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

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IN THE UPREME COURT, U.S. _|

Supreme Court of the United States

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

Petitioners,

GROKSTER, LTD., ET AL.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

BRIEF OF AMICI CURIAE

NATIONAL ACADEMY OF RECORDING ARTS & SCIENCES,

RECORDING ARTISTS’ COALITION, THE COUNTRY MUSIC ASSOCI-

TION, INC., THE GOSPEL MUSIC ASSOCIATION, THE HIP-HOP SUM-

MIT ACTION NETWORK, JAZZ ALLIANCE INTERNATIONAL, INC,

THE RHYTHM & BLUES FOUNDATION, SESAC, INC., DON HENLEY,

GLENN FREY, JOE WALSH & TIMOTHY B. SCHMIT (THE EAGLES);

MMY BUFFETT, KENNY “BABYFACE” EDMONDS; MICKEY HART

AND BILL KREUTZMAN (OF THE GRATEFUL DEAD); “MYA” HARRI-

SON, GAVIN ROSSDALE, SHERYL CROW; KIX BROOKS & RONNIE

(BROOKS & DUNN); BONNIE RAITT; NATALIE MAINES, MARTIE

MAGUIRE & EMILY ROBISON (THE DIXIE CHICKS); STEVIE NICKS,

PHIL VASSAR, PATTY LOVELESS, REBA MCENTIRE, AVRIL LAVIGNE,

DIDO, DENYCE GRAVES, TOM JONES, JESSE COLIN YOUNG SARAH

MCLACHLAN, MARTINA MCBRIDE, SAM MOORE (OF SAM & DAVE);

OE TERRY & DAVID WHITE (OF DANNY AND THE JUNIORS); BILLY

PRESTON, BOZ SCAGGS, DIANA KRALL, ELVIS COSTELLO, BRIAN

WILSON, KENNY ROGERS, TOM WAITS; TYLER STEWART, JIM

CREEGGAN, STEVEN PAGE, ED ROBERTSON & KEVIN HEARN

(BARENAKED LADIES); DERYCK WHIBLEY, DAVE BAKSH, CONE

CCASLIN & STEVE JOCZ (SUM 41); BRANDON HARGEST, BRITTANY

RGEST, CHRIS FEDUN & LESLEY MOORE (JUMP 5); BETHANY

DILLON, NICHOLE NORDEMAN, AND MICHAEL W. SMITH

IN SUPPORT OF PETITIONERS

JON A. BAUMGARTEN

Counsel of Record

PROSKAUER ROSE LLP

1585 Broadway

New York, New York 10036

dditional Counsel On the Reverse) 212-969-3000

BEST AVAILABLE COPY

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CHARLES B. ORTNER

WILLIAM M. HART

FRANK P. SCIBILIA

ISAAC NESSER

PROSKAUER ROSE LLP

Counsel for The National Academy of

Recording Arts & Sciences, Inc.,

The Country Music Association, Inc.,

The Gospel Music Association,

The Hip-Hop Summit Action Network,

Jazz Alliance International, Inc.,

The Rhythm & Blues Foundation,

SESAC, Inc., and the Individual

Artists as Amici Curiae

JAY ROSENTHAL

BERLINER, CORCORAN & ROWE, LLP

1101 17th Street, N.W.

Washington, DC 20036

Counsel for The Recording Artists’

Coalition (“RAC”) and the RAC Artists

as Amici Curiae

Of Counsel:

JOEL A. KATZ

GREENBERG TRAURIG

The Forum

3290 Northside Parkway, Suite 400

Atlanta, Georgia 30327

JAY L. COOPER

GREENBERG TRAURIG LLP

2450 Colorado Avenue

Santa Monica, California 90404

| TABLE OF CONTENTS

DOR ee BF BIE BED cetctctenccterscszscevcccccencecrescccoenevcezenes ii

INTEREST OF THE AMICI CURIAE ..............cccccceeceeeeeneees l

SUMMARY OF ARGUMENT ..........:cccccccssssessessesestesseessenens 5

FT cnticecctenbendarteeninsntmninecsereusceezessonescescocepeseesnszcczecseece 7

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......0......ccccecceeeees 7

