Amicus Curiae Brief — Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.

Supreme Court brief2005

Ask Donna

What actually matters in this document.

Text

No. 04-480

= ———— —_____— _ _|

IN THE

Supreme Court of the Gnited States

—>><¢-

METRO-GOLDWYN-MAYER STUDIOS, INC., ET AL.,

Petitioners,

Vv.

GROKSTER, LTD., ET AL.,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals for the Ninth Circuit

BRIEF OF AMICI CURIAE

NATIONAL ACADEMY OF RECORDING ARTS & SCIENCES

- AND

AMERICAN FEDERATION OF TELEVISION AND RADIO

ARTISTS, AMERICAN FEDERATION OF MUSICIANS

OF THE UNITED STATES AND CANADA, THE COUNTRY

MUSIC ASSOCIATION, INC., THE GOSPEL MUSIC

ASSOCIATION, THE HIP-HOP SUMMIT ACTION NETWORK,

JAZZ ALLIANCE INTERNATIONAL, INC, AND

THE RHYTHM & BLUES FOUNDATION

SUPPORTING THE PETITION FORA

WRIT OF CERTIORARI

Jon A. Baumgarten Joel Katz

Counsel of Record GREENBERG TRAURIG

Charles B. Ortner The Forum

William M. Hart 3290 Northside Parkway,

Frank P. Scibilia Suite 400

PROSKAUER ROSE LLP Atlanta, Georgia 30327

1585 Broadway

New York, New York | 936

212-969-3000

Attorneys for Amici Curiae

Table of Contents

Page

TABLE OF CITED AUTHORITIEG..................0.cccceceeeeeeeeeees i

INTEREST OF THE AMICI] CURIAE.................. ee ae |

SUMMARY OF ARGUMENT ....................ccecccceesessscseeeseseees 5

I ERRIEIESERS IS HE RR ENP SOE NOR CTE 5

BY SANCTIONING THE DESIGN AND

DISTRIBUTION OF SOFTWARE THAT HAS NO

“COMMERCIALLY SIGNIFICANT” USE BUT TO

INFRINGE THE CREATIVE WORKS OF OTHERS,

THE NINTH CIRCUIT HAS EVISCERATED

PROTECTION FOR SUCH WORKS, DOING

INJUSTICE TO FUNDAMENTAL COPYRIGHT

AND SECONDARY LIABILITY PRINCIPLES .................. 5

A. The Ninth Circuit Has Read The “Substantiality”

Requirement Out Of The “Substantial Non-

UNE RIS IIIS cs ccstsincictaccitslcsnescsctincescscnpeonesence 5

B. The Ninth Circuit’s Version of ‘ihe “Substantial

Non-Infringing Use” Doctrine Does Injustice to

the Primary Public Interest that Copyright Serves

in Motivating Authors and Creators to Create.......... 16

TIDE schenatiiicnssiicnsnstingspsesinniindcenngandeonsectiinitmbeniaiatiiont 20

TABLE OF CITED AUTHORITIES

Page

CASES

A&M Records, Inc. vy.

General Audio Video Cassettes, Inc.,

948 F. Supp. 1449 (C.D. Cal. 1996)... coco ccccccceceseeesees 7

A&M Records, Inc. v. Napster, Inc.,

239 F.3d 1004 (9th Cir. 2001)... cccccccccees ssi 1]

Abington Textile Machinery Works v.

Carding Specialists, Ltd.,

249 F. Supp. 823 (D. D.C. 1965)

Arthrocare Corp. v. Smith & Nephew, Inc.,

310 F. Supp. 2d 638 (D. Del. 2004) ooo... ccccccccscecceeseceee. 7

Atari, Inc. v. JS&A Group, Inc.,

597 F. Supp. 5 (N.D. I. 1983) oooccccccccccceccsceceeeee. 7,14

C.R. Bard, Inc. v. Advanced Cardiovascular Sys., Inc.,

911 F.2d 670 (Fed. Cir, 1990)... coocccccccccccccseseeececes 7-8

Cable/Home Communication Corp. vy.

Network Prods., Inc.,

902 F.2d 829 (11th Cir, 1990)... cccccccccecccscsescseesecseee. 7

Dennison Mfg. Co. v. Ben Clements & Sons, Inc.,

467 F. Supp. 391 (S.D.N.Y. 1979) .ooooocccccccccsceceeseseees 7

Ellison v. Robertson,

189 F. Supp. 2d 1051 (C.D. Cal. 2002),

aff'd in part and rev'd in part on other grounds,

357 F.3d 1072 (9th Cir. 2004)... .ccceccccscecssesecseseeeees 13

Fortnightly Corp. v. United Artists Television, Inc., :

FO U.S. 390 (19GB) ......00.cccercresrerccccsserrcccsrersercesseesees 1s

Fromberg, Inc. v. Thornhill, :

315 F.2d 407 (Sth Cir. 1963) ..........cccccccccccccceceeeeeennnees

Harper & Row, Publishers, Inc. v. Nation Enters., :

Be Fe BE tcecencesecnceescssccsecvcnesccencceccescnesseess 1S

Hoffman-La Roche Inc. v. Promega Corp., ,

_ No. C-93-1748-VRW, 1994 U.S. Dist.

LEXIS 10174 (N.D. Cal. June 13, 1994) ...........006 7

In re Aimster Copyright Litig.,

252 F. Supp. 2d 634 (N.D. Ill. 2002) ............0ee0 12

In re Aimster Copyright Litig., :

334 F.3d 643 (7th Cir. 2003), cert. denied sub nom,

Deep v. Recording Indus. Ass'n of Am., Inc., |

124 S. Ct. 1069 (2004) 0.0... ccccccccccseeerreeeereeennes 5, 12, 13

Marsh-McBirney, Inc. v. Jennings, |

No. CV 90-6370 WDK, 1991 U.S. Dist.

