Salon on Grokster

Music rules

The case before the Supreme Court does not pertain to whether the actual act of file sharing is illegal. Let’s accept for now that when you or I grab a copy of the newest Aimee Mann track from Kazaa or LimeWire, we are committing intellectual-property piracy, stealing royalties from starving artists, and threatening the entire economic basis of the music industry. Personally, I enjoy supporting the artists I like by purchasing their records on iTunes, and I especially savor doing so after I have heard a free sample of their music over the Net. But that’s an entirely separate issue from what’s at stake in this case. MGM vs. Grokster deals with whether the creators of a technology are responsible for how it used. It’s not an understatement to say that the case could influence the future of the Internet.

(Somebody at) SAVVIS.NET Wants My Content

And they’re flooding my server/desktop with HTTP requests for just about everything I have — although I see a Search query for Michael Speck — gonna have an interesting time going over the logs today, I see….

Sorry to everyone else who wants to see what’s up. If this persists, a change to my firewall setting might be in order. When sitting at the end of a 10 Mbit pipe (all we get in this building), something like this is a little overwhelming.

Later: Guess they’re done

WaPo Editorial on Grokster

The nuance in their reporting is not here, of course: Not an iPod [pdf]

But Grokster and StreamCast are not simply technologies that can be used for good or ill; they are technologies that were designed and marketed precisely so as to facilitate theft. Both companies positioned themselves to inherit Napster’s user base when the courts ordered that company to stop permitting illegal file-sharing. Both have promoted themselves based on the wide variety of materials illegally available. And both have frustrated copyright holders’ efforts to police their use. A company that builds its entire business model around facilitating illegality should not be immune from liability because of the possibility of innocent use. Drawing a clear distinction between such a product and an iPod would protect both innovation and intellectual property.

Funny: I thought that one of the important roles of law is to define the boundaries; if so, isn’t engineering something to stay within the bounds a reasonable effort? The distinction between “business model” and “technology” that the Court strained over seems to be completely absent here.

New LoC “American Memory” Archive

Now online a the Library of Congress — digital copies of The James Madison Papers

The James Madison Papers from the Manuscript Division at the Library of Congress consist of approximately 12,000 items captured in some 72,000 digital images. They document the life of the man who came to be known as the “Father of the Constitution” through correspondence, personal notes, drafts of letters and legislation, an autobiography, legal and financial documents, and miscellaneous manuscripts.

Changes In The Movie Business Model?

In Face of Soaring Costs, Studios Cut Films

But studio bosses say their parent conglomerates are trying harder to rationalize spending, seeking a sweet spot: the least number of film releases that can keep enough profits pumping through their cable networks, theme parks, music and book publishers and other subsidiaries.

“The consensus is that things have gone too far,” said a top studio executive who spoke on condition of anonymity so as not to alienate his peers. A crucial complaint is marketing costs, which reached an average of $39 million a film in 2003 before falling last year to $34.4 million, according to the Motion Picture Association of America.

But studio executives also lament that release dates are cluttered by too much competition. And the studio-owned specialty divisions created to capture the market for independent movies could feel the pain first. […]

“You’ve got to start out with a plan that says, how many films should we release a year, and work back,” the executive said. “In the ’90’s, all the international markets were still opening up, DVD and video were still growing by leaps and bounds, and the revenue profile was still growing at a very accelerating rate. Now, most of the world’s opened up, DVD is flattening – all the markets are maturing.” And video-on-demand and high-definition TV – the next big things – seem a few years away from invigorating the industry, he added.

Who’s Surprised?

But the closing lines of the article point out the special (peculiar?) nature of this product: IPod Thieves Hit Subways. Is Anyone Listening?

It would be hard to conceive of a better criminal target than the iPod. Those white cords snaking down from listeners’ ears into the recesses of their jackets signify an instant status symbol, hundreds of dollars worth of merchandise and a mark who may be blissfully unaware of his or her surroundings.

