Amicus Curiae Brief — Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.
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FILED
() NOV 8 - 2004
No. 04-480
8)
IN THE
Supreme Court of the Cited States
METRO-GOLDWYN-MAYER STUDIOS INC. ef al..
Petitioners,
;
v.
GROKSTER, LTD. ef al..
Respondents.
On Petition for a Writ of Certiorari to the
United States Court of Appeals for the Ninth Circuit
BRIEF AMICI CURIAE OF UTAH, NORTH
CAROLINA, VIRGINIA, RHODE ISLAND, TEXAS,
MISSISSIPPI, ALABAMA, ALASKA, ARIZONA,
ARKANSAS, COLORADO, DELAWARE, FLORIDA,
GEORGIA, HAWAII, IDAHO, ILLINOIS, INDIANA,
KANSAS, KENTUCKY, LOUISIANA,
MASSACHUSETTS, MICHIGAN, MISSOURI,
MONTANA, NEBRASKA, NEVADA, NEW JERSEY,
NEW MEXICO, NORTH DAKOTA, OHIO,
OKLAHOMA, OREGON, PENNSYLVANIA, SOUTH
CAROLINA, SOUTH DAKOTA, TENNESSEE, _
VERMONT, WEST VIRGINIA, WISCONSIN AND THE
TERRITORY OF GUAM
IN SUPPORT OF PETITIONERS
MARK SHURTLEFF* Roy COOPER
ATTORNEY GENERAL OF UTAH ATTORNEY GENERAL OF
PO Box 142320 NORTH CAROLINA
Salt Lake City, Utah 9001 Mail Service Center
84114-2320 Raleigh, NC 27699-9001
(801) 366-0300 (919) 716-6400
Counsel for Amici Curiae
November 8, 2004 * Counsel of Record
{ Additional Counsel Listed on Inside Cover and Front Pages]
a
WILSON-EPES PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D. C. 20001
_—
JERRY KILGORE
ATTORNEY GENERAL OF
VIRGINIA
900 E. Main Street
Richmond, VA 23219
(804) 786-2071
GREG ABBOTT
ATTORNEY GENERAL OF
TEXAS
P.O. Box 12548
Austin, TX 78711-2548
(512) 463-2100
TROY KING
ATTORNEY GENERAL
OF ALABAMA
Alabama State House
11 South Union Street
Montgomery, AL 36130
(334) 242-7300
TERRY GODDARD
ATTORNEY GENERAL OF
ARIZONA
1275 West Washington
Street
Phoenix, AZ 85007-2926
(602) 542-5025
PATRICK C. LYNCH
ATTORNEY GENERAL OF
RHODE ISLAND
150 S. Main Street
Providence, RI 02903
(401) 274-4400 }
JiM Hoop
ATTORNEY GENERAL OF
MISSISSIPPI
Department of Justice
P.O. Box 220
Jackson, MS 39205-0220
(601) 359-3680
GREGG D. RENKES
ATTORNEY GENERAL OF
ALASKA
P.O. Box 110300
Juneau, AK 99811-0300
(907) 465-2133
MIKE BEEBE
ATTORNEY GENERAL OF
ARKANSAS
323 Center Street, Suite 200
Little Rock, AR 72201
(501) 682-2007 ~
KEN SALAZAR
ATTORNEY GENERAL OF
COLORADO
1525 Sherman Street
7" Floor
Denver, CO 80203
(303) 866-3557
CHARLES J. CRIST, JR.
ATTORNEY GENERAL OF
FLORIDA
The Capitol PL-01
Tallahassee, FL 32399-
1050
(850) 414-3300
DOUGLAS B. MOYLAN
ATTORNEY GENERAL OF
GUAM
Guam Judicial Center
120 W. O’Brien Drive
Suite 2-200E
Hagatna, GU 96910-5174
(617) 475-3324
LAWRENCE G. WASDEN
ATTORNEY GENERAL OF
IDAHO
700 W. Jefferson Street
P.O. Box 83720
Boise, ID 83720-0010
(208) 334-2400
M. JANE BRADY
ATTORNEY GENERAL OF
DELAWARE
Carvel State Office Building
820 N. French St.
Wilmington, DE 19801
(302) 577-8400
THURBERT E. BAKER
ATTORNEY GENERAL OF
GEORGIA
40 Capitol Square, SW
Atlanta, GA 30334-1300
(404) 656-3300
MARK J. BENNETT
ATTORNEY GENERAL OF
HAWAII
425 Queen Street
Honolulu, HI 9586-1500
(808) 586-1500
LISA MADIGAN
ATTORNEY GENERAL OF
ILLINOIS
James R. Thompson Center
100 W. Randolph Street
Chicago, IL 60601
(312) 814-3000
STEVE CARTER
ATTORNEY GENERAL OF
INDIANA
IGCS — Fifth Floor
302 W. Washington Street
Indianapolis, IN 46204
(317) 232-6201
GREGORY D. STUMBO
ATTORNEY GENERAL OF
KENTUCKY
State Capitol, Suite 118
Frankfort, KY 40601
(502) 696-5300
THOMAS F. REILLY
ATTORNEY GENERAL OF
MASSACHUSETTS
One Ashburton Place
Boston, MA 02108
(617) 727-2200
JEREMIAH W. (JAY) NIXON
ATTORNEY GENERAL OF
MISSOURI
Supreme Court Building
207 West High Street
P.O. Box 899
Jefferson City, MO 65102
(573) 751-3321
PHILL KLINE
ATTORNEY GENERAL OF
KANSAS
120 SW 10" Ave. 2™ Floor
Topeka, KS 66612-1597
(785) 296-2215
CHARLES C. Forti, JR.
