| Grokster Oral Arguments Before the Supreme Court |
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Wednesday, April 13 2005 @ 12:39 AM EDT
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Hot off the presses, the oral arguments in the Grokster case before the Supreme Court are now available [PDF], so you can see for yourself what it was like and can make your own predictions on the outcome.
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| Authored by: Aladdin Sane on Wednesday, April 13 2005 @ 12:59 AM EDT |
If required.
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"The trouble with flawed laws like the DMCA is, flawed
individuals try to bend them to their flawed wills." --PJ [ Reply to This | # ]
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| Authored by: icebarron on Wednesday, April 13 2005 @ 01:04 AM EDT |
Wow, I've gotten the overall impression that the Chief Justices are waiting to
tear this apart. The lawyers can't seem to get it together. Their so called
expert analysis wants to ingore the rather substatial non-infringing uses. When
a Chief justice mentions putting whole libraries online, you know they actually
have a clue...
Prediction...summary judgement denied.
Proceed to prove your case...
[ Reply to This | # ]
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| Authored by: Aladdin Sane on Wednesday, April 13 2005 @ 01:04 AM EDT |
For current events, legal filings, and 10-Qs. I think 10K's are done for a
while?
Please make links clickable.
Example: <a href="http://example.com">Click here</a>
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"The trouble with flawed laws like the DMCA is, flawed individuals try to bend
them to their flawed wills." --PJ[ Reply to This | # ]
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| Authored by: chrisbrown on Wednesday, April 13 2005 @ 01:06 AM EDT |
An old Groklaw Story (Groklaw The First)
THE GROKSTER DECISION -
ODE TO THOMAS JEFFERSON (AND DAVID BOIES)
Ah, Seems a long time ago
now. [ Reply to This | # ]
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| Authored by: jasdec on Wednesday, April 13 2005 @ 02:23 AM EDT |
This is a very complicated transcript, and I think it has to be read with some
caution. It seems pretty clear that the court will, at least, allow the record
industry to proceed with a trial on the "inducement" issue. So I
wouldn't be celebrating if I were Grokster.
But the more important issue, for the future of technology, is whether the court
will say that the Sony (Betamax) case provides something like blanket protection
to P2P, when the company that sells the technology doesn't maintain central file
lists AND doesn't actively induce copyright infringement.
For all the verbal sparring between the justices and the industry's lawyer, I
don't think the outcome is at all clear.
Here's the thing. Most of the sparring with the industry lawyer ultimately
comes down to: what standard do you suggest, that would protect the ability of
start-up companies to introduce technologies that have both infringing and
non-infringing uses?
The justices didn't seem to like the idea that it's just about the percent of
usage that is infringing, but then the solicitor general and industry lawyer
both said, no, it's not just the numbers, it's the business plan.
Then they were asked repeatedly, why can't you just handle the issue of the
company's business plan under the heading "inducement?" And finally
Scalia voiced what the record industry lawyer never said clearly himself -
they're afraid someone will come along after Grokster, and create an identical
system with the intent to profit principally from copyright infringement, but
make sure that there's no paper trail that can be used to demonstrate
inducement. I.e., say to everyone, "Don't use this for copyrighted
material - wink wink, nudge nudge."
So, the industry wants a standard that doesn't require them to prove INTENT and
ACTIVE INDUCEMENT. They want to be able to say, if the technology is being used
largely for illegal copying, and there's no real business plan related to
legitimate uses, we can sue.
After Scalia voiced that recognition of the core of the industry lawyer's
concern, there was virtually no more discussion on the point, because they
decended into technical issues related to exactly what the district court meant
in its decision.
So, we really don't know what the justices think about allowing the industry
some latitude to go after companies like Grokster without showing actual
inducement. We do know, though, that Kennedy, who seemed skeptical of the
industry lawyer early on, started making noises about the inappropriateness of
using other people's property as "start-up capital."
Will they craft an interpretation of Sony that allows the industry to look at a
company's business plan as part of determining whether there are
"substantial legitimate commercial uses?" I think at a minimum they
will write in some language to protect innovators starting brand new businesses,
but they MAY essentially give the industry what they want - the right to go
after Grokster and similar companies, on the argument that their entire business
plan revolves around fostering copyright infringement, without having to show
active, intentional inducement.
I don't think this will be a disaster, because the justices showed such a clear
understanding of the risk of stifling new technology which has a lot of
potential for legal use, but which is currently largely used for illegal
activities.
But it would be a mistake to assume that this decision is a win for Grokster, or
even a win more generally for P2P. I read a willingness to rethink aspects of
Sony (remember Scalia's line about "stare dicisis"), even if not quite
as broadly as the record companies wanted.[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, April 13 2005 @ 05:49 AM EDT |
... by their questions is really tough stuff. For an example, one judge may be
asking his questions for the purpose of influencing another judge. He may be
asking questions for the purpose getting answers from the attorney to put in
his decision. And more.
Am I wrong? If so tell me about it.[ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, April 13 2005 @ 07:35 AM EDT |
They should know that - yes, the church immediately went after Gutenberg -which
sets the historic precedent for this whole thing. That at the time of betamax,
it was assumed less than 10% of the uses were legitmate, not the other way
around. MGM and the court discussed and seemed to agree for the other way, which
means they didn't read it too well. (I guess we could interpret Ginsberg's
complaints about a nonspecific decision being 13 pages many ways.) However,
they seem to desparately want betamax to give them a number for infringing uses,
when it clearly means any (meaning 1 should be enough).
This on the surface looks still good for P2P, but it is disturbing why things
need rehashed (or respun really) unless they plan on reversing it. It is almost
like the court is trying to guide this to some preplanned political thing. What
has so far been mentioned as possible solutions look complicated and beyond the
courts power alone.
ie.
Like how they come out and say that maybe they should approve any new copying
inventions, using some kind of vague 'significant infringement' test to be
determined in court. Then talk about giving inventors time before suit to try
and become noninfringing.
That is really disturbing loopy thinking(we make only bad guys go to jail, what
happens if you try really hard to be good and fail?).
Hey, that is similar to when they overturned the 4th amendment right? Only bad
guys have something to hide afterall.
OK, maybe these justices are just really dumb puppets under political pressure
to again make a bad decision.[ Reply to This | # ]
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| Authored by: ossworks on Wednesday, April 13 2005 @ 09:16 AM EDT |
| Here is a
well
written essay in reaction to the recording industry's new mantra "it's
immoral to file share." Barry Ritholtz then asks how about industry price
fixing? copyright extension? radio station consolidation? and refusing digital
distribution? Are these not immoral acts? [ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, April 13 2005 @ 10:27 AM EDT |
IN THE SUPREME COURT OF THE UNITED STATES
- - - - - - - - - - - - - - - - - - - - x
METRO-GOLDWYN-MAYER STUDIOS, INC., :
ET AL., :
Petitioners, :
v. :
GROKSTER, LTD, ET AL. :
- - - - - - - - - - - - - - - - - - - - x
No. 04-480
Washington, D.C.
Tuesday, March 29, 2005
The above-entitled matter came on for oral
argument before the Supreme Court of the United States
at 10:13 a.m.
APPEARANCES:
DONALD B. VERRILLI, JR., ESQ., Washington, D.C.; on behalf
of the Petitioners.
PAUL D. CLEMENT, ESQ., Acting Solicitor General,
Department of Justice, Washington, D.C.; for United
States, as amicus curiae, supporting the Petitioners.
RICHARD G. TARANTO, ESQ., Washington, D.C.; on behalf of
the Respondents.
1
1 C O N T E N T S
2 ORAL ARGUMENT OF PAGE
3 DONALD B. VERRILLI, JR., ESQ.
4 On behalf of the Petitioners 3
5 ORAL ARGUMENT OF
6 PAUL D. CLEMENT, ESQ.
7 On behalf of United States,
8 as amicus curiae, supporting Petitioners 18
9 ORAL ARGUMENT OF
10 RICHARD G. TARANTO, ESQ.
11 On behalf of the Respondents. 28
12 REBUTTAL ARGUMENT OF
13 DONALD B. VERRILLI, JR., ESQ.
14 On behalf of the Petitioners 50
15
16
17
18
19
20
21
22
23
24
25
2
1 P R O C E E D I N G S
2 [10:13 a.m.]