A. The Ninth Circuit Has Read The “Substantiality”

Requirement Out Of The “Substantial

Noninfringing Use” Doctrine ...............:ccccscceeeesseeenee oreee 7

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

Noninfringing Use” Doctrine Does Injustice to the

Primary Public Interest that Copyright Serves in

Enabling Authors and Creators to Create ...............0000 21

een vcr dsbninciiondosnidpaniepbiscccencedunteenescnccecncsccesesseuencen 28

TABLE OF AUTHORITIES

CASES

A&M Records, Inc. v. Gen. Audio Video Cassettes, Inc.,

948 F. Supp. 1449 (C.D. Cal. 1996) ........ccccccceseeeeeennees i]

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

239 F.3d 1004 (9th Cir, 2001) 0.0... cccccceceeeeeeneeeees 14, 15

Abington Textile Mach. Works v. Carding

Specialists, Lid.,

249 F. Supp. 823 (D.D.C. 1965).......ccccccceceeereeenees 10, 11

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

310 F. Supp. 2d 638 (D. Del. 2004) ...0......cccccceeeeeneeee 10

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

597 F. Supp. 5 (N.D. TIL. 1983)........cccccenceeereeeeenes 9,17

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

911 F.2d 670 (Fed. Cir. 1990) 2000.0... ccccceeereseeereneneees 10

Cable/ Home Communication Corp. v. Network Prods.,

Inc., 902 F.2d 829 (11th Cir, 1990)... ceceeeeeeeenenens 9

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

467 F. Supp. 391 (S.D.N.Y. 1979) .......cccccseesseeseenennees 10

Ellison v. Robertson,

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

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

357 F.3d 1072 (9th Cir. 2004)...........ccccccereeereseneenennes 19

***

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

FO Ci, BO CED citasiintchinhtnseniiennctasnmnenemassiiiiiiias 21

Fromberg, Inc. v. Thornhill,

Pee Fe Se Cee Se iesticcccicmtinciiniaienintialiniam 10

Gershwin Publ'g Corp. v. Columbia Artists Mgmt. Inc.,

ti’ tS __, | ees 19

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

SF6 UE Fe CHD cccinisitesttaiiainteementiunidsians 22

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

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

10174 (N.D. Cal. Jume 13, 1994) 00 ceecccceeeeeeeees 10

In re Aimster Copyright Litig.,

252 F. Supp. 2d 634 (N.D. Ill. 2002)................ 6, 15, 17

In re Aimster Copyright Litig.,

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

nom, Deep v. Recording Indus. Ass'n Inc.

GO BS. CR. SG COD cctscssscncestensesestansentceviensianiit passim

MGM Studios, Inc. v. Grokster Lid.,

259 F. Supp. 2d 1029

ES ey Se ccnsecaatitihadiiblindiies tiie: 11, 12, 13, 15

MGM Studios, Inc. v. Grokster Ltd.,

380 F.3d 1154 (9th Cir. 2004)............. 5, 11, 13, 14, 15

Marsh-McBirney, Inc. v. Jennings,

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

yp Tt Re 8 8 a a 10

Mazer v. Stein,

BF Ca, Bee ee cecthnthiccnicttideritetatsetiiaties 21, 22

Nintendo Inc. v. Computer & Entm't, Inc..

No. C96-0187-WD, 1996 U.S. Dist. LEXIS

20975 (W.D. Wash. May 31, 1996) ...........000.

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

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

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

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

991 F. Supp. 543 (N.D. Tex. 1997),

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

Quality King Distribs., Inc. v. L'anza Research

Int'l... Inc., 523 U.S. 135 (W998)... cccecceseeeeeeees

Reynolds Metals Co. v. Aluminum Co..

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) ................00..

Screen Gems-Columbia Music, Inc. v. Mark-Fi

Records, Inc..

256 F. Supp. 399 (S.D.N.Y. 1966) .....ccccsseseo0n

Shumaker v. Gem Mfg. Co..

311 F.2d 273 (7th Cir. 1962)............s0ecseessreees

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

GBS UD. SEF (OTE cccecccnnssscssescsnsestnesenasesseunetes

Twentieth Century Music Corp. v. Aiken,

Stk ST

United States v. Carroll Towing Co..

159 F.2d 169 (2d Cir. 1947) .......ccccccccereeerseenees

U.S. Fidelity & Guaranty Co. v. Plovidva,

683 F.2d 1022 (7th Cir. 1982) ........cccccecceeeennees

— 17

prvaseceas 10

censansect 10

pmsasunes 19

— 10

United States v. Paramount Pictures. Inc..

OO WE. CDG COD centnihtpsveniicoerenesinictaseenimnnate

Universal Pictures Co. v. Harold Lloyd Corp..

162 F.2d 354 (Sth Cir. 1947)............ccscocsorersereers

Vault Corp. v. Quaid Software, Ltd..

Ae Fl Le |

Worlds of Wonder, Inc. v. Vector Intercont'l, Inc.,

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

(PED. GED BSS. SB, TTB) ecccceseccosscavascssncsczsesense

STATUTES

BS UBL. G STEED cccecsctrensstseniinttenncnpetinatnnennaitgedl

ae. GRE. GR, 8, BB. BD ncecenterinssininaiitieesentin

OTHER AUTHORITIES

H.R. 989 before the Subcomm. on Courts &

Intellectual Prop. of the House of

Representatives Comm. on the Judiciary,

1995 WL 418350 (F.D.C.H.) (July 13, 1995)

(statement of Quincy Jomes) ..............ccecceceeeeeeees

Hearing on S. 483 before the Senate Judiciary

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

(September 20, 1995) (statement of Alan

RR ee STR ES ee es enna

Douglas Lichtman & William Landes, /ndirect Liability

for Copyright Infringement: An Economic

Perspective, 16 HARV. J. LAW & Tecu. 395,

GBS CARED corrcnsnenenseeceseenserseresseeennanceniieneatianinneinneaie 20

Ethan Smith, Universal Music To Cut Work Force As

Industry Sags, WALL ST. J.

ht, BG, Biers GIG a Mecacecdcpeartidecdovncsensiccietenentbatiiensatieen 26

|. Fred Koenigsberg. Humpty-Dumpty In

Copvrightland.,

51 J. COPYRIGHT SOCIETY 677 (Spring 2004) ............ 25

Jane Ginsburg. Copyright Use & Exeuse on the

Internet,

24 COLUM.-VLA J.L. & ARTS 1 (2001)... cccccccenneeees 23

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, 899

Dane BEBO ccreensesernsnetscinenmtinasinniinianiese 17

M. WILLIAM KRASILOVSKY & SYDNEY SHEMEL. THIS

BUSINESS OF MUSIC: THE DEFINITIVE GUIDE TO

THE Music INDUSTRY (9th ed. 2003) ..............cccceeeceeeees 4

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

N.Y. Tene, Oat. 7, FeO er GB AUS ccccccoccscccccescetssscssssesee 24

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, \05th Cong. 25 (June

27. 1997). available at

http://commdocs.house.gov/committees/ :

judiciary/hju43666.000/hju43666_0.htm#24 ............. od

Vii

Privacy & Piracy: The Paradox of Illegal File Sharing

on Peer-to-Peer Networks & the Impact of

Technology on the Entertainment Industry,

108th Cong.. reprinted at 2003 WL 2223499]