ATTORNEY GENERAL OF
LOUISIANA
P.O. Box 94005
Baton, Rouge, LA 70804
(225) 326-6000
MICHAEL A. Cox
ATTORNEY GENERAL OF
MICHIGAN
P.O. Box 30212
Lansing, MI 48909
(517) 373-1110
MIKE MCGRATH
ATTORNEY GENERAL OF
MONTANA
Justice Building
215 N. Sanders. 3” Street
P.O. Box 201401 Helena, MT
59620-1401
(406) 444-2026
JON BRUNING
ATTORNEY GENERAL OF
NEBRASKA
2115 State Capitol
P.O. Box 98920
Lincoln, NE 68509-8920
(402) 471-2682
PETER C. HARVEY
ATTORNEY GENERAL OF
New JERSEY
R.J. Hughes Justice
Complex
25 Market Street
P.O. Box 080
Trenton, NJ 08625
(609) 292-4925
WAYNE STENEHJEM
ATTORNEY GENERAL OF
NorRTH DAKOTA
State Capitol
600 E. Boulevard Avenue
Bismarck, ND 58505-0040
(701) 328-2210
W.A. DREW EDMONDSON
ATTORNEY GENERAL OF
OKLAHOMA
2300 N. Lincoln Boulevard
Suite 112
Oklahoma City, OK 73105-
4894
(405) 521-3921
BRIAN SANDOVAL
ATTORNEY GENERAL OF
NEVADA
100 N. Carson Street
Carson City, NV 89701
(775) 684-1100
PATRICIA A. MADRID
ATTORNEY GENERAL OF
New MExico
P.O. Drawer 1508
Santa Fe, NM 87504-1508
(505) 827-6000
Jim PETRO
ATTORNEY GENERAL OF
OHIO
30 E. Broad St., 17" Floor
Columbus, OH 43215
(614) 466-8980 —
HARDY MYERS
ATTORNEY GENERAL OF
OREGON
1162 Court Street, N.E.
Salem, OR 97301
(503) 378-4400
GERALD J. PAPPERT
ATTORNEY GENERAL OF
PENNSYLVANIA
16" Floor, Strawberry
Square
Harrisburg, PA 17120
(717) 787-3391
LAWRENCE E. LONG
ATTORNEY GENERAL OF
SOUTH DAKOTA
500 East Capitol Avenue
Pierre, SD 57501-5070
(605) 773-3215
WILLIAM H. SORRELL
ATTORNEY GENERAL OF
VERMONT
109 State Street
Montpelier, V T 05609-
1001
(802) 828-3173
PEG LAUTENSCHLAGER
ATTORNEY GENERAL OF
WISCONSIN
P.O. Box 7857
Madison, WI 53707-7857
(608) 266-1221
HENRY MCMASTER
ATTORNEY GENERAL OF
SOUTH CAROLINA
P.O. Box 11549
Columbia, SC 29211-1549
(803) 734-3970
PAUL G. SUMMERS
ATTORNEY GENERAL OF
TENNESSEE
P.O. Box 20207
Nashville, TN 37202-0207
(615) 741-3491
DARRELL V. MCGRAW, JR.
ATTORNEY GENERAL OF
WEST VIRGINIA
1900 Kanawha Blvd., East
Room 26E
Charleston, WV 25305
(304) 558-2021
QUESTION PRESENTED
Whether companies that provide Internet-based file-sharing
services designed to enable users to exchange copyrighted
material for free and without permission from the copyright
owners are liable for the copyright infringement committed
by their users and upon which the companies’ business
depends.
(i)
TABLE OF CONTENTS
QUESTION PRESENTED. ...........:ccccsscsssseesseseessesssneenees
TABLE OF AUTHORITIES ..........cccccccccesseseesereeeeseneees
RE IPOD ccsrecvmassesnmentnersnepentntsrensneedbninseiiinncesmnanss
I. THE DIGITAL COPYING PHENOMENON. .......
Il. P2P SOFTWARE UTILIZES THE INTER-
CONNECTION AND RAPID TRANSMISSION
PROVIDED BY THE INTERNET TO CREATE
LARGE LIBRARIES OF FILES AVAILABLE
FUSES GAEID WEDUED ccccesscoccensesnsvevsqnecctneepensqeonestocnsneness
Ill. THE NINTH CIRCUIT’S DECISION...............008
REASONS FOR GRANTING THE PETITION..............
I. THE NINTH CIRCUIT’S DECISION POSES A
THREAT TO CONSUMERS, .........::cccccceeseeeeeeeees
Il. THE NINTH CIRCUIT’S DECISION CREATES
A CONFLICT IN THE CIRCUITS. ........:ccccceeseees
Ill. FURTHER PERCOLATION IS UNLIKELY TO
BE OF ASSISTANCE TO THIS COURT..............