LEXIS 20433 (C.D. Cal. Nov. 8, 1991) ...........06 7

Mazer v. Stein, =

CO a iccscsccssnseccesssceceecoccczcccsseseccccces

MGM Studios, Inc. v. Grokster Ltd.,

259 F. Supp. 2d 1029 (C.D. Cal. SS 9,10

MGM Studios, Inc. v. Grokster Lid.,

380 F.3d 1154 (9th Cir. 2004)... eee 8, 10, 11

intendo of Am. Inc. v. Computer & Entm't, Inc.,

: ne cos-eun? WD, 1996 U.S. Dist. LEXIS 20975

(WD. Wash. May 31, 1996) .............:00scsssssssssssesesse 14

Oxy Metal Indus. Corp. v. Quin-Tec, Inc.,

No. 80-73678, 1982 U.S. Dist. LEXIS 16861

(E.D. Mich. Jeame 8, 1962) ............0000000ccccccccesecccerseseeses 7

Playboy Enters, Inc. v. Webbworld, Inc.,

99] F. Supp. 543 (N.D. Tex. 1997),

aff'd mem., 168 F.3d 486 (Sth Cir. 1999) ...........c0000 13

Quality King Distribs., Inc. v.

L'anza Research Int'l, Inc.,

QI yy ——————— 15

Reynolds Metals Co. v. Aluminum Co. of Am.,

457 F. Supp. 482 (N.D. Ind. 1978),

rev'd on other grounds, 609 F.2d 1218

(7th Cir. 1979), cert. denied, 446 U.S. 989 (1980) .....7

Shumaker v. Gem Mfg. Co.,

311 F.2d 273 (7th Cir. 1962).............ccccccecereeeeereeeeeeenes 8

Sony Corp. of America v. Universal City Studios, Inc.,

GBS U.S. SIT (1DBE) .nccccccccrcccccscccccessccsecccoscssessees passim

Twentieth Century Music Corp. v. Aiken,

422 U.S. 151 (1975) .....-.-secceeeseeenesnneeesnennenneeneesnennnee 15

United States v. Paramount Pictures, Inc.

334 U.S. 231 (1DEB) .....0ccccccccseceneseccsvsescocccceseorcescsesees 15

Vault Corp. v. Quaid Software, Ltd.,

847 F.2d 255 (Sth Cir. 1988).................cccceeeeeeeeeneenees 14

Worlds of Wonder, Inc. v. Vector Intercontinental, Inc.,

No. C86-2671, 1986 U.S. Dist. LEXIS 15879

(N.D. Ohio Dec. 30, 1986) .............--.--cc-eeeeeeneenennnnnes 14

STATUTES AND OTHER AUTHORITIES

35 U.S.C. § 271(b)

before the House of Representatives Judiciary Courts

and Intellectual Property (statement of Quincy Jones),

pe ies te nk | 18

Hearing on S. 483 before the Senate Judiciary Comm.

(statement of Alan Menken); 1995 WL 557177

Ro COE ee ee ee 17

I. Fred Koenigsberg, Humpty-Dumpty In Copyrightland,

51 J. COPYRIGHT SOCIETY 677 (Spring 2004)........... 17

Jesse M. Feder, Js Betamax Obsolete?: Sony Corp. of

America v. Universal City Studios, Inc. in the Age of

Napster, 37 CREIGHTON L. REV. 859

Mike Stoller, Editorial, Songs That Won't Be Written,

N.Y. TIMES, Oct. 7, 200, at A.1S .......ccecseceesecssneessnes 17

Pre-1978 Distribution of Recordings Containing Musical

Compositions; Copyright Term Extension; and

Subcomm. On Courts and Intellectual Prop. of the

House Comm. on the Judiciary, 105th Cong. 25 (June

27, 1997) (statement of Paul Williams), available at

hitp://commdocs. house.gov/committees/judiciary/hju4

3666.000/hju43666_O.htm#24. oo. 16

INTEREST OF THE AMICI CuRIAE!

Amicus the non-profit National Academy of Recording

Arts & Sciences, Inc. (the “Academy”) has for nearly fifty

years represented the myriad individuals who contribute to

the creation and exploitation of recorded music, including

recording artists, musicians, songwriters, record producers,

sound engineers, arrangers, narrators, writers of album

notes, and conductors. While perhaps best known for its

GRAMMY Awards -- the only peer-presented awards

which honor artistic achievement in all aspects of the

recording industry -- the Academy has established itself as

the preeminent musical arts outreach and advocacy

organization in the country. Through its affiliated

MusiCares Foundation and GRAMMY Foundation, and its

unique network of field offices across the country, the

Academy advocates on behalf of its over 18,000 members,

representing the music community on such critical issues as

protection of intellectual property rights, record piracy, and

freedom of expression, and supports archival programs to

preserve the recorded musical heritage of the United States.

Amicus the American Federation of Musicians of the

United States and Canada (“AFM”) is an international labor

organization representing over 110,000 professional

musicians in the United States and Canada. Musicians

represented by the AFM record albums, movie sound

tracks, television and radio programming, and commercials

their recorded performances. Pursuant to AFM-negotiated

agreements, recording musicians earn scale wages, pension

and health contributions, and deferred compensation tied to

the sale of recordings.

