The Suit Don’t Fit

This week it was announced that Grokster, one of the larger peer-to-peer (P2P) file-sharing companies, was shutting down. Grokster was at the short end of the Supreme Court’s decision last June, where it was ruled that distributors of P2P software could be held liable for copyright infringement if the distributors “induced” end users to use their software to trade copyrighted material. In the decision, Grokster was the poster child of inducement, as the Court described all of the things that Grokster had done to promote its software as a way to get music for free.

>From reading the headlines, you’d think the record labels are winning. Maybe not. First of all, despite what the headlines say, Grokster ain’t dead. This week’s development only means you can’t get the Grokster software from a company named Grokster anymore. If you already have a copy of the software on your computer, you can still trade music with the millions of other people who also have the software, just like before. And a Google search for “Grokster software” indicates that copies of the software are readily available for download all over the Net. Then, of course, there are the dozens of other P2P applications out there, all working independently, with the software still generally available from their creators.

Of course, none of this is without risk. The labels are continuing to sue end users—at last count, the labels have brought or threatened over 16,000 infringement lawsuits against individuals who use the various P2P networks. I’ve handled over 20 of these cases. Last week I attended a conference in Chicago, sponsored by the Electronic Frontier Foundation, to discuss the state of P2P- related litigation, and this is some of what I learned.

P2P is growing, despite all of the lawsuits. P2P is so big that the labels pay big money to a company Big Champayne, to report to them what’s being traded on the P2P systems; because that information is better market research data than the legitimate sales charts. At this point, more people are trading music for free in this country than voted for George W. Bush in the last election.

And this trend is likely to continue. There are numerous ways to avoid detection, from getting involved in undetectable (darknet) trading systems, using anonymizer programs, filtering trading through “zombie” computers, or simply shutting off the share function of your program. If all this sounds complicated, ask the next 13-year-old boy you run into to explain it to you—it isn’t.

Another interesting issue is what’s going to happen when Internet access is free and wireless, as looks likely, especially in big cities? The trail of information will lead to the wireless transmitter, then out to the open air. Will these be free-trade zones?

Music lovers aren’t particularly happy with the legal download sites, like iTunes and Rhapsody, because of the restrictions those services put on the music. All of them restrict how many times you can make copies of the music that you buy, and the formats among the systems often don’t support each other. Want to burn a backup disk, in case your iPod gets swiped or your hard drive gets fried? Sorry! No can do! Wanna play stuff from iTunes on a non-Apple player? Oops! Say you’ve subscribed to the “New Napster” and built up your music library, then you decide you can’t afford the monthly fees? Adios library!

Then there is the matter of consumers supporting an industry that promotes its products by creating a climate of fear. Suing members of your target demographic hardly seems like the best way to build brand loyalty. The heavy hand of industry-led litigation is brutal and unforgiving. I heard stories of grandmothers getting sued for allegedly having hundreds of gangsta-rap tunes on computers they don’t own. People calling the label’s “settlement hotline” (until recently, a boiler-room collection-agency operation) have been threatened with jail if they don’t quickly settle. Twelve-year-olds are getting sued. Employers have been sued for the online activities of their employees. Recently, a family received a subpoena indicating they were going to be sued for illegal music trading, and the 16-year-old son went to his room and killed himself.

A couple of targets are fighting back, risking financial ruin in the process. Several New York City folks are challenging the basic premise of the labels’ lawsuits—that simply having files with titles of popular songs available for download is not, without more information, copyright infringement. A single mom has countersued the industry for invasion of privacy, unfair business practices, computer fraud and racketeering. Other parents have convinced courts to tell the industry to leave them alone and sue their kids directly.

I also met Hank Berry, who was the CEO of the original Napster, one of the guys who started it all. He’s still fighting mammoth lawsuits, as the industry is trying to hold him personally liable for all of the music trades that took place when Napster was the only game in town. He’s countersued the industry for, among other things, collusion, price fixing, and abuse of copyright. You see, back in 2000, Napster wanted to pay the industry for the music on its system, and the industry refused to talk to Napster. And his countersuit is gaining traction as the judge in the case is starting to smell the rat that is the music industry. A trial is expected to take place in 2007.

—Paul Rapp

Paul Rapp is an intellectual-property lawyer with offices in Albany and Housatonic, Mass. He teaches art-and-entertainment and copyright law at Albany Law School. Contact info can be found at www.paulrapp.com.

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