How VCRs may help Napster's legal fight

The lawsuit the Motion Picture Association of America filed against Sony to ban the first consumer VCR may help Napster's defence of a suit from the music industry.

          "There's a period of instability with the introduction of any new technology, (when) no one really knows how the market is going to go and no one knows if the market will be restructured," said Patricia Zimmermann, author and professor at Ithaca College in Ithaca, New York, discussing the impact of new media technologies.

          She's talking about the VCR (video cassette recorder) and the lawsuit the Motion Picture Association of America (MPAA) filed against Sony to ban its predecessor, the Sony Betamax, in the early 1980s, but she might as well be talking about the Internet age. Take, for example, the trial of Napster Inc., which will begin in a US District Court courtroom today, with the MP3-sharing company defending itself against the Recording Industry Association of America's charge that it is infringing RIAA members' copyrights.

          The similarities between the two cases are not lost on Napster, according to Eric Scheirer, a media and entertainment industry analyst with Forrester Research Inc. in Boston, Massachusetts.

          "The similarity in the court of public opinion that Napster is going for is that the film industry hated the VCR, hated Betamax, they wanted to wipe it out but it turned out to make them a lot of money," Scheirer said. "That's an analogy they're trying to make."

          It's not a widely accepted analogy, however. First, Hollywood was only briefly opposed to the VCR, according to Zimmermann.

          "There is a mythology about Hollywood: that it is technophobic and sees any technological innovation or convergence as a market threat," she said. Rather, Hollywood "has been an industry characterised by an interest and economic incentive for technological innovation."

          Steve Fabrizio, a representative of the RIAA, asserted that Napster is not the same, legally, as the VCR, due to its status as a service, rather than an "article of commerce," a product.

          It is the legal issues, more so than the analogies, which complicate this case. Both Napster and the RIAA intend to rely on the same Supreme Court decision, that of 1984's Sony vs. Universal, which legalized the Betamax.

          According to Napster, in that case the court held that a technology must be "merely... capable of substantial noninfringing uses" in order to be protected by law. Napster argues that its service is capable of such uses, and thus should be protected.

          The RIAA's Fabrizio sees things differently, however. "There are no substantial noninfringing uses of Napster. Napster has not even proffered to the court a hypothetical, future capability that would be noninfringing," he said.

          Copyright infringement, particularly two subsets of it, contributory and vicarious infringement, form the basis of the RIAA's complaint. According to the RIAA's preliminary injunction motion, a party is guilty of contributory infringement when they, "with the knowledge on the infringing activity, (induce), (cause), or materially (contribute) to the infringing conduct of another."

          Vicarious infringement, on the other hand, is determined when the party in question "has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities."

          It is in answering these charges that Napster must rely on the Sony decision. If a technology can be found to have "substantial noninfringing uses," said Peter Jaszi, a law professor at the Washington College of Law at American University in Washington, D.C., then the company cannot be held liable as a contributory infringer.

          The fulcrum upon which this defense rests, according to Jaszi, is the definition of "substantial," noting that there is no clear precedent that can be applied here. The doctrine of substantial similarity in product appearance has a very low standard for determining infringement, but courts may be hesitant to extend that ruling into a distinctly different area of copyright law, he said.

          Further, the Sony case offers no guidance on this point, he said, because once it had been established that home recording for the purpose of time-shifting -- the recording of programs to simply watch at a later date; the use found to be most prevalent at the time -- was a fair use, the issue of contributory infringement was settled.

          Therefore, "after all of the technical issues are stripped away, this is a fair use case," Jaszi said.

          Fair use -- the legal doctrine which allows private, noncommercial recording, as well as limited quotations of written works and the like -- is a particularly controversial issue in the Napster case, with both sides claiming it allows vastly different uses. However, this is not a sign of misunderstanding or poorly worded laws, says Mark Fischer, a new media attorney with the Boston, Massachusetts firm, Palmer, Dodge LLP.

          "Fair use law in the United States is a set of flexible standards," he said. "There is no rule book... where you can plug in the parameters. The law does not provide certainty, but the good part is that when (new technologies) come along the law can try to apply flexible standards."

          Jaszi agreed, adding that fair use is "not a legal doctrine which lends itself to hard precedents" and is designed to be both fact and context sensitive. As such, "sometimes activities that would be technically regarded as infringing copyright are treated as privileged, because overall, they are more socially or economically desirable," Jaszi said.