(F.D.C.H.) (September 30, 2003) (testimony of

Mitch Bainwol before the Senate Comm. on

Governmental A ffairs)............ccccccccccseseeeeeseeeeeeeees 26, 27

RESTATEMENT 3D OF TORTS: PRODUCT LIABILITY, § 2(b)....... 20

RICHARD POSNER, ECONOMIC ANALYSIS OF LAW § 6.1

COG, . FORD pecnsomnscssciindeintiianeevictnneseenntaighibettinesiiitenminis 20

Subcomm. On Patents, Trademarks, &

Copyrights of the Comm. on the Judiciary on S.

1006, 89th Cong., Ist Sess. 65 (1965)

(testimony of Register of Copyrights Abraham

RSET ISD or Cea ae SR RI So ct See 23

THE FEDERALIST No. 43 (Mod. Lib. ed. 1941) «0.0.0.0... 22

INTEREST OF THE AMICI CURIAE'

Amicus the non-profit National Academy of Recording

Arts & Sciences, Inc. (the “Recording Academy” or

“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 Recording

Academy has established itself as the preeminent musical arts

outreach and advocacy organization in the country. Among

its many activities are its creation of the website “What's the

Download” (whatsthedownload.com), which advocates and

encourages music fans to engage in lawful, authorized

downloading of music through the internet. 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 Recording Artists’ Coalition (“RAC”) is a non-

profit public-advocacy organization comprised of over 130

well-known featured recording artists, including Jimmy

Buffet. Sheryl Crow, Don Henley, Billy Joel, Alanis

Morisette, Stevie Nicks, Bonnie Raitt, Bruce Springsteen,

' Counsel for the Petitioners and Respondents have consented to the

filing of this brief. Their consent letters have been filed with the clerk of

the Court. No counsel for a party in this Court authored this brief in

whole or in part, and no person or entity, other than the Recording

Academy and the Recording Artists Coalition as amici curiae, made a

monetary contribution to the preparation or submission of this brief.

and Trisha Yearwood. RAC is primarily concerned with

political. legal, and business issues affecting the interests of

recording artists. both on a federal and state level.

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, music publishers,

record producers. recording artists, record companies, and

merchandisers. who compose. produce, record, manufacture,

distribute and sell copies of recorded country music. 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.

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

organization dedicated to promoting and celebrating all forms

of gospel music. GMA _ boasts approximately 20

organizational 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.

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. The Board consists of members from both the

not-for-profit and for-profit sectors and includes the foremost

decision-makers and stake-holders in jazz education, the

music industry, journalists and the media, retail, performing-

rights groups, world-renowned jazz festival organizations,

booking agencies, and artistic circles.

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.

Amicus SESAC, Inc. (“SESAC”) is a musical performing

rights society, which serves both the creators and the users of

nondramatic musical works through licensing and royalty

collection and distribution. SESAC licenses the public

performance of more than a quarter of a million songs on

behalf of its thousands of affiliated songwriters, composers,

and music publishers. SESAC is one of three performing

rights societies recognized under the Copyright Act.

Established in 1930, SESAC is the second oldest and fastest

growing performing rights society in the United States.

The fifty-four individual recording artists whose names

appear on the cover of this brief also join as amici. Each of

these artists has, at one time or another, been signed to a

major-label or nationally-distributed independent label

recording contract.

** *

It is true that even successful artists suffer economic loss

when recorded music is downloaded and enjoyed, but not

purchased. But that tells only half of the story. While a few

creators in the music business do earn substantial livings,

many more struggle to survive despite being gifted

songwriters. musicians or vocalists who work hard at their

craft. The difficulties traditionally associated with

succeeding in the music industry are becoming almost

insurmountable for all but a few artists because of businesses

like Grokster. If Respondents are allowed to continue to

facilitate the illegal. free downloading of copyrighted music,

the record industry will be unable to risk experimentation,

and only the lowest-risk projects will be green-lighted.”

Moreover. what often gets overlooked is that the

livelihoods of those who work behind the scenes to help the

“stars” make great records -- the background musicians,

record producers, sound engineers, conductors, arrangers,

and writers of album notes. to name a few -- are directly

threatened by the massive. unfettered copyright infringement

being fostered by businesses like Grokster. Songwriters,

including those represented by amicus SESAC, are also

affected. The members of the Academy and the other amici

organizations derive much of their livelihood and income

from the sale of copies of recorded music and/or the

successful exploitation of recorded music (which is driven by

record sales), and they suffer when recorded music is

downloaded but not purchased. In fact, countless members

of the Academy and the other amici organizations have lost

their jobs with record companies, or seen their contracts not

renewed. because of the dramatic downturn in the music

business due to such infringement.

See M. WILLIAM KRASILOVSKY & SYDNEY SHEMEL, THIS BUSINESS

oF Music: THe Derinitive GuIpe TO THE Music INDUSTRY (9th ed.

2003) at 7 (“out of the 27.000 records released in the United States

annually about |0 percent are profitable”).

