@prefix vivo: . @prefix edm: . @prefix ns0: . @prefix dcterms: . @prefix dc: . @prefix skos: . vivo:departmentOrSchool "Law, Peter A. Allard School of"@en ; edm:dataProvider "DSpace"@en ; ns0:degreeCampus "UBCV"@en ; dcterms:creator "Belcredi, Carmen"@en ; dcterms:issued "2009-08-04T21:28:56Z"@en, "2001"@en ; vivo:relatedDegree "Master of Laws - LLM"@en ; ns0:degreeGrantor "University of British Columbia"@en ; dcterms:description """The Napster case has created a frenzy of controversy and confusion. The Peer to Peer technology developed by Napster creator Shawn Fanning, has forced the courts, the legislature, corporations, and individuals to reconsider the use of the Internet. Peer to peer networks create new challenges for the application of copyright law. However, these challenges are not that different from those which copyright law has evolved to accommodate in the past. Copyright law is intended to balance the interests of the creators and the public to promote the progress of science and useful arts. The premise behind copyright protection is to ensure that people continue creating, and that the public continues to enjoy those creations, through the mechanism of rewarding the creators with a temporary monopoly over their works. This balance of interests is fundamental to the interpretation of copyright law by the United States Congress and the Courts. This thesis focuses on the application and interpretation of copyright law through a case study of the law in the United States, in particular the Napster case. Although it now appears that the Internet can be subject to some form of regulation with the aid of technological innovation to enforce the regulation, the Courts in the Napster case have misinterpreted the previous judicial consideration attributed to copyright law. In essence, the fundamental principle of the balancing of interests has been lost. We are now left with an unequal balance in favor of large media conglomerates. It can be argued that the media conglomerates have used Napster as an example of their power to control the technology of peer to peer networking as a model of distribution. Napster demonstrates that peer to peer is an effective way of sharing information with an extremely large amount of people. This has the music industry scared, resulting in their legal battle to shut down the Napster technology. The claims of copyright misuse raise awareness of the need for regulation and a reassessment of copyright application in a digital age. There is a need for regulation. However, any attempts at further application of law and regulation to the Internet concerning copyright protection should consider the intent of the constitutional founders of the United States -- copyright law is intended to protect the interests of both the artists, and the public."""@en ; edm:aggregatedCHO "https://circle.library.ubc.ca/rest/handle/2429/11629?expand=metadata"@en ; dcterms:extent "5089292 bytes"@en ; dc:format "application/pdf"@en ; skos:note "T H E E V O L U T I O N O F C O P Y R I G H T : 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 C A R M E N B E L C R E D I B.A., York University, 1997 L L . B . , Queen 's University, 2000 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 T H E R E Q U I R E M E N T S F O R T H E D E G R E E O F M A S T E R O F L A W S In T H E F A C U L T Y O F G R A D U A T E S T U D I E S (Faculty of Law) W e accept this thesis as conforming to the required standard T H E U N I V E R S I T Y O F BRIT ISH C O L U M B I A October 2001 © C a r m e n Belcredi , 2001 UBC Special Collections - Thesis Authorisation Form 9/26/01 5:44 PM I n p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f t h e r e q u i r e m e n t s f o r an a d v a n c e d d e g r e e 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 c o p y i n g , 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 be g r a n t e d by t h e h e a d o f my d e p a r t m e n t 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 u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l n o t 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 . D e p a r t m e n t o f The 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 V a n c o u v e r , Canada Date http://wwvv.library.ubc.ca/spcoll/thesauth.html Page 1 of 1 A B S T R A C T The Napster c a s e has created a frenzy of controversy and confusion. The P e e r to Pee r technology deve loped by Napster creator Shawn Fanning, has forced the courts, the legislature, corporat ions, and individuals to reconsider the use of the Internet. P e e r to peer networks create new chal lenges for the appl icat ion of copyright law. However, these chal lenges are not that different from those which copyright law has evolved to accommodate in the past. Copyr ight law is intended to ba lance the interests of the creators and the public to promote the progress of sc ience and useful arts. The premise behind copyright protection is to ensure that people continue creating, and that the public cont inues to enjoy those creations, through the mechan ism of rewarding the creators with a temporary monopoly over their works. Th is ba lance of interests is fundamental to the interpretation of copyright law by the United States Cong ress and the Courts . Th is thesis focuses on the application and interpretation of copyright law through a c a s e study of the law in the United States, in particular the Napster case . Al though it now appears that the Internet can be subject to s o m e form of regulation with the aid of technological innovation to enforce the regulation, the Cour ts in the Napster case have misinterpreted the previous judicial considerat ion attributed to copyright law. In essence , the fundamental principle of the balancing of interests has been lost. W e are now left with an unequal ba lance in favor of large media conglomerates. It can be argued that the media conglomerates have used Napster as an example of their power to control the technology of peer to peer networking as a model of distribution. Napster demonstrates that peer to peer is an effective way of shar ing information with an extremely large amount of people. This has the mus ic industry sca red , resulting in their legal battle to shut down the Napster technology. The c la ims of copyright misuse raise awareness of the need for regulation and a reassessment of copyright application in a digital age. There is a need for regulation. However, any attempts at further application of law and regulation to the Internet concerning copyright protection should consider the intent of the constitutional founders of the United States -- copyright law is intended to protect the interests of both the artists, and the public. T A B L E O F C O N T E N T S A B S T R A C T A C K N O W L E D G E M E N T S C H A P T E R I -- I N T R O D U C T I O N C H A P T E R C H A P T E R C H A P T E R IV C H A P T E R V -- 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 A N D U S E F U L A R T S : T H E E V O L U T I O N O F C O P Y R I G H T L A W I. H I S T O R Y II. T H E E V O L U T I O N O F C O P Y R I G H T L A W III. T H E P 2 P T E C H N O L O G Y I -- C O P Y R I G H T L A W A N D T H E DIGITAL W O R L D : N A P S T E R A S A N E X A M P L E O F T H E C H A L L E N G E S O F A P P L Y I N G T R A D I T I O N A L D O C T R I N E I. T H E N A P S T E R C A S E - I N T R O D U C T I O N II. T H E N A P S T E R C A S E - B A C K G R O U N D III. I N T E R P R E T A T I O N O F C O P Y R I G H T L A W IV. T H E U N I T E D S T A T E S C O U R T O F A P P E A L S - T H E B A L A N C E O F I N T E R E S T S : C O N T R O L O F T E C H N O L O G Y IN A DIGITAL W O R L D C O P Y R I G H T M I S U S E C O M M E R C I A L I Z A T I O N T H E M U S I C I N D U S T R Y R E G U L A T I O N : R E S T O R I N G T H E B A L A N C E O F C O M P E T I N G I N T E R E S T S I. R E G U L A T I O N II. I N T E R N E T R E G U L A T I O N III. T H E E V O L U T I O N O F T E C H N O L O G Y IV. C O N C L U S I O N II v 1 5 5 9 10 17 17 18 22 59 62 62 68 74 83 84 92 96 99 B I B L I O G R A P H Y 101 iv ACKNOWLEDGEMENTS I would like to acknowledge Professors W e s P u e and Ruth Buchanan for providing me with their insight and guidance. Their comments and enthusiasm was instrumental in the development of the content of this thesis. Spec ia l thanks to my family and friends, who provided me with immeasurab le support and understanding throughout the entire process of writing this thesis, especial ly Nicole, Kar im, Andrea , Mon ica , Jill and Doruk. v I INTRODUCTION The Napster case provides an example of the application of copyright law to the Internet. S i nce the widespread use of the Internet began, the idea of application of law has been a point of contention. In particular, the protection of copyright has caused a lot of concerns about application and enforcement. The inherent characterist ic of information transfer and replication threatens the protection of ideas and express ions. The advance of technology assoc ia ted with Internet appl icat ions further compl icated the application of copyright law to the realm of Cybe rspace . The P e e r to Pee r (P2P) technology deve loped by Napster creator S h a w n Fann ing has created a sense of urgency surrounding the issue of Internet regulation. The Napster judgement, A&M Records, Inc. v. Napster, Inc., 114 F. Supp . 2d 896 (N.D. C a l . 200), aff'd in part and rev'd in part, 239 F. 3d 1004 (9 t h Cir. 2001), successfu l ly appl ied traditional copyright law of the United States to the Internet. The application of copyright doctrine, a longside the continued technological growth and development of the Internet, has enab led the appl icat ion of law and the policing of copyright infringing file trading. However, despite the application of copyright to P 2 P , there is question about the interpretation of that law, 1 particularly quest ions surrounding the implications of its application with respect to the intent of copyright law and as envis ioned by the United States constitution. Th is thesis will argue that although copyright doctrine is being appl ied to Cybe rspace , the original intent of copyright protection has been lost in the process . Copyright law in the United States is evolv ing. Th is thesis will focus on the law in the United States. This is primarily for the simple fact that the United States holds a strategic place in the development of the Internet, and the appl icat ion of law to Cybe rspace . The catalyst for the evolution of copyright is technological innovation. A n examinat ion of this evolution will show that copyright law has gone beyond the intent of its enactment. Through examinat ion of the appl icat ion of copyright law to P2P , in particular the interpretation of law by the court in the Napster case , this thesis will show that copyright protection has exceeded the original intent of United States copyright legislation. By examin ing the issues raised in the Napster case it will be shown that copyright law has been successfu l ly appl ied to Pee r to Pee r (P2P) technology, however the regulation and application of the law has created an imbalance of interests in favour of the large media conglomerate which hinders the public interest factor of copyright protection. The examinat ion of the issues raised by Napster will demonstrate the evolution of copyright doctrine, in particular, by the attempt to apply the common law and statutory enactment 's to meet the rapidly changing needs resulting from technological innovation and growth. 2 First this thesis will d i scuss the historical intent of copyright protection as intended by the inclusion of an intellectual property provision in the United States constitution. S e c o n d , the Napster case will be examined in detail to demonstrate the evolving doctrine of copyright law. In particular the jur isprudence and legislative attempts of Cong ress will be d iscussed in relation to the attempt to meet the changing needs that technological innovation p laces on the application of copyright law. Third, the concept of copyright misuse which is based on antitrust law, will be used to demonstrate the resulting imbalance of interests that has occurred from the appl icat ion and enforcement of copyright law to the Internet. This has ultimately led to a constraint on the a c c e s s to technology. S u c h a constraint hinders the public interest, which was intended to be an integral part of the ba lance which copyright law was enacted to protect. Fourth, the issue of regulation will be explored. Clearly, there is a need for some kind of regulation to protect copyright interests in Cybe rspace . However, the ba lance of interests that was envis ioned by the constitutional provision protecting intellectual property rights needs to be ach ieved. There is a del icate ba lance of power that should be maintained to stimulate continued creative efforts and express ions of individuals. This is what copyright is intended to protect. The 3 current appl icat ion and interpretation of copyright and the act ions of Cong ress have led to the disruption of this ba lance. The application of copyright law to the digital realm cal ls for a new type of regulation, one that will mirror the original phi losophy underpinning copyright protection. 4 II 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 A N D U S E F U L A R T S : T H E E V O L U T I O N O F C O P Y R I G H T L A W I. H I S T O R Y O F C O P Y R I G H T The United States constitution contains a provision that explicitly protects Intellectual 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 and discoveries.\" 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.\" As interpreted in Mazer v. Stein3, the purpose is \"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 1 U.S. Const , art. I, § 8 cl. 8. 2 Nimmer, Melville B. and David Nimmer, Nimmer on Copyright. Lexis Publishing 2001 New York., a t § 1.03[A]. 3 Mazerv. Stein, (1954), 347 U.S. 201, 219. 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 and free use of the facts, data, and ideas within them. The protection of copyright s tems from the concern that without the guarantee of a way to profit from creative work, too few people would actually embark on creative endeavors . However, creativity a lso depends on the use, cri t icism, supplementat ion, and considerat ion of previous works. Therefore, creators should enjoy a monopoly right just long enough to provide an incentive for more creat ion, but after the expiry of the term of the monopoly the work should be part of the \"public domain\" , as common property. 6 The intent behind the first legislation deal ing with copyright in the U.S . was to protect these creative interests, while balancing the idea of the public good, or the public interest. J a m e s Mad ison introduced the copyright and patent c lause to the Consti tut ion. Mad ison argued that copyright was one of those few acts of government in which the \"public good fully coincides with the c la ims of , individuals.\" The intent behind the inclusion of copyright in the Constitut ion was f ramed in terms of progress and learning, as well as literacy and the need for an informed ci t izenry. 7 \"When Pres ident George Wash ington declared his support for the Copyr ight Act of 1790, he proclaimed that copyright would enrich political culture by \"convincing those who are entrusted with public administration that every valuable end of government is best answered by the enl ightened conf idence of the public; and by teaching the people themselves to know and value their own rights; to d iscern and provide against invasions of them; to dist inguish 5 Vaidhayanathan, Siva, \"Copyrights and Copywrongs\", http://www.msnbc.com/news/594462.asp7cp1-1 (06/08/01) 6 Vaidhavanathan, ibid. 7 Vaidhayanathan, ibid. 7 between oppress ion and the necessary exerc ise of lawful authority.\" In considerat ion of the intent of the constitutional enactment, the Supreme Court has stated: \"The monopoly privileges that Congress may authorize are neither unlimited nor primarily des igned to provide a specia l private benefit. Rather, the limited grant is a means by which an important public purpose may be achieved. It is intended to motivate the creative activity of authors and inventors by the provision of a spec ia l reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.\" 8 It is the task of Congress , as ass igned by the Constitution, to define the scope \"of the limited monopoly that should be granted to authors or inventors in order to give the public appropriate access to their product.\" 9 This task involves balancing the interests of the creators in the control and exploitation of their works, and the competing public interest of free flow of ideas, information, and commer ce . 1 0 This ba lance was examined by the Judiciary Committee of the House of Representat ives. In a report accompany ing the revision of the Copyright Act in 1909 it stated: \"The enactment of copyright legislation by Congress under the terms of the Constitution is not based upon any natural right that the author has in his writings...but upon the ground that the welfare of the public will be served and progress of sc ience and useful arts will be promoted by secur ing to authors for limited per iods the exc lus ive rights to their writings... \" 1 1 Sony Corporation of America v. Universal Studios Inc., 464 U.S. 417 (U.S.S.C.), at 429. 9 Sony, at 429. 10 Sony, at 229. 1 1 H.R. Rep, No. 222, 60 t h Cong., 2d Sess., at 7 (1909) 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.\" 1 2 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\". 1 3 II. T H E E V O L U T I O N O F C O P Y R I G H T L A W 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. 1 4 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. 1 2 HR. Rep., ibid, at 7. 1 3 U.S. Cont. art. 1, supra, note 1. 1 4 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. 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.\" 1 5 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 protection in light of new and challenging technological phenomena. However, as with the technological innovation of the past, the delicate balance between the copyright holder and the public must be maintained. 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 P2P technology works. Generally, the interconnected quality of a P2P 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 FN 12. 