3 CHIEF JUSTICE REHNQUIST: We'll hear argument
4 now in number 04-480, MGM Studios versus Grokster,
5 Limited.
6 Mr. Verrilli.
7 ORAL ARGUMENT OF DONALD B. VERRILLI, JR.,
8 ON BEHALF OF PETITIONERS
9 MR. VERRILLI: Mr. Chief Justice, and may it
10 please the Court:
11 Copyright infringement is the only commercially
12 significant use of the Grokster and StreamCast services,
13 and that is no accident. Respondents deliberately set out
14 to capture a clientele of known infringers to stock their
15 services with infringing content, they intentionally and
16 directly promote the infringing use of the service, they
17 support infringing use of the service, and they directly
18 -- 19 JUSTICE STEVENS: May I just interrupt for the
20 one -- you said "the only significant use." There's a
21 footnote in the red brief that says the figure is some 2.6
22 billion legitimate uses.
23 MR. VERRILLI: Yeah. Yes, Your Honor. I --
24 JUSTICE STEVENS: Is that correct, or incorrect?
25 MR. VERRILLI: Well, I think it's an absolutely
3
1 incorrect assertion of reality, and perhaps I could delve
2 into it and explain why.
3 The evidence in this case, which was presented
4 at summary judgement, showed that 90 percent of the
5 material on the services was either definitely or very
6 likely to be infringing.
7 JUSTICE STEVENS: Now, was there a finding of 90
8 percent?
9 MR. VERRILLI: Well, this was submitted on
10 summary judgement, Your Honor, and we lost summary
11 judgement, so the evidence has got to be construed in the
12 light most favorable to us. And the Ninth Circuit decided
13 the case on the assumption, we'd submit, of 90 percent.
14 But with respect to that 10 percent, what
15 happened, and we submit is completely wrong, is that the
16 Ninth Circuit drew the inference, because it wasn't shown
17 by our expert study, which, by the way, is the only
18 empirical analysis in the case, to be infringing, that the
19 Court could assume that it was noninfringing and then
20 extrapolate from that to a number along the lines of the
21 number that Your Honor suggested. And I think that that's
22 completely illegitimate analysis, factually, and, besides,
23 that number is big only because the overall activity is so
24 big. The scale of the whole thing is mind-boggling. If
25 there are that many noninfringing uses --
4
1 JUSTICE STEVENS: It goes to the --
2 MR. VERRILLI: -- imagine how many infringing --
3 JUSTICE STEVENS: -- accuracy of your statement
4 that there is no other significant legitimate use.
5 MR. VERRILLI: I don't think there -- I think
6 it's quite accurate on the summary-judgement record, and
7 certainly drawing the inferences in our favor, as we must
8 here on summary -- on this summary-judgement record, that
9 there is commercially significant noninfringing use.
10 JUSTICE GINSBURG: But there could be. There
11 could be, both with respect to material in the public
12 domain and with respect to people who authorize the
13 transmission.
14 MR. VERRILLI: I don't think, in the context of
15 this record in this case and the business model of these
16 Defendants, Grokster and StreamCast, that that is true,
17 Justice Ginsburg. I don't think that's right. I think
18 what Grokster and StreamCast are arguing is that this
19 Court's decision in Sony stands for the proposition that
20 their massive actual infringement is -- gets a free pass,
21 a perpetual free pass, so long as they can speculate that
22 there are noninfringing uses out there, such as public- 23 domain uses
and authorized uses. We don't think that that
24 -- that Sony stands for any such proposition.
25 We also want to point out that that doesn't help
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1 them -- that proposition doesn't help them with respect to
2 one very significant part of this case, and that's the
3 fact that they intentionally built a network of infringing
4 users, and they actively encouraged and assisted
5 infringement.
6 Now, even if there are commercially significant
7 noninfringing uses, and we submit there most definitely
8 aren't under Sony, but even if there are, that's no
9 defense to a contributory infringement claim based on
10 intentional building up of an infringing business and
11 active encouragement and assistance of infringement, and
12 it can't be; because, otherwise, then the fact that they
13 had commercially significant noninfringing uses, again,
14 would be just a free pass to actively promote infringing
15 uses; not merely to support them, but to promote them.
16 And so -- 17 JUSTICE SOUTER: Your argument, I take it, would
18 be the same if the proportions were reversed. Your
19 argument with respect to -- your current argument with
20 respect to infringing use would be the same if only 10
21 percent -- if it were assumed that only 10 percent of the
22 use were illegitimate and infringing. Is that correct?
23 MR. VERRILLI: The active-encouragement aspect
24 of our argument would be the same, certainly.
25 JUSTICE SOUTER: That's right.
6
1 MR. VERRILLI: They don't get a -- they don't
2 get a free pass to encourage any infringement.
3 JUSTICE O'CONNOR: Is that the same as active
4 inducement -- 5 MR. VERRILLI: Yes. I think there's --
6 JUSTICE O'CONNOR: -- as that term --
7 MR. VERRILLI: -- there's a lot of --
8 JUSTICE O'CONNOR: -- is used?
9 MR. VERRILLI: Yes, Justice O'Connor, there's a
10 lot of lingo floating around in this case -- inducement,
11 active encouragement and assistance.
12 JUSTICE O'CONNOR: If we should think that the
13 Respondents are not liable for the type of contributory
14 infringement dealt with in Sony, could this Court reach
15 the question of active inducement on this record?
16 MR. VERRILLI: Yes, very definitely. I think --
17 I think the Court, of course, should find that there's
18 contributory liability under the Sony theory --
19 JUSTICE O'CONNOR: I know you do, but --
20 MR. VERRILLI: -- but with respect to --
21 JUSTICE O'CONNOR: -- I just said --
22 MR. VERRILLI: -- that theory --
23 JUSTICE O'CONNOR: -- could you --
24 MR. VERRILLI: Yes.
25 JUSTICE O'CONNOR: -- assume, for a moment, that
7
1 we didn't; could we, nonetheless, address the active
2 inducement -- 3 MR. VERRILLI: Yes -- 4 JUSTICE O'CONNOR: -- question?
5 MR. VERRILLI: -- Justice O'Connor, and let me
6 explain why. The District Court in this case issued a
7 partial final judgement, under Rule 54(b), granting the
8 Respondent's summary-judgement motions. Now, we argued
9 for contributory liability on two theories in the District
10 Court and in the Ninth Circuit. We argued that there was
11 a lack of commercially significant noninfringing use under
12 Sony, and we've argued the inducement or active-
13 encouragement theory. We argued that both theories
14 entitle us to relief against the current operations of the
15 service, entitled us to damages, and entitled us to
16 injunctive relief to eliminate the harmful ongoing
17 infringing consequences of this intentionally built-up
18 infringement machine.
19 The District Court granted summary judgement
20 against us and gave a clean bill of health, gave
21 absolution, essentially, to the current versions of the
22 services. The only thing that was left to us, as the
23 Ninth Circuit and the District Court -- and the District
24 Court, both, understood the law, is that we can go back
25 and try to show that, with respect to specific past acts
8
1 of infringement, if we can show that they occurred at a
2 time when we had given them notice that they were about to
3 occur, and that we had the power to -- and they had the
4 power to stop them at the moment we gave them the notice,
5 that we can get damages for those specific things, and
6 those specific things only. That's all that's left in
7 this case. And I think it's quite clear, from the Rule
8 54(b) certification order of the District Court that it
9 was only damages with the past services and the past acts
10 -- 11 JUSTICE KENNEDY: It's not clear -- it's not
12 clear to me from your brief, focusing on the contributory
13 aspect of it, not -- and not the inducement part of it --
14 it's not clear to me from your brief what your test is.
