1
The conventional wisdom is that governments respond slowly to
technological change. In the case of the Internet, nothing could
be further from the truth. In 1994 and 1995, "dot-com" was still
a mystical term for many. Most stories about the Internet dealt
with sexual predation rather than possibilities of extreme
wealth. Internet commerce itself was barely an idea, and some of
the most exciting sites on the Web had pictures of coffeepots in
university departments far away. ("See," one would proudly say
to a technological neophyte friend when introducing him to the
wonders of the Net, "the pot is empty and we can see that live
from here! This changes everything!") It was an innocent time.
Yet the U.S. government was already turning the wheels of
intellectual property policy to respond to the threat (and
promise) of the Internet. More precisely, they were trying to
shape the future of the cumbersomely named "National Information
Infrastructure," the official name for the "information
superhighway" that it was presumed would replace the "immature"
technology of the Net. The government was wrong about that, and
about a lot else.
2
The blueprint for new intellectual property policy online came
from the Patent and Trademark Office. That office promulgated
first a Green Paper and then, after further hearings, a White
Paper, on "Intellectual Property and the National Information
Infrastructure."1 As policy and legal documents these are in one
sense long out of date. Some of their legal arguments were
successfully challenged. Some of their most important proposals
were rejected, while many others have become law. But as a
starting point from which to trace the frame of mind that has
come to dominate intellectual property policy online, they are
hard to equal.
3
These documents contained proposals that nowadays would be seen
as fairly controversial. Internet service providers were said to
be "strictly liable" for copyright violations committed by their
subscribers; that is to say, they were legally responsible
whether or not they knew about the violation or were at fault in
any way. Loading a document into your browser's transient cache
memory while reading it was said to be making a "copy." There
was more: the beginnings of what later became the Digital
Millennium Copyright Act,2 making it illegal to cut through the
digital fences which content providers put around their
products. The attitude toward fair use was particularly
revealing. At one point in the White Paper it was hinted that
fair use might be a relic of the inconveniences of the analog
age, to be discarded now that we could have automated fractional
payments for even the most insignificant use.3 (It was noted,
however, that some disagreed with this conclusion.) At another
point, fair use was described as a "tax" on rights holders and a
"subsidy" to those who benefited from it, such as educational
institutions.4 The White Paper also suggested that while any
potential loss to rights holders caused by the new technology
needed to be countered with new rights and new protections, any
potential gain to them through the new technology was simply
theirs. Potential gain did not offset the need to compensate for
potential loss.
4
So what views of intellectual property were we carrying forward
into the Internet age? Intellectual property is just like other
property. Rights are presumptively absolute. Any limitations on
them, such as fair use, are taxes on property owners, subsidies
to the society at large. It sounds like a perfect time to
administer the Jefferson Warning I sketched out in Chapter 2.
After all, Jefferson was specifically warning against each of
these errors two hundred years ago. To find them in a student
paper would be disappointing--irritating, even. But this document
was the blueprint for the intellectual property regime of
cyberspace.
5
But do these mistakes matter? How important is it that we get
the rules of intellectual property right? To me, a number of my
colleagues, some librarians, a few software gurus, the White
Paper was more than just a bit of bad policy in a technical
field--like a poorly drafted statute about the witnessing of
wills, say. When you set up the property rules in some new
space, you determine much about the history that follows.
Property rules have a huge effect on power relationships and
bargaining positions. Think of rules setting out water rights or
the right to drive cattle over homesteaders' land in the
American West. But they also are part of a larger way of seeing
the world; think of the early-twentieth-century rules treating
unions as "conspiracies in restraint of trade" or the Supreme
Court decisions that dispossessed the American Indians on the
theory that they did not comprehend the concept of property and
thus did not "own" the land being taken from them.5 We were at a
comparable point in the history of cyberspace. What was being
set up here was a vision of economy and culture, a frame of mind
about how the world of cultural exchange operates, and
eventually a blueprint for our systems of communication. At this
stage, the range of possibilities is extremely wide. A lot of
different choices could be made, but subsequent changes would be
harder and harder as people and companies built their activities
around the rules that had been laid down. This was, in short, a
tipping point where it was particularly important that we make
the right decisions.
6
Conventional political science told us there were a lot of
reasons to fear that we would not make the right decisions. The
political process was going to be particularly vulnerable to
problems of capture by established industries, many of whom
would (rightly) see the Internet as a potential threat to their
role as intermediaries between artists and creators on the one
hand and the public on the other.
7
Intellectual property legislation had always been a cozy world
in which the content, publishing, and distribution industries
were literally asked to draft the rules by which they would
live. The law was treated as a kind of contract between the
affected industries. Rationally enough, those industries would
wish to use the law not merely to protect their legitimate
existing property rights, but to make challenges to their basic
business plans illegal. (Imagine what would have happened if we
had given the lamp-oil sellers the right to define the rules
under which the newfangled electric light companies would
operate.) There would be no easy counterweight to these
pressures, as Jessica Litman points out in a wonderful set of
reflections on copyright lawmaking, because the potential
competitors to existing titans were just being born and could
thus be strangled safely in their cradles.6 Certainly the public
would have little grasp as yet of what was at stake.
8
In any event, when had the public played a role in intellectual
property legislation? That kind of law affected businesses with
printing presses or TV towers, not normal citizens. It did not
help that the legislators were largely both ignorant and
distrustful of the technology of the Internet--which was, at the
time, thought to be dominated by foreign hackers, suicidal
cults, pirates, and sleazy pornographers. (Terrorists and
Nigerian spammers would be added to the mix later.)
9
Given an area of law that legislators were happy to hand over to
the affected industries and a technology that was both
unfamiliar and threatening, the prospects for legislative
insight were poor. Lawmakers were assured by lobbyists
10
a) that this was business as usual, that no dramatic changes
were being made by the Green or White papers; or
b) that the technology presented a terrible menace to the
American cultural industries, but that prompt and statesmanlike
action would save the day; or
c) that layers of new property rights, new private enforcers of
those rights, and technological control and surveillance
measures were all needed in order to benefit consumers, who
would now be able to "purchase culture by the sip rather than by
the glass" in a pervasively monitored digital environment.
11
In practice, somewhat confusingly, these three arguments would
often be combined. Legislators' statements seemed to suggest
that this was a routine Armageddon in which firm, decisive
statesmanship was needed to preserve the digital status quo in a
profoundly transformative and proconsumer way. Reading the
congressional debates was likely to give one conceptual
whiplash.
12
To make things worse, the press was--in 1995, at least--clueless
about these issues. It was not that the newspapers were ignoring
the Internet. They were paying attention--obsessive attention in
some cases. But as far as the mainstream press was concerned,
the story line on the Internet was sex: pornography, online
predation, more pornography. The lowbrow press stopped there. To
be fair, the highbrow press was also interested in Internet
legal issues (the regulation of pornography, the regulation of
online predation) and constitutional questions (the First
Amendment protection of Internet pornography). Reporters were
also asking questions about the social effect of the network
(including, among other things, the threats posed by pornography
and online predators).
13
There were certainly important issues within the areas the press
was willing to focus on, and I do not mean to trivialize them. I
worked with a couple of civil liberties groups in opposing the
hapless Communications Decency Act, one of the most poorly
drafted pieces of speech regulation ever to come out of
Congress.7 It was a palpably unconstitutional statute,
eventually struck down by a unanimous Supreme Court.8 Its
proposals would have burdened the speech of adults while failing
to protect the interests of minors. Reporters loved the topic of
the Communications Decency Act. It was about sex, technology,
and the First Amendment. It foreshadowed the future of online
speech regulation. One could write about it while feeling
simultaneously prurient, principled, and prescient: the
journalistic trifecta. For law professors who worked on digital
issues, the Communications Decency Act was an easy topic to get
the public to focus on; we had the reporters and editors calling
us, pleading for a quote or an opinion piece.