CORFU GE Aaa e vecoscnceoscevensccccenneabassnctutenaséansvosoesnenemeneeenses
(iii) |
14
iV
TABLE OF AUTHORITIES
CASES | Page
ALS Scan, Inc. v. Digital Serv. Consultants, Inc.,
293 F.3d 707 (4th Cir. 2002), cert. denied, 537
CLE TI ie ccectcnidcinsttelsnniiaibeninahintacepeainensitininiaite 16
A&M Records, Inc. v. Napster, inc., 239 F.3d
DODE GOI COE: FE Prctctntitsitesncersvinnediaeniannmiinens 3,7
In re Aimster Copyright Litig., 334 F.3d 643 (7th
Cir. 2003), cert. denied, 124 S. Ct. 1069
Metro-Goldwyn-Mayer Studios, Inc. v. Grokster,
Lid., 259 F. Supp. 2d 1029 (C.D. Cal. 2003),
aff'd, 380 F.3d 1154 (9th Cir. 2004)... cceeees 8, 11
Metro-Goldwyn-Mayer Studios, Inc. v. Grokster
Lid., 380 F.3d 1154 (9th Cir. 2004)... eens 5, 8,9
Recording Indus. Ass'n v. Diamond Multimedia
Sys., Inc., 180 F.3d 1072 (9th Cir. 1999)............. 4
Sony Corp. of Am. v. Universal City Studios, Inc.,
GD EAs Oe FC ei icinsictancnrenionbisathiatatentisnian 15
LEGISLATIVE HISTORY
The Dark Side of a Bright Idea: Will Personal
and National Security Risks of P2P Networks
Compromise the Promise of P2P Networks?:
Hearing Before the Senate Comm. on_ the
Judiciary, 108th Cong. (June 17, 2003) (state-
ment of Senator Orrin Hatch) ......................000000s 10
Pornography, Technology, and Process: Prob-
lems and Solutions on Peer-to-Peer Networks:
Hearing before the Senate Comm. on the
Judiciary, 108th Cong. (Sept. 9, 2003) (state-
ment of Marybeth Peters, the Register of Copy-
rights), available at http://www.copyright.gov/
docs/regstat090903 html .............cccccecccseesssreeereees l
Vv
TABLE OF AUTHORITIES—continued
SCHOLARLY AUTHORITIES
Jesse M. Feder, /s Betamax Obsolete?: Sony
Corp. of America v. Universal City Studios, Inc.
In The Age of Napster, 37 Creighton L. Rev.
Aaron L. Melville, Note, The Future of the Audio
Home Recording Act of 1992: Has it Survived
the Millennium Bug?, 7 B.U. J. Sci. & Tech. L.
2 | REPRO ce EEG 7 a Fy,
Albert Sieber, The Constitutionality of the DMCA
Explored: Universal City Studios, Inc. v. Corley
& United States v. Elcom Ltd., 18 Berkeley
EEG, CR en ee
Tim Wu, When Code Isn't Law, 89 Va. L. Rev.
a citiicieritccaitariiiittninatabinttnninibdatintiiaitaiiaea
OTHER AUTHORITIES
CR _ Investigates: Protect Yourself Online,
Consumer Reports, Sept. 2004 ..0..........::ccccccceeeees
amazon.com (last visited Nov. 8, 2004), af
http://WWW.aMAZON.COM............cescecseeseesseseeeeeeees
Business Software Alliance, Piracy and the Law,
available at http://www.bsa.org/usa/antipiracy/
Piracy-and-the-Law.cfm (last visited Nov. 8,
CinemaNow (last visited Nov. 8, 2004), af
http://WWW.CiINEMANOW.COM ............sceseceeeseeneeeeees
Cydoor: Desktop Media (last visited Nov. 8,
2004), at http://www.cydoor.com. ...........ccceeees
Simon Dyson, Informa Media Group Report,
Music on the Internet (4th ed. 2003)..............00000
FTC, FTC Cracks Down on Spyware Operation
(Oct. 12, 2004), available at http://www.ftc.
gov/opa/2004/10/spy ware. htm. ............c.ccccccceeeeees
Page
5, 12, 13
vi
TABLE OF AUTHORITIES—continued
Lev Grossman, /t's All Free, Time, May 5, 2003 ...
iPod+iTunes (last visited Nov. 8, 2004), af
http://www. apple.cOm/itunes ............cccceeeeeeeeeees
Patrick L. Kenney, The Napster Battle: Applying
Copyright Laws in the Era of the Internet and
Digital Music, e-Commerce L. & Strategy, June
TED ccutcosenenieniantseniennicsaipinimiipemnepeiainessiadiasiaiiadinaiaie
msn music (last visited Nov. 8, 2004), at
http://WWW.MUSIC.MSN.COM .........ceccceereeeeeeeeeeeeeees
Nat’! Conference of State Legislatures, 2004 State
Legislature Relating to Internet Spyware or
Adware, at http://www.ncsl.org/programs/lis/
spyware04.htm (last updated Oct. 19, 2004).......
Deputy Assistant Attorney General John G.
Malcolm, Privacy and Intellectual Property—
Legal Issues Related to Peer-to-Peer File
Sharing Over the Internet, Address to the N.Y.
State Bar Ass’n & Int'l Bar Ass'n (Oct. 23,
2003), available at http://www.cybercrime.gov/
Malcolmtestimony 102303 html ............0ccceceeeeeees
State Net, /ssue Trends Spyware, at http://www.
statenet.com/fpdata/issue_trends.htm (last visit-
GD BE Ti Ee ccscrnectninlecbtabivcciiniltipbininaideiicectaiiinaatinines
Chris Taylor, Invasion of the Movie Snatchers;
More and More Movie Fans are Sharing Films
Online, and Hollywood Doesn't Like It. Should
the Studios Find a Way to Adapt?, Time, Oct.
DD SO, OO PB censsiticnivnseciinisthicnevisisasentinlitiiamitinians
Press Release, U.S. Immigration & Customs
Enforcement, Departments of Justice, Home-
land Security Announce Child Pornography
File Sharing Crackdown (May 14, 2004), at
http://www.ice.gov/graphics/news/newsreleases
/articles/porncrackdown.htm...........cccceeseeeeereeeees
Page
12
INTERESTS OF AMICI CURIAE
The Amici States’ and Territories’ Attorneys General are
responsible for enforcing the consumer protection laws and
other public interest statutes within their respective
jurisdictions. Protecting the public and enforcing the law are
affirmative obligations. The Amici seek to identify and
prevent threats from materializing, to cultivate and encourage
a culture of lawfulness, to educate citizens about the legal
standards governing their conduct, and to maintain and
promote the development of a lawful business culture as our
residents and their institutions seek to make the most of
rapidly advancing technological innovation. The issues raised
in this case impact all of these interests.