15 What do we tell the trier of fact, that if there is a
16 substantial part of the use which is noninfringement, any
17 part?
18 MR. VERRILLI: Here's what I -- here's where I
19 think the test --
20 JUSTICE KENNEDY: Leaving aside the inducement.
21 MR. VERRILLI: Right. Here's what I -- here's
22 what we think the test is on the -- what we'll call the
23 Sony aspect of the case, that it's -- the question here is
24 -- Sony poses to us -- is really a touchstone kind of
25 question, not a numerical kind of question. The question
9
1 under Sony is whether this is a business that is
2 substantially unrelated to infringement. In other words,
3 are they building their business on supporting legitimate
4 activity, or, instead, are they building their business
5 supporting infringing activity?
6 JUSTICE KENNEDY: Well, then we just throw this
7 to the birds on the trier of fact in every case --
8 MR. VERRILLI: No, I think --
9 JUSTICE KENNEDY: Well, how do we know --
10 MR. VERRILLI: And that's where you start.
11 That's the touchstone. Now, the numbers, the relative
12 proportions of use, are relevant. In a case like Sony
13 itself, certainly, where the majority use was
14 noninfringing, that's a legitimate business; you don't
15 need to go further. In a case like this one, where,
16 taking the record at summary judgement in our favor, as it
17 must be, and the Ninth Circuit's assumption that you've
18 got 90 percent infringing use, billions and billions of
19 acts of infringing use, and minuscule actual noninfringing
20 use, it seems to us it's just --
21 JUSTICE BREYER: You're not saying -- now you're
22 using different tests. Your test is "substantial." All
23 right, on your test, are we sure, if you were the counsel
24 to Mr. Carlson, that you recommend going ahead with the
25 Xerox machine? Are you sure, if you were the counsel to
10
1 the creator of the VCR, that you could recommend, given
2 the use, copying movies, that we should ever have a VCR?
3 Are you sure that you could recommend to the iPod inventor
4 that he could go ahead and have an iPod, or, for that
5 matter, Gutenberg, the press? I mean, you see the
6 problem.
7 MR. VERRILLI: Yeah, I think my answer to -- 8 JUSTICE BREYER: What's the
answer?
9 MR. VERRILLI: -- those questions are: yes, yes,
10 yes, and yes.
11 [Laughter.]
12 JUSTICE BREYER: Because in each case -- for all
13 I know, the monks had a fit when Gutenberg made his press
14 -- 15 [Laughter.]
16 JUSTICE BREYER: -- but the problem, of course,
17 is that it could well be, in each of those instances, that
18 there will be vast numbers of infringing uses that are
19 foreseeable.
20 MR. VERRILLI: I disagree with that, Your Honor.
21 Certainly not -- I don't think there's any empirical
22 evidence to suggest, with respect to any of the things
23 that Your Honor just identified -- and let me pick out the
24 iPod as one, because it's the most current example, I
25 guess. From the moment that device was introduced, it was
11
1 obvious that there were very significant lawful commercial
2 uses for it. And let me clarify something I think is
3 unclear from the amicus briefs. The record companies, my
4 clients, have said, for some time now, and it's been on
5 their Website for some time now, that it's perfectly
6 lawful to take a CD that you've purchased, upload it onto
7 your computer, put it onto your iPod. There is a very,
8 very significant lawful commercial use for that device,
9 going forward.
10 And, remember, I -- what our test -- our test is
11 not "substantial." Our test is that it's a -- it's a -- 12
when it's a vast-majority use, like here, it's a clear
13 case of -- 14 JUSTICE SCALIA: How do you -- how do you know,
15 going in, Mr. Verrilli? I mean, I'm about to start the
16 business. How much time do you give me to bring up the
17 lawful use to the level where it will outweigh the
18 unlawful use? I have to know, going in.
19 MR. VERRILLI: Well, I -- 20 JUSTICE SCALIA: And it's one thing to sit
back
21 and, you know, calculate with this ongoing business, it's
22 90 percent/10 percent. But I'm a new inventor, and I'm --
23 you know --
24 MR. VERRILLI: I think the weight --
25 JUSTICE SCALIA: -- I'm going to get sued right
12
1 away. I know I'm going to get sued right away, before I
2 have a chance to build up a business.
3 MR. VERRILLI: I don't think that's right, Your
4 Honor, and here's why. To -- it's not just the absence of
5 commercially significant noninfringing uses that
6 demonstrates contributory infringement. I mean, you have
7 to demonstrate that you're making a material contribution,
8 with knowledge that you're doing so. The inventor, at the
9 outset, is not in that position. They're not making a
10 contribution with knowledge that they're doing so. Do
11 they have absolute certainty? No, they don't have
12 absolute certainty.
13 JUSTICE KENNEDY: Well, I don't quite understand
14 the -- I take it, inventors are profit-motive-driven, and
15 if they know that something they're working on is going to
16 have copyright experience, you -- copyright problems, you
17 can't just say, "Oh, well, the inventor's going to invent
18 anyway."
19 MR. VERRILLI: Well, I -- but the problem --
20 JUSTICE KENNEDY: Or did I misunderstand your --
21 MR. VERRILLI: No, I -- I think that you have --
22 to show contribution, you should have -- you have to be
23 making a material contribution, with knowledge that you're
24 doing so. And so --
25 JUSTICE SCALIA: But the inventor of Xerox does
13
1 that. I mean, he puts out the machine. He knows some --
2 he knows a lot of people are going to use it to Xerox
3 books.
4 MR. VERRILLI: I don't think that's right,
5 Justice Scalia. I don't think there's anywhere close to a
6 showing -- I don't think there could be anywhere close to
7 a showing that you've got the vast majority of use from --
8 for infringement from the time that the device comes out.
9 I just don't think that's --
10 JUSTICE SOUTER: Well, let's go --
11 MR. VERRILLI: -- realistic.
12 JUSTICE SOUTER: -- let's go from Xerox back to
13 your iPod. How is that clear in the iPod case? I may not
14 understand what people are doing out there, but it's
15 certainly not clear to me. I know perfectly well I could
16 go out and buy a CD and put it on my iPod, but I also know
17 perfectly well that if I can get the music on the iPod
18 without buying the CD, that's what I'm going to do. And I
19 think it's reasonable to suppose that everybody else would
20 guess that. So why, in the iPod, do you not have this
21 Damoclean sword?
22 MR. VERRILLI: Well, because I don't actually
23 think that there is evidence that you've got overwhelming
24 infringing use. I just think that's -- it's not a -- it's
25 not a --
14
1 JUSTICE SOUTER: Well, there's never evidence at
2 the time the guy is sitting in the garage figuring out
3 whether to invent the iPod or not. I mean, that's -- 4 MR. VERRILLI: I
think when you get to the -- 5 JUSTICE SOUTER: -- the concern.
6 MR. VERRILLI: -- I think when you have vast-
7 majority infringing use, they should be on the hook. Now,
8 I don't think --
9 JUSTICE SOUTER: Okay, but you're --
10 MR. VERRILLI: -- you have that problem --
11 JUSTICE SOUTER: No, but you're --
12 MR. VERRILLI: -- with the iPod, and --
13 JUSTICE SOUTER: -- you're not answering --
14 you're not answering the question. The question is, How
15 do we know in advance, on your test, anything that would
16 give the inventor, or, more exactly, the developer, the
17 confidence to go ahead? As was said a minute ago, he
18 knows he's going to be sued immediately. There isn't a
19 product performance out there, as there is in this case.
20 So, on your substantiality theory, why isn't it a foregone
21 conclusion in the iPod that the iPod loser -- or developer
22 is going to lose his shirt?