10 a) M P 3 Techno log ies like Napster can be traced back to 1987, when the Moving Picture Experts Group set a standard file format for the storage of audio recordings in a digital format. Th is format is cal led M P E G - 3 , more commonly known today as M P 3 fi les, which are created by \"ripping\". Ripping software provides the means to copy a compact disk (CD) directly onto a computer 's hard drive. Th is p rocess c o m p r e s s e s the audio information on the C D into the M P 3 format. A n M P 3 compressed format al lows for easy and rapid transfer of the file from one computer to another through e-mail , file transfer protocol (FTP) , and particularly P 2 P networks. b) P 2 P The Napster code is based on a P 2 P model . Napster is not the so le P 2 P model , there are many models , some more pure than others. The more pure the P 2 P model , the more difficult to control in terms of locating the infringer for the purpose of enforcement. In Genera l , P 2 P technologies allow individual computer users to open their hard drives directly to one another, al lowing others to search for and swap fi les between computers without recourse to more traditional W e b da tabases and servers. The purity of the P 2 P network is related to how direct the connect ion between the computers sharing information is. Both Napster and 11 Gnutel la will be descr ibed to illustrate the evolution of P 2 P technologies, and highlight the difficulties the technology has raised for application of law. i. N A P S T E R Background The Napster code w a s conce ived and written by a 19-year-old named S h a w n Fann ing. Spawn ing from a d iscuss ion among his fr iends about the difficulty in finding M P 3 fi les on the Internet, Fanning was hit with the idea of a P 2 P network that would el iminate the tedious search online to find large libraries of music. He dropped out of col lege and dedicated all of his time to the development of the Napster code. By combining the features of existing programs, which include instant messag ing of Internet Re lay Chat , the file sharing funct ions of Microsoft Windows and the advanced searching and filtering capabil i t ies of var ious search eng ines he deve loped the Napster code. The Napster Technology Through the use of Napster 's Mus i cShare software, users can make their M P 3 fi les which are stored on their personal hard drives avai lable to be searched and downloaded by other Napster users; and a Napster user can search and download files from other Napster users via the Internet. Napster provides 1 2 technical support for the indexing and searching of M P 3 files through use of a central server. A l s o avai lable to Napster users, through the Napster central server are chat rooms, where members can meet to d iscuss common interests and information about its serv ice and spec ia l new artists program. Al l that is needed to gain a c c e s s to the Napster service, is to download the free Mus i cSha re software onto a computer. W h e n first using Napster, the user is required to provide a user name and password. It is a lso optional to provide information related to age, sex, and location. The user then has the option of select ing what fi les and directories to share with other Napster users. Napster users can select what directories and files to make avai lable to the Napster community, a user may also select not to share any files or provide a c c e s s to their hard drive to any other users. The Mus icShare software searches the users library and verif ies that the avai lable files are properly formatted, if the files meet the necessary format requirements the names of those M P 3 files are uploaded from the user 's computer to the central Napster server. The actual content of the fi les remains on the user 's computer, the only data that the Napster central server contains are the file names and names of the users. The users names and the names of their files become part of a collective directory which can then be searched by anyone using the Napster sys tem. The collective directory is fluid, it t racks users who are connected in real t ime, displaying only file n a m e s which are immediately access ib le . 13 A Napster user can locate M P 3 files in two ways. The first is through the Napster search function. To search for a M P 3 file avai lable from other users currently connected to the Napster service, the user enters either the name of a song or an artist as the object of the search . This request is then transmitted to a Napster server, which compares the request to the collective directory listing. The Napster server then compi les a list of currently avai lable M P 3 fi les, which correspond with the search request, and transmits the list to the requesting user. The Napster server does not search the content of the file, it only performs a text search of the file names and index. The second search mechan ism of the Napster sys tem is through its hotlist function. A Napster user can select other users and add them to their \"hotlist\". W h e n logged onto the Napster sys tem, the user can s e e if those individuals on their hotlist are a lso logged onto the sys tem. It the hotlist user is online, their particular library can be a c c e s s e d , sea rched and downloaded from. Aga in , the Napster server only stores the names of the fi les, the contents of the hotlisted user 's M P 3 library are not stored on the Napster sys tem. To transfer a file, the Napster user cl icks on the desired file and chooses to \"download\". The Napster server software obtains the Internet address of the requesting user and the Internet address of the user with the avai lable files (the host user). The Napster server then communicate to hot users Internet address to the requesting user. The requesting user's computer uses this information to establ ish a connect ion with the host user and downloads a copy of the contents 14 of the M P 3 fi les from one computer to the other over the Internet. The down loaded file can then be a c c e s s e d and l istened to through the use of the Napster software play function, or through other software. The file can also be transferred onto an audio C D if the user has a c c e s s to the equipment which is des igned for that purpose, commonly referred to as a \"burner\". The quality of the sound recording is only slightly d iminished as a result of the transferring between audio to digital to M P 3 format. ii. G N U T E L L A Background Just in Frankel adopted the P 2 P technology of Gnutel la from the Napster code. Frankel a lso wrote the original W inamp M P 3 player under his company Nullsoft. Nullsoft was then taken over by Amer i ca OnL ine (AOL) . Whi le working at A O L , Frankel recognized Napster 's s u c c e s s and briefly turned his mind to P 2 P technologies. He and a few fellow programmers created the original version of Gnutel la , changing the Napster P 2 P code by removing the need for a central server. S o o n after the initial development of Gnute l la , A O L shut down the project, but by that time the Gnutel la code was already spreading freely on the Internet. After the shut down of the Gnute l la project by A O L , G e n e K a n took over the development of the project. Kan deve loped a Unix version of the program, 15 and a lso created the first Gnutel la portal, where developers could share information and individuals could download the software. The Gnutella Technology Gnutel la is a lso a P 2 P technology, based on the Napster code. What makes Gnute l la noteworthy for this d iscuss ion is the fact that Gnutel la is a pure P 2 P network. The bas ic idea behind Gnutel la is the s a m e as Napster, to facilitate the trading and shar ing of information among users thorough a c c e s s to each users hard drive. Wha t makes the Gnutel la service different is the fact that it does not use a central server. The Gnute l la software can be downloaded from the Internet for free. The software then provides the user with the means to search for fi les. Gnute l la differs from Napster in how files are searched and located. W h e n using Gnute l la to locate a file, the user asks the network if a file exists through the software's search options. The request is then sent out to all the computers on the network. E a c h computer then seriates its internal drives and answers yes or no to the search request. W h e n the desired file is found, the user then connects directly with the computer that contains the desired file. Thus , unlike Napster, the Gnute l la software al lows the searching and downloading of files without the use of a central server. Th is dif ference is very important with respect to the i ssue of locating and policing a P 2 P network. 1 6 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 : N A P S T E R A S A N E X A M P L E O F T H E C H A L L E N G E S O F A P P L Y I N G T R A D I T I O N A L D O C T R I N E I. T H E N A P S T E R C A S E - I N T R O D U C T I O N The Napster c a s e raises various issues deal ing with the extension of law to P 2 P networks. I will illustrate that the application of law in the Napster c a s e is the result of an ongoing evolution of copyright law, in both the common law and legislated law, towards a result that is inconsistent with the \"ba lance\" of individual rights and publ ic rights intended by the U .S . founding fathers. Napster specif ical ly dea ls with contributory infringement, vicarious copyright infringement, the de fenses of fair use and substantial non-infringing use, the appl icat ion of the Aud io Home Record ing Act , and the Digital Mi l lennium Copyright Act . E a c h of these aspec ts of copyright law's application to P 2 P technologies will be d i scussed . Whi le the law can be appl ied to the Internet, in my view, the regulation of the Internet through the application of law should be reconsidered. 17 II. T H E N A P S T E R C A S E - B A C K G R O U N D a) t h e P J A A The R I A A 1 6 is accus ing Napster of contributory and vicarious infringement of their copyrights. The joint motion for a preliminary injunction by the R IAA and the represented record c o m p a n i e s 1 7 can be framed by the following statement: \"Hundreds of thousands of copyrighted works owned by plaintiffs are being infringed - reproduced and distributed - every day by users of defendant Napster 's sys tem - infringements that Napster actively enab les and encourages, and from which it directly benef i ts . \" 1 8 The R IAA c la imed that Napster was created with the intent of facilitating unlawful copying of M P 3 f i l es . 1 9 The R IAA also found, based on statistical analys is , that \"every single Napster user sampled was engaged in some copyright infringement whi le using the Napster se rv i ce . \" 2 0 T h e economic va lue gained by the Napster serv ice is found in its quantity of users. \"Those mill ions of users are critical to 1 6 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....\" 1 7 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 Co., Capitol Records, Inc. 1 3 United States District Court, Northern District of California - San Francisco Division, Case No. C-99-5183 MHP, Notice of Joint Motion and Joint Motion of Plaintiffs for Preliminary Injunction; Memorandum of Points and Authorities, July 26, 2000 at 1. 1 8 Napster -- they form the backbone of Napster 's bus iness and translate directly into current economic value. They already have attracted many mil l ions of dol lars in investment to Napster . \" 2 1 The plaintiffs claim that they are suffering from irreparable harm as a result of Napster 's enormous popularity. The R IAA further c la imed that Napster is attempting to usurp the plaintiffs ability to enter the onl ine mus ic market by giving away the plaintiffs property. Surveys conducted by the plaintiffs showed \"that significant numbers of Napster users report buying fewer C D s as a result of their downloading the mus ic for free on Naps te r . \" 2 2 A l so noted to be of importance by the R IAA and the plaintiff record compan ies is \"a devaluing of music, as Napster teaches a generat ion of mus ic consumers that artists and copyright owners do not deserve to be paid for their work, and that creative efforts are free for the tak ing . \" 2 3 b) Napster The Napster response highlighted a number quest ions regarding how this technological advance should be treated by the law. The impact of the Napster code and P2P technologies are commented on, stating \"Napster 's one-to-one file sharing and Internet directory serv ice has ignited a revolution. By enabl ing individual Internet users to a c c e s s and share data, Napster empowers individuals rather than central ized institutions to distribute information...the whole Internet 1 9 Notice of Joint Motion of Plaintiffs, Ibid, at 2. 2 0 Notice of Joint Motion of Plaintiffs, Ibid, at 3. 2 1 Notice of Joint Motion of Plaintiffs, Ibid, at 3. 2 2 Notice of Joint Motion of Plaintiffs, Ibid, at 4. See Jay Report pp.3, 15-20 19 could be re-architected by Napster- l ike technology.\"^ 4 This statement highlights s o m e of the wider implications of the Napster case which will be explored in more detail in the following chapters. Napster ra ised the issue that to be liable for either contributory or v icar ious liability of copyright infringement, there must be primary infr ingers. 2 5 For the plaintiffs to obtain injunctive relief, direct infringement must be s h o w n . 2 6 Napster argued that the Aud io Home Record ing Act , had been judicially interpreted to include the right of a consumer to create personal M P 3 files. In the Diamond27 c a s e , which will be d i scussed in more detail below, it w a s determined that \"the purpose of [the] Ac t is to ensure the right of consumers to make analog or digital audio recordings of copyrighted music for their private, noncommerc ia l use. . .protects all noncommerc ia l copying by consumers of digital and analog musica l record ings . \" 2 8 Napster a lso looked at the legislative history of the Aud io H o m e Record ing Ac t to determine the intent of congress and notes comments made by Senator DeConc in i who stated \"As new and improved technologies become avai lable, such clarification in the law become more important.\" 2 9 Napster a lso noted that the volume of copying has no bearing on the intent of the A H R A to protect users and al low copying and sharing for noncommerc ia l users. \"There is nothing in the language of the A H R A , or any precedent under it, 2 3 Notice of Joint Motion of Plaintiffs, Ibid, at 5. 2 4 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. 2 5 Opposition of Defendant Napster, ibid, at 1. 2 6 Opposition of Defendant Napster, ibid, at 5. 27 RIAA v. Diamond Multimedia Sys., /nc.,(1999), 180 F. 3d 1072 (9 t h Cir.). 2 8 Opposition of Defendant Napster, supra, note 24, at 5. 20 suggest ing that consumers ' noncommerc ia l copying is permissible if only a few consumers do it.\" 3 0 Napster used the United States Supreme Court decis ion of Sony31 to provide a defence to the c la ims of the R IAA and record company plaintiffs. Under the Sony dec is ion, \"as long as a technology is capab le of substantial non-infringing uses , a provider making a technology avai lable cannot be liable for copyright infringement, even where it may have encouraged infringing uses and the technology may in fact have been used for infringing act ivi ty.\" 3 2 Napster c la imed that under the Sony doctrine, \"it is enough to show a single potential non-infringing use of socia l or commerc ia l impor tance.\" 3 3 Napster users can use Napster 's software and serv ices in ways that fall under the definition of \"fair u s e \" 3 4 . Napster c la imed that the bas ic fact that users of the Napster serv ice are engaged in noncommerc ia l activities \"weighs strongly in favour of finding their 2 9 Opposition of Defendant Napster, ibid, at 6. 3 0 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. 3 2 Opposition of Defendant Napster, supra, note 24, at 8. 3 3 Opposition of Defendant Napster, ibid, at 9. 3 4 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. 21 use as fair.' Examp les of ways Napster can be used to constitute a fair use include s p a c e shi f t ing 3 6 and samp l i ng 3 7 . III. I N T E R P R E T A T I O N O F C O P Y R I G H T L A W The issues ra ised in the Napster case provide a framework to demonstrate the interpretation of copyright law with respect to new technologies. Wh i le it will be shown that copyright law is appl icable to the Internet, I will argue that caution should be exerc ised in applying the law. Further, it is my posit ion that the intent of copyright protection has been lost and misinterpreted in the Napster c a s e and the subsequent action by the United States Congress . The i ssues ra ised in Napster pertain to injunctive relief. Th is is important because the dec is ion is not conclus ive, however it is illustrative of the direction that the courts are taking when applying copyright doctrine to the Internet. a) Pr imary Infringement Napster ra ises the issue that to be liable for either contributory or v icar ious liability of copyright infringement, there must be primary infringers. Napster argues that its users are not infringing copyright, that \"noncommerc ia l shar ing of Opposition of Defendant Napster, supra, note 24 at 11. 3 6 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\". 3 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. 22 music among individuals is common, legal, and a c c e p t e d . \" 3 8 For the plaintiffs to obtain injunctive relief, they must show that Napster users, by creating and shar ing M P 3 fi les, have engaged in direct infringement of the plaintiffs copyr ight . 3 9 Th is is an important factor, as without the direct infringer there can be no related liability. Direct liability by Napster users has wider implications for all individuals who use P 2 P technology for trading and shar ing information. Thus , the dec is ion that Napster users are directly liable for infringement can affect many Internet users. The owner of a copyright has the exclusive rights to do and to authorize any of the fol lowing: (1) to reproduce the copyrighted work in cop ies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sa le or other transfer of ownership, or by rental, lease, or lending; (4) in the c a s e of literary, musica l , dramatic, and choreographic works, pantomimes, and motion pictures and other audiov isual works, to perform the copyrighted work publicly; (5) in the case of literary, musica l , dramatic, and choreographic works, pantomimes, and pictorial, graphics, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio t ransmiss ion . 4 0 Opposition of Defendant Napster, supra, note 24, at 1. Opposition of Defendant Napster, ibid, at 5. 17 U.S.C. §106 23 W h e n claiming infringement, there are two fundamental e lements to the Plaintiffs case . There must be ownership of the copyright by the plaintiff and copying by the defendant. Ownersh ip breaks down into the following parts: (1) originality in the author; (2) copyrightability of the subject matter; (3) ci t izenship status of the author, such as to permit a claim of copyright; (4) compl iance with appl icable statutory formalit ies; and (5) if the plaintiff is not the author, a transfer of the rights or other relationship between the author and the plaintiff so as to constitute the plaintiff the valid copyright c la imant . 