Distinguishing between cyberlockers and legitimate cloud storage services

By , September 22, 2014.

On Thursday, the Digital Citizens Alliance released a report revealing how profitable copyright infringement can be for cyberlockers. The study by NetNames, Behind the Cyberlocker Door, found that the top fifteen direct download cyberlockers and top fifteen streaming cyberlockers rake in over $96 million a year. This represents absurdly high profit margins—63.4% for direct download and 87.6% for streaming—due in no small part to the exploitation of infringing content. The study estimates that “78.6 percent of files on direct download cyberlockers and 83.7 percent of files on streaming cyberlockers” infringe.

One interesting question that emerges from the report is whether one can draw a distinction between cyberlockers and legitimate online storage providers. The NetNames report provides a useful guide.

Copyright implicates tricky questions when it comes to services that enable copying. Copying is no doubt a useful function: think of photocopiers, VCRs, or even your hard drive, which copies as a matter of function. Yet copying is also one of the exclusive rights of a copyright owner; unchecked copying of copyrighted works can undermine the system of property rights that has resulted in the wealth of cultural prosperity we see today.

Sony Sheep and Grokster Goats

The Supreme Court first broached the question of copyright and copying devices in Sony Corp v Universal City Studios, concerning an infringement case brought against the manufacturer of one of the earliest consumer home video recorders. The district court had found that Sony could not be directly liable for user infringement; it does not “loan or otherwise provide the copyrighted work”, and “The copying occurs not in a store operated and managed by the defendants but rather in a person’s home, a location in which individual privacy is constitutionally protected and over which defendants have no control. Furthermore, defendants’ acts of selling the Betamax and blank tapes to consumers can easily lead to noninfringing uses.” On appeal, the Supreme Court looked at indirect liability. Specifically, it asked when the provision of copying devices gives rise to liability. It answered this question by saying that the mere “sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes.”

A touch over thirty years later, the Court was asked to look at the liability of companies that provided software that allowed peer-to-peer trading of computer files in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. Unlike the manufacturer defendant in Sony, the defendants in Grokster provided the ongoing infrastructure needed for users of their software to distribute files of all types. In addition, there was clear evidence that defendants “clearly voiced the objective that recipients use [their software] to download copyrighted works, and … took active steps to encourage infringement.”

The Supreme Court was asked to apply the Sony test in Grokster, a rule that “barred secondary liability based on presuming or imputing intent to cause infringement solely from the design or distribution of a product capable of substantial lawful use, which the distributor knows is in fact used for infringement.” However, the Court declined. It said:

Sony‘s rule limits imputing culpable intent as a matter of law from the characteristics or uses of a distributed product. But nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability derived from the common law.

The Court went on to describe how one could be liable for inducing infringement, holding, “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”

After Grokster, it was clear that there was a line between legitimate services that might be capable of infringement and illegitimate services that were intended to facilitate infringement, but it was less clear where that line would fall in every case—a question of increasing relevance given the explosion of online services that come into contact with copyrighted works. Columbia Law professor Jane Ginsburg refers to this inquiry as “separating the Sony sheep from the Grokster goats.”1Jane Ginsburg, Separating the Sony Sheep from the Grokster Goats, 50 Arizona Law Review 577 (2008). She observes that many cloud services are “dual purpose.”

That is, they are not inherently pernicious; they can in fact be put to perfectly lawful and socially desirable uses. If the technology itself is at least in theory neutral, does this pose an insoluble quandary: either enforce copyright at the expense of technological evolution, or promote technology at the cost of copyright? Or can we have it both ways, fostering both authorship and technological innovation? To reach that happy medium, we need to ensure the “neutrality” of the technology as applied in a given business setting. If the entrepreneur is not neutral, and is in fact building its business at the expense of authors and right owners, it should not matter how anodyne in the abstract the technology may be.

Reaching this “happy medium” is particularly challenging when it comes to cloud storage services, since their essential purpose is to serve as repositories of files for third parties. The ability to remotely store and share files is valuable. But it can also allow for a damaging level of copyright infringement—a prospect which, given the profit margins mentioned above, serves as a strong temptation to those willing to risk getting away with it.

Cyberlockers vs Cloud Storage

Prior to the NetNames report, a few observers have discussed ways to distinguish between “legitimate” services—like Dropbox—and services which tend to facilitate infringement—like Megaupload, which was indicted by a grand jury in 2012 for “massive worldwide online piracy.” In Hotfile, Megaupload, and the Future of Copyright on the Internet: What can Cyberlockers Tell Us About DMCA Reform?, Ross Drath highlights four features “that copyright owners (and governments) typically find objectionable” when it comes to remote file storage services: “(1) public (as opposed to password-protected) sharing capability; (2) direct linking; (3) lack of search function; and (4) rewards programs.”212 J. Marshall Rev. Intelli. Prop. L. 205, 212 (2012).

Carrie Bodner describes a taxonomy of cyberlockers in Master Copies, Unique Copies and Volitional Conduct: Cartoon Network’s Implications for the Liability of Cyber Lockers.336 Columbia Journal of Law & the Arts 491, 498-504 (2013). On one end of the spectrum are services like Dropbox, SkyDrive, and Amazon Cloud. These services are marketed “primarily as a backup service, similar to an external hard drive,” and thus such services tend to be employed for productive or business uses rather than entertainment. Some services are more geared toward entertainment uses—for example, Amazon Cloud Player and Google Music, both of which provide storage specifically for music files—but Bodner notes that some have nevertheless “avoided an illicit reputation,” citing close ties to reputable businesses and legitimate online music stores.4Bodner does not mention this in her article, but most of the major services also have explicit agreements with major rightsholders governing features of their cloud storage services that more directly impact copyrighted works. See, e.g., Amazon’s music cloud is licensed by all top labels. On the other end of the spectrum are “one-click file hosts” such as “Rapidshare, Hotfile, Megaupload, MediaFire and 4Shared.” The primary difference is that these services lack any restrictions on who can download files that have been uploaded. Other distinguishing characteristics include the offering of monetary incentives to users who upload content that is downloaded frequently and premium accounts that remove restrictions on download speeds and waiting periods.

The distinction drawn in the NetNames report largely tracks that made by Bodner and Drath. According to the report, cyberlockers (as opposed to “legitimate cloud storage services”) generally place no limits on who can download or stream a file and frequently offer “affiliate programs that reward users when their uploaded content is accessed.” In addition, cyberlockers often delete files that haven’t been accessed after a period of time and don’t offer synchronization with a user’s devices, indicating that their purpose is not personal storage and access. Finally, cyberlockers are lax when it comes to enforcing repeat infringer policies.

