1. Intellectual Property in Peer-to-Peer Networks Artsiom Yautsiukhin Natallia Kokash Intellectual Property Law, 18 October 2005

2. Contents Introduction Copyright and P2P file sharing Copyright Infringement Betamax defense Law Cases A&M Records v. Napster The Aimster case MGM v. Grokster BUMA v. KaZaA MPAA and RIAA v. The People Defense strategies Conclusion

3. Introduction Peer-to-Peer (P2P) - a network in which each computer shares and uses devices on an equal basis (Ex: Napster, Aimster, Grokster, KaZaA, Scour, Audiogalaxy). P2P is used for the exchange of text, image, sound and video files. These include works protected by copyright.

4. Copyright & P2P design Copyright law concerns: Users of P2P networks Developers of core P2P file-sharing technology (underlying protocols, platform tools, client implementations) Developers of ancillary services for P2P (providers of search, security, metadata aggregation)

5. P2P and Copyright Infringement The end-users Direct Infringement The P2P tool maker ~ ”wheel man” Contributory infringement Direct Infringement Knowledge Material Contribution Vicarious infringement Direct Infringement Rights and Ability to Control Direct Financial Benefit

6. Betamax defense Sony v. Universal City Studious: Sony Betamax VCR is capable of several non- infringing use (time-shifting of television broadcasts) “Betamax defense” - to prove capability of non-infringing applications, irrespective of the proportion of infringing to non-infringing uses

7. The Napster Case Contributory infringement: Direct Infringement: (at least) some users Knowledge: company e-mails, song titles in promotional screen, experience Material Contribution: site and facilities Vicarious infringement: Right and Ability to Control: Napster retains the right to block a user’s ability to access its system Financial Benefit: Napster’s value is derived from the size of it’s user base

8. The Aimster Case The same claims as in the Napster case Aimster prospect: the network traffic was encrypted allegedly making it impossible to know what files were being shared by end- users Betamax defense failed because: Aimster failed to introduce any evidence of non- infringing uses Had clear knowledge of infringing activities (“tutorials” encouraged users to download copyrighted music)

9. The Grokster Case (+ KaZaA, Morpheus) Betamax defense: project e-books, promotional music videos, video game demos Contributory infringement: Knowledge: decentralized architecture, did not have knowledge (e.g. Xerox) Material contribution: did not provide “site and facilities”, very limited involvement with the network Vicarious infringement: Right and Ability to Control: no ability to supervise and control users

10. The KaZaA Case Licensing agreement to listen music within the network without downloading Negotiations were interrupted by Buma  copyright infringement by KaZaA The Court obliged: Buma to continue the negotiations KaZaA to redesign the system But KaZaA succeeded in appeal! Decentralized architecture!

11. MPAA and RIAA v. The People The Motion Picture Association of America (MPAA) - lawsuits against individuals using P2P file-sharing software to access movies. Recording Industry Association of America (RIAA) - lawsuits against individuals who use file-sharing software. 6,000 lawsuits against music file sharers since September 2003.

12. Defense strategies “All my users are innocent”. “Capable of substantial non-infringing uses”. “Safe harbors” transitory network transmissions caching storage of materials on behalf of users (remote file storage, web hosting) provision of information location tools (providing links, directories, search engines)

13. Conclusion Lessons for Peer-to-Peer developers… Make and store no copies. Your two options: total control or total anarchy. Better to sell stand-alone software products than on-going services. What are your substantial non-infringing uses? Do not promote infringing uses. Don’t make your money from the infringing activities of your users. Give up the EULA. No direct customer support. Be open source.

14. References Intellectual Property - Peer-to-Peer (P2P) File Sharing, http://www.eff.org/IP/P2Phttp://www.eff.org/IP/P2P “IAAL*: What Peer-to-Peer Developers Need to Know about Copyright Law” “The Electronic Frontier Foundation’s (EFF) Efforts to Protect P2P “ “MGM_v_Grokster” “Napster” “BUMA_v_Kazaa” “MPAA v. The People” “RIAA v. The People”