WASHINGTON — Showing both concern and skepticism for each side’s claims in Tuesday’s oral arguments, the justices of the U.S. Supreme Court seemed to seek clarification and a middle ground in the dispute over illegal online file-sharing.
The case, which pits movie and music companies against peer-to-peer software distributors Grokster and StreamCast Networks, is the first direct challenge to the court’s 1984 Sony Betamax decision, which held that makers of video recorders could not be held liable for any copyright infringement committed by users mainly because VCRs were capable of “substantial non-infringing uses,” as the court wrote.
Whether P2P makers should similarly be exempted is the question at the heart of the case. Attorney Richard G. Taranto, representing defendants Grokster and StreamCast, argued they should be for the same reason, noting that legitimate P2P use is rapidly developing.
But plaintiffs’ attorney Donald B. Verrilli Jr. told the court that “copyright infringement is the only use” of P2P software, which he described as “an intentionally built-up infringement machine.” Any non-infringing use, he said, was mostly “theoretical.”
While not appearing to agree with that assessment, the justices focused more on trying to get Verrilli to provide a clear and workable standard for his claim that the defendants were not protected by the Sony Betamax decision. “It’s not clear to me what your test is,” said Justice Anthony M. Kennedy. “Would any non-infringing use still not protect?” he asked.
“The test is whether this is a business that is substantially unrelated to infringement,” Verrilli responded. “The numbers are relative.” He added: “There is no commercially significant non-infringing use” of P2P.
“But there could be,” said Justice Ruth Bader Ginsburg. Other justices then tried to pin Verrilli on defining a point at which infringing use surpasses non-infringing use enough to void protection under the Sony Betamax decision.
Justice David Souter pressed Verrilli, saying such a point was vital. “Otherwise, how will inventors know in advance whether they’ll be sued because their product might be used in some part for infringement?” Souter said.
“I’m starting a new business,” Justice Antonin Scalia said. “How much time do you give me to allow the lawful use to overtake the unlawful use?”
Justice Stephen G. Breyer compared P2P technology to historical innovations such as the Gutenberg Bible and the photocopier. “It could be in each of those instances that there will be vast numbers of infringing uses that are foreseeable,” Breyer said.
Implicit in the justices’ questions was a desire to get a firm legal definition of “substantial non-infringing use” from an industry insisting it did not apply to the defendants’ product. None of Verrilli’s answers, nor any from U.S. Solicitor General Paul D. Clement, who later argued in support of the plaintiffs, seemed to satisfy the justices.
Not that Taranto fared much better. Justices grilled him on why his clients should not be held liable for inducing copyright infringement. Ginsburg specifically asked Taranto why Grokster and StreamCast were any different from Napster, the P2P network that the recording industry successfully sued for copyright infringement.
“Napster helped people find files for copying,” Taranto explained. “That was a classic case of contributory infringement based on specific knowledge” that users were trading unauthorized content.
“Why isn’t this a classic case of willful ignorance?” countered Souter, echoing a main point the studios have repeatedly made, that the defendants have tried to avoid responsibility by turning a blind eye to what users of their software are doing.
Unlike Napster, Grokster and StreamCast are decentralized — they do not have servers helping users to find copyrighted material. “Didn’t your clients decentralize solely to get around the Napster ruling?” Scalia asked.
Ginsburg once more returned to the issue that dominated most of the questions. Acknowledging the Sony Betamax decision’s key point that technology capable of “substantial non-infringing uses” should be protected, she observed, “Sony Betamax also goes on for another 13 pages,” in which, among other things, the decision calls for a balance between “effective, and not merely symbolic, protection of copyright” and “the rights of others freely to engage in substantially unrelated areas of commerce.”
“You can’t just isolate one sentence and say we have a clear rule,” Ginsburg added. She then touched on a factor that could figure prominently in the court’s decision on the case, noting that the principal use of the Sony video recorder was for “time-shifting” — taping a show for personal viewing later — which constituted a large part of “substantial non-infringing use.” She advised Taranto that he had not yet convinced her of how P2P software possessed similar demonstrable use.
Afterward, representatives from both sides said they were encouraged by the arguments.
“The justices asked very good questions, and I’m certain that if the facts are closely examined, we will win,” said Michael Weiss, CEO of StreamCast.
“The Supreme Court asked exactly the right question: How do we protect the next innovator if he has to get Hollywood’s permission?,” said Fred von Lohmann, senior staff attorney for the Electronic Frontier Foundation, which has done much of StreamCast’s legal work.
“I’m cautiously optimistic,” said Andrew Lack, CEO of Sony BMG Music Entertainment. “The (oral argument) process is to slap around both sides, but I got no sense that the Supreme Court will affirm the (lower court decision in favor of defendants), so that’s a win for us.”
Though some analysts believe the court will likely remand the case in some fashion, few were willing to make any predictions. The court is expected to issue a decision by summer.