The Physical/Virtual Divide Rebecca Giblin Monash University Australia

Contributory liability Requires knowledge of, and contribution to, third party infringement Vicarious liability Requires “right and ability to supervise” and “direct financial interest” in third party infringement

Physical world assumption #1: Everyone is bound by physical world rules: apples fall down, not up Software world reality: Software code is not bound by the laws of physics or any other physical world rules

Physical world assumption #2: Developing and manufacturing distribution technologies is expensive, and limited to few Software world reality: A fully operational P2P file sharing application can be written on a whim, for virtually nothing, in just six lines of software code

Physical world assumption #3: Rational developers of distribution technologies are commercially motivated Software world reality: Profit is not always a motivation Have at look at - sometimes it’s enough just to create something really cool

Physical world assumption #4: Rational developers of distribution technologies will keep their secrets and inventions to themselves Software world reality: Might as well tell the world how it works – someone might think of a way to make it better

Inducement Inducement liability accrues where a defendant “distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement” - MGM Studios Inc v Grokster Ltd, 125 S Ct 2764, at 2770 (2005)

Inducement’s physical world assumptions Facilitators of large-scale infringement will be commercially motivated Rational developers of distribution technologies won’t share their secrets with their competitors

Conclusion If the secondary liability law is to respond to P2P file sharing in any meaningful way – one that actually reduces the quantum of infringement – it needs to recognize and respond to the fundamental differences that exist between physical and virtual technologies