Even more importantly, peer-to-peer (“P2P”) networks are
increasingly becoming havens for non-copyright-related
criminal activity. Of particular concern to the Amici is the
widespread use of P2P technology to disseminate
pornography, particularly unlawful child pornography, and
the deliberate choice of some P2P networks to disable control
devices that might be effective in tracking and prosecuting
this predatory practice. As part of an ongoing effort to keep
pace with emerging technologies that are being used to
commit, facilitate, and conceal Internet crimes against
children, federal, state, and local law enforcement officials
have joined forces as part of a nationwide initiative to combat
the large volume of child pornography being distributed
through P2P networks. See Press Release, U.S. Immigration
& Customs Enforcement, Departments of Justice, Homeland
Security Announce Child Pornography File Sharing
Crackdown (May 14, 2004), at http://www.ice.gov/graphics/
news/newsreleases/a. :cles/porncrackdown.htm. This effort is
undermined and its success will be obstructed by a legal
standard that permits companies, who facilitate not only the
conduct but also the anonymity of perpetrators, to escape any
responsibility for their role in these crimes.
2
The widespread use of P2P technology for illegal purposes
presents a number of unique threats to the citizens of the
States and Territories. Respondents’ P2P services are
overwhelmingly used to locate and duplicate copyrighted
works (such as songs, movies, print and audio books, audio
newspapers and periodicals, and computer software) for free
and without the permission of the copyright owners. The
massive scope of this infringement victimizes artists, writers,
production companies, distributors, theaters, and stores that
lawfully do business in Amici’s States and Territories and,
inevitably, the consumers who do business with them. This
infringement also creates a threat to the users of file-sharing
services (many of whom are minors) who do not yet fully
appreciate the unlawfa nature of their conduct, the legal risks
they are undertaking, and the personal risks they are running
and to which they are exposing their families. Further, the
Amici are concerned that their citizens may be subjecting
themselves to unwanted invasions of privacy and may be
unwittingly falling victims to identity theft due to their use of
P2P services. Many P2P services (including Respondent
Grokster) include hidden “spyware” with their software that is
designed secretly to monitor and report on the user’s
computer activities. Moreover, Amici have found that P2P
services are rife with criminal schemes, such as instructions
on how to pilfer financial accounting data from computer
users and otherwise engage in electronic identity theft. The
Ninth Circuit’s decision allows these problematic practices to
continue on Respondents’ services and on any other P2P
network which does business from within that circuit with
risk of liability to users.
The “mind-boggling”' level of copyright infringement
facilitated by Respondent's services also causes direct injury
' Pornography, Technology, and Process: Problems and Solutions on
Peer-to-Peer Networks: Hearing Before the Senate Comm. on the
Judiciary, 108th Cong. (Sept. 9, 2003) (statement of Marybeth Peters, The
3
to the States and Territories themselves. Any time legitimate
commerce such as that associated with the distribution and
sale of copyrighted works is submerged into the black market,
the community inevitably suffers a direct loss of the jobs,
business investment, and sales tax revenue that would
otherwise be generated by the affected industry. In this case,
the Respondents’ software (and similar P2P services that also
follow an infringement-driven business model) have caused
billions of dollars in lost sales. See, e.g., Simon Dyson,
Informa Media Group Report, Music on the Internet 25 (4th
ed. 2003). Theft and redistribution on such a grand scale
imposes broad economic harm with far reaching
consequences.
As the foregoing discussion suggests, the threats to the
citizens of Amici’s States and Territories posed by the Ninth
Circuit’s decision directly implicate the Amicis’ interests in
enforcing the law, protecting consumers, promoting a law-
abiding culture, educating citizens about legal standards, and
promoting lawful innovation. The decision creates a conflict
among the federal circuits regarding the legal standards
governing P2P technology and effectively establishes a safe
harbor for those who would utilize P2P technology for illegal
purposes. Amici need a clear and uniform legal standard that
protects the welfare of their citizens.
BACKGROUND
The Ninth Circuit’s decision is the latest attempt to grapple
with the widespread copyright infringement occurring on P2P
networks. See /n re Aimster Copyright Litig., 334 F.3d 643
(7th Cir. 2003), cert. denied, 124 S. Ct. 1069 (2004); A&M
Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001).
These networks (whether they are utilized for lawful or
unlawful purposes) build on two technical innovations of the
Register of Copyrights), available at http://www.copyright.gov/docs/
regstat090903.html (Pet. App. 65a-66a).
4
digital age: the ability easily and repeatedly to duplicate
digital files without data degradation, and the interconnection
and rapid transmission capability offered by the Internet.
I. THE DIGITAL COPYING PHENOMENON.
One significant advantage of digital technology is its ability
to make perfect-quality copies of existing data files.’ For
some time, various technologies have offered the capability of
storing and copying data (including songs, pictures, movies,
computer software and typewritten documents) in electronic
format. However, these previous technologies su‘fer from the
drawback of data degradation. In particular, when a data file
stored using older technologies is copied, some data are
inevitably lost and the copy is therefore of lesser quality than
the original. As this duplication process is repeated, copies
made from already-degraded copies become undesirable or
unusable. In contrast, digital files can be repeatedly copied
(and copies made from the copies) with little or no loss in
quality. See Aaron L. Melville, Note, The Future of the
Audio Home Recording Act of 1992: Has it Survived the
Millennium Bug?, 7 B.U. J. Sci. & Tech. L. 372, 376-79
(2001). Thus, a computer program, song or movie stored in
digital format can be copied literally millions of times, and
each of those copies can be re-copied through multiple
generations with each copy enjoying the same perfect quality
as the original. Moreover, this copying process can be
accomplished relatively quickly and inexpensively using
hardware that is commonly incorporated into personal
computers (“PCs”). See id. at 382.
