CMU Trends Digital Labels & Publishers Legal

Trends: Can contributory infringement be a crime in the US?

By | Published on Monday 6 February 2017

Kickass Torrents

As legal reps for both sides in the US government’s criminal case against KickassTorrents defended their respective positions in court last week a very familiar argument resurfaced. It’s an argument that hasn’t, in the main, worked well for the providers of file-sharing software or services in the past. Though there is a key aspect to the argument this time that lawyers for the alleged founder of KickassTorrents hope will swing things in their favour as they attempt to have the case against their client dismissed. CMU Trends provides the background.

Copyright law provides copyright owners with a number of controls over the content they own. Only the copyright owner can copy, distribute, rent out or adapt the work, or perform it in public, or communicate it to the public. If anyone else wants to do any of those things they must first get permission from the copyright owner. The rights owner usually sells this permission, which is how copyright makes money.

If a third party makes use of copyright material without permission, that’s copyright infringement. The law says that the copyright owner should sue the infringer for damages. Which is fair enough when a small number of people infringe copyright for profit. But what happens if millions of people – many of limited means – routinely infringe copyright on a not-for-profit basis? That was the challenge facing the music industry when online file-sharing first started to gain momentum around 2000.

Copyright law still says to sue the infringers. But realistically, you can’t sue millions of people. Even if you decide to sue a portion of those infringers, because they aren’t profiting from their infringement, and will likely be of limited means, the chances are the damages you’ll receive will be nominal given the costs of pursuing such litigation.

Some in the record industry hoped that pursuing a series of high profile lawsuits against a small number of file-sharers might deter others from accessing unlicensed content this way. But that strategy – when instigated in the US – delivered nothing but bad PR.

The other option is to go after the companies that are providing the software or services that are facilitating the infringement. This is in many ways an attractive option for copyright owners, because there are far fewer providers of file-sharing software and services than file-sharers. Also, if the services are generating revenue from their technology, through subscriptions or advertising, then there may be money to go after for damages.

However, such litigation is only worth pursuing if you can demonstrate in court that such technology providers can be held liable for the infringement they are facilitating.

Ever since the early days of file-sharing, whenever a copyright owner tried to sue the provider of a file-sharing software or service, the defendant would almost always rely on the same defence. They would argue that their servers never actually hosted any of the infringing content. They merely helped one user connect to the server of other users where unlicensed content could be accessed.

The uploaders and downloader involved in the peer-to-peer transaction may have exploited the reproduction and communications elements of the copyright without licence – and therefore be liable for copyright infringement – but their software or service merely connected the various people involved in the P2P exchange. They weren’t directly involved in either the reproduction or the communication.

However, that isn’t necessarily the cast iron defence many involved in the file-sharing game seem (or pretend) to assume. Many copyright systems recognise a form of copyright infringement where an infringer isn’t directly involved in the infringing activity, but in some way facilitates the process. The facilitation – especially if knowingly done – can in itself constitute copyright infringement.

So in the physical product domain, you might have someone who bootlegs CDs and DVDs and then sells them from a stall at a popular market. The owner of the market knows that the seller isn’t selling legitimate copies of the CDs and DVDs, but turns a blind eye to the infringement, and profits by charging the seller a fee for renting a stall at the market.

Many copyright systems would hold the market owner, as well as the bootleg disc seller, liable for the copyright infringement. As the copyright owner, you’d likely sue both of them, but mainly target whoever had the most money, which may well be the market owner, who – after all – owns a market that has tangible value.

Different copyright systems call this kind infringement by different names – for example secondary, contributory or authorising infringement. The exact rules for this kind of infringement vary greatly around the world, including just how widely liability can be interpreted by the courts. Which means it can be much easier to hold a third party liable for contributory infringement (or similar) in some countries compared to others.

There have been various cases in past decades that limited the reach of contributory infringement. Which meant that, when the early file-sharing services were accused of contributory infringement (they having correctly argued that they were not liable for direct infringement for the reasons explained above), legal reps for said services started looking for comparable pre-internet cases via which they could argue that this kind of infringement didn’t apply to their clients.

The big early file-sharing cases mainly occurred in the American courts, and there the landmark judgment that the technology provides tried to rely on came from the Betamax Case in 1984. Though there was a similar precedent set in English law in the mid-1980s in a legal battle between the record industry and Amstrad.

Both of these cases related to the then growing fad of home-taping – the American case focused on video recorders, the UK case on audio cassettes and tape-to-tape devices. The latter came amid the UK record industry’s ‘Home Taping Is Killing Music’ campaign, which claimed that the increased trend of consumers buying an album on cassette and then making copies onto blank tapes for their friends was in danger of killing the music industry.

The Betamax and Amstrad cases sought to make the manufacturers of the recording devices liable for the copyright infringement their technology facilitated. Betamax was accused of the US concept of contributory infringement, while the Amstrad case tested the English law principle of authorising infringement.

