Is Betamax Obsolete?: Sony Corp. of America v. Universal City Studios, Inc. in the Age of Napster

• Publication year: 2022

37 Creighton L. Rev. 859. IS BETAMAX OBSOLETE?: SONY CORP. OF AMERICA V. UNIVERSAL CITY STUDIOS, INC. IN THE AGE OF NAPSTER

Creighton Law Review

Vol. 37

JESSE M. FEDER(fn*)

INTRODUCTION

The phenomenon of peer-to-peer file distribution on the Internet - and the ensuing flood of copyright infringement lawsuits to halt the practice - has given courts a number of recent opportunities to explore the meaning of the United States Supreme Court's landmark copyright holding in Sony Corp. of America v. Universal City Studios, Inc.(fn1) In A&M Records, Inc. v. Napster, Inc.,(fn2) Metro-Goldwyn Mayer Studios, Inc. v. Grokster, Ltd.,(fn3) and In re: Aimster Copyright Litigation,(fn4) the respective courts each struggled to apply the teachings of Sony to circumstances that were not contemplated when the Court rendered its decision in 1984, producing outcomes that are, at least at first blush, startling in their inconsistency.

In Sony, the Court held that the manufacture and sale of the Betamax videotape recorder did not subject Sony to liability for contributory copyright infringement resulting from infringing uses by purchasers of the device, because the Betamax VTR was capable of "substantial noninfringing uses." Applying this standard to peer-to-peer file distribution systems, the Ninth and Seventh Circuits, in the Napster and Aimster cases, held that the purveyors of these systems were liable for contributory infringement. By contrast, a California District Court applying the Sony standard, as explicated in the Nap-ster decision, found no liability in the Grokster case (albeit on different facts).

None of the courts, however, viewed the peer-to-peer file distribution phenomenon as necessitating a reexamination of Sony, its underlying assumptions, or the implicit "balance of competing claims upon the public interest"(fn5) that it strikes. While a reexamination (at least on the part of lower federal courts) may not be strictly necessary, changing circumstances and changing technology certainly make it appropriate. If marking the twentieth anniversary of the Sony decision were not reason enough to pause and reflect upon the decision's continuing viability in the face of technological change, the divergent outcomes in the trio of peer-to-peer cases should be. Moreover, a central message of the Sony decision itself is that a return to basic principles is needed when technological change renders the copyright law ambiguous. This message applies equally well to judge-made law as it does to the language of the Copyright Act.

In this Article, I will reexamine the Sony decision in light of the peer-to-peer file distribution phenomenon that took off with the introduction of Napster. This reexamination proceeds from several premises. First, copyright promotes an important public interest in authorship and creativity that is expressly recognized in our Constitution.(fn6) It accomplishes this by granting authors exclusive rights as an incentive to create and disseminate new works of authorship. As the Supreme Court stated, "[T]he encouragement of individual effort by personal gain is the best way to advance the public welfare through the talents of authors . . . . Sacrificial days devoted to such creative activities deserve rewards commensurate with the services rendered."(fn7) Even though the immediate beneficiary of copyright protection may be an individual copyright owner, protecting copyrights ultimately serves public, not private ends.

Second, there is nothing in the copyright law - or elsewhere, for that matter - that automatically subordinates that public interest to the important public interest in technological progress. Here, as elsewhere in the law where competing public interests are at stake, Congress and the courts must weigh the interests affected and strike an appropriate balance.

Third, it is unjust to build a business on the infringement of other people's copyrights. It is precisely this type of injustice that doctrines of secondary liability under copyright law were developed by the courts to address. Before we accept as inevitable that the application of a legal rule (particularly a judge-made rule) will lead to an unjust result, justice demands that we reexamine that rule.

In Part I, I will explain what peer-to-peer file distribution networks are and how they function. I will also review the development of doctrines of secondary liability under copyright law, including their application to the Betamax VTR in Sony. In Part II, I will analyze the application of doctrines of secondary liability, as interpreted in Sony, to suppliers of peer-to-peer file distribution systems. I will propose an interpretation of the "substantial noninfringing use" standard that focuses on the commercial viability of noninfringing uses in assessing substantiality. In Part III, I will examine policy concerns that have become apparent with the broad availability and widespread use of peer-to-peer file distribution networks - concerns that were not considered by the Supreme Court on the facts before it, and that are not addressed adequately by the Sony test even as interpreted in Part II. I will address these additional concerns by proposing a modification of the Sony test for contributory infringement that draws on a recent Congressional enactment in an analogous area.

I. BACKGROUND: PEER-TO-PEER TECHNOLOGY AND SECONDARY INFRINGEMENT LIABILITY

A. PEER-TO-PEER FILE DISTRIBUTION NETWORKS: WHAT THEY ARE AND HOW THEY WORK

There is no canonical definition of "peer-to-peer." It is one of those terms that has become accepted into common usage without agreement on its actual meaning. Literally, "peer-to-peer" describes interactions between machines of equal status on the network. This description covers communications between servers, as well as file distribution systems, and is, consequently, too broad to serve as an adequate definition.

One of the more prolific writers about the Internet offers a particularly useful definition:

PEER-TO-PEER is a class of applications that takes advantage of resources - storage, cycles, content, human presence - available at the edges of the Internet. Because accessing these decentralized resources means operating in an environment of unstable connectivity and unpredictable IP address, PEER-TO-PEER nodes must operate outside the DNS system and have significant or total autonomy from central servers.(fn8)

I will endeavor to unpack this definition in the paragraphs that follow.

The predominant model for most interactions between Internet users and Internet resources is the client-server model. A typical example of this configuration is a user operating a web browser that is running on a networked PC, to retrieve information from a web page that is hosted on a computer on the Internet. In this interaction, the PC is the client and the computer that hosts the web page is the server. The client initiates the request and the server fulfils the request.

Behind the scenes a number of things have to happen to complete this transaction. Typically, the user's request identifies the desired resource using a uniform resource locator ("URL") that includes the Internet domain name of the server (e.g., www.loc.gov). The Internet Protocol ("IP") address(fn9) of the server must be resolved by locating it in a database that matches domain names with their associated IP addresses (a domain name system, or DNS database). Using the IP address thus obtained, the request is then routed through the Internet to the server. The server interprets the request and transmits the requested information back to the client, using an IP address for the client that is included in the request.

What distinguishes peer-to-peer transactions is that the resources reside, not on a few centralized servers, but on a multitude of networked PCs that may be acting simultaneously as both clients and servers.(fn10) Under this model, resources are distributed on many machines, rather than located on central servers. Finding those resources, however, presents special problems that are not present in the dominant client-server model.

The method just described for requesting information from a central server cannot be used to access resources residing on most networked PCs because, as a general matter, those machines are not assigned DNS addresses. To request information from a networked PC, then, the IP address for the PC must be obtained through means other than a DNS database. This is further complicated by the fact that most networked PCs do not have fixed ("static") IP addresses. Rather, they are assigned "dynamic" IP addresses that change over time (e.g., from one online session to another). Moreover, most of these PCs are not connected to the Internet all of the time. In order to use resources on the vast number of networked PCs that exist on the "edge"(fn11) of the Internet outside the DNS system, a means must be devised to keep track of their constantly-changing dynamic IP addresses, to associate the IP addresses with the resources that reside on these machines, and to handle transient connectivity. That's where software like Napster and Gnutella comes into the picture.

Peer-to-peer software breaks down into three logical components: client, server and index. The client component acts much like a web browser, allowing a user to perform searches and access resources...