SECTION: NEWS; Vol. 1; No. 9; Pg. 1

HEADLINE: Inside the RIAA Suits The recording industry's filings are well-known, but what's the legal basis behind them and their chance for success?;

Internet Newsletter

BYLINE: By Jonathan Bick, Esq. Mr. Bick is Of Counsel to Wolf Block Brach, Eichler and is an adjunct professor of Internet law at Pace Law School and Rutgers Law School. He is also the author of "101 Things You Need To Know About Internet Law" [Random House 2000]. He can be reached at mailto:bickj@bicklaw.com

BODY:

Inside the RIAA Suits

The recording industry's filings are well-known, but what's the legal basis behind them and their chance for success?

By Jonathan Bick, Esq.

Until recently, it was generally believed that public relations and business concerns would prevent large copyright holders, such as record labels, from suing file sharers, who are also likely to be their consumers. Copyright owners have long avoided suing direct infringers for file-sharing due to obvious concerns: The cost and the negative publicity associated with filing multiple lawsuits against individual users would be overwhelming. However, this month, the Recording Industry Association of America [RIAA] filed 261 civil complaints against people who have allegedly distributed copyrighted music on peer-to-peer [P2P] networks. This cause of action is authorized by the U.S. Copyright Act [17 U.S.C. 106 [2000]] because RIAA, as a representative of copyright owners, has the exclusive rights to reproduction, derivative works, distribution, public display and public performance of their work. Any party who contravenes these exclusive rights commits direct infringement, according to 17 U.S.C. 501 [2000]. The stated objective of the RIAA is to stop product from being stolen, according to its Web site [www.RIAA.com]. "More and more P2P users are realizing that there are dozens of legal ways to get music online, and they are beginning to migrate to legitimate services," says RIAA president Cary Sherman. "We hope to encourage even the worst offenders to change their behavior, and acquire the music they want through legal means."

A P2P network, or file sharing system, provides a means for sharing music. The method used has been documented in A & M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 901 [N.D. Cal. 2000]. This case describes in detail how users can download music from the Internet using existing technology. Peer-to-peer file sharing uses the same technology, except that only two people in electronic contact need use the software technology described in the Napster case. However, the industry suffered a blow in April 2003 with the decision in MGM Studios, Inc. v. Grokster, Ltd., No. 01-08541, slip op. [C.D. Cal. Apr. 25, 2003] [covered in the May 2003 issue of Internet Law & Strategy]. In Grokster, the district court held that Grokster, while "conceptually analogous" to Napster in operation, was different in its function in that no central server is used. Grokster [and co-defendant StreamCast] does not have the ability to monitor and control infringing conduct, the court ruled. The case is being appealed to the 9th Circuit.

It should be noted that the RIAA litigation comes at a time when the Napster case and the Digital Millennium Copyright Act 17 U.S.C. 1201-05 [2000] [DMCA] are hailed as acceptable law. The Napster case and the DMCA are generally acknowledged to represent high water marks with respect to protecting record companies from the unauthorized copying of sound recordings made possible by advances in new technology. In August, Sen. Norm Coleman [R-MN] started an investigation of the proposition that the legal pendulum has swung too far in favor of the copyright holder with respect to Internet-related protections.

By reporting the decision as the Napster court did, it may have acted unlawfully because its decision seems to incorporate information that could subject it to actions under the DMCA. Specifically, 1201[b][1][A] makes it unlawful to traffic technology designed to circumvent the rights of a copyright owner, and 1201[b][1][C] makes it unlawful to traffic technology marketed for use in circumventing technology that protects the rights of a copyright owner.

In fact, just prior to press time, a three-judge U.S. Court of Appeals panel began examining the constitutionality of the copyright subpoenas issued by the RIAA. Verizon Communications, Inc., one of the ISPs that was ordered by a U.S. District Court in August to provide the RIAA with names and addresses of subscribers, is challenging the RIAA's actions under the DMCA. Initially, the court upheld the use of the subpoenas, and the appeals court panel began its review by questioning attorneys from both sides. Judge John Roberts, recently appointed by President George W. Bush, asked RIAA attorneys how file sharing differs from opening one's home library to others. On the other hand, he also noted to Verizon counsel that the company makes money off of file sharers who require a high-speed Internet connection to download large files. Grokster and fellow P2P service Morpheus have filed briefs in the 9th Circuit for the full appeal.

