Case_Study

Running head: CASE STUDY Case Study Student University of Phoenix Case Study A copyright is a law that was passed to protect authors of books, magazine articles, plays, movies, songs, dances, recordings as well as ideas. In order to protect ones copyright, he or she must register with the Copyright Office in Washington, D.C. with two copies of the work. This is the only way an author can protect his or her work. For 70 years the work is protected under the copyright law. Anyone or any company that wants to use this protected work must first be issued a license from the copyright holder. Usually a fee of some type is contracted and the license user is free to use the copyright work. Unfortunately, sometimes two companies will have a dispute as to the protected work and how it is distributed. Especially now with the internet and the ability to have file-sharing using peer to peer networks. What is peer to peer networking' This is the ability of computers being able to communicate directly with each other but not using a central server. A peer to peer computer network uses connectivity between users in a network. The bandwidth of the users is a cumulative bandwidth rather than a conventional central server. This allows digital files to be transferred from one computer to another at a fast rate. Digital music or movies can be shared from one user to another via peer to peer networking. The problem with this type networking is the sharing of copyrighted music and videos. ("Peer-to-peer", 2008) The factual and historical background of the dispute. METRO-GOLDWYN-MAYER STUDIOS INC. et al. v. GROKSTER, LTD., et al. Metro-Goldwyn-Mayer Studio Inc., which is a group of moves studios and other copyright holders, sought damages and an injunction against Grokster and other software companies. The responders sued the respondents for copyright infringements. The responders alleged that the respondents knew and intentionally distributed their software in order to send copyrighted songs and movies to other users. The responders alleged that this was a complete violation of the Copyright Act. Grokster denied the claim and used the Sony v. Universal Studios as an example of what they were doing was legal. Grokster Ltd was a privately owned software company, based in Nevis, West Indies. In 2001, Grokster Ltd. utilized the FastTrack protocol. This software enabled users from his or her computers to share music or movies. Other software companies followed and distributed their own version of peer to peer sharing. (Wikipedia, 2008) None of the movies or music ever passed through Grokster computers, thus the respondents claimed that they did not violate any copyright laws. Grokster as well as other software companies claimed that they only assigned certain user computers as root super nodes that worked as a hub for Grokster. Grokster claimed that any specific downloads where at the discretion of the user and not Grokster. Hence here lies the problem with Grokster’s software. One person could buy a movie or a compact disk of music and proceed to share with other Grokster’s software users. Only one purchase is made from one user and then shared with other users. As more users started to use the Grokster’s software, more movies and songs were being shared. (Wikipedia, 2008) Grokster did not make any money from any of the sharing and or the selling of the Grokster software. Grokster and other software companies never sold their software to consumers. Grokster made money by selling ads on their space. MGM and the responders claimed that they were losing money by this type of sharing. The estimation of downloaded files was 90% of illegal files. The fact is that no one actually knows if this type of sharing influenced the retail sales. Some people prefer to see movies or hear music by sharing for free then if he or she likes what they saw or heard, proceed to purchase the entertainment. Some people prefer just to see movies or listen to songs and never purchase the entertainment. This point was also argued by the responders. Grokster claimed that by using their software, consumers were enticed to purchase the entertainment. MGM and the responders claimed that Grokster as well as other software companies hurt their overall sales by letting users download peer to peer sharing copyrighted files. One point mentioned by Grokster was the case by Sony v. Universal Studios 464 U.S. 417 (1984). This was known as the safe harbor principle set by the Supreme Court. Grokster argued that Sony was not liable for creating technology that could be used for copyright infringement. At the time, Sony had manufactured the VCR, video cassette recorder and instrument. This technology could enable the user to copy movies from his or her television onto a videotape cassette. This cassette was made from plastic, around an inch thick, by 7 and a half by 4 inches. These tapes made recording easy for the consumer, easy to label and easy to store. (Electronic Frontier Foundation, 1984) Many people had libraries of his and her favorite recorded movies. In the beginning of the video cassette recorder, most movies were recorded from television. During that particular time, Universal Studios owned the copyrights to television programs. Universal Studios alleged that Sony was liable for copyright infringement due to consumers using the video cassette recorders to record television programs. Universal Studios sued for monetary damages, part of the profits and an injunction against the marketing and manufacturing of Sony’s video cassette recorders. Universal Studios alleged that consumers were stealing their movies. The final outcome in this court battle was for the responders, in favor of Sony. The District Court denied all relief, holding that the noncommercial home use recording of material broadcast over the public airwaves was fair use of copyrighted works and did not constitute copyright infringement. In simpler terms the ruling was that even if consumers would violate the copyright law when he or she taped television programs off of the air, Sony would not be held liable for the violation of copyright infringement. Consumers could use the equipment for recording programs on television but he or she could also use the equipment for home videotaping as