Amicus the American Federation of Television and

Radio Artists (“AFTRA”) is a national labor union

representing approximately 80,000 performers and

newspersons that are employed in the news, entertainment,

advertising and sound recording industries. AFTRA

represents approximately 11,000 vocalists on sound

recordings, including singers who receive payments for the

sale/distribution of each recording pursuant to a royalty

contract, and “background” singers who are not signed to a

royalty contract, but who receive “contingent scale”

payments under the AFTRA-negotiated National Code of

Fair Practice for Sound Recordings (the “Sound

Recordings Code”) when the records on which they

perform reach certain sales plateaus. Both the royalty and

background artists’ pension and health insurance eligibility

depend on earnings, which, in turn, are dependent on record

sales. In addition to collective bargaining, to ensure that

AFTRA members are compensated for their creative

efforts, AFTRA participates in legislative and judicial

proceedings to protect the intellectual property rights of its

members and to prevent the unlicensed use of the works on

which AFTRA members appear.

Amicus the Country Music Association, Inc. (“CMA”)

is a not-for-profit, member based trade association

dedicated to the advancement and promotion of country

music as an art form throughout the United States and the

world. CMA’s nearly 6,000 members include songwriters,

produce, record, manufacture, distribute and sell copies of

recorded country music. These members derive much of

their livelihood and income from the sale of copies of

recorded country music, and consequently, these members |

suffer economic loss when recorded country music is

downloaded and enjoyed, but not purchased. Other

members of the CMA include advertisers and publicists,

personal and business managers, talent agents, buyers,

concert promoters, television and video producers, and

radio broadcasters. These members also participate in the

country music industry and rely heavily on the successful

exploitation of country music, which is driven by the sale

of copies of recorded country music, for their livelihood

and income.

Amicus the Gospel Music Association (“GMA”) is a

trade organization dedicated to promoting and celebrating

all forms of gospel music. GMA boasts approximately 20

organizationar members and more than 4,000 individual

members, including more than 500 artists, 125 songwriters

and 200 agents and managers. GMA members also include

publicists, music publishers, record producers, and radio

programmers. Nearly 3,000 of GMA’s members earn all or

most of their living in the music business. Nearly 700 are

employed by record companies. Gospel record companies

have been forced to reduce their workforces by ten percent

or more in the past 18 months due in part to sales lost

because of the illegal downloading of copyrighted music

made possible by companies like Respondents.

Amicus the Hip-Hop Summit Action Network is the

largest non-profit coalition of hip-hop artists and recording

industry executives in-the nation, and is dedicated to the

empowerment of youth through the positive power of hip-

hop music and culture. Hip-Hop Summit Action Network

represents the interests of artists who are financially injured

by, and has long supported the recording industry's efforts

to stop, the illegal piracy of recorded music.

Amicus Jazz Alliance International, Inc. is a wholly-

owned subsidiary of the International Association for Jazz

Education and is dedicated to expanding the audience and

visibility of jazz and, through education, leadership and

advocacy, seeks to raise the profile of the jazz art form and

foster better working relationships within the global jazz

community.

Amicus the Rhythm & Blues Foundation is the only

independent non-profit service organization solely

dedicated to the historical and cultural preservation of

Rhythm & Blues music. The Foundation provides financial

support, medical assistance and educational outreach

through various grants and programs to support R&B and

Motown artists of the 1940s through 1970s. The Rhythm

& Blues Foundation is committed to “Preserving America’s

Soul” and to serving those who enriched our lives with

their music.

The popular image of songwriters and recording artists

as fabulously rich celebrities is very far from the reality. A

few creators ‘n the music business do earn substantial

livings, but many struggle to survive despite being gifted

songwriters, musicians or vocalists who work hard at their

craft, and protection of their copyrights is crucial. Overall,

the earnings of the members of the Academy, and the other

dependent on the sale of recorded music. Respondents,

whose businesses are predicated largely on copyright

infringement, and are national in scope, have been granted

a license by the Circuit Court to steal from the creative

musical community, including members of the Academy

and the other amici whose livelihoods depend on their

being paid for the sale of recorded musi. The Circuit

Courts decision defies the original intent of the Framers as

reflected in the Constitutional mandate that creativity be

encouraged by protecting copyrights for a limited duration

in order to permit creators to earn a living from their

endeavors. The decision eviscerates traditional principles

of secondary copyright infringement liability by

immunizing Respondents from any liability for the massive

infringement they foster and facilitate, threatens to destroy

the ability of musical artists and others to sustain

themselves economically through the creation and

authorized exploitation of their recorded works, and does

irreparable, nationwide harm to the ability of creators to

protect the quality and artistic integrity of their works.

SUMMARY OF ARGUMENT

While the decision below purports to be based on this

Court’s ruling in Sony Corp. of America v. Universal City

Studios, Inc., 464 U.S. 417 (1984), the practices engaged in

by Respondents -- the distribution of software that was

designed and is overwhelmingly used to_ infringe

copyrighted music and movies on a massive scale -- do not

find sanction in that opinion. Given the massive harm

being inflicted on the amicis’ members by reason of a

decision which is not only in conflict with that of another

Circuit,” but which defies the most fundamental tenets of

essential that this Court review the rule, reasoning, and

result below.

ARGUMENT

By SANCTIONING THE DESIGN AND DISTRIBUTION OF

SOFTWARE THAT HAS No “COMMERCIALLY

SIGNIFICANT” USE BUT TO INFRINGE THE CREATIVE

WORKS OF OTHERS, THE NINTH CIRCUIT HAS

EVISCERATED PROTECTION FOR SUCH WORKS, DOING

INJUSTICE TO FUNDAMENTAL COPYRIGHT AND

SECONDARY LIABILITY PRINCIPLES

A. The Ninth Circuit Has Read The

“Substantiality” Requirement Out Of The

“Substantial Non-Infringing Use”’ Doctrine

More than twenty years ago, this Court was faced with

a new technology -- the videotape recorder or “VTR” --

that enabled consumers to, on the one hand, make

unauthorized reproductions of copyrighted television

> In re Aimster Copyright Litig., 334 F.3d 643 (7th Cir. 2003), cert.

denied sub nom, Deep v. Recording Indus. Ass'n of Am., Inc. 124 S. Ct.

