Confronting digital technology: the motion picture industry's battle with online piracy (1).

• Author: Leeds, Rachel S.
• Position: Essay

1. INTRODUCTION

This paper assesses the threats posed to the film industry as a consequence of evolving digital technology in the wake of case law that has shielded peer-to-peer networks from copyright infringement liability for facilitating online music downloads. (2) It surveys the law applicable to actions for online infringement of motion picture copyrights and analyzes how such cases may be resolved in accordance with relevant acts and case law precedents. This analysis will lead to the conclusion that the motion picture industry is likely to suffer the same harm and losses as the music industry due to the current state of the law.

Part I discusses the pertinent provisions of Chapter One of the Copyright Act, (3) including a consideration of two exclusive rights of copyright owners, the manner in which those rights are violated by online piracy, and what forms of digital online piracy may in fact be considered fair uses of copyrighted materials.

Part II addresses the doctrines of secondary copyright liability and considers the manner in which courts have applied those doctrines in cases relating to peer-to-peer network liability for facilitating copyright infringement on the Internet. This portion of the paper also includes a consideration of whether courts have misapplied these doctrines of secondary liability.

Part III considers the specific nature of online piracy problem, including a discussion of a recent study conducted by the Motion Picture Association of America (hereinafter, "MPAA") and related academic and industry commentaries. Part IV is an evaluation of what the motion picture industry is currently doing to protect itself in the process of adapting to the digital age, and how the industry is trying to save itself from a seemingly inevitable demise.

VIOLATED? EXCLUSIVE RIGHTS AND FAIR USE IN THE CONTEXT OF ONLINE FILE-SHARING

Introduction: Chapter One of the 1976 U.S. Copyright Act

The 1976 Copyright Act provides that "[C]opyright protection Subsists ... in original works of authorship fixed in a tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or through the aid of machine or device." (4) Among the listed works of authorship covered by this provision are "motion pictures and other audiovisual works." (5)

The Act confers several exclusive rights on the owner of the copyrighted work, (6) including rights of reproduction (7) and distribution. (8) Online peer-to-peer file swapping networks facilitate violations of both of these rights. By uploading a copyrighted work onto its computer, a file-sharer creates a virtually identical copy (9) of the work on its computer, and then passing it on to an infinite number of downloaders who copy the work onto their own computers.

EXCLUSIVE RIGHTS: REPRODUCTION AND DISTRIBUTION

"[C]opyright infringement is a victimless crime." (10) Such is the sentiment of the growing population of copyright pirates. (11) Copyright infringement does have victims, many in fact. Especially in the context of the motion picture industry where it often takes hundreds of people to make a single feature length film. (12) All of them are hurt by unauthorized reproduction and distribution of motion pictures. (13)

During the Clinton Administration, the Information Infrastructure Task Force's Working Group on Intellectual Property issued its final report, (14) which recognizes that digital technology is "having an enormous impact on the creation, reproduction, and dissemination of copyrighted works." (15) Despite concerns that copyright legislation afforded insufficient protection to copyrighted works in a digital world, the Digital Millennium Copyright Act (hereinafter, "DMCA") in 1998 made no amendments to section 106 of the Act. (16)

Section 106(3) extends an exclusive right of distribution to owners or authors of copyrighted works. While the right of reproduction may be infringed without infringing other rights, infringement of the reproduction right is often coupled with an infringement of the distribution right. (17) One early case against a file-sharing network awarded the largest sum of statutory damages ever to plaintiffs, owners of copyrights in musical recordings. (18) In that case, defendant, MP3.com purchased thousands of copyrighted CDs and copied the recordings onto its servers without authorization from the copyright holders, for the purpose of playing the recordings for its subscribers. (19) Thus, networks may be found liable for infringing activities conducted on the Internet, in cases where a copy is made on the user's hard drive. (20) Moreover, in a more recent case against a file-sharing network, one of the reasons why users were found to have been infringing copyrights is because making files on their own hard drives available to strangers constituted an unauthorized act of distribution. (21)

FAIR USE: 17 U.S.C. [section] 107

What Constitutes a "Fair Use"