4 1 There is no doubt that the R I A A and other represented parties are the owners of copyright, as well it cannot be argued that Napster users are not copying the copyright protected works. However, it is quest ionable if this copying is actually infringing upon the plaintiff's copyrights. With respect to the element of copying, there are two separate components which underl ie proof of copying. First, there is the question of fact as to whether the defendant in creating its work, used the plaintiff's material as a model , template, or even inspiration. The second component is whether s u c h copying is act ionable, i.e. if the defendant 's work is substantial ly similar to the plaintiffs work . 4 2 4 1 Nimmer, supra, note 2, at ss13.01[A]. 4 2 Nimmer, ibid, at §13.01[B] 24 The R I A A c la ims that there is no quest ion as to the direct infringement of Napster users. Napster on the other hand c la ims that through the appl icat ion of the de fence of fair use, there is no direct copyright infringement by its users . b) Fair U s e Napster relied heavily on the defence of fair use. A n important factor to keep in mind is that Napster argued the defence of fair use on behalf of it users, the a l leged direct infringers. There can be no third-party liability where the a l leged direct infringers are engaged in fair use. The application of fair use by the court in Napster is ev idence of the imbalance that has been created through the interpretation and re-interpretation of this defence. In particular, the chal lenge of applying law to technological innovation like P 2 P networks has created problems with the interpretation and subsequent application of the law. The intent of the constitutional foundation of copyright protection has been eroded and narrowed its appl icat ion. A fundamenta l factor of considerat ion is the fact that Napster facil i tates the transfer and shar ing of an extremely high volume. If the issue only occurred on a more individual level, i.e. friend A sending friend B a file, there would be no reason to write this thesis because the fair use doctrine would apply. However , the magni tude of the volume of sharing and transfers that takes p lace creates an issue, not drastical ly unlike any other issue that copyright law has had to adjust 25 to in the past, but new in the s e n s e that it occurs at high speeds at an exponential ly growing volume, and across borders, making it a lmost undetectable and impossible to enforce at an individual level. T h e s e inherent factors s temming from the characterist ics of the Internet are what create difficulty in the expans ion of traditional doctrine to the digital realm. The interpretation of the fair use doctrine in Napster demonstrates this difficulty. i. Background The defence of fair use was a common law defence, intended to al low the courts to avoid the appl icat ion of copyright law in a way that would create an imbalance of rights. The fair use defence al lows \"courts to avoid rigid appl icat ion of the copyright statute when, on occas ion , it would stifle the very creativity which that law is des igned to foster . \" 4 3 The Copyright Ac t of 1976 exp ressed statutory recognit ion of the defence of fair u s e . 4 4 § 107 Limitations on exclusive rights: Fair use Notwithstanding the provisions of sect ion 1 0 6 4 5 and 106A, the fair use of a copyrighted work, including such use by reproduction in cop ies or phonorecords or by any other means specif ied by that sect ion, for purposes such as crit icism, comment, news reporting teaching (including multiple copies for c lassroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include -43 Iowa State Univ. Research Found., Inc. v. American Broadcasting Cos.,(1980) 621 F.2d 57 (2d Cir); Campbell v. Acuff-Rose Music, Inc., supra, note 34, at 577. 4 4 17 U.S.C. § 107 4 5 17 U.S.C. §106 and 106A address the exclusive rights in copyrighted works, and the rights of certain authors to attribution and integrity, respectively. 26 (1) the purpose and character of the use, including whether such use is of a commercia l nature or is for nonprofit educat ional purposes ; (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. The fact that a work is unpubl ished shall not itself bar a finding of fair use if such finding is made upon considerat ion of all the above factors. The legislative intent behind the enactment of the fair use provision was \" intended to restate the present judicial doctrine of fair use, not to change, narrow, or enlarge it in any w a y . \" 4 6 The House Report accompany ing that amendment stated that the fair use doctrine is an \"equitable rule of reason\" , and as such there is no real definition of the concept, thus each case raising the quest ion of fair use must be decided on its own fac t s . 4 7 The Copyright Act lists a number of factors to be considered when assess ing whether a particular use of a copyright protected work should be cons idered to be a fair use. Sect ion 107 does not define fair use, it does not provide a rule that can be appl ied in the determination of whether a particular use is \"fair\". The reasons behind the provision of factors, rather than a strict rule or definition, are related to the need to maintain flexibility in the application of copyright law to particular situations. The factors contained in Sect ion 107 are an example of 46 Harper & Row, Publishers, Inc. v. National Enters.,(1985), 471 U.S. 539 at 549. 27 what should be considered when determining fair use, the factors listed are preceded by the words \"shal l include\", and the use of the term \" including\" is def ined in §101 as \"illustrative and not l imitative\". 4 8 T h e s e factors are not exhaus t i ve . 4 9 In Campbell v. Acuff-Rose Music, Inc.50 the court reiterates the factors to be cons idered as stated in §107 and further expla ins that these factors are \"to be explored, and the results weighed together, in light of the purposes of copyr ight\" . 5 1 With respect to the factor of \"purpose and character of use\" , Napster submits that the \"non-commerc ia l nature of Napster 's users ' activities weighs strongly in favor of a finding their use is fair .\" 5 2 ii. Interpretation The fair use provision has been interpreted by the court to include \" space shifting\" and \"sampl ing\" . S p a c e shifting is the transfer of the content of a C D into M P 3 format. Sampl ing , is the ability of a user to listen to a song through the use of Napster serv ices prior to purchasing, or to aid in determining whether to purchase the C D , hence to \"sample\" the work. The Ninth Circuit has held that s p a c e shifting or works already owned constitutes a fair use, as such use is \"paradigmat ic noncommerc ia l personal u s e \" . 5 3 * ' H.R. Rep. No. 94-1476, p 66 (1976). 4 8 Nimmer, at § 13.05[A]. 17 U.S.C. §101 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. 51 Campbell, ibid, at 578. 5 2 Opposition of Defendant Napster, supra, note 24, at 11. 28 The court rejected Napster ' argument that its users are engaging in fair use on the bas is that it is noncommerc ia l personal use. Beeze r J , for the 9 t h Circuit Court of A p p e a l stated that \"direct economic benefit is not required to demonstrate a commerc ia l use . Rather, repeated and exploitative copying of copyrighted works, even if the copies are not offered for sa le , may constitute a commerc ia l u s e . \" 5 4 The court relied on Worldwide Church of God v. Philadelphia Church of God55, where it was held that a church that copied religious text for its members \"unquest ionably profit[ed]\" from the unauthorized \"distribution and use of [the text] without having to account to the copyright holder.\" The Napster court further stated that \"commercia l use is demonstrated by showing that repeated and exploitative unauthorized copies of copyrighted works were made to save the expense of purchasing authorized c o p i e s . \" 5 6 There is ev idence that the conclusion of the 9 t h circuit court is quest ionable. The P 2 P serv ice for many users is a method to explore and gain a c c e s s to new genres and niches of music. On this bas is it does perform a \"sampl ing\" serv ice, where users can listen, explore, and then determine whether they would like to purchase the C D . In defence, Napster argued that the increase in copying to M P 3 format is a sign of the displacement of the use of the audio casset te for the s a m e purposes. Napster a lso found in its surveys that those who 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 t h Cir. 2000) Napster, supra, note 54, at para 24. 29 using Napster buy as much or more mus ic than previously. With respect to the use of Napster for sample songs, Napster c la imed that such a use is ana logous to visiting a listening station or borrowing a C D from a friend, to dec ide whether to purchase. There is ev idence that this does in fact occur, \"[o]ver 84 % of Napster users report downloading mus ic files to see if they want to buy the work . \" 5 8 c) T h e S o n y D o c t r i n e A key judicial interpretation of copyright law and its application to new technology is Sony Corp. of America v. Universal Studios.59 The Sony case is instrumental to my d iscuss ion of the protection of copyright in a digital age. Sony dealt with many of the s a m e issues which the Napster case did. It provides a good example of the extension of copyright principles to a new technology, which at the onset s e e m s to be a major impediment to the protection of copyrights, but in turn deve lops a new area of commerce as well as the ability of the public to enjoy the copyright protected works. The Sony Court explicitly interpreted copyright law to maintain the del icate ba lance between the monopoly right that copyright grants to the holder, and the intent of that protection to be in the public interest. This line of reasoning should have a lso been a fundamental considerat ion in the Napster case . Sony is the 5 7 Opposition of Defendant Napster, supra, note 24, at 12. 5 8 Opposition of Defendant Napster, ibid, at 13. 30 first major judicial decis ion address ing the chal lenges which technology p laces on the law. At its most simplistic, the Supreme Court of the United States in Sony held that the sale of home videotape recorders do not constitute contributory infringement of television program copyrights. In Sony, Universal Studios brought action against Sony Corporat ion alleging that s o m e individuals had used the Betamax video tape recorder to record some of its copyrighted works which had been exhibited on commercia l ly sponsored television. Universal Studios contended that these individuals had infringed their copyright. Furthermore, Universal Studios maintained that Sony Corp . was liable for copyright infringement al legedly committed by Betamax consumers because of the market ing of the Betamax. There w a s no relief sought against any of the Be tamax consumers , instead damages and equitable account ing of profits from Sony Corp. , as well as an injunction against the manufacture and marketing of the Betamax was sought. After reviewing the law on contributory and vicarious infringement of copyright, the Sup reme Court in Sony, looked to Patent law for an analogy and extended the \"staple article of commerce doctr ine\" to copyright law, and defined \"fair use\". The Patent Ac t express ly def ines the concept of infringement and the concept of contributory infringement. With respect to contributory infringement, it is conf ined to the knowledge of a sa le of a component especia l ly made for use in connect ion with a product that might be used in connect ion with other patents. 59 Sony, supra, note 8. 3 1 The Ac t a lso express ly provides that the sa le of a \"staple article or commodi ty of commerce suitable for substantial noninfringing use\" is not contributory i n f r i ngement 6 0 The staple article of commerce doctrine directs that when there is a charge of contributory infr ingement 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 a c c e s s to that article of commerce . A finding of contributory infr ingement would give the patentee effective control over the sa le of that item, effectively holding that the disputed article is within the monopoly granted to the pa ten tee . 6 1 Thus , contributory infringement c a s e s deal ing with patents have a lways 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 . 6 2 With respect to the application of the article of commerce doctrine and copyright law the court stated: W e recognize there are substantial dif ferences between the patent and copyright laws. But in both areas the contributory infringement doctr ine is grounded on the recognition that adequate protection of a monopoly may require the courts to look beyond actual duplication of a device or publication to the products or activities that make such duplication possib le. The staple article of commerce doctrine must strike a ba lance between a copyright holder's legitimate demand for effective -- not merely symbol ic --protection of the statutory monopoly, and the rights of others freely to engage in substantial ly unrelated areas of commerce . Accordingly , the sa le of copying equipment, like the sa le of other 35 U.S.C. §271(c) . Sony, supra, note 8, at 441. Sony, ibid., at 441. 32 articles of commerce , does not constitute contributory infringement if the product is widely used for legitimate, unobject ionable purposes. Indeed, it need merely be capable of substant ial noninfringing u s e s . 6 3 The court then found that the potential use of the Betamax for private, noncommerc ia l \"time shifting\" in the home, satisfied the substantial noninfringing use required for the article of commerce doctrine. \"It does so both (A) because respondents have no right to prevent other copyright holders from authorizing it for their programs, and (B) because the District Court 's factual f indings reveal that even the unauthorized home time-shifting of respondents ' programs is legitimate fair u s e . \" 6 4 The inclusion of the market as a factor in determining fair use is recognit ion of the intent of copyright to create incentives for creative effort. The noncommerc ia l use of a work that is copyright protected may have the effect of impairing the holder of the copyright from the rewards that are intended by such protection. However , \" a use that has no demonstrable effect upon the potential market, for, or the value of, the copyrighted work need not be prohibited in order to protect the author's incentive to create. The prohibition of such noncommerc ia l uses would merely inhibit a c c e s s to ideas without any countervail ing benef i t . \" 6 5 With respect to Napster, this issue is debatable. On the individual level of the Napster user, the downloading of a song does not s e e m to result in a commerc ia l 63 Sony, ibid., at 442. 6 4 Sony, ibid., at 442. 65 Sony, ibid., at 450-451. 33 use of the P 2 P network. However, when there are 60 million users downloading M P 3 fi les, there may be commerc ia l interests to consider. Al though this is the case , when consider ing the fair use defence, the question to be addressed is that of the individual user because it is the individual user who must be liable for primary infringement to give way to the ability to argue third party liability. At the individual level, the argument of commerc ia l interests is difficult to rationalize. W h e n determining fair use the need to ba lance the interests at play is a key factor. \"Cong ress has plainly instructed us that fair use analys is cal ls for a sensit ive balancing of interests. The distinction between \"product ive\" and \"unproduct ive\" uses may be helpful in calibrating the balance, but it cannot be wholly determinat ive.\" 6 6 The use of the Betamax to copy a program may have productive and unproductive uses and effects. One to be cons idered is the use of the Be tamax for t ime shifting, which may result in a benefit of increased viewer a c c e s s . The Sony case is a good example of the application of the Copyright Ac t to a new technology through considerat ion of the intent of copyright protection and its subsequent interpretation through statute and case law. In Sony the court appl ied doctrine to the new technology of the video casset te recorder in a way that the interests at play remained ba lanced alongside the public interest in technological innovation. This type of reasoning is consistent with the appl icat ion Sony, ibid., a f455. 34 of copyright to protect and balance the interests of the creator and the public, and should have been fol lowed in the Napster case . d) Interpretation by the Cour t in Napster The District Court rejected the examples of fair use provided in defence by Napster . \"The court f inds that space shifting accounts for a de minimis portion of Napster use and is not a significant aspect of defendant 's b u s i n e s s . \" 6 7 The Court found that, as a result of Napster C D purchases among col lege students are likely to decl ine. The Court cons idered the ev idence submitted by Napster that C D sa les actually increase to be unre l iab le. 6 8 There was conflicting ev idence produced by Napster and the R IAA to demonstrate the effect of Napster on the market. R e s e a r c h was performed by a number of professionals, and the Court p laced more faith on the R IAA research. It may be true that C D purchases among col lege students are likely to dec rease . However a number other factors should a lso be cons idered. The fact C D purchases are decl ining cannot wholly be attributed to Napster. W h e n assess ing consumer cho ices, other i ssues like quality, t rends, and economics must a lso be cons idered. Further, this reasoning diverges from that establ ished by the Sup reme Court in Sony. A n analogy can be made with Napster and the Betamax, in terms of the fundamental characterist ics that the new technology p o s s e s s e s and the 67 Sony, ibid., at 7. 6 8 Sony, ibid, at 15. 35 chal lenge that they pose. In Sony the court looked beyond the immediate effects of the technology to s e e the possib le long-term benefits that the technology could bring to both copyright holders and consumers . If Sony had been dec ided in reverse, the V C R and the video industry may have been non existent. The technology that Universal Studios attempted to quash turned into a fundamental source of capital . Napster should be regarded in the same way. The Court a lso makes reference to the fact that the plaintiffs are vulnerable to Napster in that it has the intention of entering into the digital download market, and that downloading on Napster may a lso disrupt the plaintiffs' promotional efforts because it does not involve any restr ict ions. 6 9 In some respects this is recognit ion by the Court of the potential for P 2 P technology to open new markets for distribution and consumpt ion. However, the effect of the dec is ion restricts who can participate in the new market, creating an imbalance of interests and competit ion. T h e s e interests will be d iscussed in depth in the following chapter. e) Th i rd Party Liabil ity - Contr ibutory a n d V i c a r i o u s Infr ingement The R IAA maintained that the law of contributory and vicar ious infringement was just as appl icable to Napster as it is to any other company, \"and the mere fact that [infringement is] clothed in the exotic webbing of the Internet does not d isguise its i l legal i ty.