See id at 69-70 (counterfeiters and pirates “don't have to make up

for the 85 percent of recordings released in the United States annually

that. according to the RIAA, fail to make a profit.”).

Regardless of the level of commercial and financial

success which any of these individuals have achieved, they

all have at least one thing in common -- protection of their

copyrights is crucial to their ability to earn a living.

Respondents, whose businesses are predicated largely on

granted a license by the Circuit Court to misappropriate the

creative output of the musical community. The Circuit

Court's decision defies the original intent of the Framers. as

reflected in the Constitutional mandate that copyrights be

protected so that creators may earn a living from their

endeavors -- a mandate which was designed to serve public

ends by ensuring the availability of creative works, and

which thus far has yielded great economic and cultural

benefits to our society. 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

The Ninth Circuit's opinion’ eviscerates traditional

secondary liability principles and immunizes __ the

Respondents’ distribution of software that was designed and

is overwhelmingly used to infringe copyrighted music and

movies on a massive scale. It does so by reading the

“substantiality” requirement out of the “substantial

noninfringing use” test, immunizing parties from secondary

liability so long as the product at issue is capable of any

-noninfringing use -- even if the extent of that use is

hypothetical,

insignificant.

vanishingly small, or commercially

* MGM Studios, Inc. v. Grokster Lid., 380 F.3a 1154 (9th Cir. 2004).

Compounding this problem, the Ninth Circuit has created

a “Catch 22” of epic proportions which makes evidence of

any noninfringing use a complete defense to a finding of

software device qualifies as a “staple article of commerce,”

in order to establish secondary liability the copyright owner

must give the software provider notice of specific

infringements resulting from the use of the software. But the

court states that such notice, even if provided, would come

too late because by that time the software provider could not

prevent the infringement. Thus. no amount of proof would

ever suffice to establish secondary liability against the

provider of software that was clearly designed as an

infringement machine. notwithstanding undisputed proof

that. in actual use. the software was used overwhelmingly for

infringement.

This holding conflicts with the opinion of a sister Circuit®

and defies the rulings of this Court.° The Ninth Circuit's

opinion further rejects the commonsense principle --

recognized by Judge Posner in Aimster, and in other areas of

the law and as a matter of sound policy -- that where parties

are uniquely positioned to prevent harm to others at low cost

to themselves. they must take those actions, and should not

be rewarded for affirmatively burying their heads in the sand.

The Ninth Circuit's decision sanctions Respondents’

deliberate building of a business whose commercial success

-- indeed. its very existence -- 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. and, at the same time, destroys the ability of

creators and others who make their living from the sale of

recorded music to sustain themselves economically. This

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

denied sub nom, Deep v. Recording Indus. Ass'n, Inc. 124 §. Ct. 1069

(2004).

Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984).

defies the fundamental principle -- enshrined in the

Constitution itself -- that creative output is a necessary part of

this country’s economic and cultural “Progress.” and that

such “Progress” will cease if creators and the technical teams

that support them cannot earn a livelihood through their

creative efforts.

Accordingly, it is essential that this Court reyerse the

decision 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 INgUSTICE TO FUNDAMENTAL

A. The Ninth Circuit Has Read The “Substantiality”

Requirement Out Of The “Substantial

Noninfringing 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 programs, but also,

on the other hand, to record free television programs

“broadcast on the public airwaves™ that they could not watch

as they were being televised, so they could be “watchied

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

U.S. CONST. art. 1, § 8, cl. 8.

* Sony, 464 U.S. at 419.

* Jd 0421.

the VTR directly and secondarily liable for consumers’

The district court in Sony found that “the average member

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

“time-shifting.” and, moreover, that such “time-shifting may

enlarge the total viewing audience and that many producers

lof television programming] are willing to allow private

time-shifting to continue, at least for an experimental time

period.” This 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.'' Notably, that decision was

limited to private time-shifting of free television broadcasts:

“No issue concerning the transfer of tapes to other persons,

the use of home-recorded tapes for public performances, or

the copying of rams transmitted on pay or cable

television was raised.”'”

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” from broadcast

programming.’ taking into account those copyright owners

who did not object to “time-shifting.” and device

manufacturers who wished “to engage in [a] substantially

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.

> Id at 425.

The Court echoed the concer 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.

unrelated area[] of commerce,” that is, to meet the significant

noninfringing demand. '*

To balance these competing interests based on the record

before it, 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 noninfringing

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

‘* 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.

'* Jd. at 442 (emphasis added).

7 Id

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

902 F.2d 829, 846 (1 Ith Cir. 1990) (defining substantial noninfringing

use as “wide use ‘for legitimate. unobjectionable purposes”), 44M

Records, Inc. v. Gen. Audio Video Cassettes, Inc., 948 F. Supp. 1449,

1456 (C.D. Cal. 1996) (use of device for noninfringing purposes such as

recording non-copyrighted works was insubstantial compared to the

number of defendant's customers who used device to counterfeit); Asari,

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 noninfringing

where the doctrine originated. found that the “quality,

quantity and efficiency of the suggested alternate

{noninfringing)] uses are to be considered.”'” and that

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

suffice.” Indeed, they also refused to apply the doctrine

where it was plain that the maker knew of, and sought to

capitalize on, the infringing application of its device.”' This

purpose of copying games distributed by the defendant itself. the latter

use was insubstantial given that defendant sold only nine games).

Reynolds Metals Co. v. Aluminum Co., 457 F. Supp. 482, 509 (N.D.

Ind. 1978). rev ‘d on other grounds, 609 F.2d 1218 (7th Cir. 1979), cert.

denied, 446 U.S. 989 (1980); Oxy Metal Indus. Corp. v. Quin-Tec, Inc..