14
Intellectual property was something quite different. It was
occasionally covered in the business pages with the same
enthusiasm devoted to changes in derivatives rules. Presented
with the proposals in the Green and White Papers, the reporters
went looking for opinions from the Software Publishers
Association, the Recording Industry Association of America, or
the Motion Picture Association of America. This was not bias or
laziness--to whom else would they go? Who was on the "other side"
of these issues? Remember, all of this occurred before Napster
was a gleam in Sean Fanning's eye. Sean Fanning was in middle
school. Amazon.com was a new company and "Google" was not yet a
verb.
15
In this environment, convincing the legislature or the press
that fundamental public choices were implicated in the design of
intellectual property rights for the digital world was about as
easy as convincing them that fundamental public choices were
implicated in the rules of tiddlywinks. My own experience is
probably representative. I remember trying to pitch an article
on the subject to a charming but uncomprehending opinion page
editor at the Washington Post. I tried to explain that decisions
about property rules would shape the way we thought about the
technology. Would the relatively anonymous and decentralized
characteristics of the Internet that made it such a powerful
tool for global speech and debate come to be seen as a bug
rather than a feature, something to be "fixed" to make the Net
safe for protected content? The rules would also shape the
economic interests that drove future policy. Would we try to
build the system around the model of proprietary content
dispensed in tightly controlled chunks? Would fair use be made
technologically obsolescent? Would we undercut the various
nontraditional methods of innovation, such as free software,
before they ever managed to establish themselves? What would
become of libraries in the digital world, of the ideal that
access to books had important differences from access to
Twinkies? After I concluded this lengthy and slightly incoherent
cri de Coeur, there was a long pause; then the editor said
politely, "Are you sure you couldn't make some of these points
about a free speech issue, like the Communications Decency Act,
maybe?"
16
I finally placed the piece in the Washington Times,9 which was
best known at the time as the only metropolitan newspaper owned
by the Unification Church, familiarly referred to as the
Moonies. This hardly counted as a direct line to the popular
imagination (though the article's mild criticisms elicited an
extraordinary reaction from the Clinton administration's lead
official on intellectual property policy--throwing me for several
weeks into a surreal world of secondhand threats, third-party
leaks, and a hilarious back-and-forth in the letters page).10
17
Things were not completely one-sided. An unlikely group of
critics had formed: librarians, a few software developers, law
professors, some Internet libertarians. Of particular note was
the Digital Future Coalition, which grew to represent a broad
range of interested groups and industries thanks in part to the
prescient analysis and remarkable energy of one of my
colleagues, Peter Jaszi.11 Together with Pamela Samuelson,
Jessica Litman, and a number of other distinguished legal
scholars, Peter turned his considerable intellectual talents to
explaining why writers, telecom companies, scientists,
manufacturers of consumer electronics, and a host of other
groups should be interested in the rules being debated. There
had been a series of official hearings in which complaints were
carefully collected and just as carefully ignored. This became
harder to do as the critics became more numerous and better
organized. Nevertheless, the currents were clearly running
against them. It would be nice to say that this was merely
because of the clubby history of intellectual property
legislation, or the difficulty in getting press attention, or
the various issues of industry capture and collective action
problems. Yet this would be to miss a vital element of the
situation.
18
Conventional political science showed that there were structural
reasons why the legislative process was likely to succumb to
industry capture.12 The reality turned out to be much worse. The
real problem was not a political process dominated by cynical
power politics, nor an initial absence of critical newspaper
coverage, though both of those factors contributed. The real
problem was that most of the proponents of the White Paper's
policies believed their own arguments so deeply and sincerely
that they saw any criticism of those positions as either godless
communism or hippy digital anarchism. (Frequently, in fact, they
clung to their arguments even when there was fairly strong
evidence that they would actually be harming themselves by
putting these policies into effect. I will expand on this point
later.) More importantly, they succeeded in getting their story
about the threats and promises of the digital future accepted as
the basis for all discussion of intellectual property policy. It
became the organizing set of principles, the master
narrative--call it what you will.
19
The heart of the story is beguilingly simple. The Internet makes
copying cheaper and does so on an unparalleled global scale.
Therefore we must meet the greater danger of illicit copying
with more expansive rights, harsher penalties, and expanded
protections. True, as I pointed out before, some of these
expansions may indeed have the practical effect of reducing
rights that citizens thought they had, such as fair use, low-
level noncommercial sharing among personal friends, resale, and
so on. But without an increase in private property rights,
cheaper copying will eat the heart out of our creative and
cultural industries. I call this story the Internet Threat. It
is a powerful argument and it deserves some explanation.
20
Think back for a moment to the first chapter and the difference
between Madame Bovary and the petunia. If the reason for
intellectual property rights is the "nonrival" and
"nonexcludable" nature of the goods they protect, then surely
the lowering of copying and transmission costs implies a
corresponding need to increase the strength of intellectual
property rights. Imagine a line. At one end sits a monk
painstakingly transcribing Aristotle's Poetics. In the middle
lies the Gutenberg printing press. Three-quarters of the way
along the line is a photocopying machine. At the far end lies
the Internet and the online version of the human genome. At each
stage, copying costs are lowered and goods become both less
rival and less excludable. My MP3 files are available to anyone
in the world running Napster. Songs can be found and copied with
ease. The symbolic end of rivalry comes when I am playing the
song in Chapel Hill, North Carolina, at the very moment that you
are both downloading and listening to it in Kazakhstan--now that
is nonrival.
21
THE LOGIC OF PERFECT CONTROL
22
My point is that there is a teleology--a theory about how
intellectual property law must develop historically--hidden
inside the argument I call the Internet Threat. The argument,
which is touted endlessly by the content industries--and not
without reason--can be reduced to this: The strength of
intellectual property rights must vary inversely with the cost
of copying. With high copying costs, one needs weak intellectual
property rights if any at all. To deal with the monk-copyist, we
need no copyright because physical control of the manuscript is
enough. What does it matter if I say I will copy your
manuscript, if I must do it by hand? How will this present a
threat to you? There is no need to create a legal right to
exclude others from copying, no need for a "copy right." As
copying costs fall, however, the need to exclude increases. To
deal with the Gutenberg press, we need the Statute of Anne--the
first copyright statute--and the long evolution of copyright it
ushered in.
23
But then comes the Internet. To deal with the Internet, we need
the Digital Millennium Copyright Act,13 the No Electronic Theft
Act,14 the Sonny Bono Copyright Term Extension Act,15 and
perhaps even the Collections of Information Antipiracy Act.16 As
copying costs approach zero, intellectual property rights must
approach perfect control. We must strengthen the rights,
lengthen the term of the rights, increase the penalties, and
make noncommercial illicit copying a crime. We must move outside
the traditional realm of copyright altogether to regulate the
technology around the copyrighted material. Companies are
surrounding their digital materials with digital fences. We must
make it a violation of the law to cut those digital fences, even
if you do so to make a "fair use" of the material on the other
side. We must prohibit the making of things that can be used as
fence-cutters--a prospect that worries researchers on encryption.
In the long run, we must get rid of the troublesome anonymity of
the Internet, requiring each computer to have an individual ID.