? See Recording Indus. Ass'n v. Diamond Multimedia Sys., Inc., \80
F.3d 1072, 1073 (9th Cir. 1999); Albert Sieber, The Constitutionality of
the DMCA Explored: Universal City Studios, Inc. v. Corley & United
States v. Elcom Lid, 18 Berkeley Tech. L.J. 7, 14 (2003); Patrick L.
Kenney, The Napster Battle: Applying Copyright Laws in the Era of the
Internet and Digital Music, e-Commerce L. & Strategy, Jun. 2000, at 6.
5
Of course, to make a copy of a digital file the user needs
access to a high-quality original version. This can be
accomplished by obtaining a physical data storage device
such as a compact disk (“CD”) or Digital Video Disk
(“DVD”) that contains a copy of the relevant data file.
However, the process of locating and copying a particular file
can also be accomplished by transmitting the digital data from
one computer to another through the Internet. See Tim Wu,
When Code Isn't Law, 89 Va. L. Rev. 679, 716-18 (2003).
il. P2P SOFTWARE UTILIZES THE INTER-
CONNECTION AND RAPID TRANSMISSION
PROVIDED BY THE INTERNET TO CREATE
LARGE LIBRARIES OF FILES AVAILABLE FOR
COPYING.
Typically, a person obtains information from the Internet
by using a computer to retrieve data from a Web page hosted
by another computer connected to the Internet. In this
scenario, the person seeking information is the “client” and
the computer that hosts the Web page is the “server.” The
client makes a request for access to digital files such as news
pages, weather reports, or audio files, and the server fulfills
the request by sending the relevant information to the client's
computer. See Metro-Goldwyn-Mayer Studios, Inc. v.
Grokster Lid, 380 F.3d 1154, 1158 (9th Cir. 2004)
(“Grokster IT’); see also Jesse M. Feder, /s Betamax
Obsolete?: Sony Corp. of America v. Universal City Studios,
Inc. In The Age of Napster, 37 Creighton L. Rev. 859, 863
(2004). For example, a consumer who is seeking to purchase
a copy of a copyrighted book, photograph, or song from a
legitimate online retailer will use a computer to search for the
desired file, will exchange payment data with the retailer's
Web page, and will receive a “downloaded” copy of the
digital audio file from the retailer's server.’
* There are a number of legitimate Internet vendors that offer various
types of copyrighted works for sale via download to the client's PC. See,
6
P2P exchanges operate somewhat differently. In contrast to
the typical client-and-server system discussed above, the
information contained in a P2P network does not reside on a
centralized server on the Internet fat rather exists on
networked PCs that simultaneously may be acting both as
clients and servers. Users download the P2P software
program onto their PC. On a P2P network, the person or
company who has created P2P software offers the software
for download from a Web site or other sources. Both
Grokster and StreamCast offer the software for their networks
free of charge." The software allows these users (the “peers”
in a peer-to-peer system) to access the computers of everyone
else who has installed that particular P2P software. The
purpose of networking the peers’ computers in this manner is
to allow the peers to search each others’ computers and copy
the data files stored therein. The P2P software both provides
the necessary search capability and it permits the transfer of
files between users. In other words, a P2P user may both
request and provide copies of digital files from other users on
the network.
To facilitate the file-searching function of these wide-
ranging networks, all P2P software has an indexing
component, which represents the list of files available on the
e.g., http://www.music.msn.com (music); http://www.apple.com/ itunes
(music, audiobooks, foreign language lessons and recorded public radio
programs), http://‘www.amazon.com (print and audio books, audio
periodicals such as Forbes and Scientific American , audio newspapers
such as The New York Times, music, recorded radio programs, and
computer software); http://www.cinemanow.com (movies).
* Their business model is based on advertising revenues which increase
in proportion to the amount of user traffic on their networks. Users are
attracted to Grokster and Streamcast by the possibility of free downloads
of copyrighted material. To implement this business model, Grokster and
Streamcast usually bundle intrusive adware or spyware with the free
versions of P2P software they give out to users. This adware or spyware
is automatically installed without the user’s effective consent or
know ledge.
>
network for copying at any given time. The creators of the
P2P software may choose to have this index centralized or
decentralized, although that choice has little practical impact
on the function or use of the network. The first and perhaps
most notorious P2P network, Napster, utilized a centralized
indexing system whereby the files available for copying (e.g.
copyrighted digital music files) remained on the users’ PCs,
but a centralized server maintained an index of the available
files. When users entered search requests, Napster’s server
compared the requests with the file names listed in the
centralized index and transmitted the search results to the
requesting user along with the locations of the matching files
in the form of Internet Protocol (“IP”)_addresses.° The
requesting user then communicated directly with the “host”
user to arrange for the transfer of files from one PC to another
over the Internet.®
Next-generation P2P companies such as Grokster and
StreamCast developed a modified structure for their P2P
services specifically to avoid secondary liability for the
copyright infringement imposed on Napster. They have
decentralized the indexing feature of their software. Instead
of a centralized index, every person using StreamCast’s
software maintains a list of digital files that he or she is
willing to share. The software enables each search request to
be broadcast to every computer on the StreamCast network
and routes the results to the requestor.’ Thus Grokster and
* An IP address is a string of numbers that uniquely identifies each
computer connected to the Internet.
° The Ninth Circuit relied, in part, on this central indexing feature when
it held Napster vicariously liable for the infringement of its users. A&M
Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1027 (9th Cir. 2001).
’ Grokster’s software is designed somewhat differently. Rather than
every computer maintaining its own index of files available for copying,
certain PCs on the network associated with Grokster’s software are
designated as indexing servers and requests for files are routed through
StreamCast have designed their software to shift the indexing
function to the infringing users themselves. The Ninth Circuit
has concluded that this technological slight of hand warranted
a different legal standard applicable to vicarious copyright
infringement. See Metro-Goldwyn-Mayer Studios, Inc. v.