In short: for cyberlockers, the client is the downloader. For legitimate cloud storage services, the client is the uploader. Yes, both allow users to store files remotely, but the similarities end there. For cyberlockers, the goal of spreading files as widely as possible permeates every aspect of the service.

That’s not to say that any of the characteristics described above, by itself or taken together, necessarily does or should render any given service liable for copyright infringement. In fact, Behind the Cyberlocker Door calls on credit card processors to take steps to prevent cyberlockers from profiting off the work of others. Outside of the report, voluntary efforts to mitigate piracy from all the various participants in the online ecosystem continue. These efforts are aided by a clear distinction between cyberlockers and legitimate cloud storage services.

References

References
↑1 Jane Ginsburg, Separating the Sony Sheep from the Grokster Goats, 50 Arizona Law Review 577 (2008).
↑2 12 J. Marshall Rev. Intelli. Prop. L. 205, 212 (2012).
↑3 36 Columbia Journal of Law & the Arts 491, 498-504 (2013).
↑4 Bodner does not mention this in her article, but most of the major services also have explicit agreements with major rightsholders governing features of their cloud storage services that more directly impact copyrighted works. See, e.g., Amazon’s music cloud is licensed by all top labels.

Friday’s Endnotes – 10/18/13

By , October 18, 2013.

Here’s why isoHunt deserved to die — “Critics warned that the vagueness of [the Grokster] rule would open the floodgates to frivolous lawsuits against technology innovators. But that hasn’t happened for a simple reason: It’s easy to avoid running afoul of the inducement standard. If an entrepreneur is sincerely not trying to profit from infringement, then she won’t encourage her customers to infringe, and so plaintiffs won’t be able to find evidence of her doing so. In contrast, the court found clear evidence that isoHunt was trying to profit from infringement. For example, the 9th Circuit Court of Appeals wrote that for a time, ‘isoHunt prominently featured a list of ‘Box Office Movies,’ containing the 20 highest-grossing movies then playing in U.S. theaters. When a user clicked on a listed title, she would be invited to ‘upload [a] torrent’ file for that movie.’ Since the top-grossing movies are almost always copyrighted, this feature shows clear evidence of infringing intent.”

My Art Was Stolen for Profit (and How You Can Help) — Independent artist Lisa Congdon writes of her discovery that wholesaler Cody Foster appears to have “blatant[ly]” copied her artwork. Says Congdon, “In the world of art & illustration, you can use the artwork of artists on your products as long as you ask permission, sign a licensing agreement with the artist, and agree to compensate them. I sell my images to companies all the time, companies who ask my permission and compensate me for my intellectual property. In this case, I was never contacted, asked permission or paid. That is called copying. It’s also called stealing.”

Is unauthorized online copying theft and does it hurt creators? — Canadian attorney Barry Sookman points to an interesting case that addresses a subject that is vigorously debated online. It’s an interesting case: essentially, Party A engages in copying a database compiled by Party B without permission. Party B posts angry messages about Party A online, accusing Party A of being a “thief” and of stealing the database. A sues B for defamation. Truth is a defense to defamation. So the court had to consider whether the characterization of unauthorized copying as theft is true or false. it concluded that it was true. “To a lay person such as Henry, ‘theft’ can also mean the wrongful act of taking the property of another person without permission. The data Henry had collected could be reasonably understood as her property—she had collected it, and it was her work in compiling it that gave it value. She did not give Tamburo permission to copy it and sell access to it. Although Henry might not be able to successfully sue Tamburo for using her data in this way, the gist of her statements was true: he took the data without her permission.”

Musicians: Don’t Let Google Hijack Your Brand With “Shared Endorsements” — The announcement this week that Google will start using user photos and likenesses in advertising raised a stir. Fortunately, at the moment, it appears that Google users can opt out of becoming unpaid shills (though how long Google will allow that is unclear). Probably a good idea for not just musicians, but any creators and small businesses who use Google to promote their work.

You are a soldier in Google’s Cold War with Facebook for social dominance — Web.Tech.Law takes a closer look at why Google has made the above-mentioned move.

The Walking Dead: Season 4 Begins — If, like me, you were excited to see the return of AMC’s zombie drama last Sunday, you might enjoy this look at the creation of the music for the season premiere from Bear McCreary, who regularly blogs, in depth, about his creative process. Fascinating stuff.

Tollbooths and Newsstands on the Information Superhighway — Brad Greenberg has posted a draft of an interesting forthcoming essay. “The Internet has made it easier than ever before to stay informed on current events — and without ever needing to pick up, let alone pay for, a newspaper. But recent litigation and legislation in the United States and Europe have challenged the cost-free flow of such information. The opposition to these recent legal developments is rooted in a belief that stronger intellectual property protections result in higher tolls, which, in turn, price many consumers out of accessing and using the information. But overlooked has been an existential consideration: information-gathering is expensive, and absent efficient tolls there will be far less information to access at all, regardless of cost. The United States Supreme Court recognized this principle in Harper & Row Publishers, Inc. v. Nation Enterprises as it applies more narrowly to whether copyright law inhibits free expression. Identifying the particular importance of incentives for newsgatherers, this Essay extends the Harper & Row rationale beyond its copyright mooring. In light of the continued withering corps of professional newsgatherers, these legal developments actually could enhance the exchange of information and ideas to the extent they preserve incentives for news publishers. This Essay proffers that copyright expansions actually can increase access and thereby serve important copyright and First Amendment values.”

 

Copyright Liability for Filelockers: Disney v Hotfile

By , August 20, 2012.

On Friday, the Florida Southern District Court held a hearing on several dispositive motions in litigation between film studios and popular file-locker Hotfile.

Major film studios — including Disney, 20th Century Fox, Universal City, Columbia Pictures, and Warner Bros. — sued Hotfile in February 2011 for copyright infringement and secondary copyright infringement. The studios also brought a claim against Hotfile’s owner and operator, Anton Titov, for personal liability. In July, the court dismissed the claim for direct copyright infringement but allowed the claims for inducement, contributory infringement, and vicarious liability to go forward. Hotfile raised a number of defenses in its answer to the complaint, notably that it is protected by the DMCA safe harbor, and also brought a counterclaim against Warner Bros., alleging the film studio had made material misrepresentations in thousands of DMCA takedown notices it had sent to Hotfile. Both parties moved for summary judgment earlier this year. 1The studios also seek to strike portions of testimony from several of Hotfile’s expert witnesses and defendant Anton Titov.

