For more than 100 years Hollywood has been the world’s epicenter of creative content and home to the film, television and music industries. The law of copyright – the exclusive legal right of creators and owners of creative works to publish, perform, copy and distribute such works – enabled the ascent of these industries and protected them against theft of their works.
Hundreds of miles to the north, Silicon Valley has become the world’s epicenter of technology, the densest concentration of technology companies and venture capital in the world. Silicon Valley spawned a new kind of company, the Internet Service Provider (“ISP”), companies providing consumers with Internet access, caching, web hosting and search services. As soon as they were conceived, ISPs became the target for lawsuits from claimants who argued that the ISPs were secondarily responsible for unlawful content on the Internet, often content that infringed the laws of copyright. Congress responded in 1998 by passing the Digital Millennium Copyright Act (“DMCA”), which afforded ISPs certain safe harbors against liability for copyright infringement provided that they observed certain protocols, most notably prompt response to the notification by a copyright owner of the existence of infringing content on sites hosted by ISPs.
Before the Internet, in order to steal a copy of a movie or song, one had to risk shoplifting. The Internet, however, enabled quiet theft of infringing content through the Internet in one’s home or place of work. This phenomenon, and the passage of the DMCA, presaged a series of high stake court battles pitting content owners against ISPs – Hollywood versus Silicon Valley.
Hollywood won the first several rounds.
Napster, an MP3 file sharing site, was launched in 1999. Napster facilitated peer-to-peer sharing of music files on users’ computers through software downloaded from the Napster site and a search engine permitting users to search for files through indices and a “hotlist” function, each maintained by Napster. Napster was sued by a number of record companies who contended that Napster existed primarily for the purpose of trading infringing copies of their songs. The courts agreed with the record companies, and an injunction against Napster was upheld in A&M Records v. Napster, 239 F.3d 1004 (2001). The courts found that Napster was used primarily to trade in infringing copies of song files, which activity could not occur without the software and indices maintained by Napster. The courts rejected the contentions of Napster and interested “amici,” or friends of the court, that Napster and its users were engaged in fair use, not unlike music fans trading lawfully purchased CDs.
Silicon Valley devotees of peer-to-peer file sharing, apparently having studied the Napster opinion and concluded that Napster’s demise was its maintenance of indices through which infringing files could be located, conceived Grokster, a peer-to-peer file sharing system that lacked any indices maintained by the owners of Grokster. Hollywood nevertheless succeeded in shutting down Grokster as well. The U.S. Supreme Court, in MGM v. Grokster, 545 U.S. 913 (2005), held that the courts could use evidence that Grokster promoted itself as a Napster alternative, and the high percentage of infringing files available through Grokster, to shut down the service based upon inducing infringement of copyright.
A few years later, Silicon Valley turned the tables on Hollywood through a long-running legal battle between various film studios, television networks, music publishers and sports leagues against YouTube, which was eventually purchased by Google – Viacom v. YouTube. The plaintiffs complained that infringing copies of their content were rampant on YouTube. YouTube countered that its site supported significant lawful uses and that it had done a responsible job of removing infringing content in response to notices. The courts have largely agreed with YouTube, ruling that it is entitled to the safe harbors of the DMCA. YouTube’s court successes rested on three important distinctions between its service and those of Grokster and Napster.
First, YouTube had a much better case that it enabled sharing of lawful creative content and was not merely the site and facilities for trading infringing material. Second, YouTube did a responsible job of responding to notices of the existence of infringing material on its site. Third, YouTube turned potential adversaries into customers by negotiating deals whereby potential plaintiffs could instead have placement as a “channel” on the YouTube site.
While the tussle between content owners and technology providers continues in courts and in Congress, the YouTube decisions presage an era of greater cooperation between Hollywood and Silicon Valley. Hollywood must rely upon new technology to advertise and distribute its content, and technology entrepreneurs are better served by meeting content providers in the marketplace rather than the courts.