We must make click-wrap contracts enforceable, even on third
parties, even when you cannot read them before clicking--so that
you never actually buy the software, music, movies, and e-books
you download, merely "license" them for a narrowly defined range
of uses. We must create interlocking software and hardware
systems that monitor and control the material played on those
systems--so that songs can be licensed to particular computers at
particular times. Uses that the owners wish to forbid will
actually be impossible, whether they are legal or not.
24
In other words, we must make this technology of the Internet,
which was hailed as the great "technology of freedom," into a
technology of control and surveillance. The possibility of
individuals circulating costless perfect digital copies requires
it. It would be facile (if tempting) to say we must remake the
Internet to make it safe for Britney Spears. The "Internet
Threat" argument is that we must remake the Net if we want
digital creativity--whether in music or software or movies or e-
texts. And since the strength of the property rights varies
inversely with the cost of copying, costless copying means that
the remade Net must approach perfect control, both in its legal
regime and its technical architecture.
25
Like any attractive but misleading argument, the Internet Threat
has a lot of truth. Ask the software company producing
expensive, specialized computer-assisted design programs costing
thousands of dollars what happens when the program is made
available on a "warez" site or a peer-to-peer filesharing
network. The upstart computer game company pinning its hopes and
its capital on a single new game would tell you the same thing.
The easy availability of perfect, costless copies is a danger to
all kinds of valuable cultural and economic production. The
story of the Internet Threat is not wrong, it is simply
dramatically incomplete in lots of ways. Here are two of them.
26
Costless Copying Brings Both
Costs and Benefits
27
The Internet does lower the cost of copying and thus the cost of
illicit copying. Of course, it also lowers the costs of
production, distribution, and advertising, and dramatically
increases the size of the potential market. Is the net result a
loss to rights holders such that we need to increase protection
and control in order to maintain a constant level of incentives?
A large, leaky market may actually provide more revenue than a
small one over which one's control is much stronger. What's
more, the same technologies that allow for cheap copying also
allow for swift and encyclopedic search engines--the best devices
ever invented for detecting illicit copying. What the Net takes
away with one hand, it often gives back with the other. Cheaper
copying does not merely mean loss, it also means opportunity.
Before strengthening intellectual property rights, we would need
to know whether the loss was greater than the gain and whether
revised business models and new distribution mechanisms could
avoid the losses while capturing more of the gains.
28
But wait, surely theft is theft? If the new technologies enable
more theft of intellectual property, must we not strengthen the
laws in order to deal with the problem? If some new technology
led to a rash of car thefts, we might increase police resources
and prison sentences, perhaps pass new legislation creating new
crimes related to car theft. We would do all of this even if the
technology in question gave car owners significant benefits
elsewhere. Theft is theft, is it not?
29
The answer in a word is no. Saying "theft is theft" is exactly
the error that the Jefferson Warning is supposed to guard
against. We should not assume that intellectual property and
material property are the same in all regards. The goal of
creating the limited monopoly called an intellectual property
right is to provide the minimum necessary incentive to encourage
the desired level of innovation. Anything extra is deadweight
loss. When someone takes your car, they have the car and you do
not. When, because of some new technology, someone is able to
get access to the MP3 file of your new song, they have the file
and so do you. You did not lose the song. What you may have lost
is the opportunity to sell the song to that person or to the
people with whom they "share" the file. We should not be
indifferent to this kind of loss; it is a serious concern. But
the fact that a new technology brings economic benefits as well
as economic harm to the creation, distribution, and sale of
intellectual property products means that we should pause before
increasing the level of rights, changing the architecture of our
communications networks, creating new crimes, and so on.
30
Remember, many of the things that the content industries were
concerned about on the Internet were already illegal, already
subject to suit and prosecution. The question is not whether the
Internet should be an intellectual property-free zone; it should
not be, is not, and never was. The question is whether, when the
content industries come asking for additional or new rights, for
new penalties, for the criminalization of certain types of
technology, we should take into account the gains that the
Internet has brought them, as well as the costs, before we
accede to their requests. The answer, of course, is that we
should. Sadly, we did not. This does not mean that all of the
content industries' attempts to strengthen the law are wrong and
unnecessary. It means that we do not know whether they are or
not.
31
There is a fairly solid tradition in intellectual property
policy of what I call "20/20 downside" vision. All of the
threats posed by any new technology--the player piano, the
jukebox, the photocopier, the VCR, the Internet--are seen with
extraordinary clarity. The opportunities, however, particularly
those which involve changing a business model or restructuring a
market, are dismissed as phantoms. The downside dominates the
field, the upside is invisible. The story of video recorders is
the best-known example. When video recorders--another technology
promising cheaper copying--first appeared, the reaction of movie
studios was one of horror. Their business plans relied upon
showing movies in theaters and then licensing them to television
stations. VCRs and Betamaxes fit nowhere in this plan; they were
seen merely as copyright violation devices. Hollywood tried to
have them taxed to pay for the losses that would be caused.
Their assumption? Cheaper copying demands stronger rights.
32
Having lost that battle, the movie studios tried to have the
manufacturers of the recording devices found liable for
contributory copyright infringement; liable, in other words, for
assisting the copyright violations that could be carried out by
the owners of Sony Betamaxes. This, of course, was exactly the
same legal claim that would be made in the Napster case. In the
Sony case, however, the movie companies lost. The Supreme Court
said that recording of TV programs to "time-shift" them to a
more convenient hour was a fair use.17 The movie studios' claims
were rejected.
33
Freed from the threat of liability, the price of video recorders
continued to fall. They flooded consumers' houses at a speed
unparalleled until the arrival of the World Wide Web. All these
boxes sitting by TVs now cried out for content, content that was
provided by an emerging video rental market. Until the triumph
of DVDs, the videocassette rental market made up more than 50
percent of the movie industry's revenues.18 Were losses caused
by video recorders? To be sure. Some people who might have gone
to see a movie in a theater because the TV schedule was
inconvenient could instead record the show and watch it later.
Videos could even be shared with friends and families--tattered
copies of Disney movies recorded from some cable show could be
passed on to siblings whose kids have reached the appropriate
age. VCRs were also used for copying that was clearly
illicit--large-scale duplication and sale of movies by someone
other than the rights holder. A cheaper copying technology
definitely caused losses. But it also provided substantial
gains, gains that far outweighed the losses. Ironically, had the
movie companies "won" in the Sony case, they might now be worse
off.
34
The Sony story provides us with some useful lessons--first, this
20/20 downside vision is a poor guide to copyright policy. Under
its sway, some companies will invariably equate greater control
with profit and cheaper copying with loss. They will conclude,
sometimes rightly, that their very existence is threatened, and,
sometimes wrongly, that the threat is to innovation and culture
itself rather than to their particular way of delivering it.
They will turn to the legislature and the courts for guarantees
that they can go on doing business in the old familiar ways.
Normally, the marketplace is supposed to provide correctives to
this kind of myopia. Upstart companies, not bound by the habits
of the last generation, are supposed to move nimbly to harvest
the benefits from the new technology and to outcompete the
lumbering dinosaurs. In certain situations, though, competition
will not work:
35
* if the dinosaurs are a cartel strong enough to squelch
competition;
* if they have enlisted the state to make the threatening
technology illegal, describing it as a predatory encroachment on
the "rights" of the old guard rather than aggressive
competition;
* if ingrained prejudices are simply so strong that the
potential business benefits take years to become apparent; or
* if the market has "locked in" on a dominant standard--a
technology or an operating system, say--to which new market
entrants do not have legal access.
36
In those situations, markets cannot be counted on to self-
correct. Unfortunately, and this is a key point, intellectual
property policy frequently deals with controversies in which all
of these conditions hold true.
37
Let me repeat this point, because it is one of the most
important ones in this book. To a political scientist or market
analyst, the conditions I have just described sound like a
rarely seen perfect storm of legislative and market dysfunction.