Though this is not the first infringement suit against file-lockers — Hotfile itself has been sued several times 2Once by Perfect10 and twice by Liberty Media Holdings. — it is notable for being one of the first suits initiated by major film studios against a popular file-locker. If the case progresses, it may prove influential in shaping copyright law online.

The claims of the studios are similar to claims in other copyright cases involving online service providers. It is alleged that Hotfile engaged in massive, commercial infringement by actively facilitating the reproduction and distribution of unauthorized TV shows and movies through its service. The studios point to Hotfile’s “affiliate program” that pays users for uploading popular files with the most downloads. Hotfile also operates a referral program that generates income for third-party sites that link to Hotfile content, the result of which, the studios allege, “is that Hotfile effectively partners, and acts in concert, with a vast array of pirate link sites and other affiliates to advertise and promote the infringing content on Hotfile’s servers.” Finally, like Megaupload, Hotfile is alleged to stymie takedowns of infringing content by making multiple copies of every file uploaded, each with a separate link. As the studios state:

Defendants protest that Hotfile is not like Napster, Grokster, Limewire, and other notorious infringers. But the differences make Hotfile’s infringement more egregious, not less. No earlier pirate services had the temerity actually to pay its users to upload infringing content. Hotfile does. Hotfile’s own economist acknowledges that Hotfile’s practice of paying uploaders (Hotfile’s so-called “Affiliates”) based on how many times their files are downloaded induces the uploading of “popular” (i.e., infringing) content. Additionally, unlike previous adjudicated infringers, which facilitated access to content stored on users’ computers, Hotfile itself physically stores all the infringing content on its own servers, giving it an unprecedented ability to stop the infringement – an ability Hotfile chooses not to exercise. Finally, Hotfile’s business model is indistinguishable from that of the website Megaupload, which recently was indicted criminally for engaging in the very same conduct as Hotfile. Defendants even admit that they formed Hotfile “to compete with” Megaupload.

The motions

On motion for summary judgment, the studios argue that Hotfile is ineligible for safe harbor protection because it failed to reasonably implement a repeat infringer policy, it failed to comply with the DMCA agent designation requirements, it had disqualifying knowledge — including actual knowledge of specific infringing files, “red flag” knowledge, and willful blindness — and it induced infringement.

On the first point, the studios note that Hotfile had the ability to track the number of takedown notices that individual users were responsible for (“strikes”), but it took no steps to terminate repeat infringers — a number of individual uploaders had accumulated over three hundred strikes without being terminated. The studios also note that over half of all downloads on Hotfile come from files uploaded by users with three or more strikes.

The last point, concerning the lack of knowledge requirement for safe harbor protection, has been the subject of recent court decisions in Viacom v. YouTube, from the Second Circuit, and UMG v. Veoh, from the Ninth. 3Note that the 9th Circuit ordered more briefing in Veoh this past June, following the decision in Viacom. Thus, the decision may yet be amended; the court also has a petition for rehearing on the case pending. It appears that this is the first time a court in the Eleventh Circuit has been confronted with interpreting these provisions of the DMCA. This portion of the DMCA states that a service provider is only eligible for safe harbor protection if it “does not have actual knowledge that the material or an activity using the material on the system or network is infringing,” or “in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent.” The above cases focused primarily on the scope of the latter, so-called “red flag” knowledge.

Here, the studios point to several “red flags” that should have made Hotfile aware of infringement: over 90% of downloads were infringing, the operators received a “constant stream of communications” from users who said they were downloading infringing works, thousands of linking sites associated with Hotfile contained terms like “pirate” or “warez” that indicated obvious infringement, and, perhaps most brazenly, Hotfile’s tutorials for using its service used names and titles of copyrighted works as examples.

But the court may not need to dive into the scope of “red flag” awareness just yet; the studios have also provided evidence that Hotfile had actual knowledge of specific infringing works.

Without the safe harbor, the studios argue that Hotfile is liable for contributory copyright infringement, vicarious liability, and inducement. These arguments are fairly straight-forward applications of these doctrines of secondary liability. For contributory infringement, Hotfile provided the “site and facilities” for infringement and had reason to know about such infringement. For vicarious liability, Hotfile financially benefited from infringement through its premium subscriptions while declining its ability to stop or limit infringment.

The inducement claim — “active steps . . . taken to encourage direct infringement” — tracks the Supreme Court’s Grokster opinion and “parallels the pattern of prior adjudicated infringers,” according to the studios. They allege that Hotfile’s unlawful objective is apparent from its Affilliate program, which pays users to upload popular, and predictably copyrighted, files. Hotfile also directly targets a user base of infringers, refuses to terminate repeat infringers, is overwhelmingly used only for infringement, and depends on infringement for its business model. Finally, the defendants have helped users to infringe, have impeded efforts by copyright holders to mitigate infringement, and have refused to even consider technology that could be used to prevent infringement.

Hotfile’s response to the studios’ motion for summary judgment essentially refutes their characterization of the facts — it didn’t induce infringement, it did reasonably implement a repeat infringer policy, etc. 4Hotfile has also moved for partial summary judgment on the claim that it is protected by the DMCA safe harbor for any infringement that occurred after February 11, 2011 — ten days after it was sued by the studios. To be sure, the court must sift through a lot of facts to resolve the issues raised on these motions. To succeed at the summary judgment stage, a party must show that, when all the facts are viewed in the light most favorable to the opposing party, no genuine issue of material facts exist, and the moving party is entitled to judgment as a matter of law on the issues it raises in its motion. With such complex legal issues, and thousands of pages of evidence already in front of it, the court here has its work cut out for it.

Other issues to watch

In the meantime, there are a few other legal issues raised in this litigation that are worth watching.

First, does inducement disqualify a service provider from DMCA safe harbor protection? A number of other courts have taken this position. 5See Viacom v YouTube, 676 F.3d 19, 38 (2nd Cir. 2012) (“inducement of copyright infringement … which ‘premises liability on purposeful, culpable expression and conduct,’ … might also rise to the level of control under § 512(c)(1)(B)”); Columbia Pictures v Fung, cv 06-5578-SVW, Order Granting Plaintiffs’ Motion for Summary Judgment on Liability (CD Cali. 2009) (“inducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory”); Arista Records v Usenet.com, 633 F. Supp. 2d 124, 142 SDNY 2009 (if defendants “encouraged or fostered such infringement, they would be ineligible for the DMCA’s safe harbor provisions”). The language and legislative history of the statute certainly seem to suggest that active conduct to encourage infringement is incompatible with a safe harbor for passive conduct, but courts in the Eleventh Circuit have yet to weigh in on the issue, as far as I can tell.