Fair use is an absolute affirmative defense to a charge of copyright infringement. (22) A factor considered in determining whether a use is a fair use is whether it is for a legitimate purpose. (23) The Copyright Act does recognize the defense where the protective technology for a copyrighted work is descrambled for the purpose of understanding the manner in which it works. (24) Nevertheless, other uses do not meet the legitimate purpose standard. (25) For example, in Video Pipeline Inc. v. Buena Vista Home Entertainment, Inc., (26) applying the four-step analysis of Section 107 of the Copyright Act, the court concluded that taking several minutes of footage from a motion picture to create an unauthorized "clip preview" was not a fair use. (27)

Personal Use

In an era of evolving technology, there appears to be an increasing curiosity as to whether "personal reproduction" (28) qualifies as a fair use. Many downloaders of digital media, including copyrighted works, limit their use of the works to personal use, which may not constitute infringement. (29) In cases where use of the copyrighted material is not de minimis, it may still be a fair use. (30) Nevertheless, even if downloading a copyrighted work as a "personal reproduction" is a fair use, sending a file to an "anonymous requester" is not. (31)

Commercial Use: Fair Use and Peer-to-Peer Networks

The Ninth Circuit has held that users of Napster's file-sharing network engage in commercial use of copyrighted materials not only because, "a host user sending a file cannot be said to engage in a personal use when distributing that file to an anonymous requester," but also that "Napster users get for free something they would ordinarily have to buy." (32) The Ninth Circuit explained that in regard to the fair use element of the effect of the use on the market, the district court was correct in holding that Napster's service had a "deleterious effect on the present and future digital download market," thus, "depriv[ing] the copyright holder of the free right to develop alternative markets for the work." (33)

A commercial use may also be evidenced by "repeated and exploitative copying of copyrighted works, even if the copies are not offered for sale." (34) The district court in Napster concluded that the service had a harmful impact on the market by reducing CD sales among college students and creating "barriers to plaintiffs' entry into the market for the digital downloading of music." (35) The development and growth of peer-to-peer networks has hindered the development of industry regulated on-demand networks which charge fees for their services. (36)

Fair Use and the DMCA

The DMCA authorizes use of digital rights management (hereinafter, "DRMs") (37) and other access control devices to protect copyrighted works fixed in digital media from unauthorized use or distribution. (38) The Act states that no person shall circumvent such a technological measure, (39) or provide information or technology which is capable of such circumvention. (40) It has been argued that increased use of DRMs may make it difficult for the public to make authorized fair uses of copyrighted works. (41) While to a certain extent this may be true, in reality a large portion of Internet users who seek to circumvent protective technologies, or otherwise access copyrighted works, are not doing so for a "legitimate purpose," but as a means of gaining the ability to access copyrighted works in a manner which is not authorized by the copyright owners. Perhaps, in effect, some of those that would make fair uses are being punished for the infringing activities of their pirating peers. Nevertheless, use of DRMs is one of the copyright industries' few ways of impeding infringement activities in the digital age.

Critics of the DMCA find support for their argument in that uses held to fall within the definition of the fair use privilege are not recognized as exceptions to the anti-circumvention provisions of the DMCA. (42) Even if such a use is "allowed," it may still be impossible to make such a use under [section][section] 1201(a)(2) and (b) which prohibit the distribution of technological devices to accomplish circumvention. (43) The Second Circuit addressed this issue in Universal City Studios v. Corley, (44) where it mentioned that under Stewart v. Abend, (45) the doctrine of fair use allows courts to limit the scope of the applicability of the Copyright Act where the creativity it is meant to encourage would be impeded. (46) The Second Circuit in Corley concluded that making an identical copy in the same format of the original copyrighted work cannot be a fair use. (47)

COPYRIGHT INFRINGEMENT LIABILITY OF PEER-TO-PEER NETWORKS STANDARDS FOR INFRINGEMENT

Chapter 5 of the 1976 U.S. Copyright Act describes copyright infringement and provides remedies for it. (48) Congress did not define "infringement" in the statute, but rather left the determination of its meaning to the courts. (49) The...