Fair Use and Downloading

As Eric Goldman notes on his blog, the Seventh Circuit issued an opinion yesterday in BMG v. Gonzales. The appeal squarely raised the question of whether downloading copyrighted music without permission using a peer-to-peer network is plausibly "fair use" and hence excused from liability. Judge Easterbrook, correctly in my view, thought not.

Along the way, Easterbrook includes two interesting discussions that seem likely to have broad implications.

First, the infringer here had argued that her acts were fair use because she was supposedly downloading these tracks in order to sample the music. As she explained, she might listen, like the music, and then buy the relevant CD. Easterbrook rejected this argument and did so in a way that might matter for cases involving technologies like Google Book Search. After all, Easterbrook's basic point was that copyight holders might themselves want to offer sampling services; and, if they did, (1) they would design those services differently, for example by making sure that "samples" only work for short periods of time, and (2) they would have a hard time competing with a free "fair use" service. These themes are often raised in technology cases, and Easterbrook's analysis on point is worth reading. (I for one wish he had said more about when these points resonate and when not; that is, as I discussed a few days ago, it surely isn't always the case that copyright holders should win just because these two conditions are satisfied, right?)

Second, and more for the hard-core copyright crowd, Easterbrook refuses to entertain the idea that statutory damages should be reduced in instances where the accused infringer had a good faith but ultimately incorrect belief that the infringements were fair use. Easterbrook indicates that this argument is precluded by section 402(d), and on that he is probably right. That said, the result seems wrong on policy grounds and is something I hope the EFF might someday see fit to take on. In this case, though, there was little point, as I doubt this particular defendant would have been able to show sufficient good faith anyway.

Comments

[Dave]

Although I think this case was probably rightly decided, part of Easterbrook’s opinion bothers me. He writes: “Gonzalez proceeds as if the authors’ only interest were in selling compact discs containing collections of works. Not so; there is also a market in ways to introduce potential consumers to music.” Slip op. at 4.

Certainly it’s true that authors have an interest in more than just selling their work, and marketing it is one of these interests. But whether this interest should be considered a part of the scope of privileges conferred by copyright seems contestable. The implication seems to be that copyright confers on authors a right to market their work to the public exclusively in the way they choose, and that individuals who interfere with that marketing strategy are infringing.

This interpretation seems innocuous when applied to file-sharing (which is, as Easterbrook rightly notes, not the only way to sample music for possible purchase), but it has problematic implications for more traditional fair uses. Imagine, for example, that a book publisher marketed a new author’s work as fresh and original, and I wrote a critical article using quotes to illustrate why the article was in fact tired and derivative. Would my use of the quotes become infringement because I had undermined the publisher’s marketing strategy?

Fair use cases are notorious for invoking the market freely without examining the malleability of the term. Easterbrook’s opinion makes this move too. Certainly the market in copyrighted work could be defined so broadly that it encompassed exclusive rights over marketing strategies; but the implications of this definition—that copyright owners’ monopolies extent to controlling when and how users encounter their work—strike me as troubling.

[Will Copeland]

With peer-to-peer downloading being such a popular action in today’s society, it is interesting to view the excuses people will create to justify illegal action. The fact is downloading copyrighted music for free is illegal. What measures one goes to justify it is irrelevant. I do not believe the doctrine of fair use can be brought into this argument. Fair use is not applicable because copyrighted music is one: not in the public domain, and two: the downloading of it does not serve any scientific or artistic purpose. The only purpose to illegally downloading music is to avoid paying for it. Copying copyrighted material is also infringing upon copyright law. The fact of whether or not you can justify to yourself for downloading or copying this material is beside the point. Many p2p software programs are able to escape liability using the “Betamax” ruling of 1984, but the emergence of “inducement” theory is beginning to change that as well. End-users are now the target for the liability of peer-to-peer software’s illegal abilities. Oddly enough, I don’t believe that downloading illegal music is necessarily wrong or damaging to the recording industry. However, it is illegal, whether I think it should be or not.

[Laura Hodes]

Prof. Lichtman, You don't touch on a couple of things that I find troublesome in Easterbrook's opinion.

This poor appellant, Gonzalez, a mother of five, is being found liable for some $22,500 in fines for downloading 30 songs from Kazaa.

One should note that Gonzalez was named in the first wave of civil lawsuits filed by recording industry ("RIAA") in September 2003, against individuals for illegally downloading copyrighted music.

Easterbrook makes mention of streaming radio on the Internet, iTunes, and SNOCAP-authorized trials of music over a Peer-to-Peer system, as proof of alternate ways that Gonzalez could have sampled the music industry's wares without downloading them wholesale: "With all of these means available to consumers who want to choose where to spend their money, downloading full copies of copyrighted material without compensation to authors cannot be deemed 'fair use'."

But these options weren't available to Gonzalez in 2003, the year in which the suit was brought against her. She didn't have any other options. (Not to mean this doesn't sound like a very technologically savvy individual--she doesn't even have broadband Internet access any more...) And Kazaa made it so easy to download songs for free that it surely made it seem this was a legal thing to do.

It's the very existence of P2P systems like Kazaa that forced the music industry to step up to the plate, stop simply resorting to lawsuits, and develop new technologies like iTunes that would allow consumers to legally download music.

This seems a case where the recording industry was going after "easy pickings," an easy target. It's much more difficult to go after Kazaa itself, or say the powerful venture capitalists who funded it.