\" 7 0 The Internet creates an environment that is constantly 6 9 S o n y , ibid, at 16-17. 7 0 Joint Mot ion of Plainti f fs, supra , note 18, at 4. 3 6 changing and uncertain, the application of third party liability to Napster ra ises concerns of the over extension of liability. Background W h e n the Copyright Act was legislated into existence, there was no provision deal ing with contributory infringement. Contributory infringement ar ises from the intent of Cong ress to allow copyright to be inf luenced by the parallel field of patent law. 7 1 The Supreme Court in Sony states: The absence of such express language in copyright statute does not preclude the imposition of liability for copyright infringement on certain parties who have not themselves engaged in the infringing activity. For vicarious liability is imposed in virtually all a reas of the law, and the concept of contributory infringement is merely a spec ies of the broader problem of identifying the c i rcumstances in which it is just to hold one individual accountable for the act ions of another . 7 2 The Patent Act express ly def ines the concept of infringement and the concept of contributory infringement. The concept of contributory infringement is conf ined to the knowledge of a sa le of a component especia l ly made for use in connect ion with a product that might be used in connect ion with other patents. Sony, supra, note 8, at 435. Sony, ibid, at 435. 37 Contributory Infringement There are two types of contributory infringement. First, personal conduct that forms part of or furthers the infringement, and second , contribution of machinery or goods that provide the means to infringe. 1. participation in the infringement A party \"who, with knowledge of the infringing activity, induces, causes , or materially contributes to the infringing conduct of another, may be held liable as a 'contributory infr inger'.\" 7 3 Thus, if there is knowledge that the work in quest ion constitutes an infringement, then one who causes another to infringe will himself be liable as an infr inger. 7 4 A contributory infringer has been descr ibed by the Supreme Court as one who \"was in a position to control the use of copyrighted works by others and had authorized the use without permiss ion from the copyright owner . \" 7 5 2. providing the means to infringe General ly , one who provides a copyrighted work to another, who then wrongfully cop ies from that work may be liable as a contributory infringer. However, if Gershwin Publishing Corp. v. Columbia Artists Management, Inc., (1971), 443 F.2d 1159 at 1162 (2 n d Cir.). / 7 4 Nimmer, supra, note 2, at §12.04[A][2]. 75 Sony, supra, note 8, at 437. 3 8 during this p rocess there was a lack of knowledge regarding the other party's intended illegitimate use there may be no liabil i ty. 7 6 Sony The issue of contributory infringement was important in Sony, because if the plaintiffs had been successfu l in their c laim that off-the-air v ideo taping for private use constituted copyright infringement, the monumenta l problems of enforcement against individual home users would have rendered such a decis ion largely mean ing less , un less the manufacturers and sel lers of the mach ines and tapes required to engage in such home taping were held liable as contributory inf r ingers. 7 7 Vicarious Liability Vicar ious liability exists when two elements are present. First, the defendant must posses the right and ability to superv ise the infringing conduct. S e c o n d , that defendant must have \"an obvious and direct f inancial interest in the exploitation of copyrighted materials\". T h e s e two elements are independent of one another and must be demonstrated to render the defendant vicariously l iab le . 7 8 Nimmer, supra, note 2, at §12.04[A][2][b]. Nimmer, supra, note 2, at §12.04[A][2][b]. 39 The reasoning behind the provision for vicarious liability ar ises from the context of landlords of premises where infringement takes place. The House Report from the 1909 enactment expla ins the codification of that c a s e law: The committee has considered and rejected an amendment to this sect ion intended to exempt the proprietors of an establ ishment, s u c h as a bal l room or night club, from liability for copyright infringement committed by an independent contractor, such as an orchestra leader. A wel l -establ ished principle of copyright law is that a person who violates any of the exclus ive rights of the copyright owner is an infringer, including persons who can be cons idered related or v icar ious infringers. To be held a related or v icar ious infringer in the case of performing rights, a defendant must either actively operate or superv ise the operation of the p lace wherein the performances occur, or control the content of the infringing program, and expect commerc ia l gain from the operation and either direct or indirect benefit from the infringing per formance. The committee has dec ided that no justification exists for changing existing law, and causing a significant erosion of the public performing r ight. 7 9 With respect to the claims that Sony was liable for contributory and vicar ious copyright infringement, the Supreme Court found no basis for such al legations. A \"contributory infringer\" must be in a position to control the use of the copyrighted works by others. \"The only contact between Sony and the users of the Betamax that is d isc losed by this record occurred at the moment of s a l e \" . 8 0 If S o n y were to be held liable for vicarious infringement it would have to be on the bas is that \"it sold equipment with constructive knowledge of the fact that its customers may use that equipment to make unauthorized cop ies 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.\" 8 1 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.8 2 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. 8 3 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. 8 4 81 Sony, ibid, at 439. 8 2 35 U.S.C. §271(c). 83 Sony, supra, note 8, at 441. 84 Sony, ibid., at 441. 41 With respect to the application of the article of commerce doctrine and copyright law the court stated: W e recognize there are substantial differences between the patent and copyright laws. But in both areas the contributory infringement doctrine is grounded on the recognition that adequate protection of a monopoly may require the courts to look beyond actual duplication of a device or publication to the products or activities that make such duplication possible. The staple article of commerce doctrine must strike a balance between a copyright holder's legitimate demand for effective - not merely symbol ic --protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce . Accordingly, the sa le of copying equipment, like the sa le of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing u se s . 8 5 Contributory Infringement and Napster In response to the plaintiffs' c la ims of contributory infringement, Napster stated that the law did not apply. \"The law is clear that merely providing a one-to-one file sharing technology with a real-time searchable index does not constitute third-part infringement. If this were infringement, then an ISP could be found liable simply for permitting users to search for and transfer files, where the ISP was shown to have an general ized knowledge that many of those works may be copyr ighted.\" 8 6 Napster c la imed that it had no specif ic knowledge that any particular use of a file through its system was 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.\" 8 7 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.\" 8 8 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 lse. \" 8 9 A study performed by Professor Ingram Ok in 9 0 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 B / Opposition of Defendant Napster, ibid, at 18-19. 8 8 Opposition of Defendant Napster, ibid, at 19. 8 9 Opposition of Defendant Napster, ibid, at 8. 9 0 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 MP3 music files actually being downloaded by Napster users are infringing? See Opposition of Defendant Napster, ibid, at 9. 9 1 Opposition of Defendant Napster, ibid, at 9. 43 to Napster. S h a w n Fanning, the Napster creator testified that the primary reason for developing the Napster code was to \"put an end to the frustration of his col lege roommate in finding and downloading M P 3 music f i les . \" 9 2 Th is posit ion is further reaffirmed in documentat ion of the development of the Napster bus iness plan through statements made by Napster co-founder S e a n Parker writing to co-founder John Fanning. The document specif ical ly stated that \"Use rs will understand that they are improving their exper ience by providing information about their tastes without linking that information to a name or address or other sensi t ive data that might endanger them (especial ly s ince they are exchang ing pirated mus i c ) . \" 9 3 The claim of Napster having knowledge of the infringing activity which occurs through the use of its service is further supported by the plaintiffs through c la ims that Napster execut ives have used the service themselves to download pirated m u s i c . 9 4 Furthermore, during an e-mail exchange between Napster co-founder S h a w n Fann ing and one of Napster 's chat room moderators comments were made about admitting knowledge of \" i l legal\" M P 3 files being transferred through the use of Napster. Specif ical ly, after one Napster moderator wrote to a user referring to Napster being about \"free music\", another moderator sent an e-mai l to S h a w n Fann ing asking him what was the most appropriate thing to do. The e-mai l stated \"admitting that we know Napster is used for the transfer of i l legal M P 3 files might not be the best thing to do. . . . I mean. . .obv ious ly people are going to 9 2 Opposition of Defendant Napster, ibid, at 9. 9 3 Opposition of Defendant Napster, ibid, at 10. 44 use it for that purpose.. .but ... we might not want to actually say we know that . . .*shrug* just semant ics I guess. . .but eh . . . . being sued can be a bi tch.. .\" In response S h a w n Fanning replied that it was a good point that moderators should \"try to avoid d iscuss ions similar to this. . . .you should all be aware of what you s a y \" . 9 5 T h e plaintiffs a lso submitted that Napster materially contributed to the infringements that occur on its sys tem. \"Napster provides the location, environment, and support (including software, servers, indexing, search functions, moderators, and staff) that enable users to a c c e s s each others' computer hard drives so that the infringements can take p l a c e . \" 9 6 Th is argument fol lows the line of reasoning that without the Napster support and software, the infr ingements would not occur. Napster provides the means of which these widespread infringements can occur. Vicarious Liability and Napster With respect to the Plaintiffs c la ims that Napster is vicariously liable for copyright infringement of its users (if it is cons idered to be an infringement), it was argued that both the right and the ability to control the infringing activity and a direct f inancial interest in the infringing activities must be found. Napster defended itself by stating that it was unable to actually control what goes on through the 9 4 Opposition of Defendant Napster, ibid, at 13. 9 5 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. As 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.\" 9 7 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.\" 9 8 Thus, asking Napster to supervise and police its service to exclude every copyrighted file where authorization has not been given would be impossible. \"Napster cannot identify all the copyrighted music in the universe. 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.\" 9 9 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 Web.\" 1 0 0 M 0 Opposition of Defendant Napster, ibid, at 16. 9 7 Opposition of Defendant Napster, ibid, at 20. 9 8 Opposition of Defendant Napster, ibid, at 20. 9 9 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. 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.\" 1 0 1 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. 1 0 2 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.\" 1 0 3 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 Opposition of Defendant Napster, ibid, at 18. 1 0 2 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 cause. \" 1 0 4 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. 1 0 5 Court 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. 1 0 4 Opposition of Defendant Napster, ibid, at 20-21, clause required by users to agree to upon becoming a member of the Napster community. 1 0 5 Opposition of Defendant Napster, ibid, at 21. 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 t h Circuit Court of Appeal, corrected the reasoning of the District Court in part. The 9 t h Circuit stated \"...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\". 1 0 7 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 The prel iminary injunction was granted to the plaintiffs. Specif ical ly the District Court stated that the \"Defendant is hereby preliminarily E N J O I N E D from engaging in or facilitating others in copying, downloading, uploading, transmitting, or distributing plaintiffs' copyrighted musica l composi t ions and sound recordings, protected by either federal or state law, without exp ress permiss ion of the rights owne r . \" 1 1 0 After this dec is ion c a m e down, Napster filed successfu l ly for a stay while waiting for appea l . The effect of this injunction would shut down the Napster serv ice. It can be argued that the enforcement of the injunction would in effect establ ish a precedent that would shut down the use of any P2P type serv ice or network. In my view, the effect of the reasoning in the District Court is inconsistent with the ba lance of copyright interests. By protecting the monopoly rights of the RIAA, a technology is being controlled to the detriment of the public interest. It is noted that the injunction granted by the District Court was deemed to be too narrow on appea l , however the effect of the injunction is ultimately the s a m e . f) T h e A H R A Through c a s e law, Napster argued that the A H R A has been interpreted to include the right of a consumer to create personal M P 3 fi les. In the Diamond111 c a s e it was determined that \"the purpose of [the] Act is to ensure the right of 109 Napster, ibid, at 38. 110 Napster, ibid, at 39. 50 consumers to make analog or digital audio recordings of copyrighted mus ic for their private, noncommerc ia l use. . .protects all noncommerc ia l copying by consumers of digital and analog musica l record ings . \" 1 1 2 Napster a lso looked at the legislative history of the A H R A to determine the intent of congress and notes comments made by Senator DeConc in i who stated \" A s new and improved technolog ies become avai lable, such clarif ication in the law b e c o m e more important . \" 1 1 3 Napster a lso noted that the volume of copying has no bearing on the intent of the A H R A to protect users and al low copying and shar ing for noncommerc ia l users. \"There is nothing in the language of the A H R A , or any precedent under it, suggest ing that consumers ' noncommerc ia l copying is permissib le if only a few consumers do it.\" 1 1 4 T h e Sony dec is ion provided the catalyst for the reconsiderat ion and interpretation of copyright by Cong ress , leading to the enactment of the Aud io H o m e Record ing Ac t of 1992, ( A H R A ) 1 1 5 which was added as Chapter 10 to Title 17. T h e Sony c a s e was ev idence of the need for Cong ress to address the changing needs of copyright in light of technology. The bas ic methodology that the A H R A was founded upon is to provide \"an equitable solution that promises everyone a share in the benefits of the digital 111 Diamond, supra, note 27. 112 Diamond, ibid, at 5. 113 Diamond, ibid, at 6. 114 Diamond, ibid, at 8. 1 1 5 Audio Home Recording Act of Oct. 28, 1992, Pub. L. No. 102-563. 5 1 audio revo lu t ion\" . 1 1 6 It appl ies to all technologies, such as Digital audio Tape , Digital C o m p a c t Casse t tes , and M i n i - D i s c s . 1 1 7 The central purpose of the A H R A is to resolve this debate [over home copying], by creating an a tmosphere of certainty to pave the way for the development and availability to consumers of new digital recording technologies and new mus ica l reco rd ings . 1 1 8 The A H R A ach ieves three goals. First, it a l lows manufactures to sel l digital audio recorders and audiophi les to use them for home taping, subject to regulated boundar ies. In genera l , the law implements a copying control sys tem that al lows the original works to be copied without limit but prevents copying of cop ies . S e c o n d , the A H R A compensa tes the affected parties for revenue they might lose due to home taping, it est imates funds to which manufactures and importers of digital audio recorders and tapes must contribute, and that will be distributed to recording artists and copyright owners. Third, it affords immunity to home tapers who m a k e cop ies without direct or indirect commerc ia l motivation. Th is immunity appl ies to both digital and analog reco rd ings . 1 1 9 T h e A H R A c o m e s from a history of debate and quest ion about the status of home taping for private use. Th is quest ion was particularly concerned with whether home copying implicates the copyright owner's reproduction right and whether such copying is defensible as fair use. 1 1 6 S. Rep. (AHRA), p 10. 1 1 7 H. Rep. (AHRA), p. 12. 1 1 8 S. Rep. (AHRA), p 51. 1 1 9 Nimmer, supra, note 2, at § 8B.01[C], 52 The legislative intent behind the 1976 amendment to the Copyright Act , and the inclusion of the common law defence of fair use in the statute provides the bas is on which the Sony c a s e was determined, as well as the enactment of the A H R A . The House Report contained the following: In approving the creation of a limited copyright in sound recordings it is the intention of the Commit tee that this limited copyright not grant any broader rights than are accorded to other copyright proprietors under the existing title 17. Specif ical ly, it is not the intention of the Commit tee to restrain the home recording, from broadcasts or from tapes or records, of recorded per formances, where the home recording is for private use and with no purpose of reproducing or otherwise capital izing commercia l ly on it. This pract ice is common and unrestrained today, and the record producers and performers would be in no different posit ion from that of the owners of copyright in recorded musica l composi t ions 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 t h Cir. 1999), it was determined that the purpose of the A H R A is \"to ensure the right of consumers to make analog or digital audio recordings of copyrighted mus ic for their private, non commerc ia l use. . .protects all noncommerc ia l copying by consumers of digital and analog musica l record ings . \" 1 2 1 This reasoning is consistent with the intent of copyright protection. In Diamond, the appel lants brought an action to enjoin the manufacture and distribution of a dev ice, al leging that it did not meet the requirements for digital audio recording dev ices under the H.R. Rep. No. 487, 92d Cong., 1s t Sess. 7. Diamond, supra, note 27, at 1079. 