While the RIAA's immediate economic motivations are clear, the long-term legal goals are not. Although under U.S. copyright law, the RIAA can ask as for as much as $150,000 for each copyright violation, the likelihood of such a result is remote. The reason for this conclusion is that many if not most American direct Internet music infringers are children and a parent is almost never liable for a child's unlawful acts on the Internet. [See, 101 Things You Need to Know About Internet Law [Random House 2000]] Thus, it is not likely that the collection of money damages is the motivation.

In light of the fact that most non-American direct Internet music infringers are located in jurisdictions that do not enforce U.S. copyright law, scaring current and potential downloaders may not ultimately be as effective as the industry would like. Finally, the cost and the negative publicity associated with filing multiple lawsuits against individual users would seem to overwhelm the motivation to sue its customers, just to be able to say to their members that they did what they could to protect their interests.

Most likely, RIAA's most recent action is simply a continuation of its past program. RIAA has implemented a program focusing its efforts on the most significant "leakage" points in order to have the greatest impact. Its Internet-related legal battles started with MP3 and Napster. Next, it focused on P2P networks, and stepped up legal action against the end points of the Internet, such as universities and businesses. Now that the largest infringement related entities have all been suited, it has taking action against individuals.

Without understanding the legal or economic motivations of RIAA, it is difficult to assess its realistic expectations as far as results. In any case, filing 260-plus lawsuits against various P2P users [including, as has been widely noted, a 12-year-old girl] does not seem to be a cost-effective legal action to stem the tide of music downloading. The official version, as Sherman says on the RIAA Web site, is that: "Nobody likes playing the heavy and having to resort to litigation. But when your product is being regularly stolen, there comes a time when you have to take appropriate action. We simply cannot allow online piracy to continue destroying the livelihoods of artists, musicians, songwriters, retailers, and everyone in the music industry."

The number of suits filed obviously pales in comparison to the number of P2P users, but the action is having an effect. According to a survey by Peter D. Hart Research Associates cited on RIAA's Web site, 61% of people polled admitted they knew downloading music for free is illegal, a figure that's up from 54% in July and 37% in early June [the RIAA citation of the survey does not provide the survey's sample size].

From the practicing attorney perspective, the RIAA action is loaded with legal risk and little upside legal potential. In addition to the risks associated with the suits RIAA initiated, RIAA has exposed itself to class action suits and the acceleration of adverse legislative action. The RIAA isn't blind to these risks. It has offered an amnesty program "Clean Slate" for those who wish to avoid the possibility of being named in a future suit. "For those who want to wipe the slate clean and to avoid a potential lawsuit, this is the way to go," says Mitch Bainwol, RIAA Chairman and CEO. "We want to send a strong message that the illegal distribution of copyrighted works has consequences, but if individuals are willing to step forward on their own, we want to go the extra step and extend them this option." A P2P user needs to merely pledge to stop illegal downloading and sign an affidavit to that effect. [Details on how to do so are available at www.musicunited.org.]

The Clean Slate program itself however may lead to further legal hassles for the RIAA. Already a collateral suit has been filed by California resident Eric Parke, on behalf of the general public of the state, against the RIAA because of a program related to the RIAA lawsuits. The suit, filed in the Marin Superior Court of California, charges that the RIAA's program is a deceptive and fraudulent business practice. In particular, the Parke complaint indicates that the RIAA program is designed to induce members of the general public to incriminate themselves and provide the RIAA and others with actionable admissions of wrongdoing under penalty of perjury while receiving no valid release of claims in exchange. The Parke action seeks to stop the RIAA from engaging in unlawful, misleading and fraudulent business practices. In particular, the Parke suit asks the court to enjoin the RIAA from falsely advertising its program.