23 MR. VERRILLI: Well, first of all, I don't -- I
24 think it's just counterfactual to think that there is
25 going to be overwhelming infringing use of the iPod in the
15
1 way that there indisputably is here. Second, to the
2 extent you get the closer cases, it is our position, as I
3 gather it is the position of the United States, that you
4 look at -- to see what kind of business model the
5 Defendant is operating under. Is it a -- is it -- are
6 they marketing it for legitimate purposes? Are they
7 taking reasonable steps to prevent infringement? If they
8 are, then they -- then they're not liable. Third --
9 JUSTICE SCALIA: That's your second argument, I
10 think. I thought you were going to just stick with the --
11 with the first one. I mean, that's an inducement
12 argument.
13 JUSTICE SOUTER: Yeah, that's inducement.
14 MR. VERRILLI: No, I don't think it is an
15 inducement argument, because it doesn't go all the way to
16 requiring us to show, as we can show here, that they've
17 got intent. But I do think that the issue is, you know,
18 really -- in the real world, you know, it isn't the case
19 that these guys have gotten immediately sued. That's just
20 not right. And the -- and the reality is that what
21 happens is what happens here. There's perfectly valid
22 uses -- 23 JUSTICE KENNEDY: But it is the case under the
24 test you're submitting to us.
25 MR. VERRILLI: No, I don't think that's right,
16
1 Justice Kennedy. If there's vast-majority infringing use,
2 and you continue to operate your business with the
3 knowledge that there's vast-majority infringing use, then
4 you've got liability. Now, of course, we do have all the
5 additional inducement facts here, but we've also got those
6 facts. And in the real world --
7 JUSTICE O'CONNOR: Well, are you dealing with
8 active inducement as just a theoretical add-on, or is that
9 a satisfactory way to resolve this case?
10 MR. VERRILLI: I think that it is a -- I think
11 -- 12 JUSTICE O'CONNOR: I don't understand --
13 MR. VERRILLI: Neither, is the answer.
14 JUSTICE O'CONNOR: -- your pitch.
15 MR. VERRILLI: Neither, is the answer. It is a
16 basis for resolving this case, but not to the exclusion of
17 getting the law right on Sony.
18 JUSTICE GINSBURG: But you couldn't get summary
19 judgement. Your reply brief said, "This case is so clear
20 that we should get summary judgement." If inducement is
21 the theory -- you have just said, you have to show intent
22 -- 23 MR. VERRILLI: Yes.
24 JUSTICE GINSBURG: -- so you could not --
25 MR. VERRILLI: We --
17
1 JUSTICE GINSBURG: -- you'd have to go to trial.
2 MR. VERRILLI: We agree with that. We think, in
3 a situation where the vast majority of the use is
4 infringing and there isn't any evidence of a legitimate
5 business plan, on the Sony part of the case we would be
6 entitled to summary judgement. We agree with you, Your
7 Honor, that with respect to -- 8 JUSTICE GINSBURG: Sony itself had a
trial -- 9 MR. VERRILLI: That's right.
10 JUSTICE GINSBURG: -- a full trial.
11 MR. VERRILLI: It came after the trial, that's
12 right. But the -- a key point I think I want to make here
13 is that this is not about this technology. What happens
14 in the real world is that inventors come up with
15 technology. Some people use it for lawful purposes and
16 valid purposes, as some people use this technology for;
17 some people abuse the technology to run business that -- 18 businesses
that are devoted to expropriating the value of
19 copyrights. That's exactly what's going on in this case.
20 If I could reserve the balance of my time, Mr.
21 Chief Justice.
22 CHIEF JUSTICE REHNQUIST: Very well, Mr.
23 Verrilli.
24 Mr. Clement, we'll hear from you.
25 ORAL ARGUMENT OF PAUL D. CLEMENT
18
1 FOR UNITED STATES, AS AMICUS CURIAE,
2 SUPPORTING PETITIONERS
3 MR. CLEMENT: Mr. Chief Justice, and may it
4 please the Court:
5 The decision below allows companies, like
6 Respondents, to build a business model out of copyright
7 infringement without fear of secondary liability. As long
8 as they avoid obtaining actual knowledge that a particular
9 customer is about to infringe a particular copyright, they
10 are free to operate a system that involves massive
11 copyright infringement with full knowledge that the draw
12 of the entire system for customers and advertisers alike
13 is the unlawful copying. No matter much how much of that
14 system -- 15 JUSTICE O'CONNOR: Well, what do you think Sony
16 allowed? It talked about -- if it's, what, capable of
17 substantial noninfringing use, it's okay?
18 MR. CLEMENT: That's right, Justice O'Connor.
19 And then I think the Court explained and elaborated that
20 the test is whether or not there are commercially
21 significant noninfringing uses. And I would say what the
22 Ninth Circuit did in this case is basically adopt the test
23 of mere theoretical capability for noninfringing use, plus
24 maybe some anecdotal evidence.
25 JUSTICE KENNEDY: And what -- and your test is
19
1 whether there's a substantial use that's lawful?
2 MR. CLEMENT: Well, I think the way we would try
3 to articulate it is that if the way that the business
4 model of the particular Defendant is set up is that they
5 are not involved in a business substantially unrelated
6 from copyright infringement, that there should be
7 liability in that situation. And I think in an extreme
8 case like this, where over 90 percent of the business --
9 and I think Mr. Verrilli correctly describes that it's not
10 a minimum of 90 percent; it's over 90 percent -- because
11 the only evidence on the other side is anecdotal evidence
12 that there are such things as public-domain works.
13 CHIEF JUSTICE REHNQUIST: Where did the 90
14 percent figure come from? I know we have to accept it
15 because it's summary judgement, but where did it come
16 from?
17 MR. CLEMENT: It came from a study by
18 Petitioners' experts of the actual operation of the
19 system. And what they did is, they identified about 75
20 percent of the works as clearly infringing works, another
21
15 percent of the works were identified as very likely
22 infringing works, then there were 10 percent they just
23 couldn't tell anything about.
24 JUSTICE BREYER: I thought it was just limited
25 to music.
20
1 MR. CLEMENT: Well, I think the -- it's not --
2 the system is not limited to music.
3 JUSTICE BREYER: I know, but I thought the study
4 was about music.
5 MR. CLEMENT: I'm not sure about that, but --
6 JUSTICE BREYER: Well, I thought -- I mean, you
7 know, we've had 90 briefs in this, and some briefs tear it
8 apart, and others support it, but we also have briefs from
9 the ACLU saying you could put whole libraries within this
10 system.
11 MR. CLEMENT: Well -- 12 JUSTICE BREYER: The question I wanted to ask
13 you is, given that concern, that there are, conceptually
14 anyway, really excellent uses of this thing, does
15 deliberate -- what is the word?
16 MR. CLEMENT: Actual inducement?
17 JUSTICE BREYER: Yes. Because what you are
18 worried about, it seemed to me that the actual inducement
19 would take care of. And if you sent it back and said,
20 "Let's have a trial on actual inducement." If this really
21 is the extreme case you're talking about, why wouldn't the
22 Petitioners here be bound to win that trial?
23 MR. CLEMENT: Well, based on our review of the
24 record -- and we haven't been able to see the entire
25 record -- I agree with you, the Petitioners ought to be
21
1 able to win this case on an active-inducement ground, and
2 that's a narrow way to decide the case. I do think,
3 though, this Court might have to say something about the
4 Sony issue before it reached that issue. And if it did
5 feel compelled to do that, I think it would be a mistake
6 to sanction the Ninth Circuit's reading of Sony, because,
7 you're right, there's a theoretical possibility that
8 public-domain works can be exchanged on this system, but
9 it's also true that this system doesn't have much of a
10 comparative advantage for trading in public-domain works.
11 JUSTICE O'CONNOR: Well, you got interrupted a
12 bit. Tell us, in the simplest way you can, what test you
13 think Sony stands for and how the Ninth got it wrong, if
14 you believe it.
15 MR. CLEMENT: Justice O'Connor, it stands for --
16 the test is whether or not there are commercially
17 significant noninfringing uses. The Ninth Circuit got it
18 wrong because it thought that test was satisfied by a
19 combination of two things: being able to point out that
20 there were such things as public-domain works or
21 authorized sharing of the Wilco album, for example, and
22 anecdotal evidence that you could actually do that.
