Notes & Comment
Vol. 2006, No. 1
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Copyright
Grokster and Me: Direct Infringement for Content Downloads
This space has previously considered secondary copyright infringement liability for peer-to-peer (P2P) file-sharing networks. Please see "MGM v. Grokster: Curtains for Free P2P Music?" Last June in its Grokster holding, a unanimous U.S. Supreme Court assumed, but did not decide, that individuals downloading music and other content over P2P file-sharing networks were liable for direct copyright infringement. There, the Court found that P2P file-sharing networks could be secondarily liable for such individual downloads.
Now, in one of the first appellate decisions post-Grokster, the U.S. Court of Appeals in Chicago has ruled that individuals who download content over P2P file-sharing networks without authorization from the copyright owner are engaged in direct copyright infringement. BMG Music, et al. v. Cecilia Gonzales (U.S. Court of Appeals for the Seventh Circuit, No. 05-1314 (December 9, 2005)).
Background
Cecilia Gonzales downloaded over 1,000 songs using the KaZaA P2P file-sharing network and stored them on her computer's hard drive. After being sued by the copyright owners (as part of a high-profile industry-sponsored campaign to crack down on individual users of P2P file-sharing networks), she claimed fair use under the Copyright Act because her downloads were a form of sampling that allowed her to decide which songs to eventually purchase. Though the court was skeptical of that argument, and while the amount of her downloading was an issue, Gonzales did admit to copying and storing 30 songs on her computer that she never purchased legitimately. The trial court granted summary judgment to the music companies, holding that Gonzales was not engaged in fair use when she copied and stored those 30 songs on her computer. She then appealed.
The main issue before the appeals court is whether Gonzales was entitled to have a jury decide if her unauthorized copying and storage of those 30 songs was fair use. The Court of Appeals said she was not entitled to a jury trial, that the trial court could make that decision. It affirmed entry of summary judgment against Gonzales.
Individual Downloads of Content Over P2P Networks Is Not Fair Use
Gonzales maintained that such downloads did not affect the potential market or value of the songs she copied and that she was engaged in fair use. She claimed that such downloads served as good advertising for the copyrighted works, and actually enhanced their value. The Court of Appeals in BMG Music forcefully disagreed, finding that "[A] copy [of music] downloaded, played and retained on one's hard drive for future use is a direct substitute for a purchased copy – and without the benefit of the license fee paid to the broadcaster." In this case, the court said, Gonzales's admission that she never purchased legitimate copies of the 30 songs deprived the copyright owners of royalties for such sales. The court observed that "[A]s file sharing has increased over the last four years, the sales of recorded music have dropped by 30%.... Music downloaded for free from the Internet is a close substitute for purchased music; many people are bound to keep the downloaded files without buying originals." Even though only 30 copies were involved, the court concluded that all 1000+ songs Gonzales had downloaded violated the Copyright Act: "[A]ll [such copies] undermined the means by which authors seek to profit."
Summary and Conclusion
The Seventh Circuit's decision in BMG Music v. Gonzales is a logical follow-on to the Supreme Court's Grokster ruling last June and, indeed, provides some of the legal foundation necessary for Grokster's eventual outcome. Direct infringement liability is a predicate for secondary infringement liability, and the missing link in most P2P file-sharing copyright litigation has been an established body of law holding that individual users of P2P file-sharing networks can be responsible for the primary copyright violation. BMG Music v. Gonzales begins to complete that picture, and more such cases are likely to follow.
© Matthew Joseph 2006. Law Offices of Matthew Joseph, San Mateo, California, practices in the areas of intellectual property licensing, commercial real estate leasing, and corporate and business transactions. No legal advice is intended by the information provided herein and recipients should independently consult counsel before taking any action related to this subject matter.