No. 80-73678, 1982 U.S. Dist. LEXIS 16861, at *25 (E.D. Mich. June 8,

1982).

* 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.” “[t}here

must be a quantitative element . . . . Whether a use is “substantial” or not

depends on how li! city and often the use will occur”); Dennison Mfg. Co.

v. Ben Clements & Sons, 467 F. Supp. 391, 427 (S.D.N.Y. 1979)

(defendant's proffered noninfringing 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” noninfringing 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 noninfringing 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) (rejecting

defendants staple article defense because defendant's proffered

noninfringing uses were hypothetical in nature), cf C.R Bard, Inc. v.

Advanced Cardiovascular Sys., Inc., 9\\ 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 noninfringing

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

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

provision from which Sony derived the substantial

noninfringing use doctrine, that a party can be held liable for

‘active inducement’ of a patent infringement.” Indeed,

there is nothing in Sony that compels a court to immunize

from liability a supplier that distributes an article of software

that has substantial noninfringing uses, where the supplier

engages in conduct that constitutes a knowing inducement to

infringe.

In Grokster, the Ninth Circuit was confronted with a

technology that is indisputably used primarily -- indeed,

overwhelmingly -- to infringe. The Petitioners submitted

uncontested evidence that af /east ninety percent of the

material on Respondents’ services is infringing.’ The Ninth

Circuit recognized that not even the Respondents seriously

dispute 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.””°

(D.D.C. 1965) (product could “hardly be regarded as” a staple article

where it was especially made to, and was sold in a package which

included everything needed to, infringe plaintiff's patented process).

= See 35 U.S.C. § 271(b).

* See MGM Studios, Inc., 380 F.3d at 1158, 1162.

* Id. at 1160.

** MGM Studios, Inc. v. Grokster Lid., 259 F. Supp. 2d 1029, 1036-37

(C.D. Cal. 2003).

Further. the commercial success of Respondents’

business depends on attracting as many “eyeballs” as

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

illegally download copyrighted music and movies for free.”®

Not surprisingly, this “draw” has resulted in an economic

windfall to the Respondents.”’ Indeed, the district court

concluded that there was a very real possibility that

Respondents “may have intentionally structured their

businesses to avoid secondary liability for copyright

infringement. while benefiting financially from the illicit

draw of their wares.”** At the same time, there was never

any showing that any of the claimed noninfringing uses

attracted users or. ultimately, advertisers, which are critical to

the success of Respondents’ business.

Nevertheless. the district court and the Ninth Circuit

immunized Respondents’ conduct by applying a perverse

interpretation of Sony's “substantial noninfringing use”

*° 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.”).

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

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

2001 from advertising. ... And as of July of 2002, StreamCast had $2

million in revenue and projects $5.7 million by the end of the year. . . .

Grokster also derives substantial revenue from advertising. . . . The more

individuals who download the software, the more advertising revenue

Defendants collect. And because a substantial number of users 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 essentially undisputed by Defendants.”) (Internal citations

omitted.) One can only assume that if the uncertainty over the legality of

Respondents’ software is removed by an affirmance here, the business of

Respondents and others will expand exponentially, as will the destructive

* Id at 1046.

doctrine. The Respondents submitted declarations that there

are noninfringing 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 noninfringing 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 I, which emphasized that in order for limitations

imposed by Sony to apply, a product need only be capable of

. substantial noninfringing uses.”””

Neither the district court nor the Ninth Circuit attempted

to assess the substantiality of the actual or potential

noninfringing 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 noninfringing uses

were not in the least commercially significant to

Respondents’ service.

Grokster, therefore, stands for the proposition that any

showing of noninfringing use, no matter how commercially

insubstantial, 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

* Id. at 1035.

the line at “substantial.” “commercially significant”

noninfringing use, not at any noninfringing 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.*' 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 Ninth Circuit, because the software was

effectively put into the hands of the public, and the

software's 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).

The Ninth Circuit's standard can never be met where a

defendant deliberately designs its software so that -- unlike

other peer-to-peer services such as Napster -- it avoids

knowledge of particular files being traded, and cannot know

of a specific instance of infringement unless notified by a

to the court. be too late. 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

Jd at 1161.

Id at 1162.

ld at 1162-63.

infringement. In this way, the Ninth Circuit made evidence

of any noninfringing use a complete defense to a finding of

secondary copyright infringement liability. Indeed, 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

noninfringing uses, or to assess the commercial significance

of those uses, violates not only the letter, but also the purpose

of the “substantial noninfringing 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

Circuit's decision in Aimster -- as well as its application in

the related field of patent law, from which the doctrine

originates.*°

The Seventh Circuit in Aimsier correctly recognized the

purpose of the “substantial noninfringing 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

* Id. at 1163.

See cases supra, notes 18-21.

*°© See In re Aimster Copyright Litig , 334 F.3d 643.

In re Aimster Copyright Litig., 252 F. Supp. 2d 634, 648 (N.D. Il.

2002).

* Id at 6Al.

noninfringing 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 noninfringing

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

noninfringing 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 noninfringing use, “let alone

evidence concerning the frequency of such uses,” its staple

article defense failed.*”

The question of where the line should be drawn between

substantial and insubstantial. and commercially significant

and insignificant, noninfringing 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 noninfringing use would

appear to satisfy that test.

Although the Sony majority found it unnecessary to

define just how much use was “commercially significant” 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

* See 334 F.3d at 652.