23 Now, if that were the right reading of Sony,
24 with respect, I would suggest that footnote 23 of this
25 Court's Sony decision would have been the sum total of the
22
1 Court's analysis, because in that footnote the Court
2 observed that there were broadcasts of public-domain
3 works.
4 JUSTICE KENNEDY: Suppose the owner of the
5 instrumentality, the program, thinks that there's going to
6 be a vast area of lawful use, and he knows that there's
7 going to be some abuse at the -- in the short term, but he
8 does everything he can to discourage that. He says, "This
9 is a two -- P2P is going to revolutionize the way we talk
10 to each other, there's things in the public domain.
11 Please don't use this for copyright." But he knows that
12 there's going to be some infringement, let's say, but
13 it'll be 50 percent of the use, in the short term. Can he
14 use the program?
15 MR. CLEMENT: If it's 50 percent infringement in
16 the short run? We think, absolutely, yes.
17 JUSTICE KENNEDY: Yes, that he can --
18 MR. CLEMENT: He can --
19 JUSTICE KENNEDY: -- use the program.
20 MR. CLEMENT: -- use the program. I mean, as we
21 suggest, if you're at a 50-50 -- I mean, if you're
22 anywhere below 50 percent, we think that there should be
23 no liability under the Sony standard. If you're above
24 that level and there's sufficient evidence that you're
25 really targeting infringing uses, then I think maybe there
23
1 would be liability. But in the hypothetical you suggest,
2 there would clearly not be liability in that situation.
3 What we would like to suggest, though, is there
4 ought to be enough room for -- under the Sony test, before
5 you reach actual inducement, to capture somebody where
6 they've clearly set out, as a business model, to deal with
7 the infringing uses. And the only thing they point to are
8 the theoretical possibility, anecdotal evidence, that it
9 could be used for public-domain works.
10 JUSTICE GINSBURG: If there's more, they could
11 bring it out at trial, could they not? The difference
12 between your position and Mr. Verrilli, I take it, is that
13 you think there should be not summary judgement for the
14 Petitioners, but a trial.
15 MR. CLEMENT: I think that's a fair point,
16 Justice Ginsburg. We're operating in something of a
17 disadvantage, because we haven't seen the entirety of the
18 record. Based on the record that I've seen, I think
19 there's a close case, unless perhaps once this Court
20 clarifies the legal standard, Respondents put on
21 additional evidence. I think this is a close case, where
22 you actually could grant summary judgement in favor of the
23 Petitioners. But certainly we have no objection to having
24 a trial on the Sony issue in this case. What we object to
25 is the Ninth Circuit rule, which, in every case, is going
24
1 to obviate the need for a trial, based on a showing that
2 there are such things as public-domain works.
3 JUSTICE SCALIA: The inducement -- the
4 inducement point doesn't get you very far. Presumably a
5 successor to Grokster, or whatever this outfit is called,
6 could simply come in and not induce anybody but say, you
7 know, "We're setting up the same system," know very well
8 what people are going to use it for, but not induce them.
9 And that would presumably be okay.
10 MR. CLEMENT: I think that's potentially right
11 -- 12 JUSTICE SCALIA: Which is why you need --
13 MR. CLEMENT: -- Justice Scalia --
14 JUSTICE SCALIA: -- the Sony --
15 MR. CLEMENT: -- and that's why I think it's
16 important to preserve a role for the Sony test. And,
17 again, this Court, in Sony, could have adopted a simple
18 theoretical-capability test, but this Court, instead,
19 adopted a test that required there to be shown some
20 commercially significant use for the -- noninfringing use.
21 And even in the patent context, where I think the test is,
22 and should be, more demanding, even in that context, cases
23 like Fromberg, which we cite at page 19 of our brief, show
24 that there is an analysis to make sure that the suggested
25 theoretical noninfringing use is, in fact, a practical use
25
1 of the item.
2 JUSTICE SCALIA: Will you give a company ten
3 years to establish that?
4 MR. CLEMENT: Well, I don't think --
5 JUSTICE SCALIA: I mean, what I worry about is
6 the suit that just comes right out of the box, as soon as
7 the company starts up. Will you give the company a couple
8 of years to show that it's developing a commercial use?
9 MR. CLEMENT: Well, Justice Scalia, we have
10 concerns about that, as well. I don't know that we would
11 give them ten years of, sort of, free space to do as -- 12 facilitate as
much copyright infringement as possible. I
13 think what we would say is that when you're -- when a suit
14 targets a nascent technology at the very beginning, there
15 ought to be a lot of leeway, not just for observed
16 noninfringing uses, but for the capacity of noninfringing
17 uses.
18 I don't think, in fairness, that's what you have
19 before you in this case, because this is a case where the
20 peer-to-peer technology was out there, it was employed in
21 a particular way, with a centralized server, in a way that
22 was actually -- had a lot of users involved in it, and
23 they were users of the old Napster system, that had a
24 distinct character. They were using that system for
25 infringing copyrighted musical works. And then these
26
1 individuals come along and seek to capitalize on that
2 market. That is their business plan from day one. And
3 it's not some newfangled idea. The only newfangled idea
4 here is that if you give something of value away for free
5 by ignoring the copyright laws, you're likely to draw
6 consumers to your site, and you're likely to attract
7 advertisers. But that cannot be the kind of innovation
8 that we want to further through development of secondary
9 liability into the copyright laws.
10 JUSTICE SOUTER: Mr. Clement, in one way this
11 presents an easy case for answering Justice Scalia's
12 question, but what about a case in which there isn't the
13 Napster example to start with? Should there be some kind
14 of flexible rightness doctrine in response to suits, as
15 Justice Scalia put it, against the inventor or developer
16 right out of the box?
17 MR. CLEMENT: Well, whether you call it a
18 flexible rightness doctrine or you develop the doctrine in
19 a way that is very forgiving --
20 JUSTICE SOUTER: Congress of laches.
21 MR. CLEMENT: -- a brand-new technology.
22 JUSTICE SOUTER: Congress of laches.
23 MR. CLEMENT: Right. I mean, I think -- the way
24 I would style it is to develop a substantive standard
25 that's very forgiving of brand-new technologies and allows
27
1 people to point to, in those situations, capabilities for
2 future uses. I do think that --
3 JUSTICE SOUTER: How would you express the --
4 how would you express that, that substantive standard that
5 anticipates, just as you suggested we do?
6 MR. CLEMENT: Well, I was just trying to
7 articulate it, which is to say that this Court has talked
8 about the capacity for noninfringing uses. I think, with
9 a mature product like this, it's fair to point to how it's
10 actually used in the marketplace.
11 CHIEF JUSTICE REHNQUIST: Thank you, Mr.
12 Clement.
13 MR. CLEMENT: Thank you.
14 CHIEF JUSTICE REHNQUIST: Mr. Taranto, we'll
15 hear from you.
16 ORAL ARGUMENT OF RICHARD G. TARANTO
17 ON BEHALF OF RESPONDENTS
18 MR. TARANTO: Thank you, Mr. Chief Justice, and
19 may it please the Court:
20 Because Respondent's software products are tools
21 of autonomous communications that have large and growing
22 legitimate uses, their distribution is protected under the
23 clear Sony rule. That rule should be adhered to by this
24 Court, because copyright does not generally step into the
25 role of product control, because doing so would cause
28
1 overkill. The Sony rule safeguards legitimate uses by
2 protecting the product and -- 3 JUSTICE O'CONNOR: Yeah, but active
inducement
4 is a doctrine that's been employed to curb the intentional
5 encouragement of noninfringing uses, isn't it?
6 MR. TARANTO: Not in copyright law, it hasn't,
7 but that's not my primary point. My primary point is that
8 it is critical, it is jurisdictionally critical, to
9 separate two separate acts, distributing the product and
10 any of the past acts that the Petitioners allege
11 constituted encouragement, their synonym for "inducement,"
12 which were explicitly outside the District Court ruling
13 that was certified for interlocutory appeal.
