s h m e n t of international treaties and b o d i e s to h a r m o n i z e the laws a p p l i c a b l e to the Internet. T h o u g h there has b e e n s o m e effort to h a r m o n i z e Internet i s s u e s a n d law, there is the possibility that it would only work if every single nation in the world s i g n e d on a n d enforced the treaty.  H o w e v e r , efforts to  h a r m o n i z e will b e c o m e more and more effective a s the leaders in t e c h n o l o g y a n d countries with the highest proportion of u s e r s sign o n to a c o m m o n a g r e e m e n t .  d) T h e T e c h n o l o g y  School  S c h o l a r L a w r e n c e L e s s i g a d v a n c e s the view that the Internet c a n be regulated through its technological framework, through its c o d e .  1 8 8  L e s s i g supports the  v i e w that the Internet c a n be regulated through its technological architectures:  1 8 8  See Lessig, Lawrence, "Innovation, Regulation, and the Internet", The American Prospect vol.  111 no. 10, March 27-April 10, 2000, and Code and Other Laws of Cyberspace, (New York: Basic Books, 1999)  94  "... c o d e writers are increasingly l a w m a k e r s . T h e y determine what the defaults of the Internet will be; whether privacy will be protected; the d e g r e e to which anonymity will be a l l o w e d ; the extent to w h i c h a c c e s s will be g u a r a n t e e d . T h e y are the o n e s w h o set its nature. T h e i r d e c i s i o n s , now m a d e in the interstices of how the Net is c o d e d , define what the Net i s . " 1 8 9  T h u s , "the c h o i c e is not between regulation a n d no regulation.  T h e c h o i c e is  whether w e architect the network to give power to network o w n e r s to regulate innovation, or whether w e architect it to remove that power to r e g u l a t e . "  190  With respect to the N a p s t e r situation, there h a s b e e n a n e x t e n s i o n of traditional legal principles into a new a r e a of application. although  the  Court  may  inconsistent with the Evidence  is the  have misconstrued  copyright  application  t e c h n o l o g i e s , i.e. Sony.  of  founding the  principles  initiative, in  prior  law the  in a m a n n e r  that  that  is  law c a n be a p p l i e d .  cases  dealing  with  new  W h a t is n e c e s s a r y to deal with the n e w i s s u e s w h i c h  h a v e arisen a s a result of copyright traditional  law  the  Napster demonstrates  in their  a n d the Internet is the application  true form,  a l o n g s i d e the  continued  growth  of of  t e c h n o l o g i c a l innovation to e n s u r e that the laws c a n be e n f o r c e d . T h i s is w h e r e the t e c h n o l o g y  s c h o o l a n d the traditionalist  s c h o o l must  meet.  effective regulation a n d copyright protection c a n take p l a c e w h e r e  Together, traditional  principles c a n be e x t e n d e d to apply to the new m e d i a a n d t e c h n o l o g y c a n be a d a p t e d to e n s u r e that the law is e n f o r c e d .  T h i s m a n d a t e s the n e e d for a  Lessig, Lawerence, Code, ibid, at 60 Lessig, Lawerence, "Innovation, Regulation, and the Internet", The American 111 no. 10, March 27-April 10, 2000, at 6  1 9 0  Prospect, vol.  95  cooperative environment a m o n g the artists, the copyright holders, the m e d i a c o n g l o m e r a t e s , a n d the actual d e v e l o p e r s of the technology.  III.  THE EVOLUTION OF TECHNOLOGY  T h e d e v e l o p m e n t of technology is a n important point in this d i s c u s s i o n . T h r o u g h t e c h n o l o g y t h e s e p h e n o m e n a w e r e c o n c e i v e d a n d able to evolve into what w e s e e today.  T e c h n o l o g y h a s a l s o b e e n u s e d to s o l v e m a n y of the i s s u e s w h i c h  arise a s a result of t h e s e p h e n o m e n a . T h e N a p s t e r c a s e d e m o n s t r a t e s that the ability of t e c h n o l o g y to evolve to meet the n e e d s of interested parties a n d individuals c a n lead to the regulation of the Internet.  