1069 (2004).

programs, but also, on the other hand, to record free,

broadcast television programs that they could not watch as

they were being televised so they could be “watch[ed] once

at a later time,” a practice known as “time-shifting.”’ The

respondents -- owners of less than 10% of the copyrighted

content available on commercial television stations --

sought to hold the manufacturer and distributor of the VTR

directly and secondarily liable for consumers’ copyright

infringement.

The district court found that “the average member of

the [viewing] public uses a VTR principally” to engage in

“ume-shifting,” and, moreover, that such “time-shifting

may enlarge the total viewing audience and that many

producers [of television programming] are willing to allow

private time-shifting to continue, at least for an

experimental time period.”* The Supreme Court further

concluded that even unauthorized “time-shifting” for

private, home use was presumptively a “fair use,” because

the copyright holder respondents had failed to demonstrate

that the practice was likely to cause any real harm to the

potential market for, or the value of, their works.”

The Court in Sony was thus faced with the competing

interests of copyright owners who require effective

protection against infringement of copyrighted content, and

consumers who wished only to “time shift,”° taking into

account those copyright owners who did not object to “time

shifting,” and device manufacturers who wished “to engage

> Sony, 464 U.S. at 421.

* Id. at 421, 443 (emphasis added). There was evidence that

approximately 75% of the copies made with VTRs had been made for

purposes of time-shifting. /d. at 424 n.4.

> Id. at 447-456.

' The Court echoed the concern of the district court that “{a)n

injunction would deprive the public of the ability to use the Betamax

for . . . noninfringing off-the-air recording.” /d. at 443.

in [a] substantially unrelated area{] of commerce,” that is,

to meet the significant non-infringing demand :

To balance these competing interests, the Court

borrowed the “staple article of commerce” doctrine from

patent law, holding that “the sale of copying equipment

[like the VTR], like the sale of other articles of commerce,

does not constitute contributory infringement if the product

is widely used for legitimate, unobjectionable purposes.”

Thus, the question presented in Sony, as framed by this

Court, was whether the VTR was “capable of commercially

significant noninfringing uses.”” On the facts before it, it

was unnecessary for the Court to define just how much use

was “commercially significant,” because the standard was

plainly satisfied by the primary use of the VTR before the

Court: “private, non-commercial time-shifting in the

home.”'°

Later decisions, following Sony, defined this standard

to require something more than insubstantial non-infringing

use.'' Likewise, courts applying the doctrine in patent

cases, where the doctrine originated, found that the

” The Court was concerned that “the business of supplying the

equipment that makes such copying feasible . . . not be stifled simply

because the equipment is used by some individuals to make

unauthorized reproductions of respondents’ works.” /d. at 446.

® Id. at 442 (emphasis added).

% Jd. (emphasis added).

wlihe

'! See, e.g., Cable/Home Communication Corp. v. Network Prods.,

Inc., 902 F.2d 829, 846 (11th Cir. 1990) (defining substantial

noninfringing use as “wide use ‘for legitimate, unobjectionable

purposes”); A&M Records, Inc. v. General Audio Video Cassettes,

Inc., 948 F. Supp. 1449, 1456 (C.D. Cal. 1996) (use of device for non-

infringing purposes such as recording non-copyrighted works was

insubstantial compared to the number of defendant's customers who

used device to counterfeit); Atari, Inc. v. JS&A Group, Inc., 597 F.

Supp. 5, 8 (N.D. Ill. 1983) (while defendant's PROM BLASTER could

be used for the infringing purpose of copying games distributed by the

plaintiff, and for the non-infringing purpose of copying games

distributed by the defendant itself, the latter use was insubstantial given

that defendant sold only nine games).

“quality, quantity and efficiency of the sugge*ii alternate

[non-infringing] uses are to be considered,”'? and that

“occasional,” “aberrant,” or “hypothetical” uses do not

suffice.'* Indeed, they have also refused to apply the-

doctrine where it is plain that the maker knew of, and

sought to capitalize on, the infringing application of its

device."

'? Reynolds Metals Co. v. Aluminum Co. of Am., 457 F. Supp. 482,

509 (N.D. Ind. 1978), rev'd on other grounds, 609 F.2d 1218 (7th Cir.

ade a “a ny] La 989 (1980); Oxy Metal Indus. Corp. v.

uin-Tec, Inc., No. 78, 1982 U.S. Dist. LEXIS 1 , at *

(E.D. Mich. June 8, 1982). a

3 See, e.g., Hoffman-La Roche Inc. v. Promega Corp., No. C-93-

1748-VRW, 1994 U.S. Dist. LEXIS 10174, at *29 (N.D. Cal. June 13,

1994) (rejecting argument that, in order to be found a non-staple, a

device must have “absolutely no significant potential noninfringing

use, “[tJhere must be a quantitative element . . . .; Whether a use is

substantial or not depends on how likely and often the use will

occur”); Dennison Mfg. Co. v. Ben Clements & Sons, Inc., 467 F. Supp.