As more indication that Gonzalez is not who the music industry really intends to be going after, in September of this year, an Australian federal court ruled that Sharman Networks must install filters in its Kazaa file-sharing application to prevent users from infringing on copyrights. Justice Murray Wilcox gave Sharman two months to modify Kazaa to keep users from swapping music files and other copyrighted material.

I'm not sure what effect, if any, the Australian opinion should have on the Seventh Circuit's...But it's clear that the RIAA's 2003 lawsuits against individuals like Gonzalez is purely the result of it being so difficult to bring a lawsuit against Sharman, the 'company' behind Kazaa. See this old Wired article: http://www.wired.com/wired/archive/11.02/kazaa.html

So this is just a case of the RIAA going after the weak, the un-powerful, the technologicall unsavvy, a woman who can't afford the big lawyers---and the ruling here really does not seem a fair result.

[Doug Lichtman]

Laura -
You make some great points; let me react to a few of them.

1. I guess I don't have much sympathy for the fact that Gonzales is a mother of five and the fine is so large. Like every other accused infringer, Gonzales was surely offered the standard RIAA settlement: sign a tough document admitting what you did, and pay a tiny fraction of the fine that you otherwise will have to pay. She obviously turned that down, and moreover had the audacity to then make a series of ridiculous self-serving arguments about why what she did was ok. Had she accepted her culpability, the fine would have been much less. That said ...

2. I nevertheless agree with you that RIAA should be going after Kazaa and Grokster and other third-parties that facilitate bad acts instead of going after individuals. In fact, I took that position in an editorial in the Wall Street Journal back in 2003. As I wrote there -- the original is linked here: http://www.law.uchicago.edu/news/lichtman-kazaa.html -- my view is that copyright law in cases like this should immunize individuals and instead facilitate meaningful litigation against the third-party bad actors. Indeed, my take was "shame on the EFF" for fighting against third-party liability so strongly and by that leaving individuals so exposed.

3. Lastly, you are right to emphasize Easterbrook's indifference to timing. Yes, now there are lawful alternatives for gathering samples; back then, there were not. This is why I ask in my original post about how broad Easterbrook's point really is. He seems to fully buy into the argument that something should not be fair use if the copyright holder (a) can do it themselves or license it and (b) would either do that differently or make money doing it. That is true here, but that proves too much. As you implicitly ask, does it matter whether the copyright holder *was* doing it? You seem to think so. I would ask whether the copyright holder could reasonably have been expected to be doing it at that point, or some similar test -- the point being that I don't want to force copyright holders to rush into new business models just because some would-be infringer will otherwise beat them to the punch. I'm not sure of the details of how to articulate that yet, but overall I agree with you that Easterbrook glides by that far too quickly.

[Laura Hodes]

Glad you agree with some of my points.

You write: "I would ask whether the copyright holder could reasonably have been expected to be doing it at that point, or some similar test -- the point being that I don't want to force copyright holders to rush into new business models just because some would-be infringer will otherwise beat them to the punch."

But isn't it interesting that new business models have been created (i'm thinking of the incredibly successful iTunes and its copiers) because of the very fact of infringers' downloading music. New business models are created in response to seeing how consumers act, even infringe. If the test were to just consider whether copyright holders could possibly have a market at that time, ex ante the infringement, that would be to give copyright holders too much latitude, no? And as a result, to inhibit innovation?

[Bruce]

Doug, even if you're not sympathetic to Gonzalez's economic circumstances, do you have a concern about the amount of the statutory damages here? I've always understood the purpose of statutory damages in the Copyright Act to provide a rough substitute for actual damages, given the difficulty in calculating actual damages in many cases. The 1976 House Report notes that one of the purposes of Section 504 was to "avoid[] some of the artificial or overly technical awards resulting from the language of the existing statute." I don't know what cases that's referring to, but I'm not sure that purpose is served by a $750 per song minimum penalty for *downloaders* (uploaders are another matter). Section 504 applies "per work infringed" -- meaning that the old-school infringer selling 1,000 copies of a single song is liable for statutory damages of $750 to $30,000, but the new-school downloader of 1,000 songs is liable for $750,000 to $30,000,000. The former seems closer to what Congress may have had in mind as appropriate compensation, particularly given that under Section 101(b) of the 1909 Act, infringement of sound recordings was subject to damages of up to $1 per copy ($20.12 in 2005 dollars, which is about the cost of a CD). I'm not sure I'm reading it correctly, having never practiced under the 1909 Act, but it looks like it set a minimum award of $250 total, for all infringements, and provided that awards under the Act "shall not be regarded as a penalty." $250 is about $5,000 in present dollars.

$750 per song seems to penalize Gonzalez, not compensate the copyright owners. Attorneys fees and costs can be awarded under Section 505. Willful infringement is addressed in 504(c)(2). In this case, it appears from the facts that Gonzalez had in fact downloaded far more than 30 songs (the opinion says it was 1370), but it seems problematic to have the minimum award presume in all cases far more infringement than is proved at trial. It seems even the record labels may feel the minimum is too high, which may be one reason why they agreed to sue on only 30 works instead of 1370.

[Doug Lichtman]

Bruce -

Good points. I think statutory damages can be viewed two ways: (1) as an attempt to approximate actual damages in cases where actual damages are hard to prove up; and (2) as a way of discouraging infringement and in essence making copryight into a property rule rather than a liability rule. As you say, however, neither of those stories matches well to the specific case of Gonzales. And, as I said in my original post, I would favor tweaking the statutory damages regime such that a court could go below the minimum in instances where the accused infringer had a reasonable but ultimately incorrect belief that the infringement was fair use.

[nancy]

A good suggestion