53 A H R A . T h e appel lants a lso sought payment of the royalt ies owned by the appel lee as the manufacturer and distributor of the device. The court held that because the dev ice could not make copies from the t ransmiss ions, but instead, could only make cop ies from a computer hard drive, it was not a digital audio recording dev ice and therefore not within the ambit of the Act. The defendants in Diamond manufactured and distributed a dev ice cal led the Rio. R io could store approximately one hour of digital music on its f lash memory card where digital audio files can be downloaded and played. The actual dev ice could not make dupl icates of any digital audio file it stores, nor could it transfer or upload a file to a computer or the Internet. T h e R I A A brought suit on the bas is that the manufacture and distribution of the R io did not meet the requirements under the A H R A because it does not employ a Ser ia l Copyr ight Management Sys tem ( S C M S ) , which receives, sends , and acts upon information about the generation and copyright status of the fi les it p lays, (see §1001) The R IAA also sought payment of royalties owed by D iamond as the manufacturer and distributor of a digital audio recording device, (ss 1003). The Diamond dec is ion is instrumental in setting the standard and the bas is for the interpretation and application of the A H R A . The Court provided reasoning to establ ish that under the c i rcumstances the Rio is not a \"digital audio recording 54 dev ice\" under the Act. A \"digital audio recording dev ice\" is def ined by the A H R A §1001(3) as : A n y mach ine or device or a type commonly distributed to individuals for use by individuals, whether or not included with or part of s o m e other machine or device, the digital recording function of which is des igned or marketed for the primary purpose of, and that is capab le of, making a digital audio copied recording for private use . . . A \"digital audio copied recording\" is defined a s \" in §1001(1) of the A H R A : A reproduction in a digital recording format of a digital musica l recording, whether that reproduction is made directly from another digital musica l recording or indirectly from a t ransmission A \"digital mus ica l recording\" is defined in §1001(5)(a) of the A H R A : A material object (i) in which are f ixed, in a digital recording format, only sounds , and material, statements, or instructions incidental to those fixed sounds, if any, and (ii) from which the sounds and material can be perce ived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Thus , to be a digital audio recording device, the Rio must be able to reproduce, either \"directly\" or \"from a t ransmission\", a \"digital music reco rd ing . \" 1 2 2 The court determined, through compar ison of the Rio to a computer hard drive, that the Rio is not a recording device under the A H R A . \"[A] hard drive is a material object in which one or more programs are f ixed; thus, a hard drive is exc luded from the definition of digital mus ic recordings. Th is provides confirmation that the R io d o e s not record \"directly\" from \"digital music recordings\", and therefore could Diamond, supra, note 27 at 1076. 55 not be a digital audio recording device unless it makes cop ies \"from t ransmiss ions \" . \" 1 2 3 Prior to the Diamond dec is ion, there had only been one decis ion which d i scussed the A H R A . The Court d i scussed the legislative history of the A H R A to provide s o m e insight into how a digital audio recording dev ice should be interpreted. In a Sena te Report d iscuss ing the A H R A , it was clearly stated that the definition of a digital mus ica l recording device only extends to the material objects in which songs are normally f ixed, the recorded compact d iscs , digital audio tapes, audio casset tes , long-playing a lbums, digital compact casset tes, and m in i - d i s cs 1 2 4 . Thus , there is no bas is on which to determine that songs fixed on computer hard drives can be included. Furthermore, the purpose of the A H R A \"is to ensure the right of consumers to make analog or digital audio recordings of copyrighted music for their private, noncommerc ia l u s e . \" 1 2 5 The Rio makes copies to render the mus ic portable, or \" space shift\" those files that already reside on a user's hard d r i v e . 1 2 6 Thus the Court dec ides that \"a device falls within the Act 's provisions if it can indirectly copy a digital mus ic recording by making a copy from a t ransmiss ion of that recording. B e c a u s e the Rio cannot make copies from t ransmiss ions, but instead, can only make copies 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. 1 2 5 S. Report 102-294 (1992) at 86. 125 Diamond, supra, note 27, at 1079. 127 Diamond, ibid, at 1081. 5 6 g) T h e Digital Mi l lenium C o p y r i g h t A c t In 1998, C o n g r e s s passed the Digital Mil lenium Copyright Act . The D M C A 1998 \"is des igned to facilitate the robust development and world-wide expans ion of electronic commerce , communicat ions, research, development, and educat ion in the digital a g e . \" 1 2 8 In its defence, Napster c la imed that it satisfied the condit ions for eligibility under the Digital Mi l lennium Copyright Act ( D M C A ) safe harbor provision. Under 17 U . S . C . §512. Sect ion 512 of the D M C A addresses the liability of onl ine serv ice and Internet a c c e s s providers for copyright infringements occurring onl ine. In submitting this argument, Napster argued that it is an Internet Serv ice Provider for the purposes of the safe harbor provision. Subparagraph 512(k)(1)(a) of the D M C A provides: A s used in subsect ion (a), the term \"service provider\" means an entity offering the t ransmission, routing, or providing of connect ions for digital online communicat ions, between or among points speci f ied by a user, of material of the user's choos ing, without modif ication to the content of the material sent or received. Subparagraph 512(k)(1)(b) provides: A s used in this sect ion, other than subsect ion (a), the term 'service provider' means a provider of online serv ices or network a c c e s s , or the operator of facilit ies therefore, and includes an entity descr ibed in subparagraph (a). 1 2 8 S.R. Rep 105-190 1 to 2. 57 First, Napster c la imed to offer the \" t ransmission, routing, or providing of connect ions for digital online communicat ions\" by enabl ing the connect ion of users ' hard drives and the t ransmission of M P 3 files \"directly from the Host hard drive and Napster browser through the Internet to the user 's Napster browser and hard d r i ve \" . 1 2 9 S e c o n d , Napster stated that its users choose the online communicat ion points and the M P 3 files to be transmitted with no direction from Napster. Lastly, the Napster sys tem does not modify the content of the transferred fi les. Thus , because Napster meets the definition of 'service provider', it need only satisfy the five remaining requirements of the safe harbor to prevail in its motion for summary adjudication. The Court partially agreed with the reasoning that Napster provided in argument that it is a serv ice provider. Specif ical ly, the Court agreed that the Napster server stores a transient list of the files that each user who is logged on to that server can share, if a user wants to find a particular file he or she can search the index. A n d the 'hot list' function al lows users to search for other users ' log in names and receive notification when users with whom they might want to communicate have connected. There is thus agreement that a searchab le directory and index e x i s t s . 1 3 0 Reply Brief of Appellant Napster, at 3. Motion for summary injunction, at 16. 58 The interpretation of the application of the D M C A to the Napster case creates confusion when trying to determine the rights and liabilities which occur on line. O n the one hand, the law is interpreted in a liberal fashion, where the appl icat ion of traditional legal doctrine is expanded to apply to the new technology. However , on the other hand the legislation that was implemented to specif ical ly deal with copyright in the digital age is interpreted so strictly as to forego any protection to the Napster P 2 P network. This is ev idence of the need for clarif ication of what the law is, and whom it appl ied to. It a lso demonst ra tes the difficulty in creating new legislation to deal with changes that we face in the digital age. C h a n g e s now occur so rapidly, that a strict interpretation of any statute or law in conjunction with it would become outdated by the t ime it w a s enacted. IV. THE UNITED STATES COURT OF APPEALS On appea l , after a review of the findings of law by the District Court it was determined that, \"The scope of the injunction needs modif icat ion.. .Specif ical ly, we reiterate that contributory liability may potentially be imposed only to the extent that Napster: ( 1 ) receives reasonable knowledge of speci f ic infringing fi les with copyright musica l composi t ions and sound recordings; ( 2 ) knows or should know that such fi les are avai lable on the Napster sys tem; and ( 3 ) fails to act to prevent viral distribution of the works . . .The mere ex is tence of the Napster sys tem, absent actual notice and Napster 's demonstrated failure to remove the offending material, is insufficient to impose contributory l iabi l i ty.\" 1 3 1 Napster, sup ra note 54, at 14. 5 9 Further noted by the Court of Appea l was that Napster may be vicar iously liable if it does not pol ice or patrol its sys tem to find and determine if any infringing fi les are be copied among its users. \"The preliminary injunction which we stayed is overbroad because it p laces on Napster the entire burden of ensur ing that no \"copying, downloading, uploading, transmitting, or distributing\" of the plaintiffs' work occur on the s y s t e m . \" 1 3 2 The Court of Appea l directed that the injunction remained stayed until the preliminary injunction could be mod i f i ed . 1 3 3 a) Modi f ied Injunction On March 5 t h 2001 , the United States District Court, Northern District of Cal i fornia, modif ied the original preliminary injunction against Napster. The preliminary injunction is in effect until final judgement is entered by the preceding court act ion. In summary the injunction orders Napster, from \"engaging in, or facilitating others in, copying, downloading, uploading, transmitting, or distributing copyrighted sound recordings in accordance with [the] o rde r . \" 1 3 4 The preliminary injunction sets out a number of procedures that must be fol lowed by both Napster and the R IAA and the record company plaintiffs. T h e s e procedures include instructions to the copyright holders to provide adequate notice of the ex is tence of their copyrighted sound recordings to Napster. A standard of reasonable 1 3 2 Napster, ibid, at 14. 1 3 3 Napster, ibid, at 15. 1 3 4 RIAA v. Napster, Inc., United States District Court, Northern District of California, No. C 99-05183 MHP MDL no. C 00-1369 MHP. The full text of the Napster preliminary injunction can be found at , 60 knowledge is p laced on Napster for the purposes of policing the Napster network and removing a c c e s s to infringing files. Al l parties are also ordered to use reasonable measures in identifying variations of the f i lenames with the obligation to ascerta in the actual identity of the wo rk . 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. 6 1 IV T H E B A L A N C E O F I N T E R E S T S : 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. C O P Y R I G H T M I S U S E Napster put forth the accusat ion the plaintiffs are engaging in copyright m isuse. It is argued that such engagement in copyright m isuse would preclude any enforcement of copyrights against N a p s t e r . 1 3 6 This is an interesting argument, which raises s o m e of the paradoxical issues surrounding the relationship between technology and corporatization. The Napster decis ion demonstrated the imbalance that has been created between the copyright holders and the public interest. Whi le protecting copyright, the effect of the dec is ion hinders a c c e s s to a new technology. The issue of a c c e s s is a problem that must be addressed to maintain the legit imacy of copyright protection in the eyes of the public, as well as to ensure that the public interest considerat ion is not lost in favor of corporate interests. The misuse argument is important for var ious reasons, some of which read beyond the 'black letter rule' of copyright law, and into public interest i ssues. The intent of copyright protection is to help promote the growth and development of 62 sc iences and the arts, while at the s a m e time providing the public a c c e s s to the creat ive or inventive works. There is a del icate ba lance wh ich must be maintained to ensure that things continue to be created, and the public cont inues to have a c c e s s to the works. The misuse argument ra ises issues of public interest and the a c c e s s of the public to technological advancements . Arguments made by Napster regarding misuse of copyright by the plaintiffs were not treated a s viable arguments by either the District court or the 9 T H Circuit. T h e District Court held that \"[ajlleged antitrust violations by a copyright plaintiff general ly do not afford a valid defense against an infringement action and ought not to d i ssuade a court from granting injunctive rel ief .\" 1 3 7 However, this f inding is not entirely correct. A l though the court has rejected the m isuse argument submitted by Napster, considerat ion of m isuse and the effect of the Napster judgement on the public interest and a c c e s s to technology is important when thinking about regulatory i ssues , especia l ly under these c i rcumstances given the constitutional intention of Intellectual Property protection. The accusat ion of misuse highlights the wider issue of power and control over a technology, which creates public interest concerns surrounding the a c c e s s to technological innovation and the organizat ion of the media world. Opposition of Defendant Napster, supra note 24. Napster, District Ct. supra, note 134, at 35. 63 a) Background The concept of misuse has only recently been extended to the realm of copyright law. Copyr ight law provides the holder of the copyright with a limited form of monopoly. A n attempt to expand the monopoly right granted by the Copyr ight Ac t under certain c i rcumstances may be a violation of antitrust l a w s 1 3 8 . S u c h violations have been held to occur as a result of a number of copyright owners acting in combinat ion, or alternatively, as a result of a particular copyright owner 's refusal to l icence certain of his more desirable product un less tied in with l icenses of certain of his less desirable p roduc t . 1 3 9 The appl icat ion of anti trust principles to copyright infringement de fences is unclear. Most c a s e s have ruled that no such defence may be c la imed, on the bas is that one who has entered into an illegal contract does not thereby p lace himself outside the protection of the law so as to permit others to injure him without impun i ty . 1 4 0 However, there are some court where such relief has been indicated if there is a violation of antitrust laws. T h e court in Bellsouth Adv. & Pub. Corp. v. Donnelly Info. Pub., Inc.141, dec ided that no misuse defense exists except possibly where there is an attempt to extend the exclus ionary power granted by copyright beyond the protected work 1 3 8 Nimmer, supra, note 2, at §13.09[A] 1 3 9 Nimmer, ibid, a t§13 .09[A] 1 4 0 Nimmer, ibid at §13.09[A] 141 Bellsouth, 719 F. Supp 1551, 1562 (S.D. Fla. 1988), affd, 933 F. 2d 952 (11 t h Cir. 1991) 6 4 itself. The 9 Circuit found no ev idence that the Plaintiffs seek to control a reas outside of their grant of monopoly. Rather that the Plaintiffs seek to control reproduction and distribution of their copyrighted works, exc lus ive rights of copyright h o l d e r s . 1 4 2 There is no debate that the Plaintiffs have copyright in the works, however there is debate about the effect of the copyright on the public interest. Th is is what the court s e e m s to ignore, and should be addressed . It is particularly important when deal ing with a c c e s s to new technologies. The stifling of a new technology before it even reaches its full capacity is a great loss to the public, and should be avoided if possib le. The interests at play need to be ba lanced. Here, the court weights the interests of the copyright holders to be the first and foremost considerat ion, disregarding the rationale of copyright law's ex is tence. A n analogy can be made with Patent law, which has long held that a patentee who uses 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 a c t i o n . 1 4 3 In Lasercomb America, Inc. v. Reynolds™4, the forth circuit reviewed the general doctrine underlying intellectual property law to conc lude that \"a misuse of copyright de fense is inherent in the law of copyright just as m isuse of patent de fence is inherent in patent l a w . \" 1 4 5 It was noted by the court in Lasercomb that uncertainty surrounds the application of m isuse to copyright 1 4 2 Napster, 9 t h Cir, supra, note 54, at para 75. 1 4 3 Also recognized in statute 15 U.S.C. §1115(7) . 144 Lasercomb, 911 F.2d 970 (4 t h Cir. 1990) 145 Lasercomb, ibid, at 973. 6 5 however it was held to be appl icable under the c i rcumstances. Th is is an example of the flexibility that is necessary when interpreting and applying copyright to new technologies. In Lasercomb, through a standard l icensing agreement, the plaintiff attempted to forbid the l icensee and all of its employees from developing any kind of software that would be competit ive with the plaintiffs appl icat ion. The exclus ive l icensing provision w a s copyright misuse because it extended the copyright holder's control beyond the scope of copyright by discouraging l i censees from developing their own compet ing p roduc ts . 