Grokster, Lid, 259 F. Supp. 2d 1029, 1045-46 (C.D. Cal.
2003) (“Grokster I), aff'd, 380 F.3d 1154 (9th Cir. 2004).
il. THE NINTH CIRCUIT’S DECISION.
In 2001, a number of motion picture and recording industry
entities (the “copyright plaintiffs”) sued Grokster and
StreamCast in federal district court in California for copyright
infringement based on the contributory and vicarious
infringement theories of secondary liability. The district
court granted summary judgment in respondents’ favor.
Grokster 1, 259 F. Supp. 2d at 1045-46. The court of appeals
affirmed, concluding that respondents did not have the
requisite level of knowledge to be held contributorily liable
because the software at issue was capable of substantial
noninfringing uses. Grokster IJ, 380 F.3d at 1161-63. The
court further found that respondents did not materially
contribute to the infringement of their software users because
Grokster and StreamCast neither provided storage for
infringing data files nor maintained indices of copyrighted
materials available for dissemination. /d at 1163-64. The
court of appeals rejected the copyright plaintiffs’ claim of
vicarious infringement because it concluded that neither
software provider possessed the right and at ility to supervise
and control the behavior of its users. /d. at 1165. In so doing,
the Ninth Circuit expressly rejected the copyright plaintiffs’
claim that respondents should be held liadle because they
refused to adopt simple modifications that would permit them
to monitor the behavior of their users. The court of appeals
dismissed the argument that Grokster and StreamCast should
not be able to escape vicarious liability by simply turning a
““blind eye’” to the copyright infringement of their users
while simultaneously encouraging and relying on that activity
9
in order to be profitable. /d at 1166. As the Ninth Circuit
explicitly recognized, its opinion is in conflict with the
analysis of these issues articulated by the Seventh Circuit in
In re Aimster Copyright Litig., 334 F.3d 643 (7th Cir. 2003).
See Grokster 11, 380 F.3d at 1162 n. 9.
REASONS FOR GRANTING THE PETITION
The Court should grant certiorari in this case to remedy the
conflict between the Ninth and the Seventh Circuits and to
resolve the confusion regarding the legal standards that
govern secondary copyright liability in the context of P2P
networks. The public, copyright holders, and law
enforcement officers such as the Amici have an urgent need
for uniform rules to be applied to this activity. In particular,
the Amici need such clarity to fulfill their law enforcement
duties and to protect consumers. Accordingly, irrespective of
what principles the Court ultimately applies in the P2P
context, the announcement of those principles should not be
delayed.
I. THE NINTH CIRCUIT’S DECISION POSES A
THREAT TO CONSUMERS.
Ordinarily, the societal effects of any particular copyright
infringement case are not so severe as to merit significant
consideration in the decision whether to grant certiorari. But
this is not the typical case. The illegal activity occurring on
respondents’ networks poses a number of real and immediate
threats to consumers and the economic welfare of the states
First, the people who use respondents’ P2P services and
their families are increasingly (and perhaps unwittingly) at
risk. For example, when P2P users install file-sharing
sofiware on their PCs, they can expose themselves and their
children to massive amounts of unwanted pornographic
material, including child pornography available on these
10
services.® P2P users are often ill-equipped to respond to this
onslaught, given that 41 percent of those who download files
on P2P networks are between the ages of twelve and
eighteen.” Sexual predators often seek to surprise or lure
young viewers by giving files containing offensive material
names that are innocuous or even attractive to young users
(such as “Britney Spears” or “Pokemon”). Some predators
choose to distribute pornographic images on P2P networks
because law enforcement officials have infiltrated many
Internet chat rooms where child exploitation occurs, and the
encryption features associated with P2P software can shield
the identity of the originator of offending files. By affording
predators the cover of anonymity, encryption features
incorporated into P2P software impede law enforcement
efforts to identify and prosecute those who victimize children.
Respondents’ efforts to disable their ability to police user
conduct increases the threat posed by child exploitation on
P2P networks. Simply put, other P2P services will mimic
respondents’ successful behavior—ensuring that they (and
Amici) know as little as possible about any unlawful behavior
on their networks so that they cannot be held secondarily
liable for that behavior. The Ninth Circuit’s decision
therefore puts our children at increased risk and thus presents
a question of urgent national significance in need of further
review by this Court.
Second, the fact that the Ninth Circuit’s decision allows
respondents and others to continue an infringement-based
* Deputy Assistant Attorney General John G. Malcolm, Privacy and
Intellectual Property— Legal Issues Related to Peer-to-Peer File Sharing
Over the Internet, Address to the N.Y. State Bar Ass'n & Int’! Bar Ass’n
(Oct. 23, 2003), available at http://www.cybercrime.gov/Malcolm
testimony 102303.htm.
* The Dark Side of a Bright Idea: Will Personal and National Security
Risks of P2P Networks Compromise the Promise of P2P Networks’,
Hearing Before the Senate Comm. on the Judiciary, 108th Cong. (Jun. 17,
2003) (statement of Senator Orrin Hatch).
ee ~
business model both places consumers’ privacy at risk and
frustrates the policy judgments of a number of States. Unlike
legitimate retailers, respondents do not make their money
from sales of copyrighted products to end users. Rather,
respondents’ businesses are driven by the volume of traffic on
their networks. See Grokster 1, 259 F.Supp. 2d at 1044. To
make money, respondents sell advertising to third parties.
The more users that are attracted by the prospect of free
downloads of copyrighted works, the more respondents can
charge their advertising clients.