* Id at 651.

Id. at 649.

the infringement, and that liability is appropriately

imposed.”*’ Thus, one way in which a court can assess the

substantiality of a noninfringing 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

noninfringing 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 noninfringing use

doctrine as articulated in Sony, makes evidence of any

noninfringing use a complete defense to a finding of

secondary copyright infringement liability.

The Ninth Circuit also should have refused -- as Judge

Posner did in Aimster -- to sanction Grokster’s “ostrich-like

refusal to discover the extent to which its system was being

used to infringe.”° The record was replete with evidence

that Grokster, like Aimster, deliberately devised its system to

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

“See also Worlds of Wonder, Inc. v. Vector Intercont'l, Inc., No. C86-

2671, 1986 U.S. Dist. LEXIS 15879, at *3-4 (N.D. Ohio Dec. 30, 1986)

(although defendant's tapes had noninfringing uses, those uses were not

substantial where commercial value of tapes depended on their infringing

use); Nintendo Inc. v. Computer & Entm'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 noninfringing uses, purchasers were not likely to do so given less

expensive alternatives), A/ari, 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).

* See 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, 899 (June 2004).

* See In re Aimster, 334 F.3d. at 655.

avoid actual knowledge of precisely what files its users were

copying. in an effort to avoid secondary liability. Because

Grokster “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 record demonstrates that Grokster could have, but

chose not to. implement filtering software that would have

curtailed copyright infringement on its network. This

filtering software would not have interfered with Grokster’s

tiny fraction of noninfringing material.** Thus, there is

simply no legitimate technological, economic, or practical

reason why Grokster could not have implemented it.

The record also shows that Grokster’s lack of control

over its users’ infringement is a relatively recent innovation.

Early iterations of Grokster were quite similar to Napster --

they featured a centralized server that gave Grokster

knowledge and control over its users’ activities.*” Only after

Napster was found secondarily liable for copyright

infringement did Grokster abandon this centralized model.”

Even then. however. Grokster sti// maintained the ability to

eject users from the network: it took yet another iteration of

* See id at 653-54.

* See J.A. 228-232 (Ikezoye Decl.) and J.A. 181-88 (Breslin Decl.)

(several vendors offer filtering technologies that can prevent transfer of

unauthorized works): J.A. 181-88 (Breslin Decl.) (blocking could be

accomplished “without any significant degradation in the [peer-to-peer]

system”). See also J.A. 253, 274-75(Grokster and Streamcast both have

implemented filters that eliminate pornographic files, viruses, and spoof

files); Darrell Smith. The File Sharing Dilemma, CNet News (Feb. 3,

2004) (comment of Streamcast’s former Chief Technology Officer that

“there are no technical limitations to the ability to filter” copyrighted

content and “the question is not whether file-sharing companies can filter,

but whether they will.”). See generally MGM Plaintiffs-Appellants

Opening Brief On Appeal to the Ninth Circuit (August 18, 2003) (“Pls.

Appeal Br.”), at 18-21, 58-62, and record material cited therein.

* See Pls. Appeal Br. at 10, 62-63, and record material cited therein.

* See id. at 10-11 and record material cited therein.

the software for Grokster to become fully blind to its users’

activities and fully deprived of the ability to control those

activities."' Thus, Grokster not only can control its users’

illegal activities at reasonable cost, it actually had such

control in the past. It was only when the law made clear that

such control imparted certain responsibilities that Grokster

redesigned its system deliberately to avoid those

responsibilities.

Judge Posner’s focus on “the ability of a service provider

to prevent its customers from infringing”? accords with both

logic and law. Where a party can take relatively easy steps to

prevent foreseeable harm, but affirmatively chooses not to do

so, it should be held to account.*? Tort law, from which

secondary liability in copyright derives,’ has long

*! See id. at 11-13, 18, 63, and record material cited therein.

334 F.3d. at 648. Judge Posner 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 a contributory

infringer the provider of the service must show that it would have been

disproportionately costly for him to eliminate or at least reduce

substantially the infringing uses.” /d. at 653.

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

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

ability to control the bots that automatically trolled the internet for visual

images because it was the defendant himself who programmed the

software and could have changed the parameters to avoid infringement);

Ellison v. Robertson, 189 F. Supp. 2d 1051, 1058 (C.D. Cal. 2002)

(finding defendant liable where it “should have known about the

infringement” but failed to do so through “its own fault,” and noting that

a contrary rule would encourage defendants “to remain willfully ignorant

in order to avoid contributory copyright infringement liability”), aff'd in

part, rev'd in part on other grounds, 357 F. 3d 1072 (9th Cir. 2004).

“Gershwin Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d

1159, 1162 (2d Cir. 1971) (contributory liability in copyright is

predicated on common law doctrine of joint and several tort liability),

quoting Screen Gems-Columbia Music, Inc. v. Mark-Fi Records, Inc., 256

F. Supp. 399, 403 (S.D.N.Y. 1966); Universal Pictures Co. v. Harold

Lloyd Corp., \62 F.2d 354, 365 (9th Cir. 1947) (writer who contributed

recognized that a party's ability to easily implement

preventative measures should be considered in assessing

liability.° Addressing the issue of secondary copyright

liability from a broad economic perspective, one

commentator has argued that “an efficient approach to

indirect liability might start by applying a negligence rule to

any activity that can lead to copyright infringement.

