In the Know - June 29, 2005

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a bimonthly Public Knowledge update

Contents

Grokster Ruling Chills Congress and
Maybe Innovation

If nothing else, the U.S. Supreme Court’s unanimous decision Monday
in the Grokster case has managed to chill the Congressional fever
for enacting copyright legislation. Unfortunately, that may be not
all that will be chilled as a result of the decision.

In the eagerly awaited decision, the Court created a new grounds for
entertainment companies to sue manufacturers and distributors of
technologies that can be used to infringe copyrights. Examining the
behavior of peer-to-peer companies Grokster and StreamCast, the
Court ruled that a company can be held legally responsible for the
infringement of others if it “distributes a device with the object
of promoting its use to infringe copyright, as shown by clear
expression or other affirmative steps taken to foster infringement.
Importantly, the Court said that “mere knowledge of infringing
potential” isn’t enough to demonstrate legal liability.

The Court in its ruling raised more questions than it answered about
the future of innovation and file-sharing technology. In its
opinion, the Court left intact, on paper at least, the Sony
copyright liability standard from 1984. That decision protected
device manufacturers from copyright liability if there were
“substantial non-infringing uses” for the device, be it a video
recorder or hard drive.

However, a number of legal commentators pointed out that although
the Sony standard survived, it may have been seriously undermined.
Instead, following the lead of the court, those who would sue
technology companies will look to business plans, advertising and
marketing to try and determine whether the company was promoting
copyright infringement.

That ruling was good enough for Congress, with leaders from the
Senate and the House saying that there’s no need to rush to
legislate. Sen. Orrin Hatch, (R-Utah), the former Judiciary
Committee Chairman who unsuccessfully pushed the Induce legislation
last year, claimed victory but also said Congress should wait to see
how the Grokster decision plays out in the lower courts before there
is “a rush to legislate.” Interestingly, Hatch, now the chairman of
the Intellectual Property Subcommittee who has consistently sided
with the entertainment industries on copyright issues, threw this
bone to the tech community: “Obviously, if it appears that U.S.
industries, technological innovation, or consumers are ultimately
harmed by this decision, Congress should consider a legislative
solution that appropriately balances consumer interests, innovation,
and intellectual property rights.”

Many commentators are afraid that technological innovation may
suffer. At a news conference on Monday hosted by PK, a number of
distinguished commentators said that the chilling effect will be
felt, particularly on smaller companies, as they try to figure out
what is acceptable practice under the ruling and what is not. While
they may not be promoting copyright infringement - the type of
behavior the Court warned against - they still may have to prove it
in court and the threat of litigation and the accompanying expenses
may be enough to force changes in product design, or the abandonment
of promising tech projects.

At the same time, the fact that the Court outlined a new option for
the entertainment industries to use to go after copyright infringers
should once and for all do away with the need for a broadcast flag.
If the entertainment interests want to go after file sharing, they
can do it with all of the existing tools, and don’t need any more
government handouts.

Brand X Decision Chills Competition

Sticking with the “chill” theme, which is good when the heat index
hits the upper 90s, the Supreme Court on Monday also managed to
throw a damper on competition in the Internet services sector with
its ruling in the Brand X case.

The question before the Court was how Internet access services
provided by cable companies should be regulated. The FCC wanted them
unregulated, as does the cable industry, naturally enough. The
Internet sector, as represented by Brand X, a small Internet Service
Provider, wanted FCC regulation, so that cable would be required to
open its network to competitors just as the telephone company must.

The Court sided with the FCC and cable, mainly by granting deference
to the FCC’s interpretation of the Communications Act. Since the
result in the Brand X case will ensure less competition in the
provision of broadband access, then Congress must act to ensure that
incumbent broadband providers do not discriminate against any
applications or content that passes through their pipes. This “net
neutrality” principle will ensure that communications, content and
applications are allowed to pass freely over broadband pipes,
without degradation in quality or speed. We hope that when Congress
tackles its next revision of the Communications Act, it will codify
this principle.

Broadcast Flag Folded - So Far

We achieved at least a temporary victory in our fight against the
broadcast flag. Twice last week, Senators had the opportunity to
insert language giving the FCC authority to order broadcast flag
regulations, and twice they let the opportunity pass.