To an intellectual property scholar, they sound like business as
usual.
38
In the case of the VCR wars, none of these factors obtained. The
state refused to step in to aid the movie companies by
criminalizing the new technology. There were equally powerful
companies on the other side of the issue (the consumer
electronics companies selling VCRs) who saw this new market as a
natural extension of a familiar existing market--audio recorders.
There was no dominant proprietary technological standard
controlled by the threatened industry that could be used to shut
down any threats to their business model. The market was allowed
to develop and evolve without premature legal intervention or
proprietary technological lockout. Thus we know in this case
that the movie companies were wrong, that their claims of
impending doom from cheap copies were completely mistaken. The
public and, ironically, the industry itself benefited as a
result. But the Sony case is the exception rather than the rule.
That is why it is so important. If competition and change can be
forbidden, we will get relatively few cases that disprove the
logic that cheaper copying must always mean stronger rights. The
"natural experiments" will never be allowed to happen. They will
be squelched by those who see only threat in the technologies
that allow cheaper copies and who can persuade legislators or
judges to see the world their way. The story line I describe
here, the Internet Threat, will become the conventional wisdom.
In the process, it will make it much less likely that we will
have the evidence needed to refute it.
39
The Holes Matter as Much as the Cheese
40
The Sony case is important in another way. The Supreme Court's
decision turned on the judgment that it was a "fair use" under
U.S. copyright law for consumers to record television programs
for time-shifting purposes. Since fair use comes up numerous
times in this book, it is worth pausing for a moment to explain
what it is.
41
The content industries like to portray fair use as a narrow and
grudging defense against an otherwise valid case for copyright
infringement--as if the claim were, "Yes, I trespassed on your
land, which was wrong, I admit. But I was starving and looking
for food. Please give me a break." This is simply inaccurate.
True, fair use is asserted as "an affirmative defense"; that is
the way it is brought up in a copyright case. But in U.S. law,
fair uses are stated quite clearly to be limitations on the
exclusive rights of the copyright holder--uses that were never
within the copyright holder's power to prohibit. The defense is
not "I trespassed on your land, but I was starving." It is "I
did not trespass on your land. I walked on the public road that
runs through it, a road you never owned in the first place."
When society hands out the right to the copyright holder, it
carves out certain areas of use and refuses to hand over control
of them. Again, remember the Jefferson Warning. This is not a
presumptively absolute property right. It is a conditional grant
of a limited and temporary monopoly. One cannot start from the
presumption that the rights holder has absolute rights over all
possible uses and therefore that any time a citizen makes use of
the work in any way, the rights holder is entitled to get paid
or to claim "piracy" if he does not get paid. Under the sway of
the story line I called the Internet Threat, legislators have
lost sight of this point.
42
So what is "fair use"? When I am asked this question by
nonlawyers, I offer to show them the actual provision in the
copyright act. They recoil, clearly imagining they are about to
be shown something the size and complexity of the tax code. Here
is the statutory fair use provision in its entirety:
43
Sec. 107. - Limitations on exclusive rights: Fair use
44
Notwithstanding the provisions of sections 106 and 106A, the
fair use of a copyrighted work, including such use by
reproduction in copies or phonorecords or by any other means
specified by that section, for purposes such as criticism,
comment, news reporting, teaching (including multiple copies for
classroom 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--
45
(1) the purpose and character of the use, including whether such
use is of a commercial nature or is for nonprofit educational
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.
46
The fact that a work is unpublished shall not itself bar a
finding of fair use if such finding is made upon consideration
of all the above factors.
47
"But this seems quite sensible," people often say, as though
they had expected both Byzantine complexity and manifest
irrationality. (Perhaps they have had some experience with legal
matters after all.) The ones who think about it a little longer
realize that these factors cannot be mechanically applied. Look
at factor 3, for example. Someone who is making a parody
frequently needs to take large chunks of the parodied work. That
is the nature of a parody, after all. They might then sell the
parody, thus also getting into trouble with factor 1. And what
about factor 4? Someone might quote big chunks of my book in a
devastating review that ruined any chance the book had of
selling well. Come to think of it, even a parody might have a
negative effect on the "potential market" for the parodied work.
But surely those uses would still be "fair"? (In both instances,
the Supreme Court agrees that they are fair uses.)
48
In coming up with these hypothetical problem cases, the
copyright novice is probably closer to having a good
understanding of the purpose of fair use than many people who
have studied it for years. In fact, the novice's questions shed
light on all of the exceptions, limitations, and defenses to
proprietary rights--the holes in the cheese of intellectual
property. The scholar's urge is to find one theory that explains
all the possible applications of the fair use doctrine, to
arrange all of the cases like targets and shoot a single arrow
through all of them. Perhaps fair use is designed to reduce the
difficulty of clearing rights when it would be uneconomical or
impossibly complex to do so: to reduce the paperwork, hassle,
delay, ignorance, and aggravation that economists refer to under
the sanguine name of "transaction costs."19 (Though the idea
that fair use is about transaction costs hardly explains some of
the types of fair use we care most about--the rights to parody,
to criticize, to reverse engineer.) Or perhaps fair use allows
the rights of a transformative author to be trumped only by a
second transformative author, who is building on the first--the
parodist, reviewer, collage artist, or what have you.20 (Then
again, photocopying for classroom use does not sound very
"transformative.") Could fair use be dictated by the
Constitution or by international free speech guarantees? In this
view, fair use provides a safety valve that allows copyright to
coexist with the First Amendment, property rights over speech to
coexist with freedom of expression.21 After all, it is not
entirely obvious how it could be constitutional to forbid me, in
the name of a federal law, from translating Mein Kampf in order
to warn of the dangers of fascism or parodying some piece of art
to subversive effect.
49
Each of these ideas about fair use has much to recommend it, as
do the many other grand theories that have been offered to
explain the puzzle. And therein lies the problem.
50
Intellectual property is a brilliant social invention which
presents us with great benefits but also with a multitude of
dangers:
51
1. the danger that the monopoly is unnecessary to produce the
innovation, or that it is broader or lasts for longer than is
necessary to encourage future production;
2. that overly broad rights will chill speech, criticism, or
scientific progress;
3. that it will restrict access in ways that discourage "follow-
on" innovation;
4. that it will lead to industry concentration in a way that
hurts consumers or citizens while being less subject to
antitrust regulation precisely because the monopoly or oligopoly
rests on intellectual property rights;
5. that it will establish strong "network effects" which cause
the market to tip over to some inefficient technology; and
6. that it will give the rights holder control over some
technology outside the range of the monopoly but closely linked
to it.
52
The list of dangers goes on and on, and so does the list of
exceptions, limitations, and restraints designed to prevent
them. We restrict the length of intellectual property rights.
(At least, we used to. The framers thought it so important to do
so that they put the need to have a limited term in the
Constitution itself; nevertheless both Congress and the Supreme
Court seem to have given up on that one.) We restrict the scope
of intellectual property rights, so that they cannot cover raw
facts or general ideas, only the range of innovation and
expression in between. (At least, we used to. Developments in
database protection, gene patents, and business method patents
are clearly eroding those walls.) As with fair use, we impose
limitations on the rights when we hand them out in the first
place. The exclusive right conferred by copyright does not
include the right to prevent criticism, parody, classroom
copying, decompilation of computer programs, and so on. (Though
as the next chapter shows, a number of recent legal changes mean
that the practical ability to exercise fair use rights is
seriously threatened.)