14 Questions about past acts not inherent in the
15 distribution of our product --
16 JUSTICE SCALIA: But they are inherent. They
17 are inherent. I mean, the point is that those ASDACS are
18 what have developed your client's current clientele.
19 MR. TARANTO: No, I don't think so, Justice
20 Scalia. The Petitioners -- this is what I think is key or
21 usable about the past acts. They claim that there is an
22 intent, as part of the current distribution of the
23 product, to profit from increased use, including
24 generically known infringing use, a point on which the
25 District Court and the Court of Appeals assumed to be the
29
1 case. Beyond that, the question whether there were
2 encouraging acts, any kind of promotional activity that
3 says, "We ask you to, and urge you to, use this product
4 for infringement," that is not here, because that was
5 explicitly part of the past activities, removed from the
6 District Court decision. And when the Petitioners sought
7 interlocutory appeal, they said, expressly, these were
8 "distinct and severable," in their terms -- that's a quote
9 -- 10 JUSTICE SOUTER: But I don't --
11 MR. TARANTO: -- from the past.
12 JUSTICE SOUTER: -- understand how you can
13 separate the past from the present in that fashion. One,
14 I suppose, could say, "Well, I'm going to make inducing
15 remarks Monday through Thursday, and I'm going to stop,
16 Thursday night." The sales of the product on Friday are
17 still going to be sales which are the result of the
18 inducing remarks Monday through Wednesday. And you're
19 asking, in effect -- you're asking us -- to ignore Monday
20 through Thursday.
21 MR. TARANTO: No, I'm not. Let me try to be
22 clear. There is a theory, not present here, along exactly
23 those lines, which Petitioners are entitled to argue, back
24 in the District Court, without a remand, because that
25 issue remains in the District Court. It is a theory that
30
1 says, "You started your business with illegitimate acts,
2 your current business is a causal consequence of that." I
3 will say, there is not one bit of evidence that the
4 Petitioners introduced, in resisting summary judgement, in
5 support of that theory. It is, in fact, a highly
6 implausible theory, for reasons that the District Court
7 can explain, because users of software like this switch
8 readily. There is no plausible lock-in effect to this
9 software. People go from Kazaa to Grokster to eDonkey to
10 BitTorrent week by week. That was -- that is an available
11 theory. You would --
12 JUSTICE SOUTER: Then why was current -- why was
13 inducement, as a current theory of recovery, even the
14 subject of summary judgement? It seems to me that to make
15 it a summary judgement is implausible to a non worldly
16 degree.
17 MR. TARANTO: I'm not entirely --
18 JUSTICE SOUTER: I mean, I thought you were
19 saying that, so far as the inducement theory of recovery
20 is concerned -- 21 MR. TARANTO: Yes.
22 JUSTICE SOUTER: -- the only summary judgement
23 that was granted was with respect to current acts of
24 inducement, the way the company is acting now, not the way
25 the company was acting last year. And my question is --
31
1 if that is correct, then I don't see how summary judgement
2 could even intelligibly have been considered.
3 MR. TARANTO: I think -- because as the
4 Petitioners insisted when they pressed for interlocutory
5 appeal, they said these were distinct and severable,
6 because, as Justice Scalia referred to before, the
7 important question, on a going-forward basis, is whether
8 the current set of activities -- this software, given how
9 it operates, being generally distributed -- is a vendor's
10 -- the distributor of that software -- secondarily liable
11 because somebody else, tomorrow, can do exactly the same
12 thing, without the baggage of any --
13 JUSTICE KENNEDY: Well, I don't want to get us
14 too far off the track on this question, but it just seems
15 to me that what you've done before bears on what you know,
16 or have reason to know, on an ongoing basis.
17 MR. TARANTO: I agree with that, Justice
18 Kennedy, but there's no dispute about that. This case was
19 decided on the assumption, which we are not contesting
20 here, that the Respondents here knew that there would be
21 widespread infringing use of a product that they were
22 putting out, and, what's more, that they intended to
23 profit from maximum use of the product, which necessarily
24 would include infringing use, which they had no ability to
25 separate from noninfringing use.
32
1 JUSTICE KENNEDY: Well, then why don't you tell
2 us what's wrong with the Government's test and with the
3 Petitioner's test, the substantial-use part of it?
4 MR. TARANTO: Well, I'm not entirely -- I think
5 there are several tests, and I'm not sure I followed them
6 all here. We think it is critical that the Court adhere,
7 for innovation protection, to the very clear Sony rule.
8 JUSTICE GINSBURG: That, Mr. Taranto, is
9 something I find very puzzling. There is a statement --
10 one could take it as clear -- "capable of substantial
11 noninfringing use." That would be very clear, I agree.
12 But Sony goes on for 13 more pages. If the standard were
13 all that clear, it would have stopped there. And usually
14 when you're interpreting a document, one rule is, you read
15 on, and if you read on, you find we need not give precise
16 content to the question of how much use is commercially
17 significant. That doesn't sound very clear to me. Or if
18 you then read back, as a careful reader would, then you
19 find the statement that the primary use of the Sony
20 machine for most owners was time-shifting, a use that the
21 Court found either authorized or fair, and, hence,
22 noninfringing.
23 So I don't think you can take from what is a
24 rather long opinion, and isolate one sentence, and say,
25 "Aha, we have a clear rule."
33
1 MR. TARANTO: Well, that sentence, Justice
2 Ginsburg, is expressly stated to be the rule of law that
3 is being applied. And then the Court went on to apply it
4 to say, there are two things that satisfy the test. The
5 primary thing, of course, is what takes up most of those
6 13 pages, the question whether in-home time-shifting is
7 fair use, a question that was of considerable interest to
8 tens of millions of individuals throughout the United
9 States. But the Court, in fact, didn't rely only on that;
10 it said, "In addition, there was this roughly 7 to 9
11 percent use of authorized time-shifting." It wouldn't
12 have had to even talk about that if the primary use, you
13 know, was the entirety of --
14 JUSTICE SCALIA: Mr. Verrilli, I hope you won't
15 waste a lot of your time on this point. This Court is
16 certainly not going to decide this case on the basis of
17 stare decisis, you know, whatever else is true.
18 MR. TARANTO: Well, I will -- let me urge that
19 there is, in fact, considerable weight to stare decisis,
20 because there are major technological industries that have
21 relied on the rule that derives from patent law that there
22 is no, kind of, predominant-use kind of meaning to Sony
23 rule. In the patent context from which this came, all
24 there has to be, in Professor Chisum's words, is, uses
25 that are not farfetched, illusory, uneconomical for the
34
1 user. And the inquiry there is, Is this a product whose
2 -- where the same features that are alleged to cause the
3 infringement are also, in some nontrivial way, used for
4 noninfringement?
5 JUSTICE BREYER: What is -- what is the answer
6 to Justice Kennedy's question? I took it, whether -- for
7 the last 21 years, industry throughout America has taken
8 the standard as being approximately whether it is capable
9 of substantial -- commercially significant substantial
10 noninfringing uses.
11 MR. TARANTO: Yes.
12 JUSTICE BREYER: I -- and the country seems to
13 have survived that standard. There is innovation. There
14 are problems in the music industry, but it thrives, and so
15 forth. So there is an argument for just following it,
16 because it's what it is. But suppose it's totally open.
17 Why should that be the right test, instead of some other
18 test, like substantial use, et cetera?
19 MR. TARANTO: I -- because I -- 20 JUSTICE BREYER: That, I think, was
the
21 question, and I'm very interested in your answer.
22 MR. TARANTO: Right. Because I think any
23 alternative is worse. A focus on intent to profit means
24 that virtually every business which requires money and has
25 the least bit of sensible forward-looking thinking about
35
1 what the usage is going to be will be subject to
2 litigation, arguing about their knowing that a substantial
3 amount of the value of the product was going to be based
4 on infringement.
