THE LEFSETZ LETTER: Re-Grokster

Boy did the content companies screw THIS up.

Like a slugger, the RIAA and MPAA decided to swing for the fences. Try to hit a HOME RUN!

But even casual baseball fans know that a contact hitter, one who waits for his pitch, tries for singles and doubles, tries to win the game in increments as opposed to all in one shot, has a better BATTING AVERAGE!

What's the goal here?

To stop illegal P2P distribution.

The question is, will this lawsuit ACHIEVE THIS??

Conventional wisdom is true. One cannot divine exactly what the Supreme Court will do based on oral argument. Yet, they give HINTS!

Stunningly, whether prepared by their young law clerks, or having done independent research, the justices seemed familiar with the landscape. Who'd-a-thunk we'd ever hear a black-robed alta kacher utter the word "iPod". But they weren't only familiar with the HARDWARE, they were familiar with the CONCEPTS! Yes, first and foremost, they were worried about chilling technical innovation. Hell, they even referenced GUTENBERG! The only question is, how do you balance COPYRIGHT HOLDERS' interests against the benefit of technical innovation. That's what they wanted to know. That's what they asked the content industries' representative. Where do they draw the LINE?

Donald Verrilli didn't have an answer. Oh, he weaseled and said it wasn't his RESPONSIBILITY! But god, that sounds like a second grader trying to evade the question. People have been trading P2P in excess of five years, and other than complete evisceration you've got NO SOLUTION?? You didn't even THINK about this??

And that's what the oral argument focused on. Where to draw the line.

The justices brought up the concept of INDUCEMENT! Was THAT the issue?

Stunningly, NEITHER party wanted to go there. For that would mean kicking the case back down the legal food chain, for a hearing on THIS issue, involving MORE money and more TIME!

So, assuming a new standard of infringement is to be established, WHAT IS IT??

As just stated, the RIAA attorney punted.

The Grokster attorney just asked for a reiteration of the Sony Betamax case, just like in the lower courts. But, STUNNINGLY, Justice Scalia said this case was NOT going to be decided on the basis of stare decisis, that they were going to make NEW LAW!

Once again, what should that law BE??

Well, the focus of the content companies in this case, what was discussed in court yesterday, was the issue of PROFITS! Grokster was MAKING MONEY off people acquiring the content owners' PROPERTY! They were selling a ton of ADVERTISING!

So there we have a possible line of demarcation. You can't make MONEY inducing people and having them commit copyright infringement.

But this leaves a HUGE HOLE! What if the writer of the software, the DISTRIBUTOR of the software, ISN'T INTERESTED IN MONEY!

Oh, you say EVERYBODY's interested in money.


But the creator of BitTorrent wasn't. He wrote the program in his house, and deeded it to the public. Are we going to stop people like Bram Cohen from writing software??

He didn't induce anybody to trade copyrighted material. He didn't make any money selling advertising. He even goes on record that the use of BitTorrent to trade copyrighted material is ILLEGAL! Suddenly, he won't be able to CODE??

Never gonna happen. Because then it almost becomes an issue of THOUGHT crime, an area where lawmakers and courts have ALWAYS feared to tread, for can you really read somebody's MIND?? Who KNOWS why someone created this software. To show how smart they are? To trade pictures of COINS?

But, but, BUT you say. People are going to use this software to TRADE COPYRIGHTED MATERIAL! But this guy is not Grokster. Far from it. This guy is not on trial. And, if you're familiar with yesterday's hearing, this is EXACTLY the guy the Supreme Court wants to PROTECT! For he, like Steve Jobs and Bill Gates before him, is the lifeblood of the COUNTRY!

Mmm… So, once again, what's the line of demarcation.

Is it whether you're making money?

Is it how much copyrighted material is being traded? Which means THEN you've got to go into the mind of the CREATOR??

WHATEVER line is drawn, it will be closer to the tech side than the content company side. Because everybody knows the content companies kick and scream about new technology, and then make a KILLING on it. And, the country benefits MORE from tech innovation than content distribution. Yes, based on the questions asked yesterday, it's clear that even the SUPREMES know this.

So what can the content companies hope for at BEST??

That they put Grokster out of business.

But will this solve their PROBLEM??

NO WAY!

First and foremost, you've got the issue of the aforementioned young coder, working for free for an end which cannot be determined.

Second, the software's already out there.

You can't have mass software abortion. You can't go out into the world, push a button and suddenly all P2P software is wiped from HUNDREDS OF MILLIONS OF HARD DRIVES!

Oh, you could shut down Napster, but now P2P is not dependent on a central server, it's in the hands of the USERS! Put Grokster out of business and people can STILL use its software to trade.

FURTHERMORE, the Supreme Court is not going to ban the USAGE of this software. For that's not at issue in this case. And, the companies already have a remedy at hand, SUING THE USERS! Oh, the content companies will do a public 180, and say that's not TENABLE, that they can't sue EVERYBODY! But the best the Supreme Court will do is direct them to Congress, and instruct them to get a LAW passed allowing easier access to trading names and such. A law, based on the failure of the Induce Act, that the RIAA and MPAA almost definitely won't be able to get. Think of it like a POLITICAL campaign. It's all about the MONEY! The RIAA starts advertising, saying they need this law, and then INTEL, SUN, APPLE, every Silicon Valley company known to man spends money to get the CONTRARY message out there and the RIAA's message is DWARFED! (There are no laws stating that expenditures must be EQUAL!)

It seems the content companies just can't win.

HELLO!! Isn't that rule number one of war, PICK YOUR BATTLES?

Oh, I can see being somewhat complacent after the Napster ruling, but with the advent of KaZaA, the content companies should have woken up. They needed to play in this new sphere, they needed to license their works, they needed to come up with cheap, easy distribution methods that were true competitors.

But NO, evidencing heretofore unseen hubris, the content companies decided to FIGHT! Allowing people to steal for another HALF DECADE!

But it's worse than that.

If Napster had been granted a license, we would not be where we are today.

And where we are today is that if Grokster is shut down, even all P2P, which is utterly IMPOSSIBLE, trading will CONTINUE!

You can e-mail tracks. Send them quickly via IM.

Now everybody has purchased a portable hard drive. And instead of taking a few tracks a day, they're taking hundreds, oftentimes THOUSANDS, in a matter of MINUTES!

And there's absolutely nothing the RIAA can do about this. Nada. Other than putting a policeman, with a gun, in EVERYBODY'S HOUSE!

Yeah RIGHT, THAT'S gonna happen.

By ignoring the obvious, that digital distribution on new terms is HERE, the content companies drove, FULL-FORCE, the creation of ALTERNATIVES! That are even HARDER to crack down on. Napster had a central server, it was easily stoppable. Grokster doesn't. Here we are YEARS later, and Grokster won at the two previous court levels! And, we've got the hard drive example above.

There's just no winning here.

Oh, theoretically, the Supreme Court could side COMPLETELY with the content companies. THEN, Silicon Valley companies would be COMPLETELY SCREWED! But the RIAA and MPAA would be left in the cold. It's too late. Instead of seeing an opportunity for a new avenue of distribution, and MONETIZING it, they've driven the acquisition of their wares ever further underground, where it's harder to track, and impossible to eviscerate.

Contact Bob Lefsetz | View Lefsetz Letter Archives

NOTE: The views expressed in this editorial do not necessarily reflect the opinion of CelebrityAccess, Encore or its employees.

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