well. This important clause made the ruling stand; consumers’ use of the equipment for home video taping made the video cassette recorder fail use. (Oyez, 1982) What Universal Studios, Walt Disney and other companies did not foresee, was the huge monetary gains from movie sales. Sales from movies in 1998 were 315,000 movies sold. In 2007 over ten million movies were sold. The total monetary numbers are not exactly known but estimations from last year were into the billions. These figures are only sales from the United States and do not include sales from around the world. As technology progressed, the video cassette recorder was surpassed by the digital video disc recorder. These discs were much smaller in size as compared to video cassettes and much easier to use. The consumer no longer had to rewind the movies and since the size was smaller, a much larger library was possible for the consumer for the same amount of space. This meant larger libraries and more sales. The picture and sound were much higher quality. In a way without knowing the future possibilities, The District Court started a new revolution for the movie industry. Having this case in mind, Grokster argued that the same rules should apply. Although the cases were almost similar the technology was very different. With the video cassette recorder, consumers were only able to copy either from television or another cassette recorder. With peer to peer sharing, the ability to view just about any movie or listen to any music, made this new technology software much more powerful. This brought into the discussion of when should a company be held liable for the infringements by consumers when he or she are the end users' Even though the outcome of the case was not in favor of Grokster, The Supreme Court did not give the respondents exactly what they really wanted, a complete veto over technological innovation. MGM and the other 28 entertainment companies were trying to set an example to other software companies. The Supreme Court took note that technology could evolve but under different technological avenues. All these charges going back and forth between the responders and the respondents raised the main question in these types of cases. The fundamental question, regarding as to the right to innovate and copyright infringement was on the mind of both the responders and the respondents. On an interesting note, before the Supreme Courts ruling, the Ninth Circuit’s had ruled in favor of Grokster and other software companies. The Ninth Circuit had relied on the findings of the Sony v. Universal Studios for the same outcome with Grokster. The ruling from the Ninth Circuit Court was overturned by the Supreme Court. Discuss whether the dispute has civil, criminal or regulatory agency implications. Due to the dispute of whether Grokster and other software companies violated copyright infringements this case would be a civil case. This case involved no regulatory agency or any criminal wrong doing from the responders. A civil case is a non-criminal lawsuit that involves private property rights. Other examples or civil cases can involve divorce, probate, breach of contract and copyright violations. Criminal cases involve charges being brought by a prosecutor, usually employed by the state or a local government and he or she will charge a person with the commission of a crime. The regulatory agency is a government body that is structured under the laws of a legislative statute that will ensure compliance with the provisions of the act and also in carrying out the laws purpose. (Ellis, 2005) The case between Grokster and MGM did not involve any time of wrong doing involving criminal or regulatory agency implications. On the other hand, this did involve a civil case due to the alleged copyright infringement. Grokster was not the only company that was charged with copyright infringement. Also involved was Morpheus and KaKaA. All of these software companies developed some type of peer to peer software sharing. MGM and the other 28 entertainment companies were on a quest to deny all software companies from producing any type of software that could copy and be available to share with other users. These entertainment companies were aware of the monetary implications when one person could share one purchased movie with people from all around the world. The monetary loss could be in the billions of dollars of loss revenue. The legal process used (or to be used) in resolving the issues (e.g., some form of ADR as opposed to traditional civil litigation). The legal process that was used was a suit filed by MGM and the 28 other entertainment companies. A responder, plaintiff or person who has suffered a loss, financial, physical, emotional loss is referred to as a complaint. When a person, group of people or a company files a complaint, it is the same as filing a lawsuit. This course begins the process called litigation. The lawsuit charges will contain all of the information needed for the responders to answer, especially what the responder has done in violation of civil rights. The responders must make sure that all accusations are written in the original files that were files. Once the files are filed within the court system the dependents or responders will answer the allegations by filing a reply. Sometimes the responders will answer with a counter claim suit. This counter claim suit will accuse the respondents of some type of wrong doing on their part. The action is fundamentally putting the blame on the respondents and not the responders. These pleadings of putting blame from the respondents to the responders and back and forth are what will make the suit be heard in a court of law. Along with filing a court case, both the responders and the respondents will need to be aware of various time limitations. The respondents should more aware of the statue of limitations. The statue of limitations requires that the respondents due the responders with a certain amount of time. This set time is different depending in which state the case is filed in. If for some reason the respondents miss the deadline, the responders can no longer be held accountable. The reason for having a statue of limitations is to prevent a claim of being processed after the evidence has been lost