Currently, this type of  regulation is limited, but N a p s t e r d e m o n s t r a t e s the flexibility of t e c h n o l o g i c a l innovation to meet the n e e d s that are p l a c e d upon it.  T h e injunction p l a c e d on N a p s t e r by the U . S . C o u r t s requires the s e r v i c e to filter out copyright infringing files.  W h e n the injunction w a s originally put into p l a c e  there w a s a n outcry by N a p s t e r that s u c h filtering w a s not p o s s i b l e b e c a u s e of the t e c h n o l o g i c a l nature of its peer to peer s y s t e m . T h i s w a s later proved to not be the c a s e .  O v e r the months following the injunction various f o r m s of filtering  w e r e d e v e l o p e d , s o m e proving to be more c a p a b l e than others.  A s each new  filtering t e c h n i q u e w a s put into p l a c e , a n e w w a y to circumvent the filter w a s a l s o found a n d u s e d by s o m e m e m b e r s of the N a p s t e r s y s t e m .  W h e n the filtering  s y s t e m w a s originally put in p l a c e , within 24 hours most of the b l o c k e d s o n g s  96  w e r e o n c e a g a i n available on the s y s t e m with new file n a m e s or minor t y p o s , t h e s e s m a l l c h a n g e s allowed N a p s t e r users to circumvent the n e w l i m i t a t i o n s .  191  T h i s lead to the belief that the filtering s y s t e m w o u l d never work a n d that N a p s t e r could not m e e t the requirements of the injunction.  A s e a c h filtering s y s t e m w a s c i r c u m v e n t e d a n e w t e c h n o l o g y d e v e l o p e d to m e e t the c h a n g i n g n e e d s hoping to provide an a d e q u a t e filter to m e e t the t e r m s of the injunction.  192  N e w filters have  been  put into place  using the d e v e l o p i n g  t e c h n o l o g y of digital fingerprinting, digital w a t e r m a r k i n g , a n d filters that c a n read the s o n i c characteristics of a s o n g f i l e .  193  Goodin, Dan, "Napster Injunction Puts Burden on Labels", The Standard.com, <http://www.thestandard.eom/article/0.1902,22662,00.html?printer_friendly> (visited 25/04/01) One particularly publicized service used to circumvent the Napster text filters is a software program released by Aimster that turns file names into Pig Latin, this serves as a temporary way around the blocking mechanism. The program was launched March 9, 2001, three days afterwards more than 20,000 people had downloaded the program. Robert Thompson "Company uses pig Latin to avoid Napster block", March 12, 2001, The National Post Online, <http://www.nationalpost.com/scripts/printer/printer.asp?f=stories/20010312/497929. html> (visited 25/04/01); Brad King, "File Tracker May G o Too Far", May 11, 2001, Wired News, <http://www.wired.eom/news/print/0,1294,43714,00.html> (visited 11/05/01) Aimster is also very controversial because it has set up a Napster like service through the use of A O L buddy lists, where people can create a buddy list and open their computers to a select group of people. The RIAA has filed a lawsuit against Aimster, charging that it is violating copyrights in the same manner as Napster. Aimster's C E O , Johnny Deep, has defended the Aimster service, claiming that the fact that people are opening their computers to a select group of people preserves it from outside scrutiny. T h e s e "private virtual networks" use Aimster software to do more than trade music files, and breaking into these personal private networks to look for copyrighted files would possibly be a violation of copyright itself. See, John Borland, "RIAA sues Aimster over file swapping", C N E T News.com, May 25, 2001, <http://news.cnet.com/news/0-1005-200-6033575.html> (visited 03/06/01); "Aimster also claims that it would be illegal for the RIAA to reverse-engineer its scheme and try to filter the encrypted file names since federal law bars anybody from breaking through or helping to break encryption designed to protect copyrighted works", Cecily Barnes, "Napster fans