Legal aspects of file sharing

Main article: File sharing

The legal issues in file sharing involve violation of copyright laws as digital copies of copy-written materials are transferred between users.

The debate on peer to peer and file sharing is a virtually global phenomenon. Peer to peer ("P2P") technology allows people worldwide to share files and data; however a significant proportion of the data shared is material passed freely between users that is (or should legally be) subject to copyright or other restrictions. Different legal systems, and different technologies, handle this differently. Some of the key background and distinctions are as follows:

• P2P file sharing is used both legitimately (to distribute with permission or non-copyright materials), and illegitimately (in breach of copyright). It is highly popular and effective, with some estimates being that 18 - 35% of all internet traffic is P2P usage in some form or other.

• P2P systems vary - some rely upon a centralized server, others are decentralized with no one site operating the system. Recent systems often have anonymity or obfuscation built in, making it harder to identify senders, recipients and material, and providing a degree of plausible deniability.

• In some file sharing systems, the owner of a sharing system directly distributes files themselves. In others, notably BitTorrent, the organizer is not in fact distributing any copyright material. rather, they act like a cataloger or co-ordinator, indexing files rather than themselves offering any such material. A typical such file might provide a filename, a location it can be downloaded from, and various checksums which can be used to verify the file's integrity when downloaded. It does not, itself, contain any media material, whether legal or otherwise.

Legal issues relevant to file sharing

The challenges facing copyright holders in the face of file sharing systems are quite novel historically and have highlighted many new challenges in both theory and practice:

• Ambiguities in the interpretation of copyright law
• The new challenges posed by international communications and varying legislations
• Mass litigation and the development of processes for evidence and discovery
• Rapidly developing new technologies and uses
• Low barriers to entry by would-be sharers and the development of a mass usage of the technologies
• File sharing approaches developed in response to litigation against sharers, which obfusticate or hide the fact that sharing is happening, or the identities of those involved. For example: encryption and Darknets.

Copyright law in United States

Copyright law

Main article: Copyright

A copyright in the United States consists of the rights enumerated under 17 USC 106.

The four largest record companies, working together under the leadership of the RIAA, seek to stop peer to peer file sharing by attacking the use of 'shared files folders'. They claim that the making of files available for sharing on a P2P network infringes on their right under 17 USC 106(3) "to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending". Critics have argued that the RIAA has failed to show (a) dissemination, (b) of actual phonorecords or copies, (c) "to the public" (as opposed to a limited group), or any (d) sale, transfer of ownership, rental, lease, or lending..... all of which are required components of a 17 USC 106(3) "distribution".

The Basic Copyright Law Issues

At this time the development of the law in this area is in its infancy.

In the United States, for example, a record industry trade association, the RIAA, on behalf of the four (4) largest worldwide record companies, has launched an estimated 30,000 cases over a 4-year period, all against people whose internet access accounts have, according to the plaintiffs, been associated with peer-to-peer file sharing accounts using FastTrack technology, e.g., Kazaa, LimeWire, Gnutella, iMesh, and others. The suits are based upon a report of an internet investigator who claims to have detected a "shared files folder". At the core of these cases is the allegation that the defendants "made available for distribution" the song files in a shared files folder. See, e.g. Elektra v. Barker and Warner v. Cassin, two pending cases in which the legal viability of that accusation has been tested, for an examination of the legal issues. So far only one case against an alleged infringer is known to have gone to trial. No fully contested cases are known to have been determined by a trial, summary judgment motion, or otherwise. The trial which did go forward took place in October, 2007. Although it initially resulted in a verdict of $222,000 for "making available" 24 song files having a total retail value of $23.76, or less, the Judge who presided over the trial overturned the verdict, on the ground that his submission of the case to the jury under the RIAA's "making available" theory was a "manifest error of law". He also criticized the size of the verdict as "wholly disproportionate" to the damages, and urged Congress to amend the Copyright Act to prevent the possibility of a recurrence.

Subsequent to the Thomas trial, and prior to the decision setting the verdict aside, the Courts in Atlantic v. Brennan , Elektra v. Barker, above, Atlantic v. Howell, and London-Sire v. Doe 1, had rejected the RIAA's "making available" theory.. But in Barker the judge had suggested to the RIAA another theory which it might plead -- "offering to distribute for purposes of redistribution". This theory, based on the legislative history rather than the legislation itself, has no precedent, and is ambiguous in terms of what an "offering" would be. We are not aware of any other judge adopting it.