Next, what is the role of willful blindness in the knowledge prong of the DMCA safe harbor? The studios make the claim that Hotfile acted with willful blindness, effectively admitting “that they sought to blind themselves to the infringement all around them as much as possible.” Willful blindness, defined by the Supreme Court as taking “deliberate actions to avoid confirming a high probability of wrongdoing,” has long been considered a form of knowledge. The twist is that the DMCA provides that safe harbor protection does not require “a service provider monitoring its service or affirmatively seeking facts indicating infringing activity, except to the extent consistent with a standard technical measure complying with the provisions of subsection (i).” The Second Circuit in Viacom v. YouTube confronted this question and concluded that the DMCA “limits—but does not abrogate— the doctrine” of willful blindness, and it “may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.”

Finally, on a bit of a side note, the movie studios also argue that Hotfile is ineligible for the 512(c) safe harbor — which limits remedies “for infringement of copyright by reason of the storage at the direction of a user” — because Hotfile’s service was not used primarily for “storage.” They note that a significant portion of registered users on the site only use it to download, not upload, files. More to the point, Hotfile routinely deletes files that have never been downloaded — the “antithesis” of storage, as the studios put it. I don’t recall seeing this argument raised before in another case, so it will be interesting to see how the court approaches it.

A trial is currently scheduled for early November, but it shouldn’t be a surprise if the court’s eventual decision on these motions is appealed to the Eleventh Circuit, delaying trial.

References

References
↑1 The studios also seek to strike portions of testimony from several of Hotfile’s expert witnesses and defendant Anton Titov.
↑2 Once by Perfect10 and twice by Liberty Media Holdings.
↑3 Note that the 9th Circuit ordered more briefing in Veoh this past June, following the decision in Viacom. Thus, the decision may yet be amended; the court also has a petition for rehearing on the case pending.
↑4 Hotfile has also moved for partial summary judgment on the claim that it is protected by the DMCA safe harbor for any infringement that occurred after February 11, 2011 — ten days after it was sued by the studios.
↑5 See Viacom v YouTube, 676 F.3d 19, 38 (2nd Cir. 2012) (“inducement of copyright infringement … which ‘premises liability on purposeful, culpable expression and conduct,’ … might also rise to the level of control under § 512(c)(1)(B)”); Columbia Pictures v Fung, cv 06-5578-SVW, Order Granting Plaintiffs’ Motion for Summary Judgment on Liability (CD Cali. 2009) (“inducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory”); Arista Records v Usenet.com, 633 F. Supp. 2d 124, 142 SDNY 2009 (if defendants “encouraged or fostered such infringement, they would be ineligible for the DMCA’s safe harbor provisions”).

Viacom v. YouTube: The Second Circuit’s Decision

By , April 09, 2012.

On Thursday, the Second Circuit Court of Appeals decided Viacom v. YouTube (PDF of decision).

The decision has spurred a range of reactions, with both sides publicly claiming a sort of victory; others have stated the decision “is a bummer for Google and the UGC community“, is “mostly good (for the internet and innovation)“, is a win for Viacom, or is a mixed victory.

Regardless, the opinion is sure to be an important decision in the DMCA pantheon for years to come. The influential Second Circuit has interpreted many DMCA safe harbor provisions that affect both online service providers and copyright holders.

In 2007, Viacom sued YouTube for copyright infringement because of unauthorized public performance, display, and reproduction of their works on the video site. A couple of months later, a number of other plaintiffs, including various film studios, television networks, music publishers, and sports leagues filed suit against YouTube with similar claims. These plaintiffs also sought class action certification.

The District Court combined the two suits as related, and in 2010 ruled entirely in favor of YouTube on combined motions for summary judgment. 1The motion for class action certification was subsequently dismissed as moot. The Second Circuit’s decision is a result of both groups of plaintiffs appealing that decision.

Under the Digital Millennium Copyright Act of 1998 (the DMCA), online service providers are immune from monetary liability for copyright infringment as a result of certain activities — the most notable, and the one at issue in Viacom, is the safe harbor for “Information Residing on Systems or Networks At Direction of Users.” 217 USC § 512(c).

The DMCA lays out requirements for service providers to qualify for this safe harbor, several of which are germane here. I’ll look at each of them in turn and how they were affected by Thursday’s decision.

Knowledge

First, to be protected by the DMCA, a service provider must not have “actual knowledge that the material or an activity using the material on the system or network is infringing” or “is not aware of facts or circumstances from which infringing activity is apparent.” On this point, the parties disputed over whether this means “a general awareness that there are infringements” on a service — likely indisputable in this case — or rather “actual or constructive knowledge of specific and identifiable infringements of individual items.” On this point, the District Court adopted the latter interpretation, in favor of YouTube.

On appeal, the Second Circuit agreed with the District Court’s interpretation of the DMCA’s knowledge provision but vacated the summary judgment since there was evidence that YouTube may have had knowledge of specific infringing clips. It also held that the District Court failed to examine whether YouTube had been willfully blind to specific infringing clips.

This is perhaps the key issue in the case, especially since the second knowledge prong — awareness of facts or circumstances from which infringing activity is apparent (commonly referred to as “red flag” knowledge) — has largely been written out by courts. 3See Perfect 10 v. CCBill, “Because CWIE and CCBill provided services to ‘illegal.net’ and ‘stolencelebritypics.com,’ Perfect 10 argues that they must have been aware of apparent infringing activity. We disagree.” I don’t believe, in fact, that any court has yet to find that a service provider isn’t protected by the DMCA because of “red flag” knowledge. 4Greg Jansen, Whose Burden is it Anyway? Addressing the Needs of Content Owners in DMCA Safe Harbors, 62 Federal Communications Law Journal 153, 163 (2010), “To date, no OSP has failed the stringent red-flag test”.

The Second Circuit was mindful of this but focused on the language of the statute to render the first knowledge prong as incorporating an “subjective” standard while the red flag prong reflects an “objective” standard. “Both provisions do independent work, and both apply only to specific instances of infringement.” 5I’ll note that Congress wasn’t thinking in these terms. In fact, the House Commerce Committe Report on the DMCA said, “The ‘red flag’ test has both a subjective and an objective element. In determining whether the service provider was aware of a ‘red flag,’ the subjective awareness of the service provider of the facts or circumstances in question must be determined. However, in deciding whether those facts or circumstances constitute a ‘red flag’—in other words, whether infringing activity would have been apparent to a reasonable person operating under the same or similar circumstances— an objective standard should be used.”