391, 427 (S.D.N.Y. 1979) (defendant's proffered non-infringing uses

were “occasional” and “aberrant” and product was clearly designed to

be used in an infringing manner); Arthrocare Corp. v. Smith &

Nephew, Inc., 310 F. Supp. 2d 638, 657 (D. Del. 2004) (“occasional

and aberrant” non-infringing uses do not rise to the level of substantial

noninfringing use); Fromberg, Inc. v. Thornhill, 315 F.2d 407, 414 (Sth

Cir. 1963) (rejecting staple article defense where non-infringing use

was a “limited use of little practical consequence in contrast to the

number” of devices being used to infringe); Marsh-McBirney, Inc. v.

Jennings, No. CV 90-6370 WDK, 1991 U.S. Dist. LEXIS 20433, *16

(C.D. Cal. Nov. 8, 1991) (court rejected defendants staple article

defense as the defendant's proffered non-infringing uses were

hypothetical in nature); cf. C.R. Bard, Inc. v. Advanced Saidioneaeter

Sys., Inc., 911 F.2d 670, 674 (Fed. Cir. 1990) (device a staple article

where 40-60% of the uses of the defendant's device did not infringe on

the plaintiff's patented methods).

See, e.g., Shumaker v. Gem Mfg. Co., 311 F.2d 273, 276 (7th Cir

1962) (defendant's device was not capable of substantial non-iafringing

uses where defendant advertised and sold its product with directions

and diagrams for using it in an infringing manner); Abington Textile

Machinery Works v. Carding Specialists, Lid., 249 F. Supp. 823, 849-

50 (D.C.D.C. 1965) (rejecting staple article defense where the

defendant manufactured its product with the apparent knowledge that it

would be used to infringe on A ww rhe patented process). This is

consistent with the doctrine, codified in the very patent law provision

from which Sony derived the substantial non-infringing use doctrine,

that a party can be held liable for ‘active inducement’ of a patent

infringement.” See 35 U.S.C. § 271(b). Indeed, there is nothing in

—

In Grokster, the Ninth Circuit was confronted with a

technology that is, indisputably, used primarily to infringe.

The Petitioners submitted undisputed evidence that at least

ninety percent of the material on Respondents’ services is

infringing.'° The Ninth Circuit agreed that no one seriously

contests that “the vast majority of the files” exchanged on

Respondents’ services “are exchanged illegally in violation

of copyright law.”’°

The euphemism “file sharing” does not effectively

capture the true nature of the infringing activity, which

involves unauthorized reproduction of the entirety of

numerous copyrighted works and the distribution of copies

to others, who are equally capable of copying and

retransmitting them, ad infinitum. A “massive volume” of

evidence demonstrated that Respondents “clearly know that

many if not most of those individuals who download their

software subsequently use it to infringe copyrights.”"”

Further, the commercial success of Respondents’

business is tied to being able to attract as many “eyeballs”

as possible to their services with the “draw” of being able

to download copyrighted music and movies for free.'* Not

surprisingly, this “draw” has resulted in an economic

windfall to the Respondents.” At the same time, there was

Sony that compels a court to immunize from liability a supplier that

distributes an article of software that has substantial non-infringing

uses, where the supplier engages in conduct that constitutes a knowing

inducement to infringe.

'S See MGM Studios, Inc. v. Grokster Lid., 380 F.3d 1154, 1158,

1162 (9th Cir. 2004).

'© Id. at 1160.

'7 MGM Studios, Inc. v. Grokster Lid., 259 F. Supp. 2d 1029, 1036-

37 (C.D. Cal. 2003).

18 Jd. at 1043 (“Here, it is clear that Defendants derive a financial

benefit from the infringing conduct. The ability to trade copyrighted

songs and other copyrighted works certainly is a ‘draw’ for many users

of Defendants’ software. As a result, Defendants have a user base in the

tens of millions.”).

19 Id. at 1044 & n. 11 (“Defendants derive substantial revenue from

advertising. For example, ene had $1.8 million in revenue in

never any showing that any non-infringing use attracted

users or, ultimately, advertisers, which are critical to the

success of Respondents’ business. These undisputed facts

caused the district court to conclude that there was a very

real possibility that Respondents “may have intentionally

structured their businesses to avoid secondary liability for

the illicit draw of their wares.””°

' Nevertheless, the district court and the Ninth Circuit

immunized Respondents’ conduct by applying a perverse

interpretation of Sony's “substantial non-infringing use”

doctrine. The Respondents submitted declarations that

there are non-infringing uses of their software (a handful of

works distributed via the software; others claimed to use

the software to distribute public domain or non-copyrighted

works). The district court recited those non-infringing uses

and concluded that they were “substantial” without

articulating the standard by which it reached that

determination.”' Its treatment of the issue was entirely

conclusory. The Ninth Circuit affirmed, relying on these

same declarations, and refusing to even consider

Petitioners’ evidence which established that the vast

majority of the software’s use is for infringement.

According to the court, to do so would “misapprehend{] the

Sony standard as construed in Napster 1, which emphasized

that in order for limitations imposed by Sony to apply, a

2001 from advertising. ... And as of July of 2002, StreamCast

million in revenue and projects $5.7 million by the end of the omy “a

Grokster also derives substantial revenue from advertising. . The

more individuals who download the software, the more advertisin

revenue Defendants collect. And because a substantial number of ——

download the software to acquire copyrighted material, a significant

proportion of Defendants’ advertising revenue depends upon the

infringement. Defendants thus derive a financial benefit from the

infringement. . . . This conclusion is essential

Defendants.” )(Internal citations omitted.) y undisputed by

20 Id. at 1046.

1 Id. at 1035.

product need only be capable of substantial noninfringing

uses 22

Neither the district court nor the Ninth Circuit

attempted to assess the substantiality of the actual or

potential non-infringing uses either in absolute terms or

relative to the amount of infringing use. Nor did either

court attempt to assess the commercial significance of those

uses to the Respondents’ service. Indeed, by concluding

that Petitioners’ copyrighted works were the “draw” that

resulted in Respondents having a user base in the tens of

millions, the district court implicitly found that these non-

infringing uses were not in the least commercially

significant to Respondents’ service.

