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 United States

METRO-GOLDWYN-MAYER STUDIOS, INC., ef al.,

Petitioners,

Vv.

GROKSTER, LTD.., et al,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF AMICUS CURIAE FOR RECORDING

ARTISTS’ COALITION AND DON HENLEY, GLEN

FREY, JOE WALSH, TIMOTHY B. SCHMIT

(“THE EAGLES”), KIX BROOKS & RONNIE DUNN

(“BROOKS & DUNN”), NATALIE MAINES, MARTIE

MAQUIRE, EMILY ROBISON (“THE DIXIE

CHICKS”), BONNIE RAITT, SHERYL CROW,

PHIL VASSER, “MYA” HARRISON, KENNETH

“BABYFACE” EDMONDS, BILL KREUTZMAN

& MICKY HART (OF “THE GRATEFUL DEAD”),

JIMMY BUFFETT, PATTY LOVELESS, STEVIE

NICKS (OF “FLEETWOOD MAC”), AND

GAVIN ROSSDALE (OF “BUSH”)

IN SUPPORT OF PETITIONERS

THOMAS G. CORCORAN, JR. *

JAY A. ROSENTHAL

BERLINER, CORCORAN & ROWE, L.L.P.

1101 17th Street, N.W.

Suite 1100

Washington, D.C. 20036

* Counsel of Record (202) 293-5555

November 8, 2004 Attorneys for Recording Artists’

Coalition

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

wen ee TT

TABLE OF CONTENTS

SUMMARY OF ARGUMENT .............cccccccseeseeeeneeseees

FTC wrihtinsevnnniectnrentestinnticsbencttinsincinmintiomeatinn

I. THERE IS A PRESSING NEED TO OVER-

RULE THE NINTH CIRCUITS’ ERRONE-

OUS INTERPRETATION OF THE LAW

OF CONTRIBUTORY COPYRIGHT

IEEE -scistisosscsnenseanincecunesensvsciemneeicens

CRP PUIOY scitindeptnndibicneveiteiinsnnnindiinavintipectneusnumeceness

(i)

TABLE OF AUTHORITIES

CASES Page

Metro-Goldwyn-Mayer Studios, Inc. v. Grokster

Lid., 380 F.3d 1154 (9th Cir. 2004)... 3,4,7

Metro-Goldwyn-Mayer Studios, Inc. v. Grokster

Lid., 259 F.Supp. 2d 1029 (C.D.Cal.2003)........ 6

Sony Corp. of America v. Universal City Studios,

Inc., 464 U.S. 417 (1984) 0... cccccceeeeeeneeeeees 3, 4,5, 7

STATUTES AND LEGISLATIVE MATERIALS

Privacy & Piracy: The Paradox of Illegal File

Sharing on Peer-to-Peer Networks And the

Impact of Technology on the Entertainment

Industry: Hearing Before the Senate Commit-

tee on Governmental Affairs, 108th Cong.

(September 30, 2003) (statement by Mitch

Dateret, CRUD, TRB. ccvseceusincssusinesssesstibeabinsinin

Statement of the Honorable Marybeth Peters,

Committee on the Judiciary, 108th Cong.

(Sept. 9, 2003), http://www.copyright.gov/

docs/regstat090903 html .............ccesceeeeeecereeeneeees

Statement of the Honorable Marybeth Peters,

Committee on the Judiciary, 109th Cong.

(July 22, 2004), http://www.copyright.gov/

docs/ regstat072204.pdf..........ccccceseeeeeeeereeeees

MISCELLANEOUS ARTICLES

Lev Grossman, /t’s All Free, Time, (May 5,

Recording Industry Association of America 2003

Veena BRRIIIIIID occccceccsssssiinsnsasssenecsniuacinnnieniin

5, 6

4,7

IN THE

| Supreme Court of the Anited States

No. 04-480

METRO-GOLDWYN-MAYER STUDIOS, INC., ef ai.,

Petitioners,

Vv.