Though the “red flag” prong seems all but superflous in practice, on remand, Viacom and the putative class plaintiffs should argue that it triggers a duty to investigate further. That is, when a service provider becomes aware of facts or circumstances that make infringing activity apparent, it must take affirmative steps to determine the legality of the activity. The Second Circuit didn’t address this issue, but the Ninth Circuit has held the opposite:

Perfect 10 alleges that CCBill and CWIE were aware of a number of “red flags” that signaled apparent infringement. Because CWIE and CCBill provided services to “illegal.net” and “stolencelebritypics.com,” Perfect 10 argues that they must have been aware of apparent infringing activity. We disagree. When a website traffics in pictures that are titillating by nature, describing photographs as “illegal” or “stolen” may be an attempt to increase their salacious appeal, rather than an admission that the photographs are actually illegal or stolen. We do not place the burden of determining whether photographs are actually illegal on a service provider.

This can’t be correct. In many other situations, the law places a burden on a party to inquire into the actual nature of something when the facts and circumstances make it apparent. 6For example, in federal securities law: Dodds v. Cigna Securities, “when the circumstances would suggest to an investor of ordinary intelligence the probability that she has been defrauded, a duty of inquiry arises, and knowledge will be imputed to the investor who does not make such an inquiry”; fraud: Higgins v. Crouse, “[W]here the circumstances are such as to suggest to a person of ordinary intelligence the probability that he has been defrauded, a duty of inquiry arises, and if he omits that inquiry when it would have developed the truth, and shuts his eyes to the facts which call for investigation, knowledge of the fraud will be imputed to him”; apparent agency: Whitney v. Citibank, “[A]bsent awareness of facts indicating that a partner is acting beyond his real or apparent authority, a third party is not obligated to investigate the matter further or search for some limitation on that partner’s authority”; statute of limitations: Kronisch v. US, “[E]ven if plaintiff’s awareness of his injury and its cause … could only be characterized as a mere “hunch” or “suspicion,” plaintiff would still have been under a duty to diligently investigate his claim.” And this burden-shifting doesn’t contradict the DMCA’s “no monitoring” provision, which only states that safe harbor protection doesn’t require “affirmatively seeking facts indicating infringing activity” (emphasis added) — this duty to investigate would only arise after those facts were known by the service provider.

Willful Blindness

The Second Circuit held that knowledge under the storage safe harbor includes “willful blindness.” Under the common law, consciously avoiding the confirmation of a fact that one is aware is highly probable is a type of knowledge. 7Global-Tech Appliances v. SEB, 131 S.Ct. 2060, 68-69 (2011). As the court notes, this doctrine is well-established in copyright law in general, but this is the first time the Second Circuit has faced the issue of whether willful blindness is applicable to the DMCA.

It is, though the court limits its application because safe harbor protection in the DMCA cannot be conditioned on affirmative monitoring by a service provider. So on remand, the District Court will need to determine whether YouTube “made a deliberate effort to avoid guilty knowledge”, in addition to the factual questions of whether YouTube has actual or apparent knowledge of infringing clips on its site.

Right and Ability to Control

Second, a service provider is only immune from liability when it “does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.” The Court rejected Viacom’s argument that YouTube doesn’t meet this requirement, stating that this “control” provision, like the knowledge provision above, requires “item-specific” knowledge of any infringing activity because “the provider must know of the particular case before he can control it.”

The Circuit reversed the District Court on its interpretation that the “control” provision of the DMCA requires item-specific knowledge — suggesting only vaguely that this question must be determined on a case-by-case basis — and remanded for further fact-finding on YouTube’s right and ability to control and financial benefit. 8This presents one of the places the Second Circuit diverges from the Ninth Circuit’s holding in the highly similar UMG Recordings v. Shelter Capital Partners. There the court held that the right and ability to control does require “control over specific infringing activity the provider knows about.”

But here’s where the court makes what could become a very important statement about the DMCA in the future, and one that hasn’t gotten a lot of attention in much of the initial analyses of the case I’ve read so far. While explaining what sorts of things could lead to a finding that a service provider has a right and ability to control that negates safe harbor protection, the Second Circuit said that inducement of copyright liability might rise to the level of control the DMCA speaks of.

Since the Supreme Court articulated the inducement theory of copyright liability in MGM v. Grokster, many have wondered whether the DMCA safe harbor shields service providers who induce users to infringe on copyright. Some cases have held that the DMCA safe harbors and inducement liability are “inherently contradictory”. In UMG, the Ninth Circuit, without any discussion about the interplay between the two, held the defendant protected by the DMCA against all liability, including a claim of inducement. Similarly, the District Court here granted summary judgment in favor of YouTube for inducement without any explanation.

As far as I know, this marks the first time a Circuit Court has incorporated inducement of copyright as a bar to DMCA safe harbor protection. Its placement in the “control” prong seems to make logical sense, too.

The Scope of ‘By Reason of Storage’

Finally, and this is more of a definitional requirement, immunity only extends to “infringement of copyright by reason of the storage at the direction of a user.” Viacom had argued that several of YouTube’s activities concerning uploaded videos do not fall within the scope of this definition, but again, the District Court rejected this argument.

While the Circuit affirmed that YouTube’s replication, playback, and related video functions were protected by the user storage safe harbor, it recognized that YouTube’s syndication of videos to third parties might fall outside the scope of the safe harbor but hesitated to make a definitive ruling on the point since the record didn’t reveal whether any of the clips involved in the lawsuit had actually been syndicated.

About a year ago, I wrote on this point, noting that chances were slim that Viacom would succeed on this argument, so it is somewhat notable that the Second Circuit recognized at least the existence of an outer boundary to what service providers can do with material uploaded by users while remaining protected by the DMCA safe harbor. It’s still concerning that the Circuit so easily found the other YouTube functions remained within the scope of the safe harbor, in large part because their functionality is “fully automated” — you can program just about anything to be “fully automated.” This interpretation seems to give service providers a “heads I win, tails you lose” position over content creators: one can make a fully-fledged content platform that relies on user-uploaded content that places no liability for copyright infringement since the only responsibility a provider has is to respond to individual takedown notices (pulling in enormous ad revenues), and then seek mercy because it’s too difficult to effectively address infringement due to the sheer amount of data being uploaded.

What’s Next?

For the parties involved, the Second Circuit’s decision is a mixed result on the law. YouTube won on some of its arguments, Viacom and the putative class plaintiffs one on some of theirs. But if the case continues back at the lower court, YouTube will likely ultimately be the loser.

The cardinal sin of Judge Stanton’s original decision wasn’t that he interpreted the DMCA so much in favor of YouTube, but that even under such a narrow interpretation, there was evidence that YouTube could be held liable.