1 4 6 The copyright m isuse issue raised in the Napster opposit ion is interesting in that it ra ises s o m e of the paradoxical i ssues surrounding the relationship between technology and corporatization. Napster c la ims that the knowledge of software for creating M P 3 fi les and act ions by the plaintiffs to form partnership with and investment in compan ies is an important factor to consider with respect to the c la ims made against Napster. \"Whi le Sony Mus ic now c la ims that Napster is harming its bottom line, Sony Electronics is seeking to profit from the vast number of M P 3 s currently avai lable on the Internet.\" 1 4 7 Lasercomb, ibid, at 978-9. Opposition of Defendant Napster, supra, note 24, at 22. 6 6 In Practice Management Info. Corp. v. American Medical Ass'n14\", the Ninth Circuit held that attempts to use the limited monopoly rights bestowed on a copyright holder to control competit ion in an area outside the s c o p e of the copyright constitutes misuse. Practice Management found copyright m isuse in attempt to extend the copyright monopoly in a copyrighted code sys tem for medical terminology by l icensing it to a third party under the condit ion that the third party would not use competitors products. Thus , according to Napster, the Court takes a broad view of misuse under which copyrights may not be enforced if they are being used in manner that impedes the \"copyright sys tem's goal of promoting the arts and sc iences by granting temporary monopol ies to copyright ho lde rs . \" 1 4 9 Napster supports the claim of copyright m isuse by arguing that the \"Plaint i f fs legal maneuver ing against Napster is less for enforcing Intellectual Property rights than to control (1) the flow of compet ing unsigned artists' mus ic into the electronic marketplace, and (2) the means of and bus iness model for distributing mus ic over the Internet.\" 1 5 0 Thus , the \"use of anticompetit ive litigation against new technologies and emerging artists, c loaked as an effort to preserve copyrights, attempts to restrain the breadth of useful arts by limiting the 148 Practice Management, 121 F. 3d 516, 521 (9 t h Cir. 1997), as amended 133 F.3d 1140 (9 , n Cir. 1998) 1 4 9 Opposition of Defendant Napster, supra, note 24, at 23. 1 5 0 Opposition of Defendant Napster, supra, note 24, at 24. 6 7 distribution of artistic works that the Plaintiffs do not con t ro l . \" 1 5 1 W h e n examined in more detail , this accusat ion become more credible and probable. II. C O M E R C I A L I Z A T I O N a) Internet D e v e l o p m e n t The founding ideals of the Internet were centered in the notion of f reedom of information. However, the Internet has evolved from a free p lace to share and distribute ideas and information, into a global marketplace. A s an example of this evolut ion, in months the Napster phenomena had evolved from a liberal network of trading and shar ing music and ideas to the negotiation of bus iness models with med ia conglomerates in hopes of cornering the digital online mus ic market. Internet growth can be divided into three phases of development. The first phase of the Internet was confined to a community if insiders -- scient ists and some government agenc ies . The second phase centered in the 1980s, when the Internet was opened up to a less specia l ized community. This strengthened the democrat ic and open character of the Internet, making it a s p a c e of distributed power which limits the possibility of control over the acts taking p lace in Cybe rspace . The third phase began with the establ ishment of the Wor ld W i d e Opposition of Defendant Napster, ibid, at 25. 68 W e b in 1993 and its large-scale d iscovery by bus iness by 1995. Th is phase is character ized by attempts to commerc ia l ize the Internet. 1 5 2 b) Ro le of C o n g r e s s There has been some recognition in the United States Cong ress that there is a need to address the wider issue of corporate dominance in cyberspace . The Napster c a s e has caused a clear division between the public interest in having a c c e s s to the technology, and the media corporat ions seek ing to maintain their control over the music industry and the digital distribution of its product. The act ions of Cong ress illustrate the evolutionary path that copyright is taking. It recognizes that copyright law must be adapted to apply to the digital forum, however it a lso demonstrates the imbalance of interests that have resulted from such adaptat ion. Prior to the Napster decis ion, the Senate c la imed that it wanted no part of the con t roversy . 1 5 3 Sena te Judiciary Commit tee Cha i rman Orrin Hatch, R-Utah, said explicitly, \"I think the courts can handle it.\" The committee's ranking Democrat , Partrick Leahy, a lso added that movie studios were once \"terrified\" of v ideotapes, which later turned into a major revenue stream for Hol lywood. \"In the end, things get sorted out and new (technologies) offer new opportunit ies for artists and 1 5 2 Sassen, Saskia, \"On the Internet and Sovereignty\", (1998) 5 IJGS 2 at 545. 1 5 3 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. 69 more cho ices for consumers . . .Le ts not strangle the baby in the c r a d l e . \" 1 5 4 However, after the decis ion of the District Court and the 9 t h Circuit Court of A p p e a l it is now quest ionable if \"the courts can handle it.\" S ince the Napster dec is ion, there has been some movement in the Sena te to reexamine the Napster situation and the court decis ion. The attention given to the Napster c a s e by the Senate demonstrates the importance and the impact of the c a s e on copyright as well as new technologies. Ra lph Nader, the former G r e e n Party presidential candidate, has been outspoken about the implications of the Napster decis ion for Internet Regulat ion general ly. Nader s e e s an opportunity for a new global bureaucracy, comparable to the United Nat ions, Wor ld Intellectual Property Organizat ion (WIPO). Accord ing to Nader, \"The technology of the Internet is far ahead of any legal framework, any ethical f ramework or global f ramework . \" 1 5 5 Senator Orrin Hatch, has a lso been voca l concern ing issues related directly and indirectly to Napster. Hatch has stated: \"If those digital ropes through which the new music will be del ivered are significantly narrowed by gatekeepers to limit a c c e s s to or divert fans to preferred content, a unique opportunity will be lost for both the creators of music and their fans.. . that is why I think it is crucial for policy makers to vigilant in keeping the pipes wide open. \" The concerns raised by Hatch specif ical ly deal with the need to ensure that the distributional power of the Internet is not concentrated in the hands of a few powerful corporat ions. To ensure that there is a c c e s s to the Internet forum, Hatch feels that it is important for policy makers to step in and regulate. The 1 5 4 Lochhead, Carolyn, ibid. 70 impact of this attention by government is uncertain. However, it is illustrative of the wider i ssues surrounding the Napster case . It is a lso illustrative of the power exerc ised by the state in trying to control the Internet. 1 5 6 c) Ro le of the Corporat ion Now that the Internet is in its third stage of development, corporat ions will play a signif icant role in the structure that the Internet will take in the future. The Internet has become a global marketplace. It is access ib le to anyone with a computer and an Internet connect ion. It is a marketplace in the traditional s e n s e of e -commerce where people can log on and purchase goods and serv ices, and it is a market in a more modern sense for sharing information and ideas in way that was never avai lable before. The Napster case demonstrates that this traditional and modern marketplace can c lash, creating a puzz le of legal rights to ^ McCullagh, Decian and Nicholas Morehead, \"Nader Wants Internet Control\", Jan 10, 2001, (visited 26/01/01) 1 5 6 The 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. These 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. 71 be sorted and put into place. Currently, the media corporat ions are placing the p ieces of the puzz le in place, while the public sits back and watches. Corporat ions have attempted to use the Internet to expand their market. The Napster c a s e is an example of this goal of market expans ion, as it demonstrates how corporat ions are working to control the technology that threatens their current bus iness models. They are attempts both to d isp lace poss ib le competit ion and control the digital marketplace. d) T e c h n o l o g y Techno log ica l innovation is the catalyst for market growth. Through the development of new means of communicat ion and transportation, the world has truly b e c o m e a global vi l lage where one can physical ly travel the span of the g lobe in a matter of hours, purchase Italian shoes in North A m e r i c a , and consume a \" C o k e \" in Japan . This idea of global a c c e s s is at the heart of the Internet and the attempt to commerc ia l ize. With the Napster code, Shawn Fanning stumbled upon something that the global Internet community is only beginning to understand. The implications and possibi l i t ies of peer-to-peer networking are vast. The data shar ing network created by P 2 P will likely become a useful bus iness model , for publ ishing, for mus ic distribution, and for the sharing of ideas and information. 72 The Napster code has been c loned and copied, and has already been changed and expanded to become more powerful, and completely decentra l ized. \"Peer- to-peer computing could be as important to the Internet's future as the W e b browser was to its past . . .Whi le the most visible impact of this model has been in consumer environments, peer-to-peer comput ing has the potential to play a major role in bus iness comput ing as w e l l . \" 1 5 7 Peer- to-peer technology changes the idea of the marketplace for on line e-commerce . C o m p a n i e s have been spending hundreds of mil l ions of dol lars to create a central ized marketplace, founded on the idea that Internet commerce relies on the need for a single and central destination. However, Napster, by independent ly connect ing computers across the Internet, enab les the creation of a distributed marketplace. Pee r to peer al lows for the creation of a marketp lace with no centre and no owner, just a shared group of par t ic ipants . 1 5 8 Just as the commercia l izat ion of the Internet seemed to be at its peak, the creation of Napster has changed the fundamental structure of Internet organizat ion. A s a result, Napster has threatened the big media conglomerates, forcing them into the courts to shut down Napster with the hopes of taking over the technology and developing their own profit making bus iness models based on P 2 P file shar ing. \"The P2P myth\" John Borland, Mike Yamamoto and Cory Grace, Oct 26, 2000, (01/02/01), quote by Pat Gelsignerwho is Intel's Chief Technology Officer. 73 III. T H E M U S I C I N D U S T R Y Techno logy and big corporate enterprise is so intertwined that it is somet imes difficult to see the implications and connect ions between motives and c la ims. The accusat ion of copyright m isuse brings into quest ion whether the record labels are trying to shut down Napster in hopes of taking over the technology before it destroys the control that the five major labels have over mus ic distribution. During the Napster action and after the decis ion to implement an injunction, the big five record conglomerates have been working to develop their own bus iness models . The huge s u c c e s s of Napster occurred almost overnight. Napster debuted in late 1999, within a few months it had c lose to 20 million users, and in less than two years there are more than 70 million Napster members. The impact of Napster has been felt throughout the mus ic industry, partly due to the s ize of the Napster communi ty and the speed of its growth. S o m e analysts c la im that \"[t]he record compan ies have kind of blown it...they've completely lost the ability to train mus ic l isteners into the kind of online consumpt ion patterns that would be beneficial to t h e m . \" 1 5 9 The s u c c e s s of Napster is based primarily on the a c c e s s to mus ic by its members for no charge. \"Napster's Real Importance\", Bill Burnham ZDNN, May 9, 2000, (04/02/01) 1 5 9 \"Napster traffic figures raise new questions\" John Borland, Staff Writer C N E T News.com, Aug 4, 2000, (04/02/01) 74 Prior to Napster M P 3 files were avai lable online, however, a c c e s s and search ing was tedious and bothersome. Napster created a huge network of members where M P 3 fi les cold easi ly be searched and downloaded by anyone who s igned on. Before the R IAA and record labels could do anything Napster had accumulated a huge user base. The fear is that because preliminary a c c e s s to digital onl ine mus ic has been free, consumers have deve loped user behaviour acco rd ing l y . 1 6 0 The idea that mus ic should be free has infiltrated many online mus ic seekers , and may create problems when online compan ies try to establ ish fee-based serv ices. By taking Napster to court, the record compan ies are trying to regain s o m e control over the damage that Napster has done to their future Internet related digital distribution. Simi lar c la ims regarding the recording industry's unwil l ingness to cooperate and relinquish rights of their copyrighted works to use in the distribution of digital works have been made by the National Assoc ia t ion of Record ing Merchand isers ( N A R M ) and the Digital Med ia Assoc ia t ion (DMA). T h e s e concerns and c la ims are centered around the lack of content being made avai lable to 'legitimate' retail stores to offer secure digital download sa les opportunities. Retai l merchants and online distribution compan ies claim that major labels have used the threat of piracy as a reason to withhold content from legitimate compan ies , 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. See 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 developed its own bus iness model . Accord ing to P a m e l a Horovitz, the president of N A R M , \"It would appear that most of the record compan ies are viewing retailers as potential competitors that they can use grudgingly until they can eliminate them, or marginal ize t h e m . \" 1 6 1 Th is s tance does not mean that N A R M and the D M A are in support of Napster, to the contrary they are quite against it. Liquid Aud io C E O Gerry Kerby has been sa id \"I a m aghast that a bunch of th ieves like Napster could end up winning b e c a u s e they have 60 million users and end up with l icences... I t makes me feel pretty upset that I've been a boy scout. It's like making a drug dealer a pharmacist because they sel l a lot of drugs.\" The c la ims made by Napster, N A R M and D M C are not unfounded. The range of act ions and bus iness dec is ions made by the big record labels over the past few years cal ls into quest ion not only their motives for digital distribution of mus ic but for overal l control of the global media. The record compan ies are working together to quash Napster Inc. in hopes of using the Napster peer-to-peer technology to develop their own bus iness model . Ev idence of this intent can be found in the major mergers between large media conglomerates. It is not only the quest ion of maintaining power and control by the record compan ies , it goes far beyond that to the control of the media as a whole. King, Brad, \"Music Labels Wear 'Kick Me' Sign\", Apr 2 2001, (visited 03/04/01) 76 Whi le the Napster case was unfolding, Berte lsmann's e C o m m e r c e group and Napster Inc. came to an agreement. This agreement created widespread controversy. It il lustrates the movement by large media corporat ions to take over the industry. S ince 1999, parent company Berte lsmann A G has been developing a digital distribution superhighway through its Digital Wor ld Serv ices (DWS) division. The goal is create the infrastructure to deliver secure digital media to retailers throughout the world. Johann Butting, the C E O of the D W S division said with respect to the growth of Ber te lsmann, \"Bes ides music, we are moving toward having our first publishing house online in Q1 of next year . . .we are already looking into movies, then games will come later. Eventual ly, we'll be looking into other bus iness opportuni t ies.\" 1 6 2 Ber te lsmann has created the world's largest record conglomerate, with the B M G / E M I merger, cornering nearly 2 3 % of the global music marke t . 1 6 3 A l so interesting is the interconnection among large record and media compan ies . For example, \"Ber te lsmann buys C D N o w , which has a strategic relationship with T ime Warner, which wants to cross-l icence movies with Sony , which has a subscript ion service project with Universal cal led Duet, which has a joint venture cal led Ge tMus i c with B M G . \" 1 6 4 The expans ion of corporate interests is part of the corporate world, however when the expans ion of such interests impede a c c e s s to technology and innovation to the 1 6 2 \"The Napster Master Plan\", Brad King, Nov 25, 2000, (11/30/00) 1 6 3 \"Bertelsmann Plays Musical Chairs\", Chuck Philips, Times Staff Writer, Nov 28, 2000, L A . Times, (05/02/01) 1 6 4 \"Music Battle Lines Drawn\" Brad King, Apr. 4, 2001, (04/04/01) 77 detriment of the public interest, then there is a need to rectify the damage through regulation if the Courts prove to be insufficient. Senator Orrin Hatch has been quite vocal in the need to make digital mus ic access ib le and ensure that a few rights holders in the marketplace do not control it. A l though, Senator Hatch was at one time a supporter of Napster, he has \"cautiously began to back away from his earlier support for Napster and the compulsory l icences that would grant digital mus ic compan ies a c c e s s to the labels' c a t a l o g s . \" 1 6 5 Despite S e n . Hatch's change of tune, his remarks and concerns are noteworthy. S e n . Hatch at one time warned that he would work to ensure that onl ine mus ic does not fall under the control of a few powerful distributors. A s stated by Hatch: \"I do not think it is any benefit for artists or fans to have all the new, wide distribution channels in the online world controlled by those who have controlled the narrower ones. . . . th is is especia l ly true if they ach ieve that control by leveraging their dominance in content or conduit space in an anti-competitive way to control the new independent mus ic serv ices that are attempting to enhance the consumer 's exper ience of m u s i c . \" 1 6 6 The active efforts made by the 'big five' record labels, and the mergers between these labels and other large media conglomerates is something that must be cons idered when thinking about the power and control over technology. The act ions by these corporations add to the allegation of Napster that they are working to destroy Napster because it threatens their place in the digital online 1 6 5 \"Music Battle Lines Drawn\", ibid. 1 6 6 \"Hatch Pledges to Keep Online Music Accessible\" Elizabeth Wasserman, Jan 10, 2001, (26/02/01) 78 market and could possibly mean the end of the control exerc ised by big record labels in the mus ic industry. The record labels defend themselves with the shield of copyright protection for their artists, however this is a lso a fa lse claim. The R IAA has worked towards having artists under labels be considered a 'work for hire' under s. 2 0 1 (b) of The Copyright Act, which states \"the employer or other person for whom the work was prepared is considered the author. . .and unless the parties have expressly agreed otherwise. . .owns all of the rights compr ised in the copyright.