squeeze through loopholes", C N E T News.com, March 6, 2001, <http://news.cnet.com/news/0-1005-2005042145.html> (visited 04/06/01); "Aimster S u e s the Recording Industry", The Standard, May 2, 2001, <http://www.thestandard.eom/article/0,1902,24170,00.html> (visited 03/05/01) 1 9 1  1 9 2  S e e Borland, John, "Napster's zero hour approaching on filters", C N E T News.com, March 9, 2001, <http://www.cnet.com/news/0-1005-202-5081628.html> (visited 25/04/01); John Borland, "Napster pushed to step up efforts", C N E T News.com, March 27, 2001, http://news.cnet.com./news/0-1005-200-5322820.html?tag=prntfr> (visited 04/06/01); John Borland, "Napster listens to songs in new release", C N E T News.com, May 7, 2001, 1 9 3  97  " T h e d e v e l o p m e n t of highly sophisticated filtering a n d tracking software is m a k i n g s u c h limitations p o s s i b l e for the first time. A s a result, the n e w t e c h n o l o g i e s are resurrecting a volatile i s s u e long thought d e a d : the idea that the Internet c a n be regulated by g e o g r a p h i c b o u n d a r i e s within the United States a n d from country to country." 194  In a period of a f e w months the filtering technology h a s b e e n c h a n g e d , modified, a n d re-invented to the point that N a p s t e r c a n now effectively filter out the copyright protected files from its s y s t e m . block a n d track  T h e n e w generation of software c a n  p e o p l e b a s e d o n their physical locations.  T h e s e tracking  p r o g r a m s work in a similar m a n n e r a s that u s e d for c o n s u m e r profiling u s e d by advertisers. T h e y track a p e r s o n s Internet Protocol a d d r e s s , w h i c h c a n then be u s e d to locate w h e r e a n individual lives or w o r k s .  1 9 5  T h e t e c h n o l o g i c a l innovation occurring after the N a p s t e r d e c i s i o n h a s provided a temporary solution to the problem of policing the N a p s t e r network a n d removing infringing files. T h i s provides support for the argument that t e c h n o l o g y will m e e t the n e e d s to regulate other technology. O n the o n e had the t e c h n o l o g y h a s d e v e l o p e d to meet the n e e d s of Napster. O n the other h a n d , n e w t e c h n o l o g y will be d e v e l o p e d to e v a d e tracking a n d filtering software.  A simple example would  be the inability to track people w h o u s e filters that c o n c e a l Internet Protocol  http://news.cnet.com/news/0-1005-200-5827970.html?tag=prntfr> (visited 08/05/01); "Facing the music: digital watermarks", Economist.com, May 3, 2001, <http://www.economist.com/science/PrinterFriendly.cfm?> (visited 08/05/01); "Napster launches new song-blocking technology", May 8, 2001, U S A T O D A Y . c o m , <http://www.usatoday.com/life/cyber/tech/review/2001-05-08-napster-blocking-technology-html> (visited 09/05/01). Jacobus, Patricia, "Taming the Web: Building fences, one by one", C N E T News.com, April 19, 2001, <http://news.cnet.com/news/0-1005-201-5589627-1.html> (visited 03/06/01) Jacobus, Patricia, ibid. 1 9 5  98  a d d r e s s e s along with p e r s o n a l information like a g e , s e x a n d i n c o m e .  1 9 6  There  are still m a n y outstanding i s s u e s c o n c e r n i n g the application of the law to other Napster-like p e e r to p e e r networks that are located outside of the United S t a t e s .  IV.  CONCLUSION  T h e Internet is a topic of interest a n d d e b a t e in m a n y disciplines. T h e application of law to Internet related activities has only just b e g u n to be an important i s s u e to be d e b a t e d a n d w o r k e d through by courts a n d legislatures around the world. T h e N a p s t e r c a s e provides a concrete a n d important e x a m p l e of the difficulty in applying traditional legal reasoning to new m e d i a . However, it d e m o n s t r a t e s the power that a n individual h a s in the forum of C y b e r s p a c e , h o w o n e p e r s o n c a n create s o m e t h i n g that c h a n g e s the application of the law, a n d calls for n e w regulatory m e t h o d s to be reconciled with the old o n e s .  