Negligence rules are common in tort law; they hold a party

liable in cases where that party’s failure to take economically

reasonable precautions results in a harm.”*° Applying that

reasoning to infringement facilitators like Grokster, the same

commentator argued that secondary copyright liability is

especially appropriate when the indirectly liable parties are in

a good position to prevent infringement.” ’

Grokster had the means to readily offer the public a

system which would prevent infringement, while still

facilitating the claimed noninfringing uses. Instead, it

deliberately chose to abandon that protection so it could

material to infringing film found “liable for damages as a contributory. . .

infringer and joint tortfeasor’).

** See, e.g., United States v. Carroll Towing Co., 189 F.2d 169 (2d Cir.

1947) (Hand. J.) (negligence liability in tort assessed in light of the

probability of the harm, the gravity of the harm, and the cost of

precautions), LS. Fidelity & Guaranty Co. v. Plovidva, 683 F.2d 1022,

1026 (7th Cir. 1982) (negligence should be found where the magnitude of

the loss multiplied by its probability is greater than the burden of

precautions to prevent the loss), RICHARD POSNER, ECONOMIC ANAL YSIS

OF LAW § 6.1 (4th ed. 1992) (negligence test properly takes account of

cost of precautions); RESTATEMENT 3D OF TORTS: PRODUCT LIABILITY, §

2(b) & cmts. a & d (strict liability for defective design applies when “the

foreseeable risks of harm posed by the product could have been reduced

or avoided by the adoption of a reasonable alternative design,” this

“achieve[s] the same general objectives as does liability predicated on

negligence.”).

* Douglas Lichtman & William Landes, Indirect Liability for

TECH. 395, 405 (2003).

Id at 409.

feign ignorance of the massive. unlawful use to which its

software is being put. By insulating Grokster from liability

for injury which derives directly from Grokster’s software,

and which was foreseeable, colossal, and readily preventable,

the Ninth Circuit sanctioned that choice. In doing so, the

court further compounded its error in making evidence of any

noninfringing use, no matter how commercially insignificant,

a complete defense to a finding of infringement.

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

Noninfringing Use” Doctrine Does Injustice to the

Primary Public Interest that Copyright Serves in

Enabling Authors and Creators to Create

In Sony, this Court recognized that when faced with

technological change, the Court must return to basic

principles.” The basic principle at issue here is clear:

for the general public good.’ This central concern with the

public good, enshrined in Article I, Section 8 of the

Constitution, has been vindicated time and again by this

Court.” It is thus a bedrock principle of American law -- and

* Sony, 464 U.S. at 432. See also Twentieth Century Music Corp. v.

Aiken, 422 U.S. 151, 156 (1975) (The copyright law must not be

inflexible and must be read “in the light of drastic techno ‘ogical change.”

keeping in mind at all times that its “basic purpose” is “to stimulate

artistic creativity for the general public good.”) (citing Fortnightly Corp.

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

Jd. at 431-32 (quoting Twentieth Century Music Corp., 422 U.S. at

156).

“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 public of the products of his creative genius.”), Mazer v.

indeed of American culture -- that while individual creators

may be the immediate beneficiaries of copyright protection,

such protection ultimately serves public, not private ends, by

encouraging the creation and ensuring the availability of

creative works. As James Madison observed in the Federalist

Papers. “the public good [afforded by copyright] fully

coincides . . . with the claims of individuals."

Recorded music is vital to America's cultural heritage, as

reflected in the 107 categories of GRAMMY" Awards,

covering forty 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 this vital heritage

depends upon an environment in which creators of recorded

music can earn a living from their creative endeavors. We do

not live in an era. like the Renaissance, in which artists are

financially supported by a few wealthy, private patrons.

Today. millions of members of the record-buying public are

the “patrons.” If the public is allowed to copy and distribute

sound recordings without compensating the creators (and

those who work with them), artists’ principal means of

support will vanish. The destructive consequences to our

culture will follow as certainly as night follows day. As a

former Register of Copyrights observed,

The basic purpose of copyright is the public interest,

to make sure that the wellsprings of creation do not

dry up through lack of incentive, and to provide an

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 promote the progress of the ‘useful Arts, U.S.

Const. Art. |, § 8, cl. 8, by rewarding creativity .. . .”), Harper & Row,

Publishers, Inc. v. Nation Enters., 471 U.S. 539, 546 (1985).

*' Tue FEDERALIST No. 43 at 279 (Mod. Lib. ed. 1941).

alternative to the evils of an authorship dependent

upon private or public patronage. As the founders of

this country were wise enough to see, the most

important elements of any civilization include its

independent creators -- its authors, composers, and

artists -- who create as a matter of personal initiative

and spontaneous expression rather than as a result of

patronage or subsidy. A strong, practical copyright is

the only assurance we have that this creative activity

will continue.”

Surely. Congress did not intend that the Copyright Act's

core public-protective principle -- promotion of “the useful

arts” through strong copyright protection for creators --

should be undercut by judicial interpretation which vitiates

any remedy against those who deliberately foster copyright

infringement by others. Yet the Ninth Circuit did just that,

ignoring the inevitable reality that the Framers themselves

recognized more than two centuries ago: when artists and

authors are not compensated, both their incentive to create

and, as a practical matter, their very ability 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

life, 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.

* Copyright Law Revision: Hearings Before the Subcomm. On Patents,

Trademarks, and Copyrights of the Comm. on the Judiciary on S. 1006,

89th Cong., Ist Sess. 65 (1965) (testimony of Register of Copyrights

Abraham Kaminstein).

* See Jane Ginsburg. Copyright Use and Excuse on the Internet, 24

should not, control every Internet use, but neither should every use

prompt an excuse, lest we undermine the ability of copyright owners, and

especially of individual creators, to make a living from their creativity.”).