[…] [A] recent spike in subway felonies, reported in The Daily News yesterday, has been driven by an increase in iPod thefts, the police said. As of Sunday, there had been 304 robberies in the transit system citywide this year, up 24 percent from the same period last year, the police said. Grand larcenies are up 10 percent, with 462 so far this year. Over all, transit crimes are up 16 percent.

It is impossible to say how many of those robberies were iPod thefts, but they were a major factor, the police said.

[…] Elliot Aronow, 24, an editor at The Fader, a music magazine, described the aggravation when his iPod was stolen after he left it on a table last weekend at a Duane Reade drugstore on 23rd Street. Mr. Aronow estimated that he had downloaded about 12,000 songs from friends and other sources in the past year. He last backed up his files on his own computer a few months ago, and when his iPod was stolen, he lost some songs that would be difficult to track down again.

“All the value was really in the music,” Mr. Aronow said. “The thing itself was just a stupid device.”

NYTimes’ Grokster Writeup

Plus some quite uncertain coverage of Brand X: Lively Debate as Justices Address File Sharing

The much-heralded Supreme Court showdown in the Grokster case between old-fashioned entertainment and newfangled technology found the justices surprisingly responsive on Tuesday to warnings from Grokster, the software maker that allows Internet users to share computer files on peer-to-peer networks, that a broad definition of copyright infringement could curtail innovation.

[…] That Justice Souter, the least technically minded of the justices – he still drafts his opinions by hand on a legal pad – could even invite a dialogue about Apple iPods, much less suggest that he could be tempted to engage in illegal file sharing, was an indication of how this confrontation of powerful interests had engaged the court.

But by the end of the lively argument pitting Grokster and its allies on the electronic frontier against the entertainment community’s stalwart defense of intellectual property rights, any prediction about what the court will actually decide appeared perilous. The justices themselves seemed taken aback by the procedural complexities of the case, Metro Goldwyn Mayer Studios v. Grokster Ltd., No. 04-480, which moved through the lower federal courts on summary judgment, without a trial.

Promoting Innovation

How Ampex’s patent portfolio has resurrected the value of a moribund company: The Profits in the Attic

The hottest tech stock in America hasn’t been surging because of what its products promise to do in the future, but for breakthroughs it made more than a decade ago. Ampex has quietly risen a whopping 2,000 percent in the past six months. It is perhaps the most extreme vindication of Kevin G. Rivette and David Kline’s book Rembrandts in the Attic, which argued that companies’ patent collections could constitute an overlooked treasure trove. In the past year, Ampex has found several Rembrandts in its attic, and maybe even a Renoir or two.

Never heard of Ampex? It has a long and storied history. Founded in 1944 in what is now Silicon Valley, Ampex was a pioneer in audio and video recording. […] In the 1960s, Ampex invented slow-motion instant replay and then focused on developing efforts to store and retrieve digital images. In the early 1990s, it introduced digital compression technology (or DCT), which is used in the industrial-strength recording machines it sells to the government and television stations.

[…] As Ampex struggled, the continuing revolution in consumer electronics—in particular the spread of digitization—laid the groundwork for Ampex’s rebirth. Have you visited a Circuit City lately? The aisles are full of DVD players, DVRs, digital cameras, camera-equipped cell phones, and digital camcorders. None of these was a major consumer product 10 years ago. And all of them rely on the storage and retrieval of digital images. And can you guess who held a bunch of patents on the storage and retrieval of digital images? “We were finding that the patents we gained as a result of developing DCT in the 1990s were being used in today’s ‘trendy’ electronics,” says Karen Dexter, director of investor relations at Ampex.

