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Written Materials From Ken Carson's Recent MCLE Presentation

MCLE COMPUTER AND TELECOMMUNICATIONS LAW 1999 UPDATE:

THE CHALLENGE OF MP3

1. Background

a. "From its beginning, the law of copyright has developed in response to significant changes in technology. Indeed, it was the invention of a new form of copying equipment--the printing press--that gave rise to the original need for copyright protection." Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 430 & n.11 (1984) (citing changes in copyright law following the development and proliferation of player pianos, the photocopier, cable television, and the audio tape recorder).

b. "Contributory" Copyright Infringement. The Copyright Act (unlike, for example, the Patent Act) does not expressly make anyone liable for infringement committed by another. Nonetheless, liability for copyright infringement may extend to persons who have, indirectly but in some significant way, facilitated the infringement. A defendant who has knowledge of another's copyright infringement, and "induces, causes or materially contributes to" the activity, may be liable for what is commonly referred to as "contributory infringement." E.g., Sony v. Universal, supra; Kalem Co. v. Harper Brothers, 222 U.S. 55 (1911).

c. In Sony v. Universal, two television studios sought to hold Sony liable for contributory copyright infringement based on the taping of television shows by home VCR owners. Reversing a decision of the Ninth Circuit, the Supreme Court held that the doctrine did not apply. Sony did not supply consumers with the allegedly infringed works; its VCR's were no more suited for illegitimate than legitimate use; Sony had no ongoing relationship with the typical VCR purchaser after the equipment was sold; there was no evidence that Sony had encouraged or influenced consumers to engage in illegal copying; and its alleged constructive knowledge that its VCR's were being used for unauthorized taping was insufficient to make it liable.

"[T]he sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial [i.e., commercially significant] noninfringing uses." 464 U.S. at 442 (emphasis added). VCR's, the Court concluded, were capable of, and commonly used for, the legitimate and unobjectionable purpose of "time shifting," taping at air-time for later viewing, a harmless practice consented to by many broadcasters.

d. Digital Audio Tape. In the late 1980's, electronics manufacturers began to make commercially available devices that would permit consumers to make serial digital copies from a single CD without any noticeable diminution in sound quality. Facing protracted legal battles with the music publishing industry, which saw such devices as a threat to CD sales, the manufacturers worked out a legislative compromise: the Audio Home Recording Act of 1992.

e. Audio Home Recording Act of 1992.

i. The AHRA does three key things: (a) requires that device manufacturers include technological limitations on a device's ability to make serial copies (known as a "serial copy management system"); (b) provides for a royalty from every sale of a device; and (c) insulates device manufacturers from liability for contributory copyright infringement.

ii. "Digital Audio Recording Device" The AHRA defines this key term to mean a "machine or device of a type commonly distributed to individuals for use by individuals" with a "digital recording function" that is "designed or marketed for the primary purpose of, and that is capable of, making a digital audio copied recording for private use."

2. MP3, a2b, Liquid Audio

a. This relatively new technology "compresses" digital audio data, both by analyzing the data for ways to store it efficiently and by eliminating data for imperceptible sound. Every second of CD music consists of 44,100 individual samples, each requiring 16 bits of memory; this translates to about 176,000 bytes for every second of stereo sound, and up to 650,000 MB on a single CD. Hence, before now it was impractical to put audio data on a PC's hard drive. The new technology compresses this data to 1/11th its former space, apparently without noticeable loss of sound quality.

b. Commercially available software permits a user to copy music into a PC's memory from CD's or from the Internet, where there are currently an estimated 500,000 songs available for downloading. The memory chip of the Walkman-like "Rio" holds 60 minutes of music loaded from a PC for portable listening. The available technology has reportedly spawned a booming industry in illegal copying. See, e.g., "You've Got Music," TIME, Feb. 22, 1999 at 58; "Free Music: Put Your Quarters Away!" PC/COMPUTING, Jan. 1999, at 240.

3. Battlefronts

a. In October 1998, the Recording Industry Association of America (RIAA) brought suit against Diamond Multimedia Systems, Inc., the manufacturer of the Rio device described above, claiming that the device was covered by the AHRA and thus required a serial-copy management system and the payment of royalties. In an October 26, 1998 decision, the United States District Court for the Central District of California (Collins, J.), denied the RIAA's motion for a preliminary injunction.

i. Diamond argued that the Rio was not a "digital audio recording device" covered by the AHRA. It argued that the Rio could not be said to have a "digital recording function," as required by the definition of such a device, since it was wholly reliant upon a PC to do the actual recording, and itself merely served a playback function. Diamond also argued that what is stored in the PC's memory, and thus what is reproduced in the Rio, is not a "digital music recording" within the meaning of the AHRA, which specifically exempts from the definition of such "recordings" any "material object... in which one or more computer programs are fixed."

ii. The Court rejected both arguments, as inconsistent with the legislative history, purpose and meaning of the AHRA. However, it went on to conclude that incorporating a "serial copy management system" in the Rio would make little sense, because the device did not permit "downstream" copying in the first place. The only remaining issue--whether and in what amount Diamond would be required to pay royalties (as it apparently would)--could and should be resolved without need for injunctive relief.

b. Artist-to-Consumer. Several artists, notably the rap musician Chuck D, have explored using MP3 and related technologies to offer music directly to listeners on websites, bypassing the normal distribution channels. Record companies have sought to enforce their copyright ownership to prevent such netcasting. See, e.g., "Online Distribution Rap Rebel Bypasses Record Labels," FINANCIAL TIMES, Jan. 16, 1999 at International 4; www.public-enemy.com.

c. The search engine Lycos has launched an "MP3 Search" linking feature, boasting that it provides access to over 500,000 on-line songs. Other services (e.g., www.goodnoise.com) themselves host and sell MP3 files for selected artists, and offer some for free.

d. The RIAA is expected this year to publish its "Secure Digital Music Initiative," and in an effort to make peace a coalition of software, hardware, music and Internet companies, known as the Genuine Music Coalition, have developed a means of marking authorized copies of audio files as legitimate.


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