It’s premature to say whether this case could be appealed to the Supreme Court, though that’s always a possibility — and the timing of this decision with the Ninth Circuit’s UMG decision on many of the same points can only add to the speculation.

On a broader note, as attorney Jacqueline Charlesworth points out in a relevant article, “A basic tenet of our law is that one should not encourage others to break it.”

In the adolescence of the Internet, we are seeing complex business models that may combine Grokster-like purpose with other, ostensibly benign functionalities. Services seeking to capitalize on the draw of infringing goods may exhibit superficial respect for copyright concerns—by implementing a takedown program, for instance—yet rest secure in the knowledge that their users will continue to supply the content on which they depend in limitless quantities.

… Courts must resist the invitation to oversimplify reality by arbitrarily dividing the Internet world into “true pirates” and everyone else. Not every pirate is holed up in a garage, has a name ending in “-ster” or spells “wares” with a “z.” Some dress in expensive clothing and have MBAs. Courts need to sort through the facts without prejudging them, and beware pirates in disguise.

There is plenty of evidence that the DMCA has faltered in its 14 year tenure at discouraging bad behavior — witness Megaupload and Grooveshark as recent examples. It remains to be seen whether the Second Circuit’s decision will alleviate building business models around infringement that are shielded by the DMCA safe harbors — which benefit only the service providers— or reach the balance originally intended by the DMCA — benefitting innovative tech companies, content creators, and the general public.

 

References

References
↑1 The motion for class action certification was subsequently dismissed as moot.
↑2 17 USC § 512(c).
↑3 See Perfect 10 v. CCBill, “Because CWIE and CCBill provided services to ‘illegal.net’ and ‘stolencelebritypics.com,’ Perfect 10 argues that they must have been aware of apparent infringing activity. We disagree.”
↑4 Greg Jansen, Whose Burden is it Anyway? Addressing the Needs of Content Owners in DMCA Safe Harbors, 62 Federal Communications Law Journal 153, 163 (2010), “To date, no OSP has failed the stringent red-flag test”.
↑5 I’ll note that Congress wasn’t thinking in these terms. In fact, the House Commerce Committe Report on the DMCA said, “The ‘red flag’ test has both a subjective and an objective element. In determining whether the service provider was aware of a ‘red flag,’ the subjective awareness of the service provider of the facts or circumstances in question must be determined. However, in deciding whether those facts or circumstances constitute a ‘red flag’—in other words, whether infringing activity would have been apparent to a reasonable person operating under the same or similar circumstances— an objective standard should be used.”
↑6 For example, in federal securities law: Dodds v. Cigna Securities, “when the circumstances would suggest to an investor of ordinary intelligence the probability that she has been defrauded, a duty of inquiry arises, and knowledge will be imputed to the investor who does not make such an inquiry”; fraud: Higgins v. Crouse, “[W]here the circumstances are such as to suggest to a person of ordinary intelligence the probability that he has been defrauded, a duty of inquiry arises, and if he omits that inquiry when it would have developed the truth, and shuts his eyes to the facts which call for investigation, knowledge of the fraud will be imputed to him”; apparent agency: Whitney v. Citibank, “[A]bsent awareness of facts indicating that a partner is acting beyond his real or apparent authority, a third party is not obligated to investigate the matter further or search for some limitation on that partner’s authority”; statute of limitations: Kronisch v. US, “[E]ven if plaintiff’s awareness of his injury and its cause … could only be characterized as a mere “hunch” or “suspicion,” plaintiff would still have been under a duty to diligently investigate his claim.”
↑7 Global-Tech Appliances v. SEB, 131 S.Ct. 2060, 68-69 (2011).
↑8 This presents one of the places the Second Circuit diverges from the Ninth Circuit’s holding in the highly similar UMG Recordings v. Shelter Capital Partners. There the court held that the right and ability to control does require “control over specific infringing activity the provider knows about.”

Dispatches from the SOPAcolypse

By , November 02, 2011.

Harold Camping has famously predicted the end of the world three times.

His first prediction — September 6, 1994 — came and went with little fanfare. His second attempt at setting a date for the apocalypse was far more successful. The Internet was abuzz as May 21, 2011 approached. But again, the world did not end.

Undeterred, Camping checked his math and announced a new date. October 21, 2011, would mark the final day of everything we know, for real this time. Wrong once again, the former leader of the California-based Family Radio has apparently retired from his role as apocalyptic soothsayer.

Apocalypse Now?

I mention Camping because a similar phenomenon occurs in the copyright realm. It seems that whenever new legislation is introduced, there are those who are ready to predict that if it passes, it will surely result in the demise of the Internet, or innovation, or some other thing we hold dear.

You can see this in action by taking a look at some of the headlines in response to the US House’s introduction of the Stop Online Piracy Act (SOPA):

This are just a sampling of the dire predictions about the epic catastrophes SOPA would bring if passed — the SOPAcolpyse, if you will.

But, like Camping, copyright’s skeptics have made these predictions before.

Sometimes they are done with striking consistency. Sci-fi author Cory Doctorow says SOPA “might be the worst-ever copyright proposal in US legislative history.” Not one to make use of hyperbole sparingly, Doctorow also declared a 2005 French proposal the “worst copyright law in Europe”; in 2007, it was an EU proposal that would surely be the “worst copyright law in the world!”; little more than seven months later, he stated that a Canadian legislative proposal “promises to be the worst copyright law in the developed world.”

The same goes for copyright activist Lawrence Lessig, a big proponent of the “break the internet” line over the years. Talking in 2003 about his idea for a compulsory license that would cover P2P activity, he said, “We have to buy [music and movie companies] off, so they don’t break the Internet in the interim.” That same year on PBS’s NewsHour with Jim Lehrer, it was DRM: “The response that the music industry has insisted on would be technologies that would essentially break the Internet.” Fast-forward to 2008, and Lessig, speaking at an event hosted by Harvard’s Berkman Center, Google, and the Family Online Safety Institute, again cautions against letting copyright law “break the Internet.”

The Sky is Falling

The doomsday scenarios began on day one. In February 1993, the Clinton administration put together the Information Infrastructure Task Force to study the advancement and development of information technologies, including the burgeoning Internet and infant web. Part of their mandate was examining the intersection of copyright law, digital technologies, and networked communications and exploring what changes were necessary.

The Working Group on Intellectual Property Rights released its report, Intellectual Property and the National Information Infrastructure (the “White Paper”), in September of 1995, sparking the first wave of the “parade of horribles” that would accompany copyright reform from then on out.

