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File sharing: the end of the beginning?

July 2006 - Media, Entertainment & Sport. Legal Developments by Harbottle & Lewis LLP.

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When in 1942, some three years into the Second World War, Churchill was asked whether the end of the conflict was in sight, he answered:

'This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.'

Many had expected that last June's decision of the US Supreme Court in MGM et al v Grokster et al would mark the beginning of the end of the conflict that has raged for several years between the advocates of free sharing of digital content on-line and the rights-owners. On the surface at least, this was a unanimous verdict of the nine Supreme Court justices upholding the rights-holders' position. One year on, however, the decision seems to have done little to assist rights-holders in stemming the sharing of files via P2P networks, nor has it proved to be the catalyst for cultural change among the legions of individual file-sharers that some had hoped. While there are several shifts underway that may point to an eventual conclusion to this dispute, there is still some way to go.

If you can't beat them, join them

An important cultural shift for the industry is that rights-owners themselves are increasingly embracing digital delivery technologies for their own distribution. In the case of music, this has largely been though iTunes, though several of the record labels have been working on their own P2P networks (or ‚Äėsuper distribution'). Some of the players who were originally enemies of the music industry (in particular Shawn Fanning who founded Napster and Wayne Rosso of Grokster) have set up technology companies to assist the labels with just this.

In the film world, the broadband file-sharing software BitTorrent has moved from being a target of the rights-owners to a supplier to them. In a recent press release announcing that many of its recent films will be made available by the BitTorrent network, Warners even went so far as to praise the ‚Äėelegance' of the BitTorrent solution.

Global politics

Meanwhile, rights-owners' attempts to crack down on sites that, in their eyes, facilitate file sharing are becoming much more of a political issue. Swedish file-sharing site The Pirate Bay received a great deal of free publicity after being raided by a large number of local police for copyright infringement and having all of its servers confiscated. Some press reports have claimed that the Swedish police raid was the result of political pressure brought by the US government, a claim not clearly denied. The raid was followed by protests on the streets of Stockholm and the bringing down, for a while, of the Swedish national police computer by hackers. Despite the raid, The Pirate Bay's service was up and running within a short time from servers based in the Netherlands. Since then, it has moved back to Sweden and attempts to close it down appear to have failed for now. Reports suggest that the police were unable to find any copyrighted material on the site's servers.

Another object of the US government's concern is the Russian music download site, Unlike many other sites, this site does charge for downloads, though its fees are very low at about a dollar for a chart-topping album. The site claims to be licensed under Russian law by Russian collecting societies, though the rights-owners deny the societies have any mandate to represent them and that use of the site should therefore be unlawful. This sort of site is perhaps more worrying for the rights-owners than others because it confuses consumers as to what is legal and what is not, and gets around whatever attempts the content industries have made to ‚Äėeducate' consumers that content should paid for.

As was anticipated after the Grokster decision, the case may well have been the high watermark for any strategy to stop file-sharing services based on the law. It did not rule that P2P software was unlawful, just the way P2P services were marketed. Cases against such services in other countries have not been straightforward, as the Pirate Bay saga illustrates. Certainly in the UK, our laws are unlikely to give the rights-owners any greater power to control such services than they have in the US.

While some efforts to attack the sites themselves continue, there has been no let-up in the campaigns against individual consumers. Numerous users have been individually threatened with legal proceedings in many countries including the UK. In the US, some 19,000 subpoenas have been issued, though the number of people actually sued has been far less. Indeed, not one of the US cases has yet come to court; the first such case, against a New York mother of five is to be heard shortly. These cases are expensive to bring and any resulting financial settlement rarely exceeds the costs involved. Their purpose is therefore educational, in the hope that word of mouth and front page articles in the weekend papers may scare some users off. It's a slow and piecemeal strategy. The rights-owners are therefore proposing that the rights and wrongs of copyright should be taught in schools, as part of the government's ‚Äėmedia literacy' push. Naturally, it's a controversial proposal, not least in terms of respective priorities within an already crowded curriculum.

The future

So who is winning and where are the next battles in this war? Both sides remain quick to cite statistical evidence that they have the upper hand. The US rights-owners, in the shape of the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA), claim that the number of file-sharing sites has been reduced and that an increasing proportion of consumers of downloaded music are doing so via authorised sites such as Apple's iTunes. While there is little doubt that the number of people using such services is on the increase, this does not appear to mean that the number of people using unauthorised services is falling. Indeed, the problem is continuing to get worse for film - file sharing in this area had taken off more slowly than for music because of the size of the files in question and better use of encryption than by the music industry. But now that broadband is widespread (already some six million connections in the UK alone), unauthorised sharing of video files appears to be increasing rapidly. According to P2P research company BigChampagne, over a million unauthorised copies of each of The Da Vinci Code and Mission Impossible III have been downloaded each week in June 2006.

An ally that the rights-owners would very much like to enlist in support of their cause is the ISP community. If ISPs could monitor more closely what users of their services are doing in terms of trading files, then it would be much easier and cheaper for rights-owners to enforce their rights, or so the argument goes. ISPs have been prepared to talk to the rights-owners but are reluctant to increase their role, partly because of technical complexity and partly for fear of alienating their users. ISPs in the EU have strong protections from liability under both the E-Commerce Directive and the Copyright Directive, and they are reluctant to see any of these diminish. That has not stopped the rights-owners from encouraging them to take a more active role. In Denmark recently, the IFPI (the international body representing the major record labels) obtained an injunction forcing ISPs in a particular case to block access to particular IP addresses by someone accused of file sharing (TDC Totall√łsninger A/S v IFPI Danmark). Although the order was drafted very narrowly, nevertheless it is hoped by some to be a harbinger of better days ahead for the rights-owners, particularly as the case revolved around an interpretation of the EU Copyright Directive and was thus of wider application than simply in Denmark.

MGM et al v Grokster et al, 2005 US LEXIS 5212 (27 June 2005)

TDC Totall√łsninger A/S v IFPI Danmark (10 February 2006)

Mark Owen, partner, Harbottle & Lewis LLP


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