GROKSTER, LTD., et ai,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF AMICUS CURIAE FOR RECORDING

ARTISTS’ COALITION AND DON HENLEY, GLEN

FREY, JOE WALSH, TIMOTHY B. SCHMIT

(“THE EAGLES”), KIX BROOKS & RONNIE DUNN

(“BROOKS & DUNN”), NATALIE MAINES, MARTIE

MAQUIRE, EMILY ROBISON (“THE DIXIE

CHICKS”), BONNIE RAITT, SHERYL CROW,

PHIL VASSER, “MYA” HARRISON, KENNETH

“BABYFACE” EDMONDS, BILL KREUTZMAN

& MICKY HART (OF “THE GRATEFUL DEAD”),

JIMMY BUFFETT, PATTY LOVELESS, STEVIE

NICKS (OF “FLEETWOOD MAC”), AND

GAVIN ROSSDALE (OF “BUSH”)

IN SUPPORT OF PETITIONERS

BRIEF AMICUS CURIAE

The Recording Artists’ Coalition (“RAC”) and named

individual recording artists respectfully submit this brief

amicus curiae in support of Petitioners Metro-Goldwyn-

Mayer Studios, Inc., et al.

INTEREST OF AMICUS CURIAE

This brief amicus curiae in support of Petitioners is sub-

mitted by RAC and named individual recording artists pursu-

ant to Rule 37 of the Rules of this Court. Founded in 1998,

RAC is a non-profit public advocacy organization represent-

ing over 130 well-known featured recording artists, including

some of those named on the cover of this brief. RAC is

primarily concerned with political, legal, and business issues

affecting the interests of recording artists.’

Individual recording artists are also joining RAC as amici

in this brief. All have at one time or another been signed to a

major label recording contract. The individual recording

artists joining in this Amicus Brief are Don Henley, Glen

Frey, Joe Walsh, Kix Brooks, Ronnie Dunn, Natalie Maines,

Martie Maquire, Emily Robison, Bonnie Raitt, Sheryl Crow,

Phil Vasser, “Mya” Harrison, Kenneth “Babyface” Edmonds,

Bill Kreutzman, Micky Hart, Jimmy Buffet, Patty Loveless,

Stevie Nicks, and Gavin Rossdale.

Amici have a strong interest in resolving the circuit court

conflict presently existing as to whether the creation and

distribution of unauthorized Internet peer-to-peer systems,

which systems almost exclusively facilitate the distribution of

copyrighted material in violation of the copyright laws, con-

stitute contributory copyright infringement. More to the

point, amici have an extremely strong interest in preserving

and strengthening incentive for artists to create music by

overturning the Ninth Circuit’s ruling that Respondents did

' No entity other than amici curiae authored this brief either in whole

or in part, and no person or entity other than amici curiae made a

monetary contribution to the preparation or submission of this brief. All

parties have consented to the filing of this brief, and all letters of consent

are on file.

not engage in contributory copyright infringement by creating

and distributing such peer-to-peer services.

Finally, amici want to debunk the myth that unauthorized

peer-to-peer systems are—or plausibly can be—good for

artists, and in particular musicians, the group RAC represents.

As we show, these services severely hurt anyone who tries to

make a living out of music.

SUMMARY OF ARGUMENT

When creating and distributing unauthorized peer-to-peer

services that almost exclusively facilitate copyright infringe-

ment, the Respondents should be liable for contributory

the Sony doctrine, Sony Corp. of America v. Universal City

Studios, Inc., 464 U.S. 417 (1984), to insulate Respondents

from liability. The Ninth Circuit was also incorrect in sug-

gesting that Respondent’s services help recording artists sell

records. The long-term effect is clearly the opposite. Finally,

the Ninth Circuit also ignored the mixed message sent to

young people, viz., Respondents are not engaged in copyright

infringement when they provide peer-to-peer services, but

young people are when they use the service.

ARGUMENT

I. THERE IS A PRESSING NEED TO OVERRULE

THE NINTH CIRCUITS’ ERRONEOUS INTER-

PRETATION OF THE LAW OF CONTRIBU-

TORY COPYRIGHT INFRINGEMENT.

The Sony doctrine should have no bearing on this case.