In sum, the lower courts seem to be forming a consensus that the 'making available' theory is incorrect. But the question of whether merely 'making files available' over a peer to peer network is actionable has yet to be decided on an appellate level. In Thomas Judge Michael J. Davis agreed most closely with the Howell, Brennan, and London-Sire analyses, and rejected the "offer to distribute" theory proffered by the judge in Barker.

Primary Infringement Liability

The fundamental question, "what use can a P2P file-sharing network's customers make of the software and of copyrighted materials without violating copyright law", has no answer at this time, as there has been almost no dispositive decisionmaking on the subject.

This issue has received virtually no appellate attention, the sole exception being BMG v. Gonzalez, a decision of the U.S. Court of Appeals for the Seventh Circuit, which held that where a defendant has admitted downloading and copying song files from other users in the P2P network without permission of the copyright holders, she cannot claim that such copying is a "fair use". Since Gonzalez involves a defendant who had admitted to actual copying and downloading of songs from other unauthorized users, it is of limited applicability in contested cases, in that it relates solely to the reproduction right in 17 USC 106(1), has no bearing on the 17 USC 106(3) distribution right.

A series of cases dealing with the RIAA's "making available" theory has broad implications, not only for the subject of P2P file sharing but for the internet at large. The first to receive a great deal of attention was Elektra v. Barker, an RIAA case against Tenise Barker, a Bronx nursing student. Ms. Barker moved to dismiss the complaint, contending, among other things, that the RIAA's allegation of "making available" did not state any known claim under the Copyright Act.. The RIAA countered with the argument that even without any copying, and without any other violation of the record companies' distribution rights, the mere act of "making available" is a copyright infringement, even though the language does not appear in the Copyright Act, as a violation of the "distribution" right described in 17 USC 106(3). Thereafter, several amicus curiae were permitted to file briefs in the case, including the MPAA, which agreed with the RIAA's argument, and the Electronic Frontier Foundation (EFF), the U.S. Internet Industry Association (USIIA), and the Computer & Communications Industry Association (CCIA), which agreed with Ms. Barker. The US Department of Justice submitted a brief refuting one of the arguments made by EFF, but did not take any position on the RIAA's "making available" argument, noting that it had never prosecuted anyone for "making available".. The Elektra v. Barker case was argued before Judge Kenneth M. Karas in Manhattan federal court on January 26, 2007, and decided on March 31, 2008.

The decision rejected the RIAA's "making available" theory but sustained the legal sufficiency of the RIAA's pleading of actual distribution and actual downloading. Additionally, the Court suggested to the RIAA that it might want to amend its complaint to include a claim for "offering to distribute for purposes of distribution", but gave no guidance on what type of evidence would be required for an "offer". The Court's suggestion that merely "offering" to distribute could constitute a violation of the Act has come under attack from William Patry, the author of the treatise Patry on Copyright.

Three other decisions, also rejecting the RIAA's "making available" theory, came from more unexpected sources.

The Barker decision was perhaps rendered anticlimatic by the decision of Judge Janet Bond Arterton, from the District of Connecticut, handed down six weeks earlier, in Atlantic v. Brennan , rejecting the RIAA's application for a default judgment. Brennan, like Barker, rejected the RIAA's "making available" theory, but unlike Barker it found the RIAA's specificity on the other issues to be insufficient, and it rejected the conceptual underpinnings upon which Judge Karas based his "offer to distribute" idea.

And Barker was perhaps overshadowed by the decision of Judge Gertner, rendered the same day as the Barker decision, in quashing a subpoena served on Boston University to learn the identity of BU students, in London-Sire v. Doe 1 . Here too the Court rejected the RIAA's "making available" theory, but here too -- like Atlantic but unlike Elektra -- also rejected any possible underpinning for an "offer to distribute" theory.

And then came the decision of the District Judge Neil V. Wake, in the District of Arizona, in Atlantic v. Howell.. This 17-page decision -- rendered in a case in which the defendant appeared pro se (i.e., without a lawyer) but eventually received the assistance of an amicus curiae brief and oral argument by the Electronic Frontier Foundation-- was devoted almost exclusively to the RIAA's "making available" theory and to the "offer to distribute" theory suggested by Judge Karas in Barker. Atlantic v. Howell strongly rejected both theories as being contrary to the plain wording of the Copyright Act. The Court held that "Merely making a copy available does not constitute distribution....The statute provides copyright holders with the exclusive right to distribute "copies" of their works to the public "by sale or other transfer of ownership, or by rental, lease, or lending." 17 U.S.C. ...106(3). Unless a copy of the work changes hands in one of the designated ways, a "distribution" under ...106(3) has not taken place." The Court also expressly rejected the 'offer to distribute' theory suggested in Barker, holding that "An offer to distribute does not constitute distribution".