          Napster Interim Chief Executive Officer Hank Barry said his company offers just such a service which should be protected under the Sony doctrine.

          "Just because it might also be used for uses that would be infringing, it doesn't make any sense to

          snuff out that technology," Barry said.

          But the MP3-trading that Napster facilitates transgresses the bounds of such fair use protections, according to Fischer.

          "Fair use should not apply to Napster because of the worldwide distribution to so many users. That goes beyond a fair use," he said. "Fair use here is a question of scalability. If you make a tape of your favorite songs for yourself or your friends, that's very small. The problem is, with Napster, people think the same way but they're making copies available to the whole world."

          However, under the Audio Home Recording Act, the 1992 law in which U.S. Congress specifically authorized private, noncommercial sharing, Barry argued that "Congress meant to immunize both analog and digital noncommercial, one-to-one sharing."

          Napster users "have an absolute right to make noncommercial copies on one-to-one basis," Barry said.

          Even when it was just a single, physical tape that might go to a single, physical friend -- in the case of the VCR, for instance, industry trade groups took a hard stance. "The VCR is to the American film producer and the American public as the Boston Strangler (a serial killer of the time) is to the woman alone," said Jack Valenti, president of the MPAA, the group which sued Sony over the Betamax.

          And the rhetoric hasn't been much toned down since. In a recent speech, Edgar Bronfman, Jr., chairman of Seagram, the parent company of Universal Studios Inc., likened Napster to the former Soviet Union and said that it "(takes) advantage of each person's least admirable qualities," and "(holds) fairness in contempt, (and devalues) and (demeans) the labor and genius of others."

          Napster's Barry takes issue with Bronfman.

          "There's absolutely a deep respect for copyright within every person in the Napster community," he said. "The idea that Napster doesn't respect copyright is just flat-out wrong."

          Be that as it may, even if Judge Marilyn Patel decides in Napster's favor, problems will still await the company.

          Forrester's Scheirer believes that a court victory for Napster would "mean nothing" for the company.

          Napster "doesn't have much of a chance at succeeding as a company," he said. "They don't have much opportunity to construct a viable business model around their business as it's presently constituted... there's no opportunity to monetize what they're doing."

          The case, "is almost irrelevant," he said. "Even if they win, they're not going to be a successful business and, even if they lose, the technology is going to stay around."

          While not as negative about Napster's prospects, Fischer too believes that the RIAA will achieve its ends no matter what the decision.

          "If products like Napster are supported by law, the RIAA and MPAA will be successful in amending the copyright law," he said.

          However, neither Scheirer nor Fischer think that a recording industry victory will mean an end to Napster.

          "This kind of technology is such a fundamental part of the Internet that to try to have a blanket ban against all technology like this is essentially saying people on the Internet can't exchange files with each other," Scheirer said. "You just can't do that."

          No matter what the outcome of the trial, Fischer feels that copyright laws will have to amended to incorporate new, Napster-like technologies while still compensating copyright holders.

          "We're training generations of (people) to love getting music and content over the Internet and training to think of it as a public utility, like water: free or virtually free," he said. "I don't think we're going to change basic behavior."

          Napster, and other peer-to-peer file-sharing technologies, will eventually become central components of the music business, most of the interviewees for this piece agreed.

          Record companies "will seek... some system in which the operators of the technologies voluntarily seek licensing arrangements with respect to the music transmitted," American University's Jaszi said.

          Analysts believe that technologies such as digital rights management or subscription-based download services await future digital music consumers. However, not everyone is so sure whether central bodies, such as record companies or the RIAA, will continue to play as a major role in future as they do at present.

          "Ultimately, the big question from the industry's perspective will be when the artists have total control and the ability to distribute their music and don't need the record companies any more," said Jonathan Tankel, an associate professor of communication at Indiana University Purdue University Fort Wayne in Indiana.

          As the artists become more savvy, there is the possibility of a democratization of the industry where the recording companies could become obsolete.

          As such, the record companies "have bigger problems than Napster, but this is the one that's in front of them," Tankel said.

          Napster, based in San Mateo, California, can be reached at +1-650-570-5382 or via the Web at http://www.napster.com/.

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