53
These limitations on intellectual property do not fit a single
theory, unless that theory is "avoiding the multiple and
evolving dangers of intellectual property itself." Even a single
limitation such as fair use clearly responds to many different
concerns about the dangers of intellectual property rights.
Indeed it will evolve to fit new circumstances. When computer
programs were first clearly covered by copyright law, software
engineers wondered if this would cripple the industry. Why?
Anyone who wishes to compete with a dominant program needs to
"decompile" it in order to make their program "interoperable,"
or simply better. For example, a new word processing program, no
matter how good, would be dead on arrival unless it could read
all the files people had created with the old, dominant word
processing software. But to do this, the engineers at the
upstart company would have to take apart their competitor's
program. In the process they would have to create temporary
copies of the old program, even though the final product--the hot
new software--would be completely different from the old. Would
this be a violation of copyright law?
54
In a series of remarkable and far-seeing cases involving such
issues, the courts said no.22 "Decompilation" was fair use. The
law of fair use had evolved in the context of expressive,
nonfunctional, stand-alone works such as books, poems, songs.
Now it was being applied to a functional product whose economics
depended strongly on "network effects"--many types of programs
are useful only if they are widely used. Without
interoperability, we could never take our existing documents or
spreadsheets or datasets and move to a new program, even if it
was better. One program would not be able to read the files
created by another. It would be as if language itself had been
copyrighted. To have said that the incidental copies created in
the process of decompiling software were actually infringements
of copyright would have turned the law on its head because of a
technological accident (you needed temporarily to "copy" the
programs in order to understand how they worked and make yours
work with them) and a legal accident (copyright was now being
used to regulate functional articles of commerce: "machines"
made of binary code). The difference between copying and
reading, or copying and understanding, had changed because of
the technology. The context had changed because the law was
being stretched to cover new types of products, whose economics
were very different from those of novels. Rather than let the
dominant software companies use copyright to stop others from
making interoperable software, the courts used an escape
hatch--fair use--to prevent that danger and to uphold the basic
goal of copyright: encouraging progress in science and the
useful arts.
55
This long story is told to make a simple point. The variegated
and evolving limitations on intellectual property are as
important as the rights they constrain, curtail, and define. The
holes matter as much as the cheese.
56
What does this have to do with the Sony case? In that case,
remember, the Supreme Court had said that copying TV shows in
order to time-shift was fair use. The Court could simply have
stopped there. It could have said, "since most of what consumers
do is legal, there can be no claim of contributory or vicarious
infringement. Sony is not contributing to infringement since
consumers are not infringing copyright by copying shows in the
first place." Interestingly, though this is the heart of the
ruling, the court went further. It quoted some seemingly
unrelated patent law doctrine on contributory infringement: "A
finding of contributory infringement does not, of course, remove
the article from the market altogether; it does, however, give
the patentee effective control over the sale of that item.
Indeed, a finding of contributory infringement is normally the
functional equivalent of holding that the disputed article is
within the monopoly granted to the patentee." Clearly, the
Justices were concerned that, by using copyright law, the movie
studios could actually get control of a new technology.
57
The fact that the Court expressed this concern through an
analogy to patent law was, at first sight, fairly surprising.
Courts do not normally look at copyrights in quite the same way
as they look at patents. For one thing, patent rights are
stronger, though they are harder to obtain and last for a
shorter period of time. For another, while courts often express
concern about the dangers of a patent-driven monopoly over a
particular technology, it is strange to see that concern in the
context of copyright law. An unnecessary monopoly over a plow or
a grain elevator may, as Jefferson pointed out, slow
technological development. But a monopoly over Snow White or
"Ode on a Grecian Urn"? We do not normally think of rights over
expression (the realm of copyright) threatening to sweep within
their ambit an entire new technological invention (the realm of
patent).
58
But in the Sony case, the Supreme Court quite clearly saw that,
in a world where technological developments made copying easier,
the idea of contributory infringement in copyright could be used
to suppress or control entire technologies that seemed, in the
logic of 20/20 downside vision, to pose a threat to the
copyright holder. Indeed, in some sense, the logic behind the
Internet Threat--"cheaper copying requires greater
control"--demands this result, though the Sony case antedates the
World Wide Web by a considerable time. If it is cheap copying
itself that poses the threat, then the content owners will
increasingly move to gain control over the technologies of cheap
copying, using copyright as their stalking horse. That is why
the Sony Court went beyond the simple ruling on fair use to
explain the consequences of the movie companies' claim. In a
footnote (the place where judges often bury their most trenchant
asides) the Court was almost snide:
59
It seems extraordinary to suggest that the Copyright Act
confers upon all copyright owners collectively, much less the
two respondents in this case, the exclusive right to distribute
VTR's [Video Tape Recorders] simply because they may be used to
infringe copyrights. That, however, is the logical implication
of their claim. The request for an injunction below indicates
that respondents seek, in effect, to declare VTR's contraband.
Their suggestion in this Court that a continuing royalty
pursuant to a judicially created compulsory license would be an
acceptable remedy merely indicates that respondents, for their
part, would be willing to license their claimed monopoly
interest in VTR's to Sony in return for a royalty.23
60
The real heart of the Sony case is not that "time-shifting" of
TV programs is fair use. It is an altogether deeper principle
with implications for all of the holes in the intellectual
property cheese. The Sony Court declared that because video
recorders were capable of substantial noninfringing uses, the
manufacturers of those devices were not guilty of contributory
infringement. If the rights of copyright holders were absolute,
if they had the authority to prohibit any activity that appeared
to pose a threat to their current business model, then it is
quite possible that video recorders would have been guilty of
contributory infringement. It is because we have, and need,
multiple exceptions and limitations on intellectual property
that the Supreme Court was able to resist the claim that
copyright itself forbids technologies of cheaper copying. To put
it another way, without a robust set of exceptions and
limitations on copyright, the idea that cheaper copying requires
greater control will inexorably drive us toward the position
that the technologies of cheaper reproduction must be put under
the governance of copyright holders.
61
Thus we have a corollary to the Jefferson Warning--call it the
Sony Axiom: cheaper copying makes the limitations on copyright
more rather than less important. Without those limitations,
copyright law will bloat and metastasize into a claim of
monopoly, or at least control, over the very architectures of
our communications technology. And that is exactly where the
logic of the Internet Threat is taking us today.
62
FROM NAPSTER TO GROKSTER
63
Seventeen years after the Sony decision, another court had to
deal with a suit by outraged copyright holders against the
creators of a technology that allowed individuals to copy
material cheaply and easily. The suit was called A&M Records v.
Napster.24 Napster was a "peer-to-peer" file sharing system. The
files were not kept on some huge central server. Instead, there
was a central directory--think of a telephone directory--which
contained a constantly updated list of the addresses of
individual computers and the files they contained. Anyone who
had the software could query the central registry to find a
file's location and then establish a direct computer-to-computer
connection--anywhere in the world--with the person who had the
file they desired. This decentralized design meant the system
was extremely "robust," very fast, and of nearly infinite
capacity. Using this technology, tens of millions of people
around the world were "sharing" music, an activity which record
companies quite understandably viewed as simple theft. In fact,
it would be hard to think of a situation that illustrated the
Internet Threat better. The case ended up in front of the U.S.
Court of Appeals for the Ninth Circuit, which hears cases in an
area that includes California and thus has decided a lot of
copyright cases over the years.
64
There was an irony here. When the Supreme Court decided the Sony
case, it was on appeal from the Ninth Circuit Court of Appeals.