The Ninth Circuit’s extension of the doctrine has created a

new rule permitting a defense to contributory copyright

infringement without a showing of fair use by more than a

small minority of end users. See Metro-Goldwyn-Mayer

Studios, Inc. v. Grokster Ltd., 380 F.3d 1154, 1160 (9th Cir.

2004); Pet.App. 8a.

In Sony, this Court concluded that the creators of the VCR

(referred to there as the “VTR”’) were not liable for contribu-

tory copyright infringement. However, the Sony court first

ruled that “time shifting,” viewed then as the primary use of

the VCR, id. at 419, 423, was a fair use by the end user. In

the present case, there has been no such fai. use determina-

tion. In fact, all parties, as well as the Ninth Circuit,

acknowledge that the end users engage almost exclusively in

F.3d at 1160; Pet.App. 8a.

The Respondents’ business model will not work unless the

service offers the end user a means to acquire copyrighted

music for free. By offering a means to acquire free music, the

creator of the service guarantees high traffic, thus ensuring

high advertising rates and millions of dollars in revenue.

Marybeth Peters, the Register of Copyrights, in testimony be-

fore the Senate Judiciary Committee, called this a “. . .

division of labor strategy that enlists millions of consumers to

become distributors of infringing copies, thereby attracting

more users and advertisers who generate revenue for these

companies but which i is designed to leave the proprietor with-

out legal liability.” Overwhelmingly, what Respondents have

to sell is copyright infringement. On this record, it is undis-

puted that the percentage exceeds 90%. See Petition, p. 4.

By way of contrast, in Sony, the district court found that

roughly 75% of the VCR end uses consisted of “time-shift-

ing,” a use found to be a fair use. The other 25% of uses, as

we read the opinion, were not contended to constitute a

violation of copyright. Jd. at 422-425.

Underlying the Sony court’s ruling that “time shifting” is

“fair use” was the conclusion that the copyright owners

? Statement of the Honorable Marybeth Peters, Register of Copyrights,

Before the Senate Committee on the Judiciary, 109th Cong. (July 22,

2004), p. 3.

suffered no economic harm. The Court was presented with

overwhelming evidence that the TV producers were not

losing money as a result of the manufacturing and distribution

of the VCR. /d. at 444-446.

The contrast with the present case could not be more stark.

Since the introduction of the peer-to-peer systems, the record

industry has been in a severe depression. As Mitch Bainwol,

Chairman of the Recording Industry Association of America,

testified to the Senate:

In the past three years, shipments of recorded music in

the United States have fallen—by an astounding 26

percent, from 1.16 billion units in 1999 to 860 million

units in 2002. And worldwide, the recording industry has

shrunk from a $40 billion industry in 2000 down to a

$32 billion industry in 2002. Hit records—which are

critical to the long-term health of the music industry and

enable investment in new artists and new music—have

suffered most dramatically. In 2000, the ten top-selling

albums in the United States sold a total of 60 million

units. In 2001, that number dropped to 40 million. Last

year, it totaled just 34 million.

The root cause for this drastic decline in record sales

is the astronomical rate of music piracy on the Internet.

Computer users illegally download more than 2.6 billion

copyrighted files (mostly recordings) every month. At

any given moment, well over five million users are

online offering well over 1 billion files for copying

through various peer-to-peer networks.”

> The Paradox of Illegal File Sharing on Peer-to-Peer Networks and

the Impact of Technology on the Entertainment Industry, Testimony of

Mitch Bainwol before the Senate Committee on Governmental Affairs,

108th Cong. (September 30, 2003), p 2. http://www.riaa.com/news/news

letter/093003 2a.asp. See also, Lev Grossman, Technology: /t's All Free,

Time Magazine (Canadian Edition)(May 25, 2003), p. 1; RIAA 2003

Yearend Statistics, http://www.riaa.com/news/newsletter/pdf/2003 year

End_.pdf .