W h e n interpreting the law to meet the n e c e s s a r y regulatory s t a n d a r d s that the Internet is dictating to e n s u r e the protection of the rights that the legal s y s t e m s t a n d s for, it is important not to l o o s e sight of the foundation that t h o s e v a l u e s were premised upon.  This is e s s e n t i a l to maintain faith a n d legitimacy in the  legal s y s t e m . N a p s t e r s h o w s that the current interpretation of prior c o m m o n law doctrine  related  to  copyright  a n d technological  innovation  H o w e v e r , it a l s o provides us with a 'red flag' reminding  is  questionable.  us that there  is a  n e c e s s a r y b a l a n c e that must be maintained.  1 9 6  Jacobus, ibid.  99  In the era of transnational corporations and multi national co-operation, the public interest factor is fundamental when thinking about the regulation of copyright interests. The consideration of the public interest is fundamental to ensure that future creators and authors will enjoy the exclusive rights of their work, while allowing the public to enjoy the benefits such works. Thus, it is necessary for new co operative measures to be taken by the state to ensure that copyright law evolves in a manner consistent with this philosophy.  100  BIBLIOGRAPHY  Texts 1. A l b a r r a n , A l a n B. a n d David H. 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T h e D i l e m m a s of Capitalists in a n A g e of Transition", K e y n o t e a d d r e s s form c o n f e r e n c e on State Sovereignty in the World Economy, U of C , Irvine, F e b 2 1 - 2 3 1997, <http://fbc.binghamton.edu/iwsovty.htm> 6 3 . Y o r g e y , L i s a , A . , " R e a c h i n g the W o r l d by W e b " , Target Philadelphia, Jul 2000.  Marketing,  Media and Web Articles 1. " F r o m the C I O D i s c u s s i o n G r o u p " M a r c h 13, 2 0 0 0 , http://www.educause.edu/page2/cio_napster.html (04/02/01)  106  2. " G o r e L i k e n s A m e r i c a n D e m o c r a c y to N a p s t e r C a s e " , S e p t 28, 2 0 0 0 , <http://dailynews.yahoo.com/htx/nm/20000928/pl/gore_napster_dc_1.html> (9/30/00) 3. " M e e t the Napster", T I M E M a g a z i n e , O c t 2 2 0 0 0 , <http://www.time.eom/time/magazine/articles/0,3266,55730,00.html> 4. " S c h o o l s R e c e s s on Napster", W i r e d N e w s Report, A u g 30, 2 0 0 0 . 5. A s s o c i a t e d P r e s s , " G a t e s t a k e s the stage at W o r l d E c o n o m i c F o r u m " , J a n 29, 2 0 0 1 , <http://news.cnet.com/news/0-1005-200-463-7279.html> (01/02/01) 6. A s s o c i a t e d P r e s s , " S e n a t e ' s E a r s H e a r the N o i s e " , A p r 3, 2 0 0 1 , <http://www.wired.eom/news/print/0,1294,42809,00.html> (04/04/01) 7. Barlow, J o h n Perry, " N a p s t e r . c o m and the death of the m u s i c industry", M a y 12 2 0 0 0 , <http://www.technocrat.net/958163435/index_html> (04/02/01) 8. Barlow, J o h n Perry, " T h e Next E c o n o m y of Ideas: Will copyright survive the N a p s t e r b o m b ? N o p e , but creativity will", O c t 2 0 0 0 , <http://www.wired.eom/wired/archive/8.10/download_pr.html> (11/30/00) 9. B a r n e s , C e c i l y , " N a p s t e r f a n s s q u e e z e through loopholes", C N E T N e w s . c o m , M a r c h 6, 2 0 0 1 , <http://news.cnet.com/news/0-1005-200-5042145.html> (visited 04/06/01) 10. Barry, H a n k , N a p s t e r C E O , " N a p s t e r C E O : A c t of C o n g r e s s n e e d e d to r e m e d y c o m p l i c a t e d licensing m o r a s s that threatens internet m u s i c " , stmt by N a p s t e r C E O , <http://www.napster.com/pressroom/pr/010403.html> (06/04/01) 11. B e n n e r , Jeffrey, " N a p s t e r Fallout: P r i v a c y L o s e s ? " , M a r 6, 2 0 0 1 , <http://www.wired.eom/news/print/0,1294,42203,00.html> (06/03/01) 12. B o r l a n d , J o h n , "Microsoft plays O S card to c e m e n t anti-piracy role", F e b 1, 2 0 0 1 , C N E T N e w s . c o m , <http://news.cnet.com/news/0-1005-2004684177.html> (01/02/01) 13. B o r l a n d , J o h n , " N a p s t e r alternatives start blocking s o n g s " , C N E T N e w s . c o m , April 6, 2 0 0 1 , <http://news.cnet.com/news/0-1005-200-5530715.html> (visited 04/06/01) 14. B o r l a n d , J o h n , " N a p s t e r listens to s o n g s in new r e l e a s e " , C N E T N e w s . c o m , M a y 7, 2 0 0 1 , <http://news.cnet.com/news/0-1005-2005827970.html?tag=prntfr> (visited 08/05/01)  107  15. B o r l a n d , J o h n , " N a p s t e r p u s h e d to step up efforts", C N E T N e w s . c o m , M a r c h 2 7 , 2 0 0 1 , http://news.cnet.com./news/0-1005-200-5322820.html?tag=prntfr> (visited 04/06/01) 16. B o r l a n d , J o h n , " N a p s t e r s c r e e n s s o n g s , but files still slip through", C N E T N e w s . c o m , M a r c h 5 2 0 0 1 , <http://news.cnet.com/news/0-1005-2005028511.html> 17. B o r l a n d , J o h n , " N a p s t e r s c r e e n s s o n g s , but files still slip through", Staff Writer, C N E T N e w s . c o m , M a r c h 5, 2 0 0 1 , <http://news.cnet.com/news/0-10052 0 0 - 5 0 2 8 5 1 1 .html?tag=prntfr> 18. 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C h a s e , S t e v e n , " N a p s t e r d i n e m a y set up s h o p offshore", M a r c h 5, 2 0 0 1 , T h e Globe and Mail. 28. C h a s e , S t e v e n , J o h n H e i n z l , "Pirate Films are big a g a i n " , F e b 8, 2 0 0 1 , T h e Globe and Mail. 2 9 . C h u , S h o w w e i , " C a n a d a tops world in N a p s t e r u s e " , April 6, 2 0 0 1 , <http://www.theglobeandmail.com> 30. C h u , S h o w w e i , " P e e r - t o - p e e r gets d o w n to b u s i n e s s " , G l o b e a n d M a i l , M a r c h 8, 2 0 0 1 . 3 1 . C N E T N e w s . c o m staff, "Big Blue touts n e w Napster-proof m u s i c locks", J a n 21, 2001, <http://news.cnet.com/news/0-1005-200-4551774.html?tag=prntfr> 32. C N E T N e w s . c o m , " D O J c o n c e r n s shutter file-swapping service", Staff, J a n 22, 2001, <http://news.cnet.com/news/0-1005-201-45653280.html?tag=prntfr> 33. 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E v a n g e l i s t a , B e n n y , " B r e a k Into Digital M u s i c Market: Portable audio player w e i g h s just 3 o u n c e s , will cost about $ 3 0 0 " , S a n F r a n c i s c o C h r o n i c l e , J a n 2, 2001. 40. Evangelista, Benny, "Emusic Cautions Napster Users", S a n Francisco C h r o n i c l e , D e c 1, 2 0 0 0 . 4 1 . E v a n g e l i s t a , B e n n y , " F r e e W e b M u s i c Not J u s t a F a d " , J u n e 9, 2 0 0 0 , S a n Francisco Chronicle.  109  4 2 . E v a n g e l i s t a , B e n n y , " N a p s t e r T e a c h - i n on C a m p u s : M o r e c o l l e g e s try warnings instead of c r a c k d o w n s " , S e p t 4, 2 0 0 0 , S a n F r a n c i s c o C h r o n i c l e . 4 3 . E v a n g e l i s t a , B e n n y , " N a p s t e r Traffic B o o m i n g : Court fight d r a w s millions to m u s i c site", A u g 1 2 0 0 0 , S a n F r a n c i s c o C h r o n i c l e . 4 4 . E v a n g e l i s t a , B e n n y , " T h e N a p s t e r Effect: P r o g r a m m a y h a v e started s o m e t h i n g that no court c a n stop", S a n F r a n c i s c o C h r o n i c l e , S e p t 2 8 , 2 0 0 0 . 4 5 . E v a n g e l i s t a , B e n n y , " T h e Waiting G a m e : W h e e l s of justice are grinding slowly in the N a p s t e r c a s e " , Chronicle Staff Writer, S a n F r a n c i s c o C h r o n i c l e , J a n 26, 2001. 4 6 . F o l e y , M a r y J o , " P e e r - t o - p e e r monsters are on the way", J a n 9, 2 0 0 1 , <http://www.zdnet.eom/filters/printerfriendly/0,6061,2673018-2,00. html> (26/02/01) 4 7 . Fost, D a n , " M o n i c a it's not, but m e d i a are all worked up about copyright c a s e " , S a n F r a n c i s c o C h r o n i c l e , Oct 3, 2 0 0 0 . 4 8 . G a n a h l , J a n e , " L i s t e n . c o m T u n e s Out 42 E m p l o y e e s " , S a n F r a n c i s c o C h r o n i c l e , J a n 14, 2 0 0 1 . 4 9 . 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