Sony, with its rule about reproductive technologies with
substantial noninfringing uses, reversed the appeals court
decision. The Supreme Court was, in effect, telling the Ninth
Circuit that it was wrong, that its ruling would have required
the "extraordinary" (legal shorthand for "stupid") conclusion
that copyright law gave copyright holders a veto on new
technology. In the process, the Supreme Court told the Ninth
Circuit that it also did not understand the law of fair use, or
the freedom that should be given to individuals to make
"noncommercial" private copies. The identities of the judges had
changed, but now, seventeen years later, the same Circuit Court
had another high-profile case on exactly the same issues. In
case any of the judges might have missed this irony, it took
David Boies, the lawyer for Napster, about ninety seconds to
remind them in his oral argument. "This court," he said, adding
as if in afterthought, "in the decision that the Supreme Court
ultimately reversed in Sony. . . ."25 To the laypeople in the
audience it probably just seemed like another piece of legal
droning. But to the lawyers in the room the message was quite
clear. "The last time you got a case about a major new
technology of consumer reproduction, you really screwed it up.
Hope you can do better this time." The judges' mouths
quirked--not entirely in pleasure. The point had been registered.
65
Think for a moment of the dilemma in which the court had been
placed. On the one hand, you had tens of millions of people
"sharing" music files and Napster was the service that allowed
them to do it. If this was not contributory copyright
infringement, what was? On the other hand, Napster seemed to fit
very nicely under the rule announced in the Sony case.
66
The argument went like this. Like the VCR, the Napster service
had substantial noninfringing uses. It allowed bands to expose
their music to the world through the "New Artists" program. It
made it easy to share music which was no longer under copyright.
These uses clearly do not infringe copyright. There were also
the claims that it permitted "space-shifting" by consumers who
already owned the music or "sampling" of music by listeners as
they decided whether or not to buy. One could argue that space-
shifting and sampling were fair use (though in the end the court
disagreed). But since we have two clear noninfringing uses, the
technology obviously does have substantial uses that do not
violate copyright. Thus, Napster cannot be liable as a
contributory infringer, just as Sony could not be liable for the
Betamax. Supreme Court precedent covers this case. The Ninth
Circuit is bound by that precedent. All the judges can do, goes
the argument, is to apply the words of the rule laid down in
Sony, say that Napster wins, and move on to the next case. If
Congress wants to make services like Napster illegal, it is
going to have to pass a new law. The boundaries of the Sony rule
are clear and Napster fits within them. (Of course, the last
point is subject to argument, but the argument for Napster on
this issue was a good one. Not overwhelming--there were more
noninfringing uses in the Sony case because the normal way
consumers used the technology in question was found to be a fair
use--but certainly powerful.)
67
A more daring strategy was to suggest that all the copying done
over Napster was fair use, or at least presumptively fair. In
Sony, the Supreme Court had said that the law presumes that
noncommercial private copying--such as taping a show at home for
future viewing--is a fair use. This presumption shifts the burden
to the copyright holder to prove that the practice caused harm
to them. Copying on Napster was done by private individuals. No
money was exchanged. Does this mean we must presume it was fair
use and require the music companies and songwriters to show
clear evidence of "market harm" if they want to convince us
otherwise?
68
It sounds as though proving market harm would be pretty easy.
How could millions of people exchanging hundreds of millions of
songs not be causing harm? But it is more complicated. Remember
the Jefferson Warning. We are not talking about swiping shoes
from a shoe store. There one merely has to show the theft to
prove the loss. By contrast, music files are copied without
being "taken" from their owner. The record companies would have
to show harm to their market--the people downloading who do not
purchase music because it is available for free. Those who
download, but would not have purchased, do not count. And we
have to balance those who are deterred from purchasing against
those who purchase a whole CD because they are exposed to new
music through Napster. One very interesting empirical study on
the subject indicates that the result is a wash, with hardly any
measurable effect on sales; the overall drop in CD purchases
results from larger macroeconomic issues.26 This study, however,
has been subject to detailed methodological criticism.27 Another
study shows a weak effect on sales, though rather woundingly it
seems to suggest that the result is economically efficient--fewer
people end up with music they do not like.28 Other studies, by
contrast, support the record company position--suggesting that
illicit file sharing does indeed undercut sales of both CDs and
authorized digital downloads.29 Given the complexities of the
issue, the record companies did not want to engage in a war of
dueling empirical studies.
69
So, if Napster's users were not infringing copyright law in the
first place--at least until the record companies came up with
convincing evidence of market harm--because their copying was
noncommercial, then Napster could hardly be guilty of
contributory infringement, could it? There would be no
infringement at all!
70
You could see Mr. Boies's arguments as simple equations between
the cases.
71
* Noninfringing uses such as recording public domain films and
"time-shifting" programs are equivalent to noninfringing uses
such as the New Artists program or sharing public domain music
(and maybe "space-shifting" one's own music?); or
* Private noncommercial videotaping is equivalent to private
noncommercial file sharing. Both are presumptively fair uses.
* Either way, Sony=Napster and Napster wins.
72
Napster did not win, of course, though when the judges handed
down their decision it was clear they had been paying attention
to Mr. Boies, at least enough to make them very wary of
tampering with Sony. They claimed that they were upholding that
case, but that Napster could be liable anyway. How? Because
there was enough evidence here to show that the controllers of
Napster had "actual knowledge that specific infringing material
is available using its system, that it could block access to the
system by suppliers of the infringing material, and that it
failed to remove the material." There was indeed evidence that
Napster knew how its system was being used--an embarrassing
amount of it, including early memos saying that users will want
anonymity because they are trading in "pirated music." Then
there were nasty circumstantial details, like the thousands of
infringing songs on the hard drive of one particular Napster
employee--the compliance officer tasked with enforcing the
Digital Millennium Copyright Act! (The recording company lawyers
waxed wonderfully sarcastic about that.)
73
But despite the ludicrously dirty hands of Napster as a company,
lawyers could see that the appeals court was making a lot of new
law as it struggled to find a way to uphold Sony while still
making Napster liable. The court's ruling sounded reasonable and
clear, something that would only strike at bad actors while
paying heed to the Sony Axiom and the assurance of safety that
the rule in Sony had provided to technology developers for the
previous twenty years. But hard cases make bad law. In order to
accomplish this piece of legal legerdemain, the court had to
alter or reinterpret the law in ways that are disturbing.
74
The first thing the court did was to reject the argument that
the "sharing" was private and noncommercial. As to the idea that
it is not private, fair enough. Sharing one's music with fifty-
four million people does not sound that private, even if it is
done for private ends, in private spaces. What about
noncommercial? Embracing some earlier rulings on the subject,
the court said a use was "commercial" if you got for nothing
something for which you would otherwise have to pay. On the
surface this sounds both clever and reasonable--a way to
differentiate home taping from global file sharing--but the
argument quickly begins to unravel. True, the Betamax owners
could get TV shows for free just by watching at the regular
time. But they could not get a copy of the show for free at the
moment they wanted to watch it. That was why they taped. One
could even argue that Napster users would have access to most
songs over the radio for free. But lawyers' quibbling about
which way the rule cuts in this case is not the point. Instead,
we need to focus on the change in the definition of
"commercial," because it illustrates a wider shift.
75
Remember, a finding that a use is "noncommercial" makes it more
likely that a court will find it to be legal--to be a fair use.
The old test focused mainly on whether the motive for the
copying was to make money. (A different stage of the inquiry
concerned whether there was harm to the copyright holder's
market.) The Napster court's test concentrates on whether the
person consuming the copy got something for free. Instead of
focusing on the fact that the person making the copy is not
making money out of it--think of a professor making electronic
copies of articles for his students to download--it focuses on
the presumptively dirty hands of those who are "getting
something for nothing." But lots of copyright law is about
"getting something for nothing."