Other collateral legal difficulties have arisen as a result of RIAA's litigation effort. For example, earlier this month, MIT was legally compelled by RIAA to name Claudiu A. Prisnel, class of '06, as an "alleged infringer," despite Prisnel's verified documentation that he does not own a computer and was out of the country for the months surrounding the alleged infringement. MIT answered a subpoena from RIAA naming Prisnel in response to the industry association's request for the name of a network user who, on June 27 from a computer at the Theta Delta Chi fraternity, allegedly offered hundreds of music recordings over the KaZaA file-trading system. It may be argued that RIAA misused its subpoena alternatives.

It should also be noted that RIAA doesn't make or enforce the laws, although it does have a very strong lobby presence in Washington, DC. The same cannot be said of the millions of file-sharers who may be motivated by the RIAA suits, especially the seemingly overzealous, an apparently unintentional, naming of a 12-year old New York City girl [The pre-teen's family has settled with the RIAA for $2000, and a P2P industry group that includes Grokster as a member, P2P United, has offered to reimburse the family. Wire service reports quote Grokster President Wayne Rosso as commenting, "I just feel that these people are bullies. They're like the show-business version of the Taliban." The RIAA says future settlements will have to be higher.] File-sharers may now be able to persuade Congress to pass legislation which reduces copyright holders' Internet intellectual property protection rights.

Proving RIAA's Case

If those named in the suits don't step up to settle as readily as the 12-year-old and the RIAA is forced to try these cases, what is the likelihood of success? It is likely that attorneys for the alleged file-sharer will require RIAA attorneys to undertake the burden of proving the elements of direct or contributory infringement, or vicarious liability, which rests with the copyright owner in a suit brought for copyright infringement. According to Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 [1991], the leading case with respect to the elements that a plaintiff must prove in an infringement action, the plaintiff must demonstrate that the copyright holder has ownership of a valid copyright, and that the alleged infringer copied constituent elements of the work that are original.

Plaintiff's ownership is based on the fulfillment of each of the following five requirements: the work is original to the author; the work is copyrightable; a statute exists to allow a claim of copyright; the work is in compliance with applicable statutory formalities; and a valid relationship exists between the author and the plaintiff. The RIAA should face little difficulty with respect to these matters.

The second element that RIAA must demonstrate is copying. RIAA's major challenge will be to prove proof of copying [ie, the file-sharer did in fact copy the material in question]. It is generally not practical to establish copying as a factual matter by direct evidence, chiefly because of the lack of a witness to the physical act of copying. In addition, the copying of Internet content may occur without any objective physical manifestation. Therefore, RIAA will have to prove copying indirectly, by the establishing defendant's access to the infringed material and the substantial similarity of the material in the defendant's possession and the copyright protected work. This should prove to be a substantial task for RIAA.

Effect of RIAA's Suits

It is unlikely that RIAA's program will be successful. First, parents are not liable for their children's bad acts unless RIAA could prove they knew his child was downloading music illegally, which is difficult. The RIAA would have to demonstrate that the parents knew of the infringement, and that the parent caused or materially contributed to the infringement, which is even more difficult.

Next, while the parents are not liable, RIAA can sue the children themselves. The copyright law applies to minors. However, while RIAA can get a judgment against child, it is unlikely they can collect, because a child has few if any assets. Thus, the economics of most of the RIAA cases would most likely result in settlements before going to trial.

Non-minor RIAA suit defendants who simply have infringing material on their computers would most likely argue that they copied the songs in accordance with the fair-use provisions of copyright law, which allow protected works to be used for such things as scholarship and journalism. These suits would also most likely result in settlements.

However, RIAA suit defendants who are accused of copying files and making them available to others via the Internet and are unable to use a fair-use defense will most likely be forced to go to trial and lose.

Despite the high-profile lawsuits, the deterrent effect will likely be nominal. Most music file sharers understand that with 60 million potential defendants the likelihood of paying for downloaded music due to litigation is less than a million to one.