Their chances came as first a Senate appropriations subcommittee,
responsible for allocating money to the Federal Communications
Commission (FCC) approved its version of the FY 2006 spending bill
on June 21, and then the full Appropriations Committee approved the
bill on June 23. Despite strong indications that a broadcast flag
amendment would be added to the legislation, none was.

Why was that? You, PK readers and members, were a large part of the
result, along with like-minded people from the Electronic Frontier
Foundation (EFF). Working together, PK and EFF put out action alerts
warning of a flag just one day before the subcommittee meeting. Many
other websites and blogs linked to our action alert, including
Consumers Union’s hearusnow.org and Slashdot. By EFF’s count, more
than 15,000 faxes and emails were sent to Capitol Hill over just a
few hours.

However, while we won this skirmish, the battle goes on. Senators
will have an opportunity to attach broadcast flag language when the
spending bill goes to the Senate floor, which will likely happen
after the July 4 recess. To be really sneaky, they could try to add
broadcast flag language when the House-Senate conference committee
meets to work out differences between the spending bills of each
chamber. The House passed its bill, HR 2862, on June 16, also
without broadcast-flag language.

Yet another tactic would be to add some broadcast-flag related
provisions to the massive budget resolution that Congress must pass
each year, a bill that ends up as a giant catch-all. But you can be
assured that PK will be watching closely and working with its
friends on the Hill to preserve our broadcast flag court victory.

Orphan Works - Save Those Dates

The Library of Congress has announced preliminary plans to hold
three roundtable discussions this summer on the important topic of
orphan works. Those are works for which the authors or creators
can’t be found, making it difficult for other authors or creators to
use or reference the work later on.

There will be two days of discussion at the Library, on July 26 and
July 27, in Washington. The third session will be Aug. 2 in
Berkeley, Cal., at the Boalt Hall School of Law at the University of
California. The Library said it would announce more details later on
the sessions, including the specific times and places, topics to be
covered, and procedures for registering to participate.

And now a word from our sponsors: The work PK is doing to protect
the free flow of information and sharing of knowledge is vital to
a vibrant democracy. You can help us continue to do so in two
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Briefly:

The House Appropriations Committee has come out strongly in favor of
the new open access policy at the National Institutes of Health
(NIH) that encourages publication of taxpayer-supported research
online. The committee approved the bill June 16, and included
language in its report on bill that covers NIH saying the panel “is
pleased that NIH is moving forward to implement its Public Access
policy and is hopeful that the policy will be a first step toward
providing free and timely access to the published results of all
NIH-funded biomedical research.” The committee asked NIH for a
report by March 1, 2006, on the progress of the open access policy.
The Committee also said it was concerned that an NIH-sponsored
service, PubChem, may be encroaching on the private sector service
offered by the American Chemical Society. The Committee report on
the appropriations bill (HR 3010) said: “The Committee is concerned
that NIH is replicating scientific information services that already
exist in the private sector. In order to properly focus PubChem, the
Committee urges NIH to work with private sector providers to avoid
unnecessary duplication and competition with private sector chemical
databases.” The Alliance for Taxpayer Access has worked to combat an
attempt by the American Chemical Society (ACS) to shut down or
restrict NIH’s PubChem database, which allows researchers to link
from a database of chemical names and structures into related items
in NIH databases. The ACS argues that the government’s open service
competes with the private sector.

The battle over municipal Wi-Fi is taking shape in Congress. Rep.
Pete Sessions (R-Tex.) has introduced a bill (HR 2726) banning
cities from offering the service, and Sen. John Ensign (R-Nev.) is
said to be drafting a bill with the same goal. But Sens. Frank
Lautenberg (D-N.J.) and John McCain (R-Ariz.) have introduced their
own bill (S 1294) that would prohibit states from blocking local
governments which want to provide telecom services.

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For the best in blogging: www.Godwinslaw.org, by PK Legal
Director Mike Godwin. From ruminations on Tarzan, to plots against
America, to experiments with BitTorrent, it’s all here.