76
To put it differently, one central goal of copyright is to limit
the monopoly given to the copyright owner so that he or she
cannot force citizens to pay for every single type of use. The
design of the law itself is supposed to facilitate that. When
"getting something for free" comes to equal "commercial" in the
analysis of fair use, things are dangerously out of balance.
Think back to Jefferson's analogy. If I light my candle at
yours, am I getting fire for free, when otherwise I would have
had to pay for matches? Does that make it a "commercial" act?
77
Having dismissed the claim that this was noncommercial sharing,
the court then reinterpreted the Sony decision to allow
liability when there was "actual knowledge" of specific
copyright violations, an ability to block access by infringers,
and a failure to do so. Neither side was entirely happy with
this ruling, but the record companies believed--rightly--that it
would allow them effectively to shut Napster down. Yet the
Napster ruling only postponed the issue. The next set of file
sharing services to be sued after Napster were even more
decentralized peer-to-peer systems; the Napster court's
reinterpretation of Sony would not be able to reach them.
78
The peer-to-peer file sharing service called Grokster is a
relatively typical example. Unlike Napster, Grokster had no
central registry. The system was entirely run by the individual
"peer" computers. Because the system was designed this way, the
people who made and distributed the software had no knowledge of
specific infringing files. The users were doing the searching,
indexing, and storing, and Grokster had no ability to control
their behavior. For those reasons, a court of appeals held that
Grokster was not liable. As in Sony, the system had substantial
noninfringing uses. Lots of interesting content was traded on
Grokster with the copyright holder's consent. Other material was
in the public domain. Grokster made money by streaming
advertisements to the users of its software. The movie companies
and record companies saw this as a flagrant, for-profit piracy
ring. Grokster's response was that like the makers of the VCR,
it was simply providing a technology. Its financial interest was
in people using that technology, not in using it for illicit
purposes--though, like the VCR manufacturer, it would profit
either way. The court of appeals agreed. True, the majority of
the material traded on Grokster was illicitly copied, but the
court felt that it could not give the recording or movie
companies control over a technology simply because it allowed
for easier copying, even if most of that copying was illegal. As
I tried to point out in the section on the Sony Axiom, that line
of thought leads to copyright holders having a veto over
technological development.
79
It was at this point that the Supreme Court stepped in. In the
case of MGM v. Grokster,30 the Supreme Court followed the line
of the Napster court, but went even further. The Court created a
new type of contributory copyright infringement--while apparently
denying it was doing so. Grokster and its fellow services were
liable because of three different kinds of evidence that they
had "intended" to induce copyright violation. First, they were
trying "to satisfy a known demand for copyright infringement."
This could be shown by the way that they advertised themselves
as alternatives to the "notorious filesharing service, Napster."
Second, the file sharing services did not try to develop
filtering software to identify and eliminate copyrighted
content--though this alone would not have been enough to make
them liable. Finally, their advertising-supported system clearly
profited by high-intensity use, which they knew was driven in
the most part by illicit copying. This too would not have been
enough by itself, the Court added, but had to be seen in the
context of the whole record of the case.
80
Let me be clear. I wept no tears for Napster, Grokster, and
their ilk. I see no high-minded principle vindicated by middle-
class kids getting access to music they do not want to pay for.
It is difficult to take seriously the sanctimonious preening of
those who cast each junior downloader of corporate rock as a Ché
Guevara, fighting heroically to bring about a new creative
landscape in music. (It is almost as hard to take seriously the
record industry executives who moralistically denounce the
downloading in the name of the poor, suffering artists, when
they preside over a system of contracts with those same artists
that makes feudal indenture look benign.) The file sharing
companies themselves were also pretty unappealing. Many of the
services were bloated with adware and spyware. True, some of
their software engineers started with a dewy-eyed belief that
this was a revolutionary technology that would break the record
companies and usher in a new era of musical creativity. Whether
one agrees or disagrees with them, it is hard--for me at least--to
doubt their sincerity. But even this quality did not last long.
For most of the people involved, the words "stock options"
worked their normal, morally debilitating magic. In internal
company correspondence, attacks on the hypocrisy of the music
companies and defenses of a democratic communications structure
imperceptibly gave way to discussions of "customer base," "user
experience," and "saleable demographics." I care little that
Napster and Grokster--as individual companies--lost their specific
legal battles. There are few heroes in this story. But if we had
to rely on heroes, nothing would ever get done.
81
I do care about the technology behind Napster and Grokster--about
the kind of decentralized system it represents. I also care
about the principle I identified as the Sony Axiom--a principle
that goes far beyond music, peer-to-peer systems, or the
Internet as a whole. The Supreme Court's decision in Grokster
could have been much worse. But it still offers a modest threat
both to that technology and to that axiom.
82
What is so great about peer-to-peer systems? We talk about
"cheap speech" on the Internet, but bandwidth is actually
expensive. If one is talking about music or video files, and one
wishes to speak to many people in a short period of time, one
vital way to have cheap speech is over peer-to-peer networks. If
many of your viewers or listeners are willing to become
broadcasting stations as they watch, you can cheaply reach a
million people in a short period of time with your video of
abuse in Abu Ghraib or your parody of political leaders. You do
not need to rely on a broadcasting station, or even on the
continued existence of entities such as YouTube, which face
their own legal worries. By making your listeners your
distributors, you can quickly reach the same number of ears that
the payola-soaked radio waves allow the record companies to
reach.
83
One need not cheer Grokster. Much of what went on there was
indeed illicit. But there are two key things to understand about
peer-to-peer networks. The first is that they are hard to
police. They have multiple nodes. That is why they work. It
means they will have both infringing and noninfringing uses, and
the noninfringing uses will be centrally connected to our
deepest values of free speech and cultural decentralization.
84
The second feature of peer-to-peer networks is even more basic.
They are networks and thus subject to the laws of network
economics. In short, they only work well if many people use
them. A person who uses a peer-to-peer system that no one else
uses is in the position of the person who owns the only fax
machine in the world. Peer-to-peer networks provide cheap and
unregulable audiovisual or data-heavy "speech" to a mass
audience. And if the past is any guide, those networks will also
carry large amounts of illicit material, just as photocopying
machines (and VCRs) are widely used to violate copyright. The
Grokster case makes it harder, but not impossible, to have
successful, widely used peer-to-peer systems that are not
themselves illicit. If they are widely used, there will be
infringing content. If you try to police them and filter them,
you will know more about that infringing content and thus might
be liable--that was the point of the Napster case. If you do not,
you will be failing to take precautions. That was the point of
the Grokster case. What is a poor peer-to-peer network to do?
Apart from making sure that the last four letters of your
service's name are not "-ster," I am hard-pressed to advise you.
85
A decision does not need to make an activity illegal in order to
impede it. It only needs to make it uncertain. Already, for
example, the free--and so far as I could tell, entirely well-
meaning--service "bonpoo," which allowed you to send large file
attachments to many people at once, has shut down all of its
capabilities except photo transfer. That is simply one trivial
instance of a larger harm. Lots of new communications
technologies will remain undeveloped because of the
uncertainties left by this ruling.