\" Th is ultimately means that an artist will never regain the rights to their works. Under normal l icensing of copyright the rights to the work are s igned over for 3 5 years then they go back to the artists. Act ions like this demonstrate that the R IAA is working to ensure that the record labels maintain control of copyrights. Th is unlimited control is in the interests of the record labels, not in the interests of the artists. The granting of an injunction against Napster has helped the R IAA and affiliated record compan ies to delay the growth of P 2 P models online, giving them time to develop their own bus iness models. The application of copyright law is justified. However, it is important to note the implications and result of the court dec is ion. The law is appl icable, although it may need to be changed in some respects by the legislature. The implications of the application of the law are what need to be examined . From this perspect ive the Internet should be dealt with in a different 79 manner. Corporat ions have the right to make bus iness dec is ions and to take action to ensure 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 accompl ished with a motive to d isp lace other corporat ions in an anti-competit ive manner something must be done. W h e n deal ing with Internet technological issues there is more at stake, the application of rights or of regulations goes beyond the interested parties and has an overall effect on the technology, which given the virtues of cyberspace, affect all Internet users. The integration of multiple corporate interests, and the struggle for control and power is an interesting phenomenon in itself. On the one hand, the production of dev ices to download and playback M P 3 files is rampant. Most of these dev ices are connected, in some way, to the large media conglomerates that have taken Napster to court to find that the downloading of copyrighted M P 3 fi les is i l legal. If found il legal, why would someone purchase an M P 3 player? There is an inherent contradiction to the actions of the record companies. A n easy answer is that they can control the distribution of the files, and control the means with which to upload them and listen to them. The T ime Warne r /AOL merger presents another interesting situation. The joint company will have more Internet subscr ibers than any other ISP, as well as the ability to offer them all of the content produced by T ime Warner 's music, film and entertainment divisions. However , an interesting fact is that A O L employees created the P 2 P technology used in Gnute l la \"one of the most potent piracy tools on the N e t . \" 1 6 7 Gnutel la is a 1 6 7 \"Napster Wildfire\" Evan Hansen, John Borland, and Mike Yamamoto, Staff C N E T News.com, May 15, 2000, (04/02/01) 8 0 pure P 2 P code, with no central server. The open code of Gnutel la is owned by no one and thus possibly untouchable by the law or any form of regulatory control. The Internet was created by technological innovation under the notion that information should be free and access ib le . This is the attitude of the cyberspace pioneers. W h e n the commercia l potential of the Internet began to be recognized, the big corporat ions moved in and began to commercia l ize cyberspace . The border less nature of cyberspace al lows for both the commercial izat ion and the growth of free s p a c e to share information and ideas among the individuals who are connected around the world. Napster demonstrates that the Wor ld W ide W e b and the W e b browser are not the only means of organizing and exploring cyberspace . Peer- to-peer technologies reorder the exchange of information over the Internet and chal lenge the central ized bus iness model that e -commerce has been premised upon. Napster directly threatens the existence of the record company, it provides for an effective and quick means of distributing and sharing music, while a lso building a community of members . This threatens the ability of the record labels to distribute their works, and ultimately the wider plan of the media conglomerates to corner the whole media market. The Napster /Ber te lsmann al l iance is ev idence of the quest to take over the global distribution of med ia . There is a struggle for power in and over Cybe rspace . Corporat ions seek the power to exploit the Internet for monetary gain. The Napster case is an example of the manipulation of the law by the market to 81 control the Internet. In theory the law is controlled by the state, which in most c a s e s bel ieves it has the sovereign right to control. 82 V R E G U L A T I O N : R E S T O R I N G T H E B A L A N C E O F C O M P E T I N G I N T E R E S T S The ba lance of Interests intended by the protection of copyright law under the United States constitution has been d isp laced. The Internet has created the biggest issue of regulatory control and application of law that has ever been s e e n . Clear ly , there is a need for some kind of regulation regarding copyright protection and the Internet. The Napster case is ev idence that the law can be appl ied to the 'border less realm' of Cyberspace . For the most part with the technological innovation that cont inues to occur at an exponent ia l rate there is l ikelihood that enforcement may be effective. However, this appl icat ion and enforcement has re-routed the phi losophy behind copyright law. The technological development surrounding the Internet is some of the most important that we have ever wi tnessed. The Internet is a useful tool for the dispers ing of information, the sharing of ideas, the building of communit ies, and consumer ism. Th is only magnif ies the need to create a balance of interests to enable the maximizat ion of the Internet as a global and multi faceted tool, as well as the Internet's continued growth and development. 83 The quest ion that must be addressed is how can this be accompl i shed? To answer this quest ion ideas of regulation need to be examined to assist in placing the role of technology, law and regulation into perspect ive and create some gu idance as to where we should go from here. I. R E G U L A T I O N This part of the chapter will examine the fundamental reasons and ideas behind the concept of regulation. This is important in understanding the quest ion of regulation and 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 ideas of regulation will be expla ined. Lastly, the three general f rameworks of regulation will be explored. a) B a s i c Definit ion of Regulat ion A bas ic and general definition of regulation can be summed up in the following way: \"Regulat ion involves the constitution of a form of authority, whether internal or external, to achieve ordering in an area of life that has come to attention as showing tendencies to disorder, perversity or e x c e s s . Success fu l regulation involves the consent of the regulated and hence much effort is devoted to achieving and very often to raising s tanda rds . \" 1 6 8 Clarke, Michael, Regulation: The Social Control of Business between Law and Politics, (New York: St. Martins Press, 2000), at 3. 8 4 The regulatory process is essential ly a political one. In the process of regulation there is often extensive interaction between public and private actors. \"Regulat ion is hence a continuous and dynamic political p rocess: sustaining an effective regime requires evolving to meet changing c i rcumstances and involving new regulatees as they a r i s e . \" 1 6 9 It is also important to make note of the distribution of power in the regulatory process. Bes ides the power of the regulator and the regulatees, there is also the power of the other interested parties to consider. This power is dependent to a large extent on the ef fect iveness of their mobil ization and o rgan iza t ion . 1 7 0 b) History of Regulation The rise of regulatory society can be explained by looking at three broad phases . It is important to note that regulatory society as we know it today is a relatively modern construct. i. phase one The first phase of the rise of regulatory society is roughly around the time of industrialization up to the end of the nineteenth century. During this time period political, economic and legal institutions became linked. Industrialism purged the remnants of feudal distinctions and establ ished the market and freedom of contract for all in it. 1 6 9 Clarke, Michael, ibid, at 4. 1 7 0 Clarke, Michael, ibid, at 4. 8 5 Industrialization ushered in a key feature of modernity, namely constant economic change and an ever-diversifying divis ion of labour and technological innovation, accompan ied by end less expans ion of wealth and prosperity... Individualism b e c a m e establ ished as a central political, economic and moral idea: markets were seen as composed primarily of competing individuals who were given equal rights before the law and whose rights of dec is ion-making and integrity were increasingly required to be respected, a long with a moral expectat ion of individual responsibi l i ty and se l f -he lp . 1 7 1 T h e s e aspec ts of individual ism c a m e with an increase in individual polit ical express ion . A freer market in goods and serv ices led to a greater soc ia l consc iousness . A long with this new awareness of the disparity between rich and poor was an movement for change, demands were increasingly made for rights of full political participation, leading to the right of enfranchisement. The rise of technology, for example mining and factories, brought with it safety hazards . Regulat ion was introduced to establ ish standards to provide safe working condit ions. The introduction of regulation is concerned with the establ ishing of s tandards which take account of all part ies who are eventual ly agreed as having a legitimate interest in the regulated act iv i ty . 1 7 2 Thus , with the rise of the industrialized state came many other areas which needed to be regulated, leading to the expans ion of the state at a local level. T h e s e areas included gas, water, care of cr iminals, the division of labour, sewage , street maintenance, security, and health. Clarke, Michael, ibid, at 12. Clarke, Michael, ibid, at 13. 8 6 \"By this point, several feature of modern society critical to regulation were clear. Economic and technical change were endemic , which posed ever-new hazards for workers, consumers and the wider public from technology, constantly reconfigured the division of labour, and generated no only new skil ls, but new ideas and interest groups. The achievement of the rule of law, that is the subject ion of all to the law with equal rights and responsibi l i t ies as ci t izens, accompan ied by enfranchisement, form the bas is of the stable, modern, industrial ized democracy which the exper ience of the twentieth century s e e m s to indicate is something c lose to a universal in human societ ies. T h e s e achievements required the establ ishment, much against the w isdom of past centuries, of the state at local and national level, on an unheard of s c a l e . 1 7 3 ii. phase two The second phase of the rise of the regulatory state is roughly from 1900 to 1960, where the state emerged as a central actor. \"It was a period that saw the rise of a statist ideology that portrayed it as omnicompetent, staffed by experts who would guide the society and economy in all a s p e c t s . \" 1 7 4 During this t ime period both the state and the economy expanded. The labour structure a lso changed , a primarily manual working c lass became the minority, whereas there was huge growth in the manager ia l and professional c lasses . iii. phase three The third phase is that of contemporary society. It is based on consumer ism and the demand for security. A society based on consumer ism brings with it the need for increased regulation. There is a need for an increased amount of attention on Clarke, Michael, ibid, at 14. 8 7 bas ic safety s tandards for workers, consumers , and the general public. A l so , the genera l complexi ty of many products means that consumers cannot be expected to be able to appra ise the quality of the product themselves, therefore a regulatory provision is necessary . \"The consumer -based economy of aff luence is then perforce a regulatory economy, in which consumer rights increasingly prevail and the market principle of caveat emptor is c o m p r o m i s e d . \" 1 7 5 c) T h r e e ideas of regulat ion W h e n thinking about regulation there are three main ideas or mean ings to consider: regulation as targeted rules, regulation as direct state intervention in the economy more generally, and regulation as encompass ing all mechan i sms of socia l control, by whomsoever e x e r c i s e d . 1 7 6 Regulat ion as targeted rules is the s implest way of thinking about regulation. Here, regulation involves the promulgation of a binding set of rules to be appl ied by a body devoted to this p u r p o s e , 1 7 7 an example of which would be legal regulation. The second concept ion of regulation involves direct state intervention in the economy. Th is broader idea of regulation is commonly found in the area of political sc ience , taking into considerat ion all of the efforts of state agenc ies to U 4 Clarke, Michael, ibid, at 14. 1 7 5 Clarke, Michael, ibid, at 15. 1 7 6 Scott, Colin, Robert Baldwin and Christopher Hood, eds, Regulation, Oxford University Press, (New York: 1998) at 3. 7 7 Baldwin, Robert, and Marti Cave, Understanding Regulation: Theory Strategy, and Practice, (New York: Oxford University Press, 1999), at 2. 8 8 steer the e c o n o m y . 1 7 8 Regulat ion has a more broad sense and covers all state act ions des igned to influence industrial or socia l behav iou r , 1 7 9 for example the socia l welfare state or grants to industry. i The third idea of regulation is that regulation e n c o m p a s s e s all mechan isms of socia l control, by whomsoever exerc ised. Government institutions are included in this definition, however, this definition a lso extends to mechan isms which are not state induced. A l so included in this concept of regulation would be soc ia l norms and the effects of the markets on modifying individual behaviour, for example moral regulation. d) T h r e e genera l f rameworks of regulation There are three general f rameworks that can be used to explain regulation: the public interest/legal ana lyses, the interest-group theory, and the public cho ice model . E a c h framework will be d i scussed . i. the public interest/ legal perspect ive framework The public interest/legal perspect ive framework a s s u m e s that the state, acting in the public interest, establ ishes a legal framework to realize a speci f ic set of Scott, Colin, supra, note 176, at 3. Baldwin, Robert, supra, note 177, at 2. 89 regulatory ob jec t i ves . 1 8 0 The public interest can be understood from a utilitarian perspect ive - the greatest overall good. Thus , the state translates publ ic preferences into a legal regulatory regime. ii. interest-group theory Interest-group theorists view regulation as an exerc ise among groups and between groups and the s ta te . 1 8 1 Groups are bel ieved to be the source of any regulatory initiatives and the regulatory outcomes are likely to be the result of either a c lose working relationship between a dominant group and the state or of compromises among groups. The perspect ives of interest-group theorists vary from open-ended plural ism to co rpo ra t i sm . 1 8 2 T h e pluralist model focuses on the state as an a rena where compet ing groups struggle for power. The corporatist model , on the other hand, v iews the group as acting in partnership with the state. The state and the group establ ish a regime that may have the consequence of a c lose public/private co-operat ive regulatory structure. Another possib le consequence may be the exclus ion of groups that are not part of the corporatist framework. 1 8 0 Francis, John, G. , the Politics of Regulation: A Comparative Perspective, (Cambridge: Blackwell Publishers, 1993) at 7. 1 8 1 Francis, John, G., ibid, at 8. 1 8 2 Francis, John, G. , ibid, at 8. 90 iii. the public choice model The core assumpt ion of the public choice model is that individuals, as they act in society, seek to real ize their preference. This perspect ive draws heavily from micro-economic theo ry . 1 8 3 The focus of the public choice model is on the individual, not the group or the state. However, the cho ices made by the individual have an impact on the group and the state. The rational dec is ion of the individual does not necessar i ly mean the rational action by the organizat ion. The purported objectives of large organizat ions are easi ly subverted by the pursuit of the compet ing preferences of their respect ive members un less the organizat ion is carefully s t ruc tu red . 1 8 4 The Napster case provides an example of the need for regulation to protect copyright interests. Copyright protection is explicitly recognized through constitutional recognit ion, and must be implemented in a way that provides a ba lance of interests among the artists and the public. The courts and legislature have both dealt with the application of legal doctrine to the Internet. The Napster court has appl ied the law in a way that is detrimental to the public interests and cal ls for a public interest regulatory approach. Congress , as mandated by the constitution, must step in to re establ ish the ba lance of interests to ensure the protection of copyright, and the maintenance of the public interest. Francis, John, G., ibid, at 9. Francis, John, G., ibid, at 9. 91 II. I N T E R N E T R E G U L A T I O N Al though, it is recognized that there exists a need to regulate the Internet with respect to the protection of copyright, there are wider issues related to Internet regulation in genera l . The approaches to Internet regulation can be grouped into four main schoo ls of thought. The traditionalist schoo l , self-regulatory schoo l , internationalist schoo l and the technology schoo l . a) T h e Tradit ional ist S c h o o l The Tradit ionalist Schoo l bel ieves that the Internet does not pose any problems which traditional legal doctrine cannot answer. This school of thought concedes that the law can be either appl ied as it would be appl ied in the 'real ' world, or s imply extended to apply to Internet issues. This appears to be the current v iew of most states and courts. Through the extension of the law and legislat ion, traditional legal approaches have been appl ied to the Internet. The Napster c a s e is an example of such an appl icat ion. b) T h e Sel f -Regulatory S c h o o l The Sel f -Regulatory Schoo l bel ieves that traditional legal doctrine does not work in Cybe rspace . The most dominant scholars within this schoo l of thought are David Pos t and David Johnson . Post and Johnson argue that the state does not 92 have the ability to impose sanct ions and law in Cybe rspace because of its border less nature, making Cybe rspace almost a-jurisdictional, because physical locat ions, and physical boundar ies, are irrelevant in the networked environment of the Internet. 