5 JUSTICE KENNEDY: But -- 6 MR. TARANTO: Every -- 7 JUSTICE KENNEDY: --
but what you have -- what
8 you want to do is to say that unlawfully expropriated
9 property can be used by the owner of the instrumentality
10 as part of the startup capital for his product.
11 MR. TARANTO: I -- well -- 12 JUSTICE KENNEDY: And I -- just from an
economic
13 standpoint and a legal standpoint, that sounds wrong to
14 me.
15 MR. TARANTO: Well, I'm not entirely sure about
16 that formulation. Sony clearly sold many more tapes
17 because of the illicit activity of Library. Sony
18 presumably sold more machines, maybe even priced them
19 higher, because there was a group of people who wanted the
20 machine for the illicit activity. The Apple iPod, in the
21 60 gigabit version, holds 15,000 songs. That's --
22 JUSTICE KENNEDY: So you think that --
23 MR. TARANTO: -- a thousand CDs.
24 JUSTICE KENNEDY: -- unlawfully expropriated
25 property can be a legitimate part of the startup capital.
36
1 MR. TARANTO: No, I -- what I think is that, as
2 a matter of general judicially formulated secondary
3 copyright liability law, there is no better policy balance
4 that the Court can strike, and that only Congress can make
5 the judgements about what the industry-wide facts are.
6 And I -- let me pause there a minute -- there are no
7 industry-wide facts in this record. Every citation in the
8 Petitioner's brief about the magnitude of harm to the
9 industry is extra-record citation. There are 26 billion
10 --
11 JUSTICE GINSBURG: Then perhaps there should be
12 a trial so it would all come out.
13 MR. TARANTO: Petitioners -- it's not just that
14 they didn't have it in their brief, they did not submit
15 any evidence in response to the summary-judgement motion
16 that said the rule of Sony should be applied here because
17 the magnitude of the injury to the recording industry or
18 in -- someday in the future, to the movie industry, is at
19 zero -- 20 JUSTICE GINSBURG: Well, they weren't
21 concentrating on the damage to them, they were
22 concentrating on the facilitation of copying that was
23 provided. And you don't question that this service does
24 facilitate copying.
25 MR. TARANTO: As does the personal computer and
37
1 the modem and the Internet service provider and the
2 Microsoft operating system. There's -- everything in the
3 chain that makes this work is absolutely essential to
4 facilitating the copying. The question is which pieces,
5 if any, and under what standard, get singled out for a
6 judicially fashioned secondary copyright liability
7 doctrine.
8 JUSTICE GINSBURG: Well, you said -- I think you
9 were saying -- this is something for Congress to solve;
10 it's not for the Court. But the Court is now faced with
11 two apparently conflicting decisions: Aimster, in the
12 Seventh Circuit, the Ninth Circuit decision. And if
13 you're just looking at this in the abstract, you might
14 say, "Well, it's -- isn't it odd that Napster goes one way
15 in the Ninth Circuit, and this case goes another way?"
16 MR. TARANTO: Let me suggest why that's not odd
17 and why the cases are not just different, but critically
18 different. Napster rests -- never mind the exact words of
19 the opinion -- Napster involves something more than
20 distribution of a product. Napster, the company, was
21 sending out, in response to requests, "Where is this
22 filed," an answer, the information, "The file is here."
23 Every time it sent out that information, if it had been
24 told by Mr. Verrilli's client, "That file may not be
25 shared," it was, with specific knowledge to that file,
38
1 giving assistance. That is a classic contributory
2 infringement case based on specific knowledge of
3 infringement. And the reason --
4 JUSTICE SOUTER: Why isn't this a classic
5 willful-ignorance case?
6 MR. TARANTO: Because willful ignorance is about
7 having possession of information and refusing to look at
8 it. This -- that does not occur here. This tool of
9 autonomous communication is one in which there is no
10 Mother-may-I system, no chaperone, no information provided
11 to us at the time that there is any regress. When I ask
12 for a file from you, there is no information that goes
13 back to StreamCast or to Grokster --
14 JUSTICE SOUTER: Sure, but I thought willful
15 ignorance was basically a certainty of what was going on
16 without empirically verifying it, so as to, sort of,
17 maintain the guise of one's hands over one's eyes. And it
18 seems to me, if that's what it is, that's what we've got.
19 MR. TARANTO: No, I don't think so, I think, on
20 either account. My understanding of where in the law
21 willful ignorance has bite is when you do have the
22 information right in front of you, and you refuse to look
23 at it. And, what's more, the change of system to an
24 autonomous communication tool, where there is no
25 intermediary, which is what all of their filtering systems
39
1 would require, getting permission in advance, the change
2 of tool is not just some way of blinding oneself to the
3 information.
4 JUSTICE SCALIA: Yeah, I think it would also
5 include disabling yourself from looking at it. And so, I
6 think it's an important part of your case, that you didn't
7 adopt this new system of decentralizing the file so that
8 it's in the computers, out there, solely in order to get
9 around Napster.
10 MR. TARANTO: Right. And I think that the
11 summary-judgement record on this is -- it, I mean, doesn't
12 leave any real room for dispute. Seeking --
13 JUSTICE BREYER: Well, wait. In respect to that
14 -- I mean, is it open? If you win on the question of the
15 standard, is it open, or would we have to remand it for
16 them to argue, in light of the history, in light of what
17 they do now, they, your client, with knowledge of
18 infringement, actively encouraged users to infringe
19 copyright using their -- using the Grokster technology,
20 and, indeed, knowingly would include willful blindness?
21 MR. TARANTO: I think -- 22 JUSTICE BREYER: Because -- as I had gotten
that
23 from one of these amicus briefs, you know, that's their
24 standard -- they say a willful -- of willful, deliberate
25 inducement. And that, it seems to me, important that they
40
1 be able to argue that. Now, can they argue it, in your
2 opinion, if we do nothing but affirm the Ninth Circuit?
3 MR. TARANTO: I think that they can certainly
4 argue, with an affirmance by this Court, that all of the
5 past acts, to use the District Court's term, constitute a
6 basis for a -- inducement liability. There would be some
7 legal questions about whether there is such a thing as
8 inducement liability, but they get to argue that. No
9 remand is required for that.
10 The record in this case establishes that one
11 reason for going to the decentralized system, without a
12 central index and a third-party intermediary, was to --
13 was a reaction to the Ninth Circuit's Napster decision
14 that said, "That's a legal problem." But it is also, I
15 think, beyond genuine dispute, for summary-judgement
16 proposes, that there were other reasons. You don't have
17 to have the servers to maintain. When StreamCast, in
18 particular, was running a Napster-like system, the so-
19 called openNap system, it had ten servers, and quickly
20 maxed out and started crashing, and immediately concluded
21 -- I think this is at page 789 or -- and 798 of the joint
22 appendix -- we would have had to start doubling, tripling,
23 quadrupling the number of services, and we didn't have --
24 JUSTICE STEVENS: Mr. Taranto -- 25 MR. TARANTO: -- the money to do it.
41
1 JUSTICE STEVENS: -- can I ask -- I'm still a
2 little puzzled about the posture of the case.
3 MR. TARANTO: Yes.
4 JUSTICE STEVENS: Because I read the District
5 Court opinion. I think he said -- the judge said that
6 both parties agreed that there were no disputed issues of
7 fact that would preclude the entry of summary judgement in
8 either way, no disputed issues relative to whether to
9 grant relief. And I -- it's on page 24a of the cert
10 petition. And I understand you to be saying that leaving
11 everything alone, affirming would allow the case to go
12 forward with your adversaries seeking damages on an
13 active-inducement theory. Am I correct?