Copyright scholar Pamela Samuelson penned an article in Wired magazine that gave a laundry-list of reasons to oppose legislation proposed after the White Paper was released: “your online service provider will be forced to snoop through your files”, it would “transform the emerging information superhighway into a publisher-dominated toll road”, it would “eliminate fair-use rights”, “it can be construed as outlawing many activities widely believed to be lawful.”

Others concurred. “The bill in Congress now, critics say, goes much too far … the Internet’s potential as a source of public education and free expression could be crippled … [it] could instead turn out to be the executioner of the Internet’s real promise.”

The initial legislation evolved to become the Digital Millennium Copyright Act (DMCA), which became law in 1998. Some still weren’t convinced the days of a free Internet weren’t numbered. A writer in the Berkeley Technology Law Journal predicted shortly after the DMCA became law that:

The post-DMCA Internet will feature even more of those damnable “404 – file not found” messages than it currently does. As media companies expand their demand-letter operations from commercial “piracy” to include negative commentary, transformative uses, and what they deem to be a little bit too much sampling or quotation, the ranks of the independent Internet publishers will be radically depopulated.

Ten years later, many of those same critics couldn’t praise the DMCA enough. Wired magazine calls it “the law that saved the web.” “Blogs, search engines, e-commerce sites, video and social-networking portals are thriving today thanks in large part to the notice-and-takedown regime ushered in by the much-maligned copyright overhaul.”

A Decade of Falling Sky

Since the DMCA, most copyright legislation has elicited similar responses.

The No Electronic Theft (NET) Act was passed in 1997, expanding the definition of “financial gain” in criminal copyright infringement and increasing criminal penalties. Among the opponents of the bill was the Association for Computing, which raised concerns that it would restrict dissemination of science, criminalize the transfer of information protected by fair use, and chill free speech in research institutions. Others warned it would greatly expand the scope of criminal infringement; “aggressive prosecutors would abuse their discretion to win convictions” or “bring weak felony cases to get quick misdemeanor plea bargains.” 1Eric Goldman, A Road to No Warez: The No Electronic Theft Act and Criminal Copyright Infringement, 82 Oregon Law Review 369 (2003).

None of these concerns materialized. As Eric Goldman concludes after examining the five years following the Act, “the prosecutions to date appear generally consistent with Congress’ objectives for the Act.” None of the convictions could be fairly characterized as “de minimis“, none of the defendants could have raised a legitimate fair use defense, and universities and educators remained untouched by efforts under the Act. 2Id. 392-96.

The Artists’ Rights and Theft Prevention (ART) Act of 2005 added provisions to criminal copyright law that expressly targeted “camming” and distribution of pre-release commercial works. Critics called it draconian, foresaw an uptick in prison sentences, and decried a lack of fair use in the Act. The provisions have instead been used judiciously; prisons have not been filled with cammers and leakers.

2008 brought the Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act, a broad bill that amended civil and criminal provisions of the Copyright Act and created the Intellectual Property Enforcement Coordinator position, currently held by Victoria Espinel.

The response? Michael Seman of NetSherpa wrote, “The passing of the PRO-IP act is the latest in a string of actions taken by the U.S. Government that result in further constricting the free exchange of ideas,” one that “means we’re close to losing the flow of culture that the Internet so greatly facilitates.” Mike Masnick said, “All it will actually serve to do is to limit more creative forms of expression and much more innovative business models from being allowed to thrive.” And noted copyright scholar William Patry remarked, “The dangers in the new Zero Tolerance to copyright go far beyond the individuals swept within its net, although that is bad enough: the Zero Tolerance approach threatens respect for law itself.”

Grokster pt. 2

Legislative proposals aren’t the only things that brings out the freedom and innovation pessimists.

The Supreme Court issued its decision in Metro-Goldwyn-Mayer Studios v. Grokster in 2005, holding that “one who distributes a device with the object of promoting its use to infringe copyright” may be liable for the resulting infringing acts by its users. In its amicus brief to the Grokster court, the National Venture Capital Association warned that a rule holding Grokster liable would “have a chilling effect on innovation.”

However, since Grokster:

[V]enture capital in the media and entertainment sectors grew faster than the rest of the VC market in four out of the six years. By comparison, in the five years before the Grokster decision, growth was lower in four of them. From 2000 to 2004, media and entertainment venture capital accounted for about 4.6 percent of total VC dollars invested. From 2006 through 2010, media and entertainment VC dollars grew to 7.1 percent of total VC dollars. 3Greg Sandoval, VCs to Congress: Antipiracy will ‘chill’ tech investment, CNet, June 24, 2011.

This year alone, in a down economy, music-based startups have received nearly half a billion dollars in funding. And some of these startups are far more exciting than the mere hoarding of music files that Grokster and other P2P services offered.

Little difference that makes though. In a letter to Congress on the proposed PROTECT IP Act, a group of venture capitalists offer the same warning: the bill would “throttle innovation” and “chill investment.”

It’s the End of the World as We Know It

Despite this history, critics of the Stop Online Piracy Act promise that the bill spells the end of innovation, culture, freedom, and the very Internet itself, for real this time.

It won’t.

In the long term, the public benefits the most when both creators and innovators succeed. And our laws should continue to adapt to make sure that happens.

References

References
↑1 Eric Goldman, A Road to No Warez: The No Electronic Theft Act and Criminal Copyright Infringement, 82 Oregon Law Review 369 (2003).
↑2 Id. 392-96.
↑3 Greg Sandoval, VCs to Congress: Antipiracy will ‘chill’ tech investment, CNet, June 24, 2011.

.torrent = .crime

By , March 01, 2011.

I sometimes see the phrase “.torrent = .crime” used online in discussions about enforcing copyright online. It is considered by copyright critics as a dig against efforts to enforce the widespread copyright infringement occurring within the bittorrent ecosystem 1The bittorrent “ecosystem” describes the multitude of independent components — from torrent file hosts, to torrent search engines and meta search engines, to trackers — that together make the bittorrent protocol work. — the idea being that content producers have mistakenly declared torrent technology categorically unlawful.

Most recently, it has popped up in response to the US government’s seizure of domain names as part of Operation in Our Sites. A number of the sites targeted were part of the bittorrent ecosystem, like meta-search engine Torrent Finder. And with the pending appeal of Isohunt in the Ninth Circuit, the meme will likely persist — the torrent search engine’s appellate brief devotes considerable space to rebutting the association between torrents and infringement. Proponents of the meme believe the association is unfair and are quick to point out the many legitimate uses of the bittorrent protocol as evidence.

