A Spectacular Mistake

Because they said it a lot better than I could have, this is the text of a statement from the Electronic Frontier Foundation released last Monday, June 27, 2005:

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Today the Supreme Court issued a ruling that could impede makers of all kinds of technologies with expensive lawsuits. The long-awaited decision in MGM v. Grokster states that [peer-to-peer] software manufacturers can be held liable for the infringing activities of people who use their software. This decision relies on a new theory of copyright liability that measures whether manufacturers created their wares with the "intent" of inducing consumers to infringe. It means that inventors and entrepreneurs will not only bear the costs of bringing new products to market, but also the costs of lawsuits if consumers start using their products for illegal purposes.

"Today the Supreme Court has unleashed a new era of legal uncertainty on America's innovators," said Fred von Lohmann, EFF's senior intellectual property attorney. "The newly announced inducement theory of copyright liability will fuel a new generation of entertainment industry lawsuits against technology companies. Perhaps more important, the threat of legal costs may lead technology companies to modify their products to please Hollywood instead of consumers."

The Supreme Court has also ordered the lower court to consider whether peer-to-peer companies Grokster and StreamCast can be held liable under the new standard. StreamCast is confident that it will pass muster under the new, multi-pronged test.

MGM v. Grokster was brought by 28 of the world's largest entertainment companies against the makers of the Morpheus, Grokster, and KaZaA filesharing software products in 2001. The entertainment companies hoped to obtain a legal precedent that would hold all technology makers responsible for the infringements committed by the users of their products. The Electronic Frontier Foundation (EFF), along with StreamCast counsel Matt Neco and Charles Baker of Porter and Hedges, defended StreamCast Networks, the company behind the Morpheus filesharing software.

The entertainment companies lost their case in District Court, then lost again on appeal to the Ninth Circuit Court of Appeals. The lower court rulings were based on the Supreme Court's landmark decision in the 1984 Sony Betamax case, which determined that Sony was not liable for copyright violations by users of the Betamax VCR.

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You know, most of the time, I admire the level-headed decisions that the Supreme Court makes. But when they get it wrong, they almost always do it in a pretty spectacular fashion that will have negative repercussions for decades to come. Anyone remember studying Plessy vs. Ferguson in history? It was the case that reinforced "separate but equal" laws. The decision was made in 1896 and lasted until it was overturned in 1954 by Brown vs. Board of Education. This is one of those instances in which I think that the Supreme Court really screwed the pooch. This time, it wasn't to civil rights, but to another of the foundations of what is supposed to make this country great.

This is yet another significant blow to what used to be one of America's most vaulable assets: its ingenuity and innovation. What this means is that if you make a product and people co-opt it to use for illegal purposes, YOU can be held liable, regardless of legal and legitimate uses your product may have. Before last Monday, this was not true. It's what allowed for such devices as VCRs to exist (a legal battle that was resolved over 20 years ago).

So now, when people (as a lot of software is developed by individuals, not companies) develop new products, they not only have to worry about the normal concerns of whether or not people will want it and whether or not it's safe, they also have to have crystal balls to determine whehter people will start using it for illegal purposes.

I hate to sound like an alarmist, but is it any wonder that we're losing our technological edge in the world today? Is there really any doubt that America will soon be a second-rate country when it comes to innovation, one of the basic underpinning of our whole economy? Not in my mind. People in this country today are scared to be clever because the smarter you are, the more jealous companies will go after you to protect their precious revenue sources. Now, our lawmakers and courts are openly complicit with corporations in this effort. I know that if I ever release or contribute to any open source software, I will only do so anonymously, because I don't want anyone coming after me. (Note that the products that the defendants produced in this lawsuit were not open source, but the same principles apply to ALL software.)

What is really nagging me at this point is that I wonder what effect this will have in other industries? The gun manufacturing industry has lobbied quite successfully for years that they should not be held liable for the illegal uses of their products. It seems to me that this decision completely overturns that argument, because now, they should know in advance what the people who use their products will use them for. It will be interesting to see if this case is used as a legal argument in those lawsuits. Of course the gun manufacturing lobby has lots and LOTS of cash that it generously gives away to politicians, so I doubt that anything remotely logical will make a difference.