1 8 5 Thus , the Internet should be viewed as its own jurisdiction, where laws and regulation will develop freely within that jurisdiction. \"The rise of the computer network is destroying the link between geographica l location and (1) the power of the local government 's to assert control over the online behaviour (2) the effects of onl ine behaviour on individuals or things (3) the legit imacy of the efforts of a local sovereign to enforce rules appl icable to global phenomena (4) the ability of physical location to give notice of which sets of rules app l y . \" ' 8 6 Within the self-regulation school of thought is the idea that the Internet has deve loped its own distinct online community. Virtual communit ies can be defined as \"soc ia l aggregat ions that emerge from the Net when enough people carry on those public d iscuss ions long enough, with sufficient human feel ing, to form webs of personal relat ionships in C y b e r s p a c e \" . 1 8 7 With this idea of community c o m e s the concept that those who inhabit it should regulate Cybe rspace . T h o s e who support this idea of communit ies in cyberspace argue that those communi t ies have, and will, develop appropriate norms and values to govern the s p a c e s , which they inhabit. 1 8 5 Post, David, \"Anarchy, State, and the Internet: An Essay on Lawmaking in Cyberspace\" 1995 J. Online L. art 3 at para 34. 1 8 6 Post, David, and David Johnson, \"Law and Borders - the Rise of Law in Cyberspace\", (1996) 48 Stan. L. Rev. 1367, at 6., 1 8 7 Maltz, Tamir, \"Customary Law & Power in Internet Communities\", School of Law, University of New South Wales, (visited 10/12/00) 93 Thus , the inherent nature of the Internet goes beyond the jurisdiction of the state, and in effect creates its own jurisdiction. Th is separate jurisdiction of C y b e r s p a c e , should be left a lone to self-regulate. The state has no power in Cybe rspace . c) T h e Internationalist S c h o o l The Internationalist school of thought is premised on the idea that the Internet should be governed through international mechan isms. T h e s e mechan isms include the establ ishment of international treaties and bodies to harmonize the laws appl icable to the Internet. Though there has been some effort to harmonize Internet i ssues and law, there is the possibil ity that it would only work if every single nation in the world s igned on and enforced the treaty. However, efforts to harmonize will become more and more effective as the leaders in technology and countr ies with the highest proportion of users s ign on to a c o m m o n agreement . d) T h e T e c h n o l o g y S c h o o l Scho la r Lawrence Less ig advances the view that the Internet can be regulated through its technological framework, through its c o d e . 1 8 8 Less ig supports the v iew that the Internet can 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 \"... code writers are increasingly lawmakers. They determine what the defaults of the Internet will be; whether privacy will be protected; the degree to which anonymity will be a l lowed; the extent to which a c c e s s will be guaranteed. They are the ones who set its nature. Their dec is ions, now made in the interstices of how the Net is coded , define what the Net i s . \" 1 8 9 Thus , \"the cho ice is not between regulation and no regulation. The cho ice is whether we architect the network to give power to network owners to regulate innovation, or whether we architect it to remove that power to regu la te . \" 1 9 0 With respect to the Napster situation, there has been an extension of traditional legal pr inciples into a new area of appl icat ion. Napster demonstrates that although the Court may have misconstrued the law in a manner that is inconsistent with the copyright founding initiative, the law can be appl ied. Ev idence is the application of the law in prior c a s e s deal ing with new technologies, i.e. Sony. What is necessary to deal with the new issues which have ar isen as a result of copyright and the Internet is the appl icat ion of traditional principles in their true form, a longside the cont inued growth of technological innovation to ensure that the laws can be enforced. Th is is where the technology schoo l and the traditionalist school must meet. Together, effective regulation and copyright protection can take p lace where traditional principles can be extended to apply to the new media and technology can be adapted to ensure that the law is enforced. This mandates the need for a Lessig, Lawerence, Code, ibid, at 60 1 9 0 Lessig, Lawerence, \"Innovation, Regulation, and the Internet\", The American Prospect, vol. 111 no. 10, March 27-April 10, 2000, at 6 95 cooperat ive environment among the artists, the copyright holders, the med ia conglomerates, and the actual developers of the technology. III. THE EVOLUTION OF TECHNOLOGY The development of technology is an important point in this d iscuss ion . Through technology these phenomena were conce ived and able to evolve into what we see today. Techno logy has also been used to solve many of the issues which ar ise as a result of these phenomena. The Napster case demonstrates that the ability of technology to evolve to meet the needs of interested parties and individuals can lead to the regulation of the Internet. Currently, this type of regulation is l imited, but Napster demonstrates the flexibility of technological innovation to meet the needs that are p laced upon it. The injunction p laced on Napster by the U.S . Courts requires the serv ice to filter out copyright infringing files. W h e n the injunction was originally put into p lace there was an outcry by Napster that such filtering was not possib le b e c a u s e of the technological nature of its peer to peer system. This was later proved to not be the case . Over the months following the injunction var ious forms of filtering were deve loped, some proving to be more capable than others. A s each new filtering technique was put into place, a new way to circumvent the filter was a lso found and used by some members of the Napster system. W h e n the filtering sys tem was originally put in p lace, within 24 hours most of the b locked songs 96 were once again avai lable on the system with new file names or minor typos, these smal l changes al lowed Napster users to circumvent the new l imi tat ions. 1 9 1 This lead to the belief that the filtering system would never work and that Napster could not meet the requirements of the injunction. A s each filtering system was circumvented a new technology deve loped to meet the changing needs hoping to provide an adequate filter to meet the terms of the in junct ion. 1 9 2 New filters have been put into place using the developing technology of digital fingerprinting, digital watermarking, and filters that can read the son ic character ist ics of a song f i l e . 1 9 3 1 9 1 Goodin, Dan, \"Napster Injunction Puts Burden on Labels\", The Standard.com, (visited 25/04/01) 1 9 2 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, (visited 25/04/01); Brad King, \"File Tracker May Go Too Far\", May 11, 2001, Wired News, (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. These \"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, (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, (visited 04/06/01); \"Aimster Sues the Recording Industry\", The Standard, May 2, 2001, (visited 03/05/01) 1 9 3 See Borland, John, \"Napster's zero hour approaching on filters\", C N E T News.com, March 9, 2001, (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, 97 \"The development of highly sophist icated filtering and tracking software is making such limitations possib le for the first t ime. A s a result, the new technologies are resurrecting a volatile issue long thought dead : the idea that the Internet can be regulated by geographic boundar ies within the United States and from country to count ry . \" 1 9 4 In a period of a few months the filtering technology has been changed , modif ied, and re-invented to the point that Napster can now effectively filter out the copyright protected files from its sys tem. The new generat ion of software can block and track people based on their physical locations. T h e s e tracking programs work in a similar manner as that used for consumer profiling used by advert isers. They track a persons Internet Protocol address , which can then be used to locate where an individual lives or w o r k s . 1 9 5 The technological innovation occurring after the Napster decis ion has provided a temporary solution to the problem of policing the Napster network and removing infringing fi les. Th is provides support for the argument that technology will meet the needs to regulate other technology. O n the one had the technology has deve loped to meet the needs of Napster. On the other hand, new technology will be deve loped to evade tracking and filtering software. A s imple example would be the inability to track people who use filters that concea 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, (visited 08/05/01); \"Napster launches new song-blocking technology\", May 8, 2001, USATODAY.com, (visited 09/05/01). Jacobus, Patricia, \"Taming the Web: Building fences, one by one\", C N E T News.com, April 19, 2001, (visited 03/06/01) 1 9 5 Jacobus, Patricia, ibid. 98 add resses along with personal information like age, sex and i n c o m e . 1 9 6 There are still many outstanding issues concerning the application of the law to other Napster- l ike peer to peer networks that are located outside of the United States. IV. C O N C L U S I O N The Internet is a topic of interest and debate in many discipl ines. The appl icat ion of law to Internet related activities has only just begun to be an important issue to be debated and worked through by courts and legislatures around the world. The Napster c a s e provides a concrete and important example of the difficulty in applying traditional legal reasoning to new media. However, it demonstrates the power that an individual has in the forum of Cyberspace , how one person can create someth ing that changes the application of the law, and cal ls for new regulatory methods to be reconci led with the old ones. W h e n interpreting the law to meet the necessary regulatory s tandards that the Internet is dictating to ensure the protection of the rights that the legal sys tem stands for, it is important not to loose sight of the foundation that those va lues were premised upon. This is essent ia l to maintain faith and legit imacy in the legal sys tem. Napster shows that the current interpretation of prior common law doctr ine related to copyright and technological innovation is quest ionable. 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Media and Web Articles 1. \"From the C IO Discuss ion Group\" March 13, 2000, ht tp: / /www.educause.edu/page2/cio_napster.html (04/02/01) 106 2. \"Go re L ikens Amer ican Democracy to Napster C a s e \" , Sept 28, 2000, (9/30/00) 3. \"Meet the Napster\" , T I M E Magaz ine , Oct 2 2000, 4. \"Schoo l s R e c e s s on Napster\", Wi red News Report, Aug 30, 2000. 5. Assoc ia ted P ress , \"Ga tes takes the stage at World Economic Forum\", J a n 29, 2001 , (01/02/01) 6. Assoc ia ted P ress , \"Senate 's Ears Hear the Noise\" , Apr 3, 2001 , (04/04/01) 7. Bar low, John Perry, \"Napster .com and the death of the mus ic industry\", May 12 2000, (04/02/01) 8. Barlow, John Perry, \"The Next Economy of Ideas: Wil l copyright survive the Napster bomb? Nope, but creativity will\", Oct 2000, (11/30/00) 9. Barnes , Cec i ly , \"Napster fans squeeze through loopholes\", C N E T N e w s . c o m , March 6, 2001 , (visited 04/06/01) 10. Barry, Hank, Napster C E O , \"Napster C E O : Act of Cong ress needed to remedy compl icated l icensing morass that threatens internet music\" , stmt by Napster C E O , (06/04/01) 11. Benner , Jeffrey, \"Napster Fallout: Pr ivacy L o s e s ? \" , Mar 6, 2001 , (06/03/01) 12. Bor land, John , \"Microsoft plays O S card to cement anti-piracy role\", Feb 1, 2001 , C N E T News .com, (01/02/01) 13. Bor land, John , \"Napster alternatives start blocking songs\" , C N E T News .com, Apri l 6, 2001 , (visited 04/06/01) 14. Bor land, John , \"Napster listens to songs in new release\", C N E T News .com, May 7, 2001 , (visited 08/05/01) 107 15. Bor land, John , \"Napster pushed to step up efforts\", C N E T N e w s . c o m , March 27, 2001 , http:/ /news.cnet.com./news/0-1005-200-5322820.html?tag=prntfr> (visited 04/06/01) 16. Bor land, John , \"Napster sc reens songs, but files still slip through\", C N E T News .com, March 5 2001, 17. Bor land, John , \"Napster sc reens songs, but files still slip through\", Staff Writer, C N E T News .com, March 5, 2001, 18. Bor land, John , \"Napster traffic f igures raise new quest ions\", Staff Writer C N E T N e w s . c o m , A u g 4, 2000, (04-02-01) 19. Bor land, John , \"Napster 's zero hour approaching on filters\", C N E T News .com, March 9, 2001 , (visited 25/04/01) 20. Bor land, John , \" R I A A sues A imster over file swapping\" , C N E T News .com, May 25 , 2001 , (visited 03/06/01) 21 . Bor land, John , \"R IAA: Gnutel la not yet a threat\", Staff Writer, C N E T News .com, March 29, 2001, 22. Bor land, John , Mike Yamamoto and Cory Gr ice, \"The P 2 P myth\", Oct 26, 2000, 23. Bor land, John , \"R IAA: Gnutel la not yet a threat\", Staff Writer, C N E T News .com, March 29, 2001, 24. Brown, Jane l le , \"The Next Napster?\" , March 20, 2001, 25. Burnham, Bill, \"Napster 's Rea l Importance\", Z D N N , May 9, 2000, (04/02/01) 26. 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Dyson , Esther, \"Shar ing Content Without Control\" , Oct 9, 2000. (05/02/01) 37. Evangel is ta , Benny, \"Bigger Battle Brewing: Napster -RIAA Court C a s e Becoming Gol iath vs. Gol iath\", S e p 18, 2000, S a n Franc isco Chronic le . 38. Evangel is ta , Benny, \"Book Publ ishers Learn From Napster\", A u g 28, 2000, S a n Franc isco Chronic le. 39. Evangel is ta , Benny, \"Break Into Digital Mus ic Market: Portable audio player we ighs just 3 ounces , will cost about $300\", S a n Franc isco Chron ic le , J a n 2, 2001 . 40. Evangel is ta , Benny, \"Emus i c Caut ions Napster Users\" , S a n Franc isco Chronic le , D e c 1, 2000. 41 . Evangel is ta , Benny, \"Free W e b Mus ic Not Just a F a d \" , June 9, 2000, S a n Franc isco Chronic le. 109 42. Evangel is ta , Benny, \"Napster Teach- in on C a m p u s : More co l leges try warnings instead of crackdowns\" , Sept 4, 2000, S a n Franc isco Chronic le . 43 . Evangel is ta , Benny, \"Napster Traffic Booming: Court fight draws mil l ions to mus ic site\", A u g 1 2000, S a n Franc isco Chronic le. 44. Evangel is ta , Benny, \"The Napster Effect: Program may have started someth ing that no court can stop\", S a n Franc isco Chronic le, Sept 28, 2000. 45 . Evangel is ta , Benny, \"The Wait ing G a m e : Whee l s of justice are grinding slowly in the Napster case\" , Chronic le Staff Writer, S a n Franc isco Chronic le , Jan 26, 2001 . 46. Foley, Mary Jo , \"Peer- to-peer monsters are on the way\", J a n 9, 2001 , (26/02/01) 47. Fost, Dan , \"Mon ica it's not, but med ia are all worked up about copyright case \" , S a n Franc isco Chronic le, Oct 3, 2000. 48. G a n a h l , Jane , \"L is ten.com Tunes Out 42 Employees\" , S a n Franc isco Chron ic le , J a n 14, 2001. 49. Geis t , M ichae l , \"Everybody wants to rule the Web\" , Thurs. Jan 18, 2001 , 50. 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K ing, Brad , \"Digital Mus ic 's Nasty Little War\" , Oct 31, 2000, (11/30/00) 60. K ing, Brad, \" E m u s i c Tracks Napster Naugh t i es \" , Nov 21 , 2000, (11/23/00) 61 . K ing, Brad , \"Mus i c Labels W e a r 'Kick Me ' S ign\" , Apr 3, 2001 , (03/04/01) 62. K ing, Brad, \"Mus ica l Battle Lines Drawn\", Ap r 4, 2001, (04/04/01) 63. K ing, Brad, \"Napster Filter More Like a S ieve\" , Mar 5, 2001 , < http .//www. wi red. com/news/pr i nt /0,1294,42196,00. htm l> (06/03/01) 64. King, Brad, \"Napster Loss Is Copyright Ga in \" , Mar 3, 2001, (03/03/01) 65. K ing, B rad , \"Napster Loss Is Copyright G a i n \" , Mar 3, 2001, (03/03/01) 66. K ing, B rad , \"Napster Outlast ing Opponents\" , Nov 10, 2000, (11/30/00) 67. King, Brad , \"Napster Spat Pits F a n s vs. Bands \" Ap r 21 2000, wi red.com. 68. K ing , Brad , \"Napster 's C lone 's Cur ious Terms\" , Mar 2, 2001 , (06/03/01) 69 . K ing, Brad , \"Pi rates Beware : We ' re Watch ing\" , J a n 3, 2001 , 70. 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Pere ra , Rick, \"Gnutel la May Be Used for Kiddie Porn\" , Jan 10, 2001 , (26/02/01) 80. Phi l ipkoski , Kr isten, \"Napster: Not Just For the Music\" , July 29, 2000, 81. Phi l ips, Chuck , \"Ber te lsmann P lays Mus ica l Chai rs\" , T imes Staff Writer, Nov 28, 2000, L.A. T imes , (05/02/01) 82. Reuters , \"Napster audience up 28%\" , March 2, 2001, (02/03/01) 83. Reuters , \"Napster 's offer not a hit with record industry\" Reuters, Feb 21 , 2001 , The G lobe and Mai l . 84. Reuters , \" U . S . Sena te to prove Napster decis ion\" , F e b 15, 2001 , the G l o b e and Mai l . 112 85. R o s e , M .J . , \"What 's Next: Bookster?\" , Oct 2, 2000, (11/30/00) 86. R o s e n , Hilary B., president and C E O of RIAA, \"Ta lkBack R e s p o n s e : Promote online music , not online theft\", (01/02/01) 87 .Sage r , R y a n , \"Napster 'Teach-In' : Hai l Shawn\" , A p r 3, 2001 , (03/04/01) 88. 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Varan in i , G iancar lo , \"Shawn Fanning on Napster\", March 1 2000, (visited 11/30/00) 97. W a s s e r m a n , El izabeth, \"Hatch P ledges to Keep Onl ine Mus i c Access ib le \" , \" J a n 10, 2001 , 113 , (26/02/01) 99. W e i s m a n , Robyn , \"Germany moves to Sque lch Rac i sm on Napster\", D e c 21 , 2000, (04/02/01) 114 "@en ; edm:hasType "Thesis/Dissertation"@en ; vivo:dateIssued "2001-11"@en ; edm:isShownAt "10.14288/1.0077439"@en ; dcterms:language "eng"@en ; ns0:degreeDiscipline "Law"@en ; edm:provider "Vancouver : University of British Columbia Library"@en ; dcterms:publisher "University of British Columbia"@en ; dcterms:rights "For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use."@en ; ns0:scholarLevel "Graduate"@en ; dcterms:title "The evolution of copyright : Napster and the challenges of the digital age"@en ; dcterms:type "Text"@en ; ns0:identifierURI "http://hdl.handle.net/2429/11629"@en .