14 MR. TARANTO: Yes. I think -- all I read this,
15 page 24a, to say is that both sides filed for summary
16 judgement, so each one, of course, thought that there was
17 -- that it was entitled to summary judgement. Each --
18 JUSTICE STEVENS: But it says, "Both parties
19 believe there are no disputed issues of fact material to
20 Defendant's liability."
21 MR. TARANTO: I think that's just because each
22 side filed summary judgement. Each side filed extensive
23 -- 24 JUSTICE STEVENS: So then your answer to my
25 question is that, yes, if we affirm, as a possibility,
42
1 they could continue to seek damages on an active- 2 inducement theory.
3 MR. TARANTO: Yes, absolutely. And there are -- 4 there are affirmative
defenses that are not even part of
5 this motion that, of course, would, by themselves,
6 preclude summary judgement in their favor.
7 JUSTICE STEVENS: And then one other -- 8 JUSTICE GINSBURG: I thought --
9 JUSTICE STEVENS: -- question I had. Does the
10 record contain their proposed form of injunction that they
11 requested?
12 MR. TARANTO: I don't think it does, beyond the
13 statement at the end of their summary-judgement pleading
14 that asked for a very general injunction, "Stop the
15 Defendants from infringing." I'm not aware of anything
16 more specific.
17 Let me comment a bit on what the record says
18 about the substantial legitimate uses. This is not a
19 question of --
20 JUSTICE GINSBURG: Mr. Taranto, before you go
21 back to that, I wanted to be clear on what you were saying
22 would be left over for trial.
23 MR. TARANTO: Yes.
24 JUSTICE GINSBURG: Because, as I read your
25 briefing, it was, "Well, they can argue about some bad
43
1 things that Grokster was doing in the past, but this
2 decision says: henceforth, what we're doing is okay. The
3 case zeroed in on now and the future, and the only thing
4 that was left open was something that was over and gone
5 could get damages for it." But I thought that this
6 judgement gave you an okay, a green light, from now on.
7 MR. TARANTO: I -- my view that -- I mean, this
8 was not talked about in these terms. I believe it ought
9 to be open to the Petitioners, not only to prove that past
10 acts were, themselves, illegal, but that the causal
11 consequence of those past acts should somehow reach
12 forward into the current acts.
13 JUSTICE SOUTER: Then what is the point of the
14 current summary judgement?
15 MR. TARANTO: The point of the current summary
16 judgement is that there is -- the forward-looking
17 character of the activities taking place, starting in
18 September 2002 on forward, has been held, by itself, not
19 to be a basis for -- 20 JUSTICE SOUTER: So you're saying the summary
21 judgement simply, in effect, says, "They're not doing
22 anything wrong now, but we have left open the question,
23 not merely of what they have done wrong in the past, but
24 whether what they did wrong in the past can carry forward
25 into the future"?
44
1 MR. TARANTO: As I say, it wasn't stated in
2 those terms, but, yes, I think that --
3 JUSTICE SOUTER: That's bizarre.
4 MR. TARANTO: Well, I don't think so, because --
5 [Laughter.]
6 MR. TARANTO: -- because the important question
7 is, to the Petitioners, the entire recording and movie
8 industry, Is this set of activities, which you and I,
9 tomorrow, can start engaging in, one that they can stop?
10 There are literally a handful -- on page 7 and 8 of their
11 brief --
12 JUSTICE SOUTER: So you're saying -- what it
13 really says is, "There's nothing to enjoin, but there may
14 very well be something to recover for," -- 15 MR. TARANTO: Yes.
16 JUSTICE SOUTER: -- "even as to future
17 activity."
18 MR. TARANTO: Yes, exactly right. And they
19 would, of course, have had to make the very implausible
20 assertion, in a business in which there is no plausible
21 lock-in, that somehow a set of isolated events -- e-mails
22 -- a handful of e-mails out of literally, between the two
23 companies, 1700 a day, that might have said, "Why don't
24 you load some music out"? -- are somehow the causal -- the
25 cause of what is going on today.
45
1 Let me say a few words about what the record
2 says about legitimate activities. Altnet is a company --
3 this is at 1169 and -70 of the joint appendix -- they say
4 that they have distributed, on peer-to-peer systems,
5 hundreds of thousands of authorized songs, and, they say,
6 millions of pieces of -- of video games, leading to sales.
7 This is not a trivial number. JIVE, at page 67 to 68,
8 speaks about 250,000 peer-to-peer downloads of a music
9 video. The Internet archive, which is talked about in the
10 record, and as you now look at what they are on their
11 Website, now lists some several hundred musical artists
12 with 20,000 recordings which are being put out there for
13 peer-to-peer distribution. The Creative Commons is
14 licensing all kinds of things for authorized public
15 distribution. There are musical bands --
16 JUSTICE SCALIA: Because, I gather, that some
17 artists don't make money from the records, but make money
18 from the popularity that draws fans to their concerts.
19 MR. TARANTO: My understanding --
20 JUSTICE SCALIA: So they're willing to give away
21 the records for free.
22 MR. TARANTO: -- my understanding is "some" is a
23 great understatement, yes.
24 The bands talked about at 159 and 160 to '70 of
25 the joint appendix, which have authorized their live
46
1 concert recordings to be traded among -- on -- to be
2 traded. The GigAmerica business is in the business of
3 compiling -- this is at 323 of the joint appendix -- of
4 compiling musical recordings and other things for
5 authorized distribution. The world of music distribution
6 and video distribution and movie-trailer distribution and,
7 in small instances now, text distribution, but growing, is
8 changing and making use of this extremely innovative, low-
9 cost tool. The great innovation of this tool of
10 communication --
11 CHIEF JUSTICE REHNQUIST: Mr. Taranto?
12 MR. TARANTO: Yes.
13 CHIEF JUSTICE REHNQUIST: In your motion for
14 summary judgement, did you ask that the Plaintiff's claim
15 be dismissed?
16 MR. TARANTO: Well, we asked for judgement, in
17 our favor on their claim, that our current activities
18 constituted a basis for secondary liability. I'm not sure
19 if word "dismiss" was --
20 CHIEF JUSTICE REHNQUIST: Were there other
21 claims? You said "on their claim." Were -- did they make
22 other claims?
23 MR. TARANTO: They had a generic claim about
24 secondary copyright liability. We made the motion -- or,
25 actually, StreamCast made a motion that said, "Let's carve
47
1 this piece out and talk just about whether the set of
2 current activities supports secondary liability." The
3 other side eventually agreed that that was distinct and
4 severable from their claim of secondary liability as to
5 past acts and as to past versions of the software, which
6 has -- which has changed.
7 JUSTICE GINSBURG: Where does one find that?
8 CHIEF JUSTICE REHNQUIST: (Inaudible)
9 MR. TARANTO: Yes, the motion -- well, it -- the
10 simplest place, I guess, is in the June 2003 District
11 Court ruling, which is in the Joint Appendix and attached
12 to the brief in opposition, ruled on the Petitioner's
13 motion for an interlocutory appeal under 1292.
14 JUSTICE GINSBURG: But the motion itself is not
15 there to take it through the opinion of the Court?
16 MR. TARANTO: No, the motion is not -- is not in
17 the joint appendix. The -- most of the motions -- in
18 fact, both of our summary-judgement motions and their
19 summary-judgement motion, are in the joint excerpts of
20 record in the Ninth Circuit, can be found in --
21 CHIEF JUSTICE REHNQUIST: The text on -- 22 MR. TARANTO: -- 30 volumes.
23 CHIEF JUSTICE REHNQUIST: -- the text, on pages
24 23a and 24a, gives the impression that the District Court
25 is disposing of the entire case.
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1 MR. TARANTO: That -- it may give that
2 impression [ Reply to This | # ]
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| Authored by: Anonymous on Wednesday, April 13 2005 @ 06:40 PM EDT |
The case is focusing on whether or not it is ok for a business to make its
money, or much of it, offering a service that facilitates infringement.
This is moot because p2p has moved on to BitTorrent, which is free software, and
so no money is being made. If the Supreme Court gave exactly the ruling the RIAA
wants, it still would would not outlaw BitTorrent. [ Reply to This | # ]
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