or the facts have become blurred through the passing of time. In addition, the witnesses could also disappear and or die, thus affecting the outcome of a case. Only the legislature can extend or reduce the amount of time in the statue of limitations. (Hill & Hill, 2005) The relevant legal principles/issues bearing on the dispute. The main legal principle disputed with this particular case was whether or not Grokster and other software companies had violated the copyrights of the entertainment companies. As previously mentioned in this article, some examples of previous court cases were mentioned during this court case. The amusing part of the final outcome was what the Supreme Court said. Instead of answering or clarifying secondary liability, the Supreme Court announced a new doctrine for copyright inducement. (Lohmann, 2005) Justice Stephen Breyer, joined by Justices Sandra Day O'Connor and John Paul Stevens, adopted and endorsed the views expressed by many of the technology sector amici, declaring that "Sony's rule is strongly technology protecting ... Sony thereby recognizes that the copyright laws are not intended to discourage or to control the emergence of new technologies, including (perhaps especially) those that help disseminate information and ideas more broadly or more efficiently." In contrast, Justice Ruth Bader Ginsburg's concurrence, joined by Chief Justice William Rehnquist and Justice Anthony Kennedy, rejected the bright-line interpretation. Unmoved by the argument that Sony bars contributory infringement unless a technology is almost exclusively used for infringement, Ginsburg declared, "Sony, as I read it, contains no clear, near-exclusivity test." The inconclusive debates in the concurring opinions leave innovators and lower courts with precious little guidance. Assume that a technology company steers entirely clear of any inducement of infringement, as well-advised companies certainly will. How will courts react when copyright owners buttress their contributory infringement claims by commissioning experts to opine that the technology in question is primarily used for infringing purposes' If you happen to distribute technologies that are widely used for infringing purposes, like CD or DVD burners, a great deal may hang on this question. The Court was even stingier with guidance on vicarious liability; copyright's other secondary liability doctrine. The Court recited the traditional formulation: "a vicarious liability theory ... allows imposition of liability when the defendant profits directly from the infringement and has a right and ability to supervise the direct infringer." But, having disposed of Grokster on inducement grounds, the Court declined to address the vicarious liability theory. The lower courts in Grokster, responding to the diametrically opposing views of the parties, addressed vicarious liability in some detail. The entertainment industry had argued that the ability to redesign a product to reduce infringing uses ought to be deemed equivalent to a "right and ability to supervise" the customers who use the technology. The P2P defendants replied that such a "could have designed it differently" test would effectively force technology companies to redesign their products to suit the demands of copyright owners. On this point, the Solicitor General's amicus brief before the Supreme Court sided with the defendants: "The 'right and ability to supervise' element of vicarious liability ... has never, to our knowledge, been held to be satisfied by the mere fact that the defendant could restructure its relations or its product to obtain such an ability." So what is the law' The Supreme Court ducked the question, leaving innovators and lower courts to sort the matter out in future cases. (Lohmann, 2005) Identify appropriate risk management strategies that might be employed to avoid this type of dispute from recurring in the future. As already noted, the Supreme Court did not offer any solutions to these types of cases. When a company finds a new way for technology to advance, the implications of being sued for any type of copyright infringement is very high. When an entire company can be broken by lawsuits due to copyright infringement, there has to be some type of avenue for that company to take to protect itself. The best way for a company to avoid a law suit is to address the main issue of any type of copyright infringement. If a user can use the software of equipment for copying copyright material, can the company that invented the software or equipment be sued' Due to the high level of monetary loss from the outcomes of these particular law suits, any company would be wise to address these unknowing issues with a law firm. Copyright laws are written to protect the main author. This case that was just discussed will not be the last of copyright infringement lawsuits. As technology progresses more questions will arise as to what is legal and what is not. Maybe on day, software companies can work together with entertainment companies and arrive at some type of an agreement as to what is accepted and what is not. Until that day arrives, some companies will feel the wrath of entertainment companies for their work being copied and distributed without their written permission. References (). MGM v. Grokster. Electronic Frontier Foundation. Retrieved from http://w2.eff.org/IP/P2P/MGM_v_Grokster/ Electronic Frontier Foundation (1984). The Betamax Case. Retrieved December 15, 2008, from http://w2.eff.org/legal/cases/betamax/ Ellis, D. R. (2005). THE FILE-SHARING WARS: NATIONAL NINE NIX NIFTY NON-NAPSTER NETWORKS. Retrieved December 15, 2008, from http://www.easl.info/print.php'sid=17&POSTNUKESID= Hill, G. N., & Hill, K. T. (2005). Statue of Limitations. Retrieved December 15, 2008, from http://legal-dictionary.thefreedictionary.com/Statue+of+limitations Lohmann, F. V. (2005, July 25, 2005). Remedying ’Grokster’. Law.Com. Retrieved from http://www.law.com/jsp/article.jsp'id=1122023112436 Oyez (1982). Sony Corp v. Universal Studios Case Media. Retrieved December 15, 2008, from http://www.oyez.org/cases/1980-1989/1982/1982_81_1687/ Peer-to-peer. (2008). In (Ed.) (Eds.), . Retrieved , from Wikipedia (2008). Grokster. Retrieved December 15, 2008, from http://en.wikipedia.org/wiki/Grokster