This column first examined the safe harbor provided by the 1998 Digital Millennium Copyright Act (DMCA) nearly five years ago (AVN Online, June 2002). It discussed how certain classes of Web businesses, such as ISPs, could be exempt from liability for the misdeeds of their customers by registering a designated agent with the Library of Congress and following a specified procedure under the so-called "notice and takedown" provisions of the DMCA. Generally, if the registered agent receives a DMCA complaint about, for example, copyright infringement or defamation, the ISP is required to notify its customer of the complaint and, in the event of an insufficient or absent response, take down the offending material. The idea was that such a procedure would strike a balance between the rights of copyright holders on the one hand and society’s interest in promoting the Internet on the other. As things have evolved since the 1998 DMCA enactment, however, the recording and motion picture industries (including adult) believe they are getting the short end of the stick with the emergence of Internet spaces that readily facilitate swapping copyrighted audio and video clips.
It started with Napster, which had a central-indexing website connected to a platform that linked peers together so they could swap files. While it seemed a no-brainer that Napster was a copyright-infringing machine, quite a bit of kicking and scratching had to be overcome to get it taken down (A & M Records Inc. v. Napster Inc., 2000 WL 1170106 [N.D. Cal., Aug. 10, 2000], affirmed 239 F.3d 1004 [9th Cir. 2001], on remand 2001 WL 227083 [N.D. Cal., March 5, 2001], affirmed 284 F.3d 1091 [9th Cir. 2002]).
Nonetheless, fed up with paying $20 for a CD with only one or two good songs, Americans flocked from the fallen Napster to Grokster, which shamelessly boasted it was Napster’s replacement. A subtle but legally significant difference from Napster kept Grokster in business until the Supreme Court stepped in and made a distinction between the videocassette recorder and Grokster (Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 259 F.Supp.2d 1029 [C.D. Cal. 2003] affirmed, 380 F.3d 1154 [9th Cir. 2004] vacated and remanded, 545 U.S. 913 (2005), on remand, 419 F.3d 1005 [9th Cir. 2005], ___ F.Supp.2d ___, 2006 WL 2806882 [C.D. Cal., Sept. 27, 2006]). The difference was that Grokster’s software operated independent of any central index or platform, so peers were independently connecting to each other, which Grokster claimed (correctly) that it could not control. But the Supreme Court held that Grokster was guilty because, among other things, of its intent ("Thus, where evidence goes beyond a product’s characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions directed to promoting infringement [as Grokster did], Sony’s [Betamax decision’s] staple-article rule will not preclude liability."). Down went Grokster, but CD pricing still exceeded teen budgetary constraints.
Although Grokster’s functionality prevented it from qualifying for any DMCA safe harbor, that is not so with Google, MySpace, and other information-sharing platforms. As passive, information-sharing mechanisms, they are exactly what the DMCA safe-harbor rule was designed to protect. The idea was a trade-off: Congress believed there was an important public interest in promoting the information-sharing ability of the Internet, so it reduced the potential copyright (and other civil) liability of such operations, so long as they made what Congress believed were reasonable efforts to unplug offending posts. Back to basics: Remember, Congress is the source of all copyright protection, and what Congress gives, Congress can take away, and it did so in part.
Meanwhile, the recording industry remained hysterical. Unable to stymie file swapping, it turned to suing individual file swappers: more than 30,000 individuals who posted on KaZaa and the like (more than a third of them outside the United States). Needless to say, this did not sit well with the public. The recording industry time and again obtained infringement judgments for thousands of dollars against college students and what the public viewed as poor working stiffs being taken advantage of by greedy record companies who still were charging $20 for CDs. (Thousands of settlements averaged a little over $3,000 each.) But from the recording industry’s standpoint, it was taking a terrible beating from this—revenue from album sales declined from $14.6 billion in 1999 to $12.6 billion in 2002, according to the Recording Industry Association of America.
The most recent development in this scenario is quite interesting. In November and December 2006, the recording industry filed two lawsuits in federal court in Los Angeles against Grouper Networks and MySpace, both of which would seem to be textbook examples of DMCA safe harbors (UMG Recordings, Inc., et al v. Grouper Networks, Inc. d/b/a Grouper.com, No. 06-cv-06561-AHM [C.D. Cal., filed Oct. 16, 2006] and UMG Recordings, Inc., et al v. MySpace, Inc d/b/a MySpace.com, No. 06-cv-07361-SVW [C.D. Cal., filed Nov. 17, 2006]). Clearly, the recording industry is attempting to contract the scope of the DMCA safe harbor. If these lawsuits are unsuccessful—there are armies of powerful law firms on both sides—you can bet the recording industry views them as setting the stage for a no-holds-bared assault on Congress to tighten up the DMCA safe harbor, or at least require the beneficiaries of the safe harbor to pay some kind of compulsory royalty to the copyright owners for file swapping that is not successfully filtered (giving the safe-harbor companies an incentive to filter, at which they are getting remarkably proficient).
Remember, this is not just academic. What gets file-swapped almost as much as music? Right: Adult product! A scene from a movie fits neatly on a manageably swappable file, especially now that so many people have warp-speed Internet access. If you own content, you are not just a spectator at this game.
(Clyde DeWitt is a Los Angeles attorney whose practice has focused on adult entertainment since 1980. He can be reached through AVN Online’s offices, or at [email protected]. Readers are considered a valuable source of court decisions, legal gossip, and information from around the country, all of which is received with interest. Books, pro and con, are encouraged to be submitted for review, but they will not be returned. This column does not constitute legal advice but, rather, serves to inform readers of legal news, developments in cases, and editorial comment about legal developments and trends. Readers who believe anything reported in this column might affect them should contact their personal attorneys.)