Grokster, therefore, stands for the proposition that any

showing of non-infringing use will result in the application

of a standard for a finding of contributory liability that is

virtually impossible to meet. That approach is not

supported by Sony, which drew the line at “substantial,”

“commercially significant” non-infringing use, not at any

non-infringing use.

The Ninth Circuit compounded this profound error by

creating a “Catch 22” in the standard of knowledge to

which Respondents were to be held. According to the

Ninth Circuit, where a device qualifies as a “staple item”

within the meaning of Sony, more than “constructive”

knowledge of its potentially infringing use must be

established.2> However, at the point in time before

Respondents released their software, there was no actual

instance of infringement that could be proved to result from

the use of that software.’ Once the software is released,

and actual instances of infringement resulting from the use

of the software occur, providing specific notice of those

infringements to Respondents would be too late, said the

22 380 F.3d at 1162 (emphasis in original).

3 Id. at 116).

4 Id. at 1162.

Ninth Circuit, because the software was effectively put into

the hands of the public, and the software maker arguably

had no further control over its use.” This approach appears

nowhere in Sony or in the law of secondary liability, but is

derived solely from the Ninth Circuit’s interpretation of its

own decision in A&M Records, Inc. v. Napster, Inc., 239

F.3d 1004, 1021 (9th Cir. 2001).

In these circumstances, no amount of proof would ever

suffice to establish secondary liability against the maker of

software that was clearly designed as an infringement

machine,” notwithstanding undisputed proof that, in actual

use, the device was used overwhelmingly for infringement.

The fallacy of this approach ultimately led the Ninth

Circuit to the absurd conclusion that Respondents’ software

did not even ‘materially contribute’ to the infringing

activities of its users.”’

The Ninth Circuit’s failure in Grokster to make any

attempt to assess the substantiality of the actual or potential

non-infringing uses, or to assess the commercial

significance of those uses, violates not only the letter, but

also the purpose of the “substantial non-infringing use”

standard as articulated by this Court in Sony. It is also

inconsistent with the decisions of other courts that have

applied the doctrine in the copyright context since Sony --

including the Seventh Circuit’s decision in Aimster -- as

well as its application in the related field of patent law,

from which the doctrine originates.”

> Id. at 1162-63.

It can never be met where a defendant deliberately designs its

software so that -- unlike other peer-to-peer services such as Napster -

it does not have knowledge of particular files being traded, and so

cannot know of a specific instance of infringement notified by a

too late. In this way, sae court made evidence of any non-

infringing use a complete defense to a finding of secondary copyri

infringement liability. aciahcoegs -

*” 380 F.3d at 1163.

8 See cases supra, notes 13 & 14.

The Seventh Circuit in Aimster correctly recognized the

purpose of the “substantial non-infringing use” doctrine in

the context of a peer-to-peer technology that was used

primarily to infringe.” There, as in Napster and Grokster,

it was “unequivocally established that Aimster’s users

[were] engaged in direct copyright infringement.””” Like

the Respondents, Aimster took steps to ensure that it could

not identify the content of specific files in an effort to avoid

having the requisite knowledge to establish contributory

liability.’ And, while the Seventh Circuit recognized that

Aimster, like Grokster and StreamCast, could be used for

non-infringing purposes,” that Court refused to hold that

this, alone, was sufficient for Aimster to avoid liability:

Were that the law, the seller of a product or service

used solely to facilitate copyright infringement,

though it was capable in principle of non-

infringing uses, would be immune from liability

for contributory infringement. That would be an

extreme result, and one not envisaged by the Sony

majority.”

What Sony required was a weighing of infringing and

non-infringing uses: “when a supplier is offering a product

or service that has noninfringing as well as infringing uses,

some estimate of the respective magnitudes of these uses is

necessary for a finding of contributory infringement.”™

Because Aimster failed to produce any evidence that its

service had ever been used for a non-infringing use, “let

9 See In re Aimster Copyright Litig., 334 F.3d 643.

2002).

Id. at 641.

2 See 334 F.3d at 652.

8 Id. at 651.

4 Id. at 649.

alone evidence concerning the frequency of such uses,” its

staple article defense failed.*°

Equally important, the Seventh Circuit refused to

sanction Aimster’s “ostrich-like refusal to discover the

extent to which its system was being used to infringe.””°

Amster, like Grokster, deliberately devised its system to

avoid actual knowledge of precisely what files its users

were copying, in an effort to avoid secondary liability. But

because Aimster “blinded itself in the hope that by doing so

it might come within the rule of the Sony decision;” “{i}t

must take responsibility for that self-inflicted wound.”

The question of where the line should be drawn

between substantial and insubstantial, and commercially

significant and insignificant, non-infringing use is,

ultimately, for the court to decide. The Ninth Circuit did

not draw a line, but instead read “substantiality” and

“commercially significant” out of the test altogether. Any

non-infringing use would appear to satisfy that test.

Although the Sony majority found it unnecessary to

define just how much use was “commercially significant”

*% Id. at 653.

"dd. at 653-54. The Seventh Circuit concluded that “{e]ven when

there are noninfringing uses of an Internet file-sharing service, . . . if

the infringing uses are substantial then to avoid liability as

contributory infring the provider of the service must show thet i

would have been nately costly for him to eliminate or at

least reduce substantially the infringing uses.” /d. at 653. See also

Playboy Enters., Inc. v. Webbworld, Inc., 991 F. Supp. 543 (N.D. Tex.