The Ninth Circuit’s decision opens the flood gates for

computer software developers to create and market peer-to-

peer services with impunity, which, with full knowledge and

intent,’ provide the means and opportunity for millions of

primary infringers, typically young people, to engage in what

may well be the most extensive and damaging reign of

Not only have sales of records plummeted. Amici represent

to the Court that record companies have fired thousands of

employees and have significantly cut back on investment and

expansion plans. Experimentation—the seed of most intellec-

tual progress—has largely been abandoned. Only low-risk

music projects see the light of day. Many artists have been

dropped by major labels, and for those artists remaining,

promotion and tour support money has been greatly cur

ailed, if not eliminated entirely. Artists who would have been

signed in better times are being ignored. Amici believe that

the principal reason for this catastrophic loss i is the prolifera-

tion of unauthorized peer-to-peer services.”

As Register Peters stated it in her testimony before the

Senate: “These facts make the comparison to Sony remarka-

bly inapt. In my view, if the VCR had been designed in such

* Statement of the Honorable Mary Beth Peters, Register of Copy-

rights, Before the Senate Committee on the Judiciary, 108th Cong.

(September 9, 2003)(“it is apparent that an overwhelming number of their

customers are using it for . . . copying and distributing copyrighted

works”), p. 1; Pet. App. 62a. See Metro Goldwyn-Mayer Studios Inc. v.

Grokster, Lid., 259 F.Supp. 2d 1029, 1046 (C.D.Cal. 2603) (“The Courts

is not blind to the possibility that defendants may have intentionally

structured their businesses to avoid secondary liability for copyright

infringement while benefiting financially from the illicit draw of their

wares); Pet.App. 54a.

’ See Peters, note 4, supra, p. 2 (“such infringement is occurring on a

mind-boggling scale.”); Pet. App. 66a. See also, Bainvoll, quoted supra.

° See Bainwol, supra.

a way that when a consumer merely tumed it on, copies of all

of the programs he recorded with it were immediately made

available to every other VCR in the world, there is no doubt

the Sony decision would have gone the other way.”’ The

technology of copying has changed since the Court’s decision

in Sony. The distinguishing points, referred to by the Register,

supra, are the unlimited extent and almost instantaneous rate

of spread now provided by peer-to-peer services. Copying

from a VCR is slow and quality declines with repetition.

The Register also states: “If the Sony precedent continues

to be an impediment to obtaining effective relief against those

who profit by providing the means to engage in mass in-

fringement, it should be replaced by a more flexible rule that

is more meaningful in the technological age, but that still

vindicates the Court’s goal to balance effective and not

merely symbolic protection of copyright with the rights of

others to engage in substantially unrelated areas of com-

merce.”*

One of the arguments advanced by Respondents and their

supporters is that unauthorized peer-to-peer services actually

help recording artists. The Ninth Circuit seemed to accept

this argument relying on the example of Wilco. Wilco was a

struggling rock act that lost its major label deal and then

signed another major label contract ostensibly because it had

successfully offered its music for free over the usually

unauthorized peer-to-peer systems. Metro-Goldwyn-Mayer,

supra, 380 F.3d at 1161; Pet.App. 1 1a.

While free distribution may have helped Wilco in the short

run, by enabling it to obtain a new contract, Wilco’s long

term prospects will surely be poor if it cannot sell its music in

the future because Respondents wil! distribute it for free, with

” See Peters, note 2, supra, p. 14.

* Id., p.3.

or without Wilco’s authon. .. «a. That is, the value of

Wilco’s offering its music for free on the Internet depends on

Wilco being able to prevent free distribution of its m»« > in

the future. As shown above; the music industry as a whole

has suffered a catastrophic loss since the introduction of peer-

to-peer services. That loss cannot plausibly be remedied by

following the example of Wilco.

Finally, by allowing the creators of these systems to escape

liability, the Ninth Circuit is sending an insidious mixed mes-

sage to the end users, typically young people. When a 14

year old reads a story proclaiming that Grokster is legal, how

can that 14 year old be expected to understand that what he

does should be illegal, when he knows that Grokster is im-

inensely profitable precisely because it facilitates his sup-

posed illegality? Providing safe harbor to the creators of

these systems, we respectfully submit, is like legalizing the

manufacture and sale of drugs, but not the use of drugs.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,