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Balancing Author Creativity With Innovation

April 30, 2010

Judge Sidney Thomas

Sidney Thomas (pictured at right), author of the Ninth Circuit’s MGM Studios Inc. v. Grokster Ltd. decision, is reportedly on the short list for nomination to the Supreme Court. Grokster at both the Circuit and Supreme Court levels is an interesting case from a policy perspective because it analyzes an intersection of promoting the rights of authors and promoting innovation. What happens when copyright law interferes with innovation? The Supreme Court has demonstrated, in two cases, that it is possible to both protect authors’ rights, and at the same time promote innovation even when the two are in conflict.

The Constitution, on one hand, seeks to promote creation of works of authorship via copyright law. On the other hand, it seeks to promote innovation and protect inventors. Things get more complicated, however, once these goals are in conflict with each other.

The Supreme Court first considered this conflict in Sony Corp. of America v. Universal City Studios Inc.. In this case, copyright holders sought secondary copyright liability against Sony for producing Betamax recorders. The Court declined to extend secondary copyright infringement to devices “capable of commercially significant noninfringing uses.” In so doing, the Court struck an ideal balance between protecting copyright and innovation. Had the ruling gone the other way, there might not be VCR’s, or innovation that followed, like DVR. Moreover, VCR’s probably benefited copyright by exposing the works to a broader audience. The holding in Sony was a clear rule that protected technology, thereby promoting innovation and allowing inventors to predict what innovation may face penalties.

The Court again considered the issue in Grokster. In this case, the facts are somewhat similar to Sony. This time, the plaintiffs sought secondary copyright infringement against the producers of a peer-to-peer file sharing software program. However, in Grokster, there is ample evidence that the defendants were actively encouraging users to infringe. The case likely would have come to a different conclusion had the defendants not actively encouraged infringement:

…one who 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, is liable for the resulting acts of infringement by third parties.

The Court made the right choice here, further defining the law and coming to an equitable conclusion. The clear and technology-protective Sony test was maintained, and instead the Court focused on the defendant’s actions. A focus on the actions of the defendant still encourages innovation while at the same time protecting copyright holders. Innovation is still permitted unless the innovators actively seek to infringe copyright:

We are, of course, mindful of the need to keep from trenching on regular commerce or discouraging the development of technologies with lawful and unlawful potential.  Accordingly, just as Sony did not find intentional inducement despite the knowledge of the VCR manufacturer that its device could be used to infringe, 464 U. S., at 439, n. 19, mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability.

The Supreme Court, when considering Sony and Grokster, was careful not to extend copyright protection so far that it interferes with innovation and commerce. This type of care supports the Constitutional goals of both promoting rights of authors and promoting innovation, and strikes an ideal balance between the two. This careful approach should be employed whenever possible to further the Constitutional goals of IP law.

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