The next critical decision was that in Capitol v. Thomas, which had received a great deal of media attention due to the fact that it was the RIAA's first case to go to trial, and probably additional attention due to its outsized initial jury verdict. The RIAA had prevailed upon the trial judge to give the jurors an instruction which adopted its "making available" theory, over the protestations of the defendant's lawyer. Operating under that instruction, the jury returned a $222,000 verdict over $23.76 worth of song files. Almost a year after the jury returned that verdict, however, District Judge Michael J. Davis set the verdict aside, and ordered a new trial, on the ground that his instruction to the jurors -- that they did not need to find that any files were actually distributed in order to find a violation of plaintiffs' distribution right -- was a "manifest error of law". The Judge's 44-page decision agreed with Howell and London-Sire and rejected so much of Barker as intimated the existence of a viable "offer to distribute" theory.

There may be indications that the RIAA has been jettisoning its "making available" theory. In a San Diego, California, case, Interscope v. Rodriguez, where the Judge dismissed the RIAA's complaint as "conclusory", "boilerplate", "speculation", the RIAA filed an amended complaint which contained no reference at all to "making available". In subsequent cases, the RIAA's complaint abandoned altogether the "making available" theory, following the model of the Interscope v. Rodriguez amended complaint.

In its place, it is apparently adopting the "offer to distribute" theory suggested by Judge Karas. In the amended complaint the RIAA filed in Barker, it deleted the "making available" argument -- as required by the judge -- but added an "offer to distribute" claim, as the judge had suggested. It remains to be seen if it will follow that pattern in other cases.

Secondary Infringement Liability

Secondary liability, the possible liability of a defendant who is not a copyright infringer but who may have encouraged or induced copyright infringement by another, has been discussed generally by the United States Supreme Court in MGM v. Grokster, which held in essence that secondary liability could only be found where there has been affirmative encouragement or inducing behavior. On remand, the lower court found Streamcast, the maker of Morpheus software, to be liable for its customers' copyright infringements, based upon the specific facts of that case.

Under US law "the Betamax decision" (Sony Corp. of America v. Universal City Studios, Inc.), holds that copying "technologies" are not inherently illegal, if substantial non-infringing use can be made of them. Although this decision predated the widespread use of the Internet, in MGM v. Grokster, the U.S. Supreme Court acknowledged the applicability of the Betamax case to peer to peer file sharing, and held that the networks could not be liable for merely providing the technology, absent proof that they had engaged in "inducement."

A little over a year later, the RIAA initiated the first major post-Grokster, secondary liability case, Arista v. Limewire, in Manhattan federal court. Lime Wire denied the allegations, and counterclaimed, charging the major record companies with antitrust violations and other misconduct."Lime Wire Sues RIAA for Antitrust Violations" The antitrust claims have, however, been dismissed, so the case is moving ahead solely on the copyright issues.

Electronic Frontier Foundation

The Electronic Frontier Foundation (EFF) seeks to protect and expand digital rights through litigation, political lobbying, and public awareness campaigns. The EFF has vocally opposed the RIAA in its pursuit of lawsuits against users of file sharing applications and supported defendants in these cases. The foundation promotes the legalization of peer-to-peer sharing of copyrighted materials and alternative methods to provide compensation to copyright holders.

In September, 2008, the organization marked the 5th 'anniversary' of the RIAA's litigation campaign by publishing a highly critical, detailed report, entitled "RIAA v. The People : Five Years Later", concluding that the campaign was a cruel failure.

Copyright law in European Union

Main article: EU Copyright Directive

In the European Union (EU), the 2001 EU Copyright directive, which implemented the 1996 WIPO treaty ("World Intellectual Property Organization Copyright Treaty"), prohibits peer-to-peer, claiming it is a violation of the directive. However, not all European member states have implemented the directive in national legislation. Notably, on December 22, 2005, after discussing the EU directive, the French parliament passed two amendments legalizing the exchange of copies on the Internet for private use. In a later proceeding, the French government withdrew the article in question and made illegal any p2p client obviously aimed at sharing copyrighted material. The term "obviously" was not defined. The project of law (called DADVSI) has still to be discussed by the French Senate and, if the decision differs from the Assemblée Nationale's, it will be debated on second lecture back at the Lower House.

