High-Tech Firms Walk Warily in Post-Grokster Era
Lower courts have yet to interpret the landmark Supreme Court MGM v. Grokster ruling, which found peer-to-peer(P2P) networks can be liable for users’ sharing copyrighted files, but attorneys are amassing arsenals to deploy on high-tech clients’ behalf in a post- Grokster world. The now-defunct P2P network settled its fight with the entertainment industry late last year (WID Nov 8/05 p1, June 28/05 p1), but as new modes emerge, legal experts await cases testing Grokster’s updated liability standards. Intellectual property (IP) attorney John Hornick Wed. gave D.C. Bar Assn. members some rules of the road.
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Companies can act prophylactically to avoid liability for copyright infringement, Hornick said. Firms should educate their software developers about copyright laws and doctrines of secondary liability. They should be alert for elements that could cause users to infringe and figure out how to avoid creating that evidence of intent, he said. The suggestions seem obvious, but persuading a hip- shooting startup to aim more warily is easier said than done, he said.
“If [companies] want to talk about intent, don’t write it down, don’t leave people voicemails, don’t make a record of it,” Hornick said. “Non-lawyers think they can write anything they want in e-mail and they do it all the time. E-mail has become one of the greatest sources of evidence,” he said. No matter what the business model, clients need to be told not to create a paper trail -- internally through memos, e-mails and proposals or through external channels, Hornick said.
Directly encouraging or instructing users to employ a product for infringement in manuals, newsletters, websites, chatrooms or help lines is also off limits, Hornick said. Boasting about possible infringing uses in advertising or to investors, or showing disdain for copyrights by inviting legal action where the “goal is to get into trouble,” is also taboo. That’s particularly important for new companies that like to push the edge of the envelope by generating a buzz about their products or services, Hornick said.
The Supreme Court found advertising designed to stimulate copyright violations is a “classic instance of inducement” and such evidence really hurt Grokster. Using technology to boost the likelihood users will obtain the product for infringing purposes is frowned on, too. Hornick said use of infringing keywords in metatags to lure Web crawlers to a firm’s site and having the means to block copyright owners’ ability to detect infringement, like flagging creators’ IP addresses, also could work against them.
If a product’s distributor can learn the extent of user infringement, so can copyright owners, he said: “Don’t leave your head in the sand, especially if a product contains such functionality. Go out and find out if it’s being used for infringement and if it is, take remedial steps -- whatever they may be” -- like killing the offering or fixing future versions of the product, Hornick said.
In developing new technologies, expressions of intent to promote infringing use raise risk, and if a firm has evidence of intent “you're probably going to get sued,” he said: “The clearer the expression, the greater the risk.” Encouraging a company to be “intellectually honest about their application” and setting up guidelines for a client to be follow cuts the chance of it getting entangled in a suit, Hornick said.
Hornick wouldn’t say if he thinks Grokster was right or wrong, whether Congress should step in or whether the ruling will affect P2P innovation. “I don’t care about any of these things. I have no agenda either -- unless, of course, somebody’s paying me to have one,” he joked.
P2P is ‘Here to Stay’
The software licensing and copyright expert warned: “We know P2P software is here to stay… If you want to make it and sell it, build in copyright protections.” His advice came the day P2P monitor BigChampagne said U.S. file-sharing hit a record high in Dec.. The firm found an average simultaneous user level of 6.98 million -- trumping the previous high of 2.89 million, set in July. The Dec. estimate is a 26.9% jump over figures from the same month in 2004.
A Dec. NPD Group study showed the number of households downloading music from unauthorized P2P services has fallen since the Supreme Court ruling. Downloading households fell 11%, from 6.4 million to 5.7 million, June to Oct. (WID Dec 15 p9). Significant global P2P usage gains also were reported. BigChampagne reported 9.55 million average simultaneous users in Dec. -- up 26% from the previous year.