1997), affd mem., 168 F.3d 486 (Sth Cir. 1999) (finding vicarious

lability and rejecting defendant's argument that he did not have the

Oey So cemnt Ge Se Ga cuamatest y trolled the Internet for

v images because it was the defendant himself who programmed

189 F. . 2d 1051, 1

infringement); Ellison v. Robertson, 058 (C.D.

Cal. 2002) ( in defendant liable where it “ have known about

the infringement failed to do so “its own fault,” and noting

that a contrary rule would encourage ndants “to ,

ora n oder Yo. and commibury copmiginingeen

, in . rev’ ;

(9th Cir. soe us in part on other g , 357 F. 3d 1072

in light of the fact that the VTR was predominantly used

for time-shifting, Justice Blackmun noted, in dissent, that

“if no one would buy the product for noninfringing

purposes alone, it is clear that the manufacturer is

purposely profiting from the infringement, and that liability

is appropriately imposed.”** Thus, one way in which a

court can assess the substantiality of a non-infringing use is

to consider the market for that use.*” Because Respondents

give their software away for free, and the software is paid

for by advertising revenue, the Ninth Circuit could have

considered whether the stated non-infringing uses would

generate enough “eyeballs” to sustain the viability of

Respondents’ business model in the absence of the

infringing uses (which the district court had conceded were

the “draw” attracting Respondents’ sizable user base).

Instead, it adopted a test which, contrary to the letter and

purpose of the substantial non-infringing use doctrine as

articulated in Sony, makes evidence of any non-infringing

use a complete defense to a finding of secondary copyright

infringement liability.

8 Sony, 464 U.S. at 491 (Blackmun, J., dissenting).

3° See also Worlds of Wonder, Inc. v. Vector Intercontinental, Inc..

No. C86-2671, 1986 U.S. Dist. LEXIS 15879, at *3-4 (N.D. Ohio Dec.

30, 1986) (although defendant's tapes had non-infringing uses, those

uses were not substantial where commercial value of tapes depended on

their infringing use); Nintendo of Am. Inc. v. Computer & Enim't, Inc.,

No. C96-0187-WD, 1996 U.S. Dist. LEXIS 20975, at *6 (W.D. Wash.

May 31, 1996) (although it was “technically possible” to use

defendant's product for certain non-infringing uses, purchasers were

not likely to do so given less expensive alternatives); Atari, 597 F.

Supp. at 8 (same); cf. Vault Corp. v. Quaid Software, Lid., 847 F.2d

255,

262 (Sth Cir. 1988) (viable commercial market existed for

noninfringing use of product: making back-up copies of copyrighted

software).

v. Universal City Studios, Inc. in the Age of Napster, 37 CREIGHTON L.

REV. 859, 899 (June 2004).

B. The Ninth Circuit’s Version of The “Substantial

Non-Infringing Use” Doctrine Does Injustice to

the Primary Public Interest that Copyright

Serves in Motivating Authors and Creators to

Create

In Sony, this Court recognized that when technological

change renders the copyright law ambiguous, the Court

must return to basic principles.*' The “ultimate aim” of

public good.”** The important public interest, mandated by

Article I, Section 8 of the Constitution, has been reaffirmed

time and again by this Court.** Even though the creator

may be the immediate beneficiary of copyright protection,

such protection ultimately serves public, not private ends,

by ensuring the availability of creative works.

Sony, 464 U.S. at 432. The copyright law must not be inflexible

and must be read “in the light of Gouttle chontaaionl change,” keeping

in mind at all times that its “basic " is “to stimulate artistic

creativity for the general public good.” Twentieth Century Music Corp.

v. Aiken, 422 U.S. 151, 156 (1975) (citing Fortnightly Corp. v. United

Artists Television, Inc., 392 U.S. 390, 395-96 (1968)).

oat at 431-32 (quoting Twentieth Century Music Corp., 422 US. at

_ See, e.g., Sony, 464 U.S. at 429 (“T]he limited grant is a means by

which an important public purpose may be achieved. It is intended to

motivate the creative activity of authors and inventors by the provision

of a special reward, and to allow the public access to the products of

their genius after the period of limited exclusive control has expired.”);

United States v. Paramount Pictures, Inc., 334 U.S. 131, 158 (1948)

(“*The sole interest of the United States and the primary object in

conferring the monopoly lie in the general benefits derived by the

public from the labors of authors.’ It is said that reward to the author or

artist serves to induce release to the ic of the of his

creative genius.”); Mazer v. Stein, 347 U.S. 201, 219 (1954) (The

encouragement of individual effort by personal gain is the best way to

achieve the public welfare through the talents of authors . . . Sacrificial

days devoted to such creative activities deserve rewards commensurate

with the services rendered.”); Quality King Distribs., Inc. v. L’anza

Research Int’'l., Inc., 523 U.S. 135, 151 (1998) (“In construing the

Statute, however, we must remember that its principal purpose was to

oo " A. oe of the be yt U.S. Const., Art. I, § 8, cl. 8,

warding ivity .. . .”); Harper & Row, Publishers, Inc. v.

Nation Enters., 471 Us 539, $46 (1985), —

Recorded music is vital to America's cultural heritage,

and this is reflected in the 107 categories of GRAMMY

Awards covering 40 separate genres and groupings,

including classical, jazz, gospel, blues, folk, polka, country,

R&B, Latin, rock, pop, rap, dance, alternative, and blue

grass music. The preservation and growth of that heritage

depends very much upon providing an environment in

which creators of recorded music may earn a living from

their creative endeavors. We no longer live in the

Renaissance and succeeding eras when artists were

financially supported largely by wealthy, private patrons.