The snappy soundbite, however, glosses over the distinction between a technology and uses of a technology. It also relies on a fundamentally flawed premise: the fact that there are some legitimate uses of a technology does not make all uses of that technology legitimate. And within the general bittorrent ecosystem, there are a lot of illegitimate uses of the technology — so much so that the association between “torrent” and “crime” is not entirely unfair.

The Supreme Court, through its decisions in Sony Corp of America v. Universal City Studios, 464 US 417, and MGM v. Grokster, 545 US 913, maintained what is really a common sense distinction between technology and uses of that technology. Simply put, you can’t be liable simply for making something that can be used for copyright infringement, but you can be liable if you intend or encourage infringing uses.

Put another way, while direct infringement is a strict liability tort, meaning the intent of an infringer is irrelevant, secondary liability requires some form of culpability. Grokster reads Sony as saying you can’t impute this intent based solely on the characteristics of a device. But the rule in Sony doesn’t mean a manufacturer or service is completely precluded from liability if it satisfies the Sony safe harbor — a manufacturer or service provider can still be liable if it is found to be culpable in other ways, including whether it induced infringement.

The Supreme Court in Grokster noted three features of the evidence of intent that most showed culpability. Satisfying a known source of demand for copyright infringement, no attempt to filter or develop mechanisms for diminishing infringing activities, and selling advertising based on high-volume use — revenues increase the more people use it, and the overwhelming amount of people use it for infringing purposes. Any one of these alone is not enough to show culpability, but taken together, the intent to encourage infringement is, in the words of the Court, “unmistakeable.”

The torrent ecosystem facilitates piracy — not by design, but by use.

I’m talking about just the torrent ecosystem here — the trackers, hosts, and search engines that do little if anything to ensure their services are not used to aid in distributing unauthorized content. BitTorrent as a protocol is in no way a problem. Facebook, Twitter, and other large-scale systems use the BitTorrent protocol to distribute software updates to their servers; the same is true of gaming companies like Blizzard Entertainment, makers of Worlds of Warcraft. Many Linux distros are promulgated via bittorrent. The technology offers several advantages over other methods of distributing large amounts of data.

But outside these specific uses is a world of public torrent hosts that allow anyone to upload torrent files of any type of content, no questions asked, and search engines that can help users locate whatever they want. And it is here where, any way you look at it, “.torrent” actually does equal “.crime”. The overwhelming majority of what is being distributed in the general bittorrent ecosystem is infringing.

How overwhelming? According to the available research, anywhere from 90-99% of files available in the torrent ecosystem are infringing. 2Robert Layton & Paul Watters, Investigation into the extent of infringing content on BitTorrent networks, Internet Commerce Security Laboratory (2010), confirms 89% of all torrents in sample infringing; Sauhard Sahi & Ed Felten, Census of files available via BitTorrent, (2010), concluded 99% of files likely infringing; Columbia Pictures v. Fung, Order granting Plaintiffs’ motion for summary judgment on liability (2009), evidence showed approximately 95% of files available on defendant’s torrent search engines infringing. A study released January 2011 discovered only 1 legitimately offered file in the top 10,000 torrents offered by one of the largest public bittorrent trackers.

In the face of such overwhelming infringement, it’s absurd to think you can design a site or service that facilitates access to this universe of material, without any attempt at filtering or mitigating infringement, and escape liability. The fact that there are some legitimate uses for the technology does not mean that all uses of the technology are legitimate. Search engines, trackers, and torrent hosts exist for verified and authorized content. But that fact doesn’t save the general and open-for-all torrent sites; neither does the fact that the protocol is used by large-scale systems for distributing software updates. It’s not like Facebook and Twitter are going to Torrent Finder to find new patches.

The distinction between legitimate and illegitimate uses of bittorrent is a distinction between services where the use of the protocol is secondary to the service and the ability to pirate through the service is diminished and minimized, and services that tap into the general bittorrent ecosystem. The latter services may claim to have legitimate uses, but these claims are drowned out by the evidence.

The business model of these sites depends on popular — ie, copyrighted — content. It’s the major draw: Torrent Finder wasn’t making $15,000 a year advertising to people looking for the latest Linux distros or searching for unsigned bands. Isohunt’s Gary Fung admitted as much during the course of that litigation. 3Columbia Pictures v. Fung, p. 34. Courts looking at nearly every other major file-sharing service that has found itself subject to a lawsuit have come to the same conclusion: “While there is doubtless some demand for free Shakespeare,” said the Supreme Court in Grokster, “the evidence shows that substantive volume is a function of free access to copyrighted work.” 4545 US at 926.

Sites that have gone legit have discovered just how true this is. Search engine YouTorrent reported that it lost over half its traffic when it stopped indexing files from sites like PirateBay and only returned verified authorized and open-license results.

Some torrent site operators have adopted a “would if they could” attitude toward copyright infringement: they’d like to stop it, but it’s impossible to know what files are authorized and which are not. This argument doesn’t hold up against the significant percentage of infringing files available.

Some theories of secondary liability, like contributory infringement, require that the secondary party has some knowledge of the underlying misconduct, with the caveat that the secondary party cannot escape liability by being “willfully blind.” You can’t, like an ostrich with his head in the sand, deliberately ignore bad behavior and expect to stay out of trouble. While the question of willful blindness can often be a tough one to answer, courts haven’t had trouble in cases of file-sharing services. With such a high percentage of infringing files present on all these services — 89%, 95%, 99% — you can’t claim ignorance of infringement.

Anyone who bristles at the association of bittorrent with copyright infringement has to admit, if honest, that within the general bittorrent ecosystem, torrents have largely become synonymous with distributing unauthorized content. The technology itself is neutral, it can be put to legitimate or illegitimate uses, but any service wanting to become a component part of the unregulated, open, and public torrent universe has a high burden for establishing legitimacy.

 

References

References
↑1 The bittorrent “ecosystem” describes the multitude of independent components — from torrent file hosts, to torrent search engines and meta search engines, to trackers — that together make the bittorrent protocol work.
↑2 Robert Layton & Paul Watters, Investigation into the extent of infringing content on BitTorrent networks, Internet Commerce Security Laboratory (2010), confirms 89% of all torrents in sample infringing; Sauhard Sahi & Ed Felten, Census of files available via BitTorrent, (2010), concluded 99% of files likely infringing; Columbia Pictures v. Fung, Order granting Plaintiffs’ motion for summary judgment on liability (2009), evidence showed approximately 95% of files available on defendant’s torrent search engines infringing.
↑3 Columbia Pictures v. Fung, p. 34.
↑4 545 US at 926.