86
My colleague Jennifer Jenkins gave one useful hyperbolic
illustration, drawing on earlier work by the Electronic Frontier
Foundation: if one were launching the iPod today, it is not
clear how it would fare under Grokster's standard. Of course,
there is no danger that the iPod will be challenged. It has
become respectable and the music companies ended up sanctioning
it. But how does it fare if we simply apply the tests laid down
in the Grokster case? There is Apple's "tainted" advertising
campaign, urging users to "Rip, Mix, and Burn." Does this not
suggest complicity, or even intent? There is the fact that the
iPod does not restrict itself solely to proprietary formats
protected by digital rights management. It also allows
uncontrolled MP3 files despite the fact that this format is
"notoriously" used to transfer files against the wishes of the
copyright owner. This, surely, is a "failure to police." And
finally, there is the fact that it would cost about $10,000 to
fill an iPod with songs downloaded from iTunes. Clearly Apple
must be aware that much of the music that fills iPods is
illicitly copied. They are profiting from that fact to drive
demand for the product, just as Grokster was profiting from the
attractions of illicit traffic to drive people to use their
service!
87
No one is going to sue Apple now, of course. In fact,
established players in the marketplace are probably fairly safe
(and have better lawyers). But what if a product as good as the
iPod were being developed now by some upstart company? What if
it were no more and no less likely to be used for infringing
purposes? Would the business plan ever see the light of day? Or
would it be quietly smothered due to legal uncertainty? I have
little sympathy for Grokster the company, but the decision that
doomed it is a bad piece of technology policy.
88
There is a second reason to dislike the Grokster decision.
Despite some of the angst-ridden announcements made when the
decision was handed down, the Supreme Court has not killed peer-
to-peer systems. The concept is far too well entrenched. But the
decision will mean that there are fewer of them that are widely
used, easy to operate, and made by responsible and reputable
people you can trust. This will probably lessen, but not end,
illicit copying online. But that effect comes with a price--it
makes our communications architecture a little bit more tightly
controlled, reducing but not removing the availability of
methods of mass distribution that are entirely outside
centralized public or private control. It is another--relatively
small--step toward an Internet that is more like cable TV or
iTunes, a one-way flow of approved content. One might decide
that such a price was well worth paying. But where is the
limiting principle or end point of the logic that led to it?
89
There is no provision in U.S. statutory copyright law that
imposes liability for contributory or vicarious infringement.
None. The patent statute has such a provision; not the Copyright
Act. The courts have simply made the scheme up themselves. Then
they made up limitations--such as Sony--in order to rein it in. In
Grokster, the Supreme Court went further. It made up a new type
of "inducement" liability. Fine. As I have tried to indicate
here, the decision is not as dreadful as it is reputed to be.
But so long as there is any unregulated space in our
communications network, some portion of it will have illicitly
copied content on it. The more the system is free of central
control, the more it is open to use by any citizen, the cheaper
it gets--all very desirable characteristics--the more illicit
content there will be. That is the premise of the Internet
Threat--the belief that control must rise as copying costs fall.
I have tried here to suggest an alternative interpretation, the
Sony Axiom: without a strong internal set of limitations over
copyright, cheaper copying and the logic of the Internet Threat
will always drive us toward giving control over our
communications architecture to the content industries.
90
There was one particularly striking moment in the Napster oral
argument. The lawyer for the recording companies was arguing
that Napster was illegal. The judges interrupted, as they often
do, and there was a back-and-forth debate about the likely reach
of any ruling that would shut down Napster. "I am not trying to
say the Internet is illegal," said the lawyer. There was a pause
as everyone weighed those words carefully.
91
My response would be "Really? Why not?" The logic of the
Internet Threat leads to the position that a network is either
controlled or illegal. The better and cheaper the network, the
tighter the control needed. The Internet itself could have been
designed differently. There could have been more centralized
control, filtering of content, a design based on one-way
transmission, closed protocols that allow users only a limited
number of options. Indeed there were such systems--the national
French Minitel system is an example. The Internet represents the
opposite set of choices--freedom from centralized control,
absence of intervention. In a famous article, Saltzer, Reed, and
Clark provided the argument that an "end-to-end" network that is
"dumb" and leaves processing to the "ends"--the smart terminals
at either end of the wires--will be stable and robust.31 But it
will also be remarkably uncontrolled and it will lower global
copying costs close to zero for digital content. It is that
principle that has made it successful. To put it tersely: the
logic of the Internet Threat runs in exactly the opposite
direction to the Internet itself. The logic of control is not
the logic of the Net.
92
Here is one last thought experiment. Apply the same test I
suggested for the iPod to the Internet itself.32 Imagine you
knew nothing of the Net. (Those of you who are over twenty-five
may actually be able to remember when you knew nothing of the
Net.) Imagine that you are sitting in a room somewhere
discussing--perhaps with a group of government bureaucrats or
some policy analysts from the Commerce Department--whether to
develop this particular network. The scientists are
enthusiastic. They talk of robustness and dumb networks with
smart terminals. They talk of TCP/IP and HTML and decentralized
systems that run on open protocols, so that anyone can connect
to this network and use it any way they want to. You, of course,
know nothing about the truly astounding outburst of creativity
and communication that would actually flower on such a system,
that would flower precisely because it is so open and no one
country or company controls it or the protocols that run it. You
do not know that millions of people worldwide will assemble the
greatest factual reference work the world has ever seen on this
network--often providing their information for free out of some
bizarre love of sharing. You do not know about Amazon.com or
Hotornot.com or the newspapers of the world online, or search
engines, automatic page translation, plug-ins, or browsers. You
cannot imagine free or open-source software being assembled by
thousands of programmers worldwide. E-mail is only a dimly
understood phenomenon to you. Teenagers in your world have never
heard of instant messaging--a nostalgic thought.
93
As the scientists talk, it becomes clear that they are
describing a system without centralized direction or policing.
Imagine that your decision is framed by the logic of control I
have described in this chapter, by the fears that the content
industry has had for at least the last thirty years--by the logic
of the suit they brought in Sony. Imagine, in other words, that
we make the up-or-down decision to develop the Internet based on
the values and fears that our copyright policy now exhibits, and
that the content industries have exhibited for thirty years.
There is no way, no way at all, that a network like it would
ever be developed. It would be strangled at birth. You would be
told by the lawyers and policy wonks that it would be a haven
for piracy and illegality. (And it would be, of course--though it
would also be much, much more.) You would be told that the
system needed to be designed to be safe for commerce or it would
never attract investment, that it would need to be controlled
and centralized for it to be reliable, that it would need to be
monitored to stop it being a hotbed of crime. With the copyright
lawyers in the room, you would end up designing something that
looked like cable TV or Minitel. The Internet would never get
off the ground.
94
The Internet is safe now, of course, because it developed so
fast that it was a reality before people had time to be afraid
of it. But it should give us pause that if we had our current
guiding set of policy goals in place, our assumption that
cheaper copying means we need greater regulation, we would never
have allowed it to flourish. As Jessica Litman points out, we
are increasingly making our decisions about technology and
communications policy inside copyright law. We are doing so
according to the logic of control that I have sketched out in
this chapter. But the logic of control is a partial logic. It
blinds us to certain possibilities, ones that have huge and
proven potential--look at the Internet.
95
The law has not been entirely one-sided, however. The Sony case
drew a line in the sand which promised to halt the inevitable
drift toward greater and greater control over communications
technology by content owners. It turned out the heavens did not
fall. Indeed, the content companies thrived. Perhaps that line
was drawn in the wrong place; reasonable people can disagree
about that. But Grokster smudges the line without drawing a
clear new one. If that new line is drawn according to the logic
of control, what technologies will we never see? Could they be
technologies that would transform our lives as unimaginably as
the Internet has since 1995?
96
I have described the story line--the cluster of metaphors and
images and concerns--that pervades our copyright policy. I
labeled it "the Internet Threat." In the next chapter, I discuss
an alternative story line, a different way of understanding our
current policies. The subject of that story line is the best-
known example of contemporary attempts to control the digital
world, the Digital Millennium Copyright Act or DMCA.