Today, millions of members of the record-buying public

are the “patrons.” If they are allowed to copy and distribute

recordings protected by the Copyright Act compensating

the creators (and those who work with them), the artists’

principal means of support will vanish, with the destructive

consequences to our culture following as certainly as night

follows day. Surely, it was not the intent of Congress that

its statutes be interpreted to undercut the core principal that

“the useful arts” be promoted through the maintenance of a

strong copyright law. The Ninth Circuit ignored the basic

tenet of copyright law that when there is no recompense for

uses of a copyrighted work, not just the incentive to create,

but, as a practical matter, the very ability of artists to create,

is undermined. As acclaimed songwriter and recording

artist Paul Williams testified before Congress:

I am joined by many in this room for whom

songwriting is our life’s work. That is to say, it is

our /ife, but it is also our work. The royalties we

earn on songs we've written pay our bills. Put

our kids through school. Enable us to plan for

retirement. Without our copyrights, we will be

economically devastated.“

“ Pre-1978 Distribution of Recordings Containing Musical

Compositions; Copyright Term Extension; and Copyright Per Program

Licenses: Hearing Before the Subcomm. On Courts and Intellectual

Prop. of the House Comm. on the Judiciary, 1\0Sth Cong. 25 (June 27,

1997) (statement of Paul Williams), available at

Composer and lyric; a Menken similarly testified:

inspires a person to become a composer rather

than a surgeon, or a dentist in my case, ‘t is the

reality of life .. . that one must work in - der to

support oneself and one’s family. .. . If it

becomes clear that insufficient copyright

protection is available to provide that support,

there will be less incentive to try and make one’s

living as a creator.”

And legendary songwriter Mike Stoller wrote:

Many say that since making music is an art,

artists should do it simply for the love of it. But

how free can artists be to do what we love if we

must spend most of our days doing something

else to make a living?”

The advocates of those who support file sharing without

compensating the creators portray the ensuing litigation as

battles between “David” and “Goliath,” claiming merely to

be facilitating the “sharing” of music and other “content”

among a “community” of users, and arguing that they are

under attack by “giant” (hence “evil”) record companies

and music publishers who are motivated solely by “greed.”

Lost in this formulation, however, is the recognition that

the victims here are not the developers of the software

which encourages and facilitates theft. As one

commentator aptly put it: “Since when did unauthorized

taking . . . become ‘sharing?’ . . . Since when did millions

of people unrelated to any common bond whatsoever

except the purchase of a computer and its attachments, and

http://commdocs.house.gov/committees/judiciary/hju4 3666.000/hju4 36

66_0.htm#24.

483 before the Senate Judiciary Comm. (statement of Alan Menken),

1995 WL 557177 (F.D.C.H.).

Oct. 7, 2000, at AIS.

a desire to take property without payment, constitute a

‘community.'?"*’ By framing the debate as if the

companies that are building their businesses on the backs of

uncompensated creators are the “victims,” the Respondents

seek to shift the focus away from the ultimate victims: the

public, and the creators of recorded music and those who

work with them. Most of these individuals are nut wealthy

“superstars.” They are singers, musicians, composers,

producers, engineers, arrangers, technicians and the like

who rely on revenues derived from the lawful sale of

records to support themselves and their families.“* And it

is those individuals and their ability to earn a living from

their creative endeavors that the copyright laws are

designed to protect for the benefit of our society.

By completely eliminating from the balance the

merely symbolic -- protection of the statutory monopoly,”

the Ninth Circuit's test does injustice to the primary public

interest that copyright serves in motivating authors and

creators to create. And it contributes to a growing

perception that is taking root nationwide: that music is

free, or that it is permissible to steal it. This threatens the

livelihoods of not just big-name record artists and record

companies, but the livelihoods of everyone involved in the

making, presentation, and _ distribution of sound

recordings.” By removing the financial incentive to create,

"|. Fred Koenigsberg, Humpty-Dumpty In Copyrightland, 51 J.

989 before the House of Representatives Judiciary Courts and

Intellectual Property (statement of Quincy Jones), 1995 WL 418350

(F.D.C.H.) (“[W)je must not forget that there are many

songwriter/musicians, particularly blues and jazz musicians, who

support themselves and their families on the royalties earned from the

three or four songs that they composed.”)

* Sony, 464 U.S. at 442.

recordings they distribute to the public. They devote an enormous

amount of attention towards crafting the sound, which is a fundamental

fewer and fewer talented individuals will be able to afford

to devote their efforts to expanding America’s musical

heritage, jeopardizing the future of music itself, to the

public’s detriment.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

JON A. BAUMGARTEN

Counsel of Record

CHARLES B. ORTNER

WILLIAM M. HART

FRANK P. SCIBILIA

PROSKAUER ROSE LLP

1585 BROADWAY

NEw YORK, NEW YORK 10036

Of Counsel:

JOEL KATZ

GREENBERG TRAURIG

THE FORUM

3290 NORTHSIDE PARKWAY, SUITE 400

ATLANTA, GEORGIA 30327

part of their art. Respondents have usurped for themselves a

fundamental copyright right that belongs to the creator of a

copyrightable work, namely, the right to control the manner and

method of the work's distribution, and, hence, its artistic integrity.

Respondents have become the record “store,” but all of the records are

free. The “record” that the user “obtains” from this store may not,

however, be the “record” as the artist (and the producer and recording

engineer who labored to ensure that the recording was of the highest

fidelity) intended it to be heard. The quality of the “file-shared” copy

is often poor, or incomplete. It may be an unauthorized and low-

quality bootleg of a live recording. It could even be a mislabeled

recording by a different artist altogether. And the listener may likely

never know that the defects were not the fault of the recordings’

creators. .

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.