Without our copyrights, we will be economically

devastated.”

Renowned Composer and lyricist Alan Menken similarly

testified:

While it is impossible to ascertain exactly what

inspires a person to become a composer rather than a

surgeon, or a dentist in my case, it is the reality of life

. that one must work in order 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?”

“ Pre-19°8 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, \0Sth Cong. 25 (June 27, 1997)

(statement of Paul Williams). available at http://commdocs.house.gov

committees judiciary hju4 3666 .000 hjyu43666 0. htm#24.

hefore the Senate Judiciary Comm., 1995 WL 557177 (F.D.C.H.)

(September 20, 1995) (statement of Alan Menken).

“Mike Stoller. Editorial, Songs That Won't Be Written, N.Y. TIMES,

Oct. 7, 2000. at AIS. Mike Stoller testified similarly below. See

Declaration of Mike Stoller in Support of Plaintiffs’ Motion for Summary

Judgment. August 15. 2002. at J.A. 290, ® 11-13 (“Today, | fear for the

seventeen-year-old songwriter looking forward to a career in the music

business. ... If [Defendants] get away with their thievery, it will4urn

that teenager's future livelihood into a mere hobby, and, in domg so, it

will ensure that fewer and fewer talented individuals can afford to devote

their efforts to expanding America’s musical heritage. ... Where

would | be today if, after composing “Jailhouse Rock.” anyone could

have recorded it. and anyone else could have copied that recording,

—

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 that

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 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 not 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 €arn

without paying us? Probably, | would not be a professional songwriter.

Probably, | would not have devoted my full-time efforts to composing

and songwriting over the course of my career.”). -

*’ |. Fred Koenigsberg, HMumpty-Dumpty In Copyrightland, 5\ J.

989 before the Subcomm. on Courts & Intellectual Prop. of the House of

Representatives Comm. on the Judiciary, \995 WL 418350 (F.D.C.H.)

(July 13, 1995) (statement of Quincy Jones) (“[W]e must not forget that

musicians, who support themselves and their families on the royalties

earned from the three or four songs that they composed.”).

a living from their creative endeavors that the copyright laws

are designed to protect for the benefit of our society.

It is hardly a secret that record companies have fired

thousands of employees and have significantly cut back on

investment and expansion plans, largely due to the downturn

in record sales resulting from illegal downloading via the

internet.”” Experimentation -- the seed of most intellectual

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 curtailed, if not

eliminated entirely. Artists who would have been signed in

better times are being ignored. And, for every recording

artist who has been dropped or whose projects are not being

funded by record companies. countless others have suffered

economically as well -- the musicians and backup singers

who would have been employed. graphic artists whose

livelihood is derived from creating album covers, employees

of recording studios. songwriters. and untold others. It

cannot be reasonably disputed that the principal reason for

this catastrophic harm is the proliferation of businesses like

Grokster.”

By completely eliminating from the balance the copyright

holders’ “legitimate demand for effective -- not merely

symbolic -- protection of the statutory monopoly,””' the

See. e.g. Ethan Smith. Universal Music To Cut Work Force As

Industry Sags. WALL STREET J., Oct. 16. 2003, at A3 (noting that, as of

late-2003. the “industrywide work force .. . hald] already shed nearly one

in five jobs over the last few years.” and that “{i}n all, nearly 8.000 jobs

[had already | been stripped from the five major record companies”).

” See Privacy & Piracy: The Paradox of Ilegal File Sharing on Peer-

to-Peer Networks and the Impact of Technology on the Entertainment

Industry, \08th Cong.. reprinted at 2003 Wi. 22234991 (F.D.C.H.) (Sept.

30. 2003) (testimony of Mitch Bainwol before the Senate Committee on

Governmental! Affairs) (“Bainwol Testimony”).

" Somy. 464 U.S. at 442.

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, worse.

that infringement is acceptable conduct.” 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, 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 detriment of the

public, this nation, and its culture.

See Bainwol Testimony, at 5-6 (describing the music industry's

efforts to counteract this perception).

” We further note that artists place a premium on the quality of the

recordings they distribute to the public. They devote an enormous

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

part of their art. Respondents have usurped for themselves a fundamental

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. The

listener may never know that the defects were not the fault of the

CONCLUSION Of Counsel.

The judgment of the Ninth Circuit court of appeals should

be vacated and reversed. JOEL A. KATZ

Respectfully submitted. voy ears mean LLy

JON A. BAUMGARTEN 3290 Northside Parkway, Suite 400

Counsel of Record Atlanta, Georgia 30327

CHARLES B. ORTNER

WILLIAM M. HART Jay L. COOPER

FRANK P. SCIBILIA GREENBERG TRAURIG LLP

ISAAC NESSER 2450 Colorado Avenue

Proskauer Rose LLP Santa Monica, CA 90404

1585 Broadway

New York. New York 10036

(212) 969-3000

Counsel for The National Academy

of Recording Arts & Sciences, Inc.,

The Country Music Association, Inc.,

The Gospel Music Association, The

Hip-Hop Summit Action Network,

Jazz Alliance International, Inc., The

Rhythm & Blues Foundation,

SESAC, Inc., and Individual Artists

as Amici Curiae

JAY ROSENTHAL

BERLINER, CORCORAN & Rowe, LLP

1101 17th Street, N.W.

Washington, DC 20036

Counsel for The Recording Artists’

Coalition (“RAC”) and the RAC

Artists as Amici Curiae

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.