Issues & Overview Intellectual Property In The Online World: An Ongoing Digital Dilemma

Wednesday, June 1, 2005 - 01:00

From the very first moment when a record company learned that a song could be
shared through an online file sharing service for free, or a photographer
discovered that his/her photo was being distributed as a high-resolution graphic
without a license or an author saw proprietary content posted on a web site
without permission, the battle between content providers and technology
providers has been raging. New technological advancements are often met with
serious concerns over the ability to use such systems for the unauthorized use,
copying or distribution of intellectual property.

File Sharing Comes To The Supreme Court

Despite the demise of the old Napster service in 2001 (the trademark is now
owned and used by the legal music service Napster, LLC), the popularity and use
of peer-to-peer ("P2P") file sharing networks has exploded during the past few
years through such services as KaZaa, Morpheus, Grokster, Gnutella, eDonkey and
dozens of other systems. At the same time, music sales have been falling, and
many blame the widespread availability of free music through such P2P networks.
The Recording Industry Association of America ("RIAA"), Motion Picture
Association of America ("MPAA") and others who represent copyright holders whose
creative materials are traded via P2P services, have successfully used the
threat of statutory damages under the Copyright Act to bring actions and obtain
settlements against individual end users. However, they have been largely
unsuccessful in holding current providers of P2P services liable for the alleged
infringing activities occurring through use of such services, due, in large
part, to technological differences between the first generation of P2P providers
and the most current P2P networks. In 2004, the U.S. Court of Appeals for the
Ninth Circuit affirmed a District Court's grant of summary judgment in favor of
the P2P service providers Streamcast Networks (a/k/a Morpheus) and Grokster,
holding that the providers were not liable for contributory or vicarious
copyright infringement. The decision relied upon the landmark 1984 Betamax
decision ( Sony Corporation of America v. Universal City Studios, Inc.)
by the U.S. Supreme Court, which held that the maker of a product with a
substantial non-infringing use could not be held liable for copyright
infringement merely because the product is used by some users to commit
infringement. The entertainment industry appealed the decision, and on March 29,
2005, the United States Supreme Court returned to this heated debate by hearing
oral arguments in the case of MGM v. Grokster. Technology providers and
content providers are eagerly awaiting a decision to see whether the Court makes
a ruling that gives content providers the legal authority to bring actions
directly against the P2P services or whether the Court sides with technology
providers and the independent technology innovators, who may be, in the words of
Justice Souter, just a "guy in the garage." However, the Supreme Court may or
may not have the last word on this issue, as Congress has discussed amending the
Copyright Act to allow direct actions against P2P providers for inducing
copyright infringement.

Broadcast Flag

The ability to transmit content via digital television, or "DTV", was
heralded by the technology industry as the wave of the future. While embracing a
new outlet for its content, the entertainment industry became concerned over the
potential for the unlicensed distribution of high-quality broadcasts. In
response to these concerns, the Federal Communications Commission adopted what
became known as the "Broadcast Flag" rule in 2003 to, in the words of the FCC,
create a "redistribution content control protection systemÉ[that would]Éprotect
digital broadcast television from the threats of mass, indiscriminate
redistribution while protecting consumers' use and enjoyment of digital
broadcast content." The Broadcast Flag requirement would have required all
providers of equipment capable of receiving digital television transmissions to
implement approved Broadcast Flag technologies by July 2005. Since the
technology industry was obviously not overly anxious to implement an expensive
new system for the sole purpose of benefiting the entertainment industry,
technology providers brought suit alleging that the FCC had overstepped the
authority granted to it by Congress. On May 6, 2005, a three judge panel from
the U.S. Court of Appeals for the District of Columbia unanimously agreed with
the technology industry that the FCC did not have the right under its current
authority to impose a system such as the Broadcast Flag.

Family Entertainment And Copyright Act

While the technology and entertainment industries await the outcome of MGM
v. Grokster,
President Bush signed into law the Family Entertainment and
Copyright Act on April 27, 2005. The Act establishes stiff criminal penalties
for some of the most objectionable, and largely indefensible, acts of copyright
infringement affecting the entertainment industry. These acts include the
distribution of pre-release audiovisual works on the Internet and using a
camcorder to record a movie in a theater. At the same time, the Act permits the
marketing and distribution of certain technologies designed to enable a user to
delete certain offensive content from a movie. Because the bill addressed the
most objectionable practices, did not address many controversial issues and
included provisions that benefited both the technology providers and the content
providers, it represented an unusual instance where the industries agreed on a
piece of legislation.

The Family Entertainment and Copyright Act is a rare exception to what has
become the rule in this area. As new technologies are introduced each year, from
multi-purpose wireless devices to advances in the transmission of broadband
signals, the battles between technology providers and content providers are
likely to continue since neither side believes that current law adequately
addresses their industry's unique concerns and needs.