To make this business model work, free versions of P2P
software are almost always bundled with intrusive spyware,
which is automatically installed on the users’ computers
without their effective knowledge or consent. Spyware, a
form of adware, monitors a user’s Web browsing activities
and causes targeted advertising to appear on a_ user’s
computer screen." Some sophisticated spyware is even
capable of logging keystrokes to record personal information,
such as online account passwords, which can lead to identity
theft. Spyware consumes hard drive space, slows users’
Internet connections and is responsible for a large percentage
computer crashes. CR Investigates: Protect Yourself Online,
Consumer Reports, Sep. 2004, at 12. A number of States
have made efforts to curb the dissemination of spyware. See
Nat’! Conference of State Legislatures, 2004 State Legislature
Relating to Internet Spyware or Adware, at http://www.ncsl.
org/programs/lis/spyware04.htm (last updated Oct. 19, 2004)
(detailing State efforts); State Net, /ssue Trends: Spyware, at
http://www.statenet.com/fpdata/issue_trends.htm (iast visited
Nov. 8, 2004) (same); see also FTC, FTC Cracks Down on
Spyware Operation (Oct. 12, 2004), available at http://www.
The spyware Cydoor is bundled with Grokster’s free software.
Cydoor displays pop-up advertisements and communicates information to
advertisers about users’ Web activity. See CR Investigates: Protect
Yourself Online, Consumer Reports, Sep. 2004, at 12; http://www.cydoor.
com.
12
ftc.gov/opa/2004/10/spyware.htm (discussing federal efforts
to combat spyware). The Ninth Circuit’s decision stands as a
potential roadblock to the effective implementation of the
States’ and Territories’ policy decisions, since respondents’
services operate from the Ninth Circuit but are available to
the citizens of every State on the Internet.
Third, the scope of the unlawful conduct facilitated by
respondents’ activities is staggering. Each and every day
more than 85 million copyrighted songs are illegally
downloaded from P2P networks. See Lev Grossman, /t’'s Al/
Free, Time, May 5, 2003 (more than 2.6 billion songs
illegally copied each month). That is the rough equivalent of
two hundred million CDs being stolen every month. See Wu,
supra, at 710. This is crime of unprecedented proportions,
and music is just one type of copyrighted work that is
illegally distributed on respondents’ networks.
The widespread copyright infringement on which
respondents’ business is based has real-world costs for
- American consumers and the community. In this case, the
scope of the lost commerce cannot be overstated. As a result
of that injury to lawful trade, the Amici’s States and
Territories are losing jobs, sales tax revenue, and legitimate
business investment on a significant scale. See Business
Software Alliance, Piracy and the Law, available at http://
www.bsa.org/usa/antipiracy/Piracy-and-the-Law.cfm (last
visited Nov. 8, 2004) (noting lost jobs, wages and tax revenue
due to pirated software); Chris Taylor, /nvasion of the Movie
Snatchers; More and More Movie Fans are Sharing Films
Online, and Hollywood Doesn't Like It. Should the Studios
Find a Way to Adapt?, Time, Oct. 11, 2004, at A2 (noting
that illegal downloads threaten the livelihoods of a wide
variety of artists).
These losses are not limited to brick-and-mortar businesses.
The illegal duplication of copyrighted works on P2P networks
threatens the ongoing development of legitimate innovations
in online retailing. As noted above, a number of businesses
oe ee ere nem ee ee ee
13
have launched Internet Web sites that sell authorized
downloads of songs, movies, books, computer software and
other copyrighted works. See supra at note 3. The threat of
secondary copyright liability persuaded Napster to convert to
a business based on authorized sales. See supra at 9. But the
viability and success of these innovative online businesses is
diminished by the fact that all of the copyrighted materials
they sell can be easily and quickly obtained on respondents’
P2P networks for free. By establishing standards that
immunize respondents from secondary liability, the Ninth
Circuit’s decision imperils the trend to lawful online
commerce in copyrighted works.
Moreover, the harms associated with the Ninth Circuit's
decision extend beyond just the economic aspects of
infringement. As courts and commentators have noted, many
P2P users are genuinely confused about the legal standards
that govern the duplication of copyrighted works on P2P
networks. See Wu, supra, at 722-26 (discussing several
studies which have shown that “those who use filesharing
networks do not think they are stealing”). While such
copying is clearly unlawful, many of the users of these
systems (nearly half of whom are minors) are unaware or
uncertain of this fact. See id And P2P services exploit this
ambiguity to the fullest extent. See id. at 724 (“The design of
P2P networks... tak[es] full advantage of an _ existing
ambiguity as to whether home, non-commercial copying is
‘wrong.’”). As a result, the operators of P2P systems are able
to entice users with the prospect of free songs and movies,
and (as noted below) expose those users to both legal and
safety risks. The Ninth Circuit’s decision exacerbates this
problem by immunizing respondents from liability for
operating and profiting from an infringement-driven business,
yet leaves the individual consumer fully exposed to the legal
and practical consequences (which the consumer may not
fully appreciate) of illegal P2P use.
14
The Ninth Circuit's decision provides an incentive for
technological innovation to develop in a manner that foments
lawlessness and puts the public at risk. At a minimum, the
Ninth Circuit’s decision must be read as stating that the fact
that respondents affirmatively chose to eliminate or disable
tools for detecting and discouraging illegal activity is
irrelevant to the secondary-liability analysis. See Pet. App.
13a, 43a n.7. At worst, the Ninth Circuit’s decision provides
a perverse incentive for P2P businesses to take steps to
minimize their ability to control unlawful conduct on their
networks, so that the P2P provider can claim ignorance of its
users’ intringement while profiting from the infringing traffic.
See id.
Il. THE NINTH CIRCUIT’S DECISION CREATES A
CONFLICT IN THE CIRCUITS.