In both cases, the consumer electronics companies prevailed, and for similar reasons. Basically, the tech firms argued that their recording devices had both legitimate and illegitimate possible uses, and once they had sold a recorder there was simply no way that they could control whether a customer used their device for legal or illegal purposes. Plus the small print on marketing and packaging usually carried some sort of warning telling customers not to use the device to infringe copyright.

Home taping didn’t kill music, and the rise of the CD and the DVD subsequently provided the music and movie industries with a boom decade. But when the music industry decided to take on file-sharing services like Napster and Grokster they both quickly referenced the Betamax judgment. After all, their software had both legitimate and illegitimate uses, and they couldn’t control how people used it. So if Betamax and Amstrad weren’t liable for copyright infringement, neither were they.

Initially it wasn’t entirely clear whether or not the Betamax judgment (and similar rulings elsewhere) could indeed protect the early file-sharing services from liability for the copyright infringement they facilitated. But then, in various jurisdictions, the defence started to fall down.

Judges in numerous courts started to accept the argument that – unlike the manufacturer of a video or cassette recorder – the provider of a file-sharing software retains a link via the net to the device on which the infringer is infringing. So there is control. Some file-sharing services have databases of the unlicensed content they are helping others to access, and those with no centralised database could still add filters to their software in a bid to stop obviously copyright infringing material from being shared.

In the US, Napster was the first high profile casualty to the music industry’s legal battle against file-sharing technologies, and its argument that the Betamax defence did not apply. Though it was the Supreme Court ruling against Grokster in 2005 that set the real precedent in American law regarding the liabilities of file-sharing service providers.

Many of Grokster’s US-based rivals quickly threw in the towel in the wake of that ruling, though one very popular service of the time – LimeWire – fought on for many more years, despite now having a pretty weak defence.

The Grokster ruling was only binding in the US, of course, meaning that similar test cases needed to be fought elsewhere in the world. In the UK, where the English law concept of authorising infringement was generally seen has being narrower than contributory infringement in the US, you sensed that the record industry was, for a time, nervous of fighting a test case that it might lose.

Kazaa was successfully sued in Australia, which has a very similar copyright system to the UK, though it was really the movie industry’s first and successful attempt at web-blocking – against Newzbin – that provided some clarity on the matter under English law.

Last year the alleged founder of KickassTorrents, Artem Vaulin, was arrested in Poland at the request of the American government, which subsequently launched efforts to extradite the KAT man to face charges of criminal copyright infringement in a US court.

Copyright infringement is usually dealt with through the civil courts – ie the copyright owner sues the alleged infringer for damages. Though under most copyright systems criminal proceedings can also be launched against an infringer, usually where the infringement is occurring at a commercial or industrial level – which is to say there is lots of infringement and it’s all done for profit.

Vaulin’s US legal reps, who are attempting to have the case against their client dismissed before the extradition proceedings have even gone through the motions, are utilising the classic argument at the heart of their defence: ie that KickassTorrents was not involved in any actual hosting or transfer of copyright infringing files, it was the site’s users who exploited the reproduction and communication elements of copyright without licence.

But how do they think that argument can work over ten years after the Grokster ruling? Well, because it is a criminal action rather than a civil case that is being pursued against Vaulin. If found guilty, a civil action will likely follow, but a criminal prosecution is required if there is to be any chance of forcing the KAT man to leave Europe and face allegations of infringement in a US court.

The other big famous file-sharing case was the one pursued against the three founders of The Pirate Bay in Sweden. That was a contributory infringement case. Legal reps for the TPB Three tried the usual “but we didn’t host any of the infringing content” argument and lost.

Crucially, that case was both a civil and criminal action at the same time, something allowed under Swedish law. As a result, the three founders all eventually served some jail time for their role facilitating rampant copyright infringement via The Pirate Bay site.

In the UK, an early criminal case against the operator of a file-sharing site called Oink pressed fraud rather than infringement charges, prosecutors likely nervous that liability for authorising infringement might not stand up in court, especially in a criminal case. Though the fraud charges didn’t stand up either.

In a later case against the online music community Dancing Jesus a criminal action for authorising infringement did succeed, albeit in a lower court where the defendant had non-specialist legal representation. But what about in America?

Vaulin is being represented in the US by the lawyer Ira Rothken, who is also famously representing Kim Dotcom in the long running MegaUpload case. He is adamant that – whether or not his client may be liable for secondary or contributory infringement in the civil courts – there is no provision for pursuing a criminal case for this kind of infringement under American law. He said in court last week: “The government cannot use the civil judge-made law in Grokster as a theory in a criminal case”.

US prosecutors – backed by the music and movie industries – do not concur, basically arguing that Rothken is trying to employ mere technicalities to excuse what, in their minds, was clearly a criminal operation. However, despite Grokster and the subsequent cases that have successfully relied on it, there seemingly remains ambiguity surrounding the criminal liabilities of file-sharing services for contributory infringement under American law. All of which makes the KAT case once to watch this year.

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