And so the company began to contact consumer electronics giants, an American David twirling a patent slingshot at Japanese giants. […]

The suits themselves didn’t garner much attention. But last fall, the Japanese electronics giants began to fold. […]

Slate’s Grokster Coverage

Dahlia Lithwick’s on maternity leave, so Grokster argument coverage comes from Emily Bazelon: Grok Around the Clock

Outside the courthouse today, a few feet away from the open-source guys are folks with guitars. Their signs read “Don’t Steal My Future” and “Feed a Musician.” That’s one way of putting the choice the court faces today—the techies vs. the musicians. (The choice is also between the big fat technology industry and the big fat recording industry, but never mind that.) The justices seem vexed by their choice. They don’t want to be the Luddites who killed off the next iPod, but they also don’t want to abandon all pretense of enforcing federal copyright law. So they vent a little by giving lawyers on both sides a hard time. Donald B. Verrilli Jr. is representing the studios that sued Grokster and StreamCast. When he implies that the court needs to clarify Sony, the justices want to know what he has in mind. “It’s not clear to me what your test is,” Justice Anthony Kennedy says (testily).

Verrilli’s proposed test is that a company like Grokster should have to show that its business is “substantially unrelated to copyright infringement.” Justice Stephen Breyer doesn’t seem happy with that standard. “Under your test, if you were counsel to Xerox, are you sure that you could recommend that your client go ahead with developing its product?” he asks. Then he repeats his question three times, swapping in for Xerox the VCR, the iPod, and Johannes Gutenberg’s printing press.

“My answers are yes and yes and yes and yes,” Verrilli responds—what choice does he have? Breyer says that in each instance, most of the foreseeable uses of the new technology could have involved copyright infringement. Verrilli backpedals. The test he wants now is that a company should be held liable when it makes a “material contribution” to copyright infringement with the knowledge that it’s doing so.

“But the maker of Xerox knows that!” Antonin Scalia exclaims. It’s not a good sign when Breyer and Scalia join forces. Worse, David Souter piles on. […]

[…] O’Connor asks whether [Acting Solicitor General Paul] Clement thinks the court should restrict itself to holding companies liable for “actual inducement” of copyright infringement. Scalia intercepts. “The actual inducement test doesn’t get you very far, does it, because a successor to Grapster or whatever this thing is called would know very well” how to avoid looking like an inducer. From this we learn that Scalia doesn’t care about sounding cool like Souter. Nor does Kennedy, who has just referred to Grokster as “an instrumentality program.”

Scalia wants Clement to explain how the court can stave off a world in which lawsuits stifle innovation. “What I worry about is the suit that comes right out of the box as a company starts up,” he says. Clement is open to giving the new kid on the block extra leeway. But he warns the court not to fall too hard for the innovation mantra. “The only newfangled idea here is that if you give someone else’s property away for free, you’re likely to attract users and advertisers,” he says. “But that is not the kind of innovation that we want to foster.”

[…] When [Grokster attorney Richard] Taranto starts to invoke Sony—he’s not interested in a new test—Scalia calls him off. “I hope you’re not going to waste too much of your time,” he says. “This court certainly is not going to decide this case on the basis of stare decisis.” That’s Latin for standing by Sony. Ouch.

Breyer, however, is no longer on Scalia’s team. For 21 years, he points out, the Sony test has allowed plenty of technology to flourish. But Kennedy attacks before Taranto can relax. “You want to say that unlawfully expropriated property can be used as startup capital,” Kennedy says. “From a legal standpoint and an economic standpoint, that sounds wrong.”

Taranto retreats to arguing that Congress, not the courts, should resolve the substantial policy questions at stake.

Freelancer Copyright Sustained

Freelancers Hit the Jackpot

A settlement reached last Wednesday in a class-action online publishing lawsuit could mean plenty of freelance writers will be eligible to receive their share of up to $18 million dollars from big media companies, once the agreement receives court approval that is expected in the next few weeks.

The settlement, which could net qualifying freelancers a collective minimum of $10 million and maximum of $18 million, is the result of a lawsuit meant to remunerate writers for work that had been published over the years in online databases without their approval.

See also Boston Globe’s Database operators settle copyright suit [pdf]; NYTimes’ Settlement in Freelance Writers' Suit