This Court has historically granted certiorari in copyright
cases presenting issues of urgent importance regardless of
whether the state and lower federal courts had diverged on the
issues in question. See, e.g., Brief of Petition for a Writ of
Certiorari at 10, New York Times Co. v. Tasini, 533 U.S, 483
(2001) (No. 00-201) (asserting review in copyright cases is
granted “even absent a direct circuit conflict”) (citing
Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994);
Feist Publ’ns, Inc. vy. Rural Tel. Serv. Co., 499 U.S. 340
(1991); Harper & Row Publishers, Inc. v. Nation Enters., 471
U.S. 539 (1985); Mills Music, Inc. v. Snyder, 469 U.S. 153
(1985); Sony Corp. of Am. v. Universal City Studios, Inc., 464
U.S. 417 (1984)). For the aforementioned reasons, this case
would meet that standard. However, this Court’s immediate
review is even more critical because, as Petitioners have well
documented (Pet. at 24-29), the Ninth Circuit’s decision
conflicts with the law of the Seventh Circuit in several critical
respects."
''As the Seventh Circuit's well-reasoned opinion in Aimster
demonstrates, the Ninth Circuit’s decision also conflicts with this Court's
15
In Aimster, the Seventh Circuit upheld a preliminary
injunction effectively shutting down Aimster’s P2P file-
sharing service. Aimster’s software was designed to prevent
the company from knowing what specific files were being
copied and shared among its users. See 334 F.3d at 646-47.
The Seventh Circuit concluded that “the ability of a service
provider to prevent its customers from infringing is a factor to
be considered in determining whether the provider is a
contributory infringer.” /d. at 648. The Aimster court also
concluded that “[w]illful blindness” satisfied the knowledge
requirement for contributory infringement. /d. at 650. The
court stated that a file-sharing service does not shield itself
from liability for contributory infringement by using
encryption technology to prevent itself from obtaining actual
knowledge that its service is being used for unlawful
purposes. /d. at 650-51. Further, in analyzing the
noninfringing use defense, the court held that the burden is on
the product or service provider to establish that its product or
service not only is capable of noninfringing uses, but is
actually used for noninfringing purposes. /d at 653.
Moreover, the court held that even if there are noninfringing -
uses for a file-sharing network, if the infringing uses are
substantial, then to escape liability the service provider must
demonstrate that the burden of eliminating or reducing the
infringing uses would have been disproportionately costly.
Id.
These points are in direct conflict with the Ninth Circuit’s
decision in this case. First, where the Ninth Circuit requires
only that a product or service be capable of noninfringing
uses, the Seventh Circuit obliges P2P providers to
demonstrate that its product or service is actually used for
noninfringing purposes. Second, unlike the Ninth Circuit, the
holding in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S.
417 (1984). See Aimster, 334 F.3d at 647-51 Petitioners have effectively
described the Ninth Circuit’s misapplication of Sony, see Pet. at 15-24,
and Amici will therefore not repeat those points here.
16
Seventh Circuit held that P2P providers could not design their
software so as to avoid knowledge that their product is being
used to facilitate copyright infringement; rather, the court
concluded that, regardless of whether a product or service is
used for noninfringing purposes, the ability of a provider to
limit or prevent the infringement of its users is relevant to the
liability analysis.
These are fundamental uifferences between the circuits on
an issue of vital importance. It simply is impossible to
believe that the same court that shut down Aimster would
have- condoned the actions of Grokster and StreamCast.
Because the copyright laws inherently require uniform rules
and because this Court long has recognized that liability
should not be affected by the fortuity of geography, certiorari
should be granted to review the Ninth Circuit’s holding.
Ill. FURTHER PERCOLATION IS UNLIKELY TO BE
OF ASSISTANCE TO THIS COURT.
Awaiting further development of these issues in the lower
federal courts is not likely to be of material assistance to this
Court. The Ninth Circuit’s decision creates a zone of safety
for those who would build infringement-based P2P
businesses. Respondents and others can now base their P2P
operations within the Ninth Circuit, distribute P2P software
that enables Internet-based copyright infringement, and then
sell advertising based upon the high volume of infringing
traffic. Because the Internet allows nationwide distribution of
P2P software from computers based in the Ninth Circuit, any
future challenges to such conduct in other circuits is likely to
result in litigation over the jurisdictional aspects of engaging
in Internet activity that one circuit has held legal, but which
has effects in other circuits. See, e.g, ALS Scan, Inc. v.
Digital Serv. Consultants, Inc., 293 F.3d 707, 713 (4th Cir.
2002) (discussing the challenges of evaluating personal
jurisdiction over Internet-based entities and adopting a test to
determine whether a State can assert jurisdiction based on the
17
extent of interaction with the defendant’s Web site), cert
denied, 537 U.S. 1105 (2003).
To be sure, copyright holders will attempt to litigate these
issues in jurisdictions other than the Ninth Circuit, but there
will be significant resources wasted on litigating jurisdictional
issues, which would be unnecessary if this Court were to
review the holding below and resolve the split in the circuits.
It is quite possible that courts outside of the Ninth Circuit will
transfer all such challenges to that jurisdiction. In any event,
the Court cannot be certain that additional judicial scrutiny of
these important issues will be quick in coming or that future
cases will present an equally clean vehicle for review. And at
a minimum, the Court has the benefit of two fundamentally
different approaches to the issues presented and these are a
more than adequate platform for evaluating the social and
legal issues that should inform the Court’s disposition of this
case.
CONCLUSION
For the foregoing reasons, and those set forth in the Petition
for Certiorari, Amici respectfully ask this Court to grant the
petition for a writ of certiorari to the United States Court of
Appeals for the Ninth Circuit.
Respectfully submitted,
MARK SHURTLEFF* Roy COOPER
ATTORNEY GENERAL OF UTAH ATTORNEY GENERAL OF
PO Box 142320 NORTH CAROLINA
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Counsel for Amici Curiae
November 8, 2004
* Counsel of Record
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