Graduated Response

In response to copyright violations using peer to peer file sharing or BitTorrent the content industry has developed what is known as a graduated response, or three strikes system. Consumers who do not adhere to repeated complaints on copyright infringement, risks losing access to internet. The content industry has thought to gain the co-operation of internet service providers (ISPs), asking them to provide subscriber information for ISP addresses identified by the content industry as engaged in copyright violations. Consumer rights groups have argued that this approach denies consumers the right to due process and the right to privacy. The European Parliament passed a non-binding resolution in April 2008 admonishing laws that would require ISPs to disconnect their users and would prevent individuals from acquiring access to broadband.

In a number of European countries attempts to implement a graduated response have led to court cases to establish under which circumstances an ISP may provide subscriber data to the content industry. In order to pursue those that download copyrighted material the individual committing the infringing must be identified. Internet users are often only identifiable by their Internet Protocol address (IP address), which distinguishes the virtual location of a particular computer. Many ISPs allocate a pool of IP addresses as needed, rather than assigning each computer a never-changing static IP address. Using ISP subscriber information the content industry has thought to remedy copyright infringement, assuming that that the ISPs are legally responsible for end user activity, and that the end user is responsible for all illegal activity connected to his or hers IP address.

In 2005 a Dutch court ordered ISPs in the Netherlands to not divulge subscriber information because of the way the Dutch content industry group had collected the IP addresses (Foundation v. UPC Nederland). According to Dutch law ISPs can only be ordered to provide personal subscriber data if it is plausible that an unlawful act occurred, and if it is shown beyond a reasonable doubt that the subscriber information will identify the person who committed the infringing act. In Germany court specifically considered the right to privacy and in March 2008 the German Federal Constitutional Court ruled that ISPs could only give out IP address subscription information in case of a "serious criminal investigation". The court furthermore ruled that copyright infringement did not qualify as a serious enough offense. Subsequently, in April 2008, the Bundestag (German parliament) approved a new law requiring ISPs to divulge the identity of suspected infringers who infringe on a commercial scale. In Italy courts established that criminally liability does not extend to file sharing copyrighted material, as long as it is not done for commercial gain. Ruling on a case involving a copyright holder employed a third party to collect IP addresses of suspected copyright infringers, the Italian Data Protection Authority ruled in February 2008 that the systematic monitoring peer-to-peer activities for the purpose of detecting copyright infringers and suing them. In Spain the Spanish Supreme Court recently ruled that personal data associated with an IP address could only be disclosed in the course of a criminal investigation or for public safety reasons (Productores de Música de España v. Telefónica de España SAU). File sharing is legal for private use if it is done without any profit purpose. and a police chief of the technology squad has publicly said "No pasa nada. Podéis bajar lo que queráis del eMule. Pero no lo vendáis." ("It's ok. You can download whatever you want with eMule. But don't sell it."). There have also been demonstrations where the authorities has been informed that copyrighted material was going to be downloaded in a public place. The downloading was done and no legal measures could be taken against it.

At the same time a number of other European countries are considering to implement a graduated response to copyright infringement via the internet, including France and Britain. In France President Nicolas Sarkozy is backing a proposal to implement a graduated response law, while in Britain voluntary arrangement between ISPs and the content industry is considered towards this end.

Copyright law in Canada

Main article: File Sharing in Canada

Interestingly, Canada stands out by authorizing, at least until the projected copyright reform proposed by Bill C-61, downloads on peer-to-peer networks under the "private copying" exception.

Copyright law in Australia

A secondary liability case in Australia, under Australian law, was Universal Music Australia Pty Ltd v Sharman License Holdings Ltd [2005] FCA 1242 5 September 2005, which was settled out of court. In Australia it is legal to share music socially, however sharing music anonymously is illegal.

Important cases

USA

• Sony Corp. v. Universal City Studios (The Betamax decision)
• MGM v. Grokster
• The AACS encryption key controversy of 2007

Sweden

• The 2006 raid on The Pirate Bay.

Singapore

• Odex's actions against file-sharing

See also

• 2005 Sony BMG CD copy protection scandal
• EU Copyright Directive
• Disk sharing
• Ethics of file sharing
• File sharing timeline
• P2P
• BitTorrent
• Legality of BitTorrent
• Don't Copy That Floppy