Tuesday, April 24, 2012
I'm a big fan of Dropbox. With a full schedule of professional travel, a need to work at home and on the go, and a less-than-perfectly-reliable university-issued computer, I've learned the hard way that I need dependable, easy-to-use cloud-based storage for my important data. But Dropbox has always targeted the casual data-sharer as much as the power user, and yesterday the company unveiled a new feature of its software that allows users to share files on their computers with anyone using an http link to a copy of the file stored on Dropbox's cloud-storage servers. The thing about this service, as some tech commentators have pointed out, is that it implements essentially the same technology that led to the federal government's recent criminal indictment of file-sharing juggernaut MegaUpload and its eccentric founder, Kim Dotcom.
So does Dropbox have a date with the feds in its future? I think most would agree the answer is no, but getting to that answer reveals the problems we've created in trying to manage the social, legal, and technological issues that surround the exchange of information. More after the jump...
The big story in copyright law for the past two or three decades has been the ongoing battle between the forces of "content" and "distribution"--between the owners of intellectual property rights in information and the sellers of technology that makes the distribution of that information cheaper, easier, and broader. This is nothing particularly new; those who make their living off of the creation and sale of new information have always been wary of technological progress. But mass adoption of digital technology and high-speed data networks have significantly raised the stakes.
In Section 512(c) of the Copyright Act (the so-called "DMCA safe-harbor") and in the case of Sony Corp. v. Universal City Studios, Congress and the Supreme Court, respectively, attempted to strike what turns out to be an uneasy balance between these competing interests. Section 512(c) immunizes the sellers of technology that facilitates the distribution of copyrighted information from liability for infringing uses of their services by customers, provided the technologists meet certain conditions. In Sony, the Court announced that technology itself is not a copyright outlaw so long as it is capable of substantial non-infringing uses. But of course, individuals and institutions may well use such technology for infringing purposes, and such uses remain actionable. We thus have a distinction set up within copyright law itself between the power of a technology in itself and the use of that technology by real people in real social settings. While we may hold individuals responsible for uses of technology that infringe a copyright, we do not hold the technology itself responsible for such uses.
This leads to the odd situation in which we now find ourselves, where the viability of entire segments of the digital economy, and of some of the largest and fastest-growing businesses in the world, come to turn on the thorniest and most contentious questions of fact the legal system can ever grapple with--questions of intent. In MGM v. Grokster, for example, the defendant companies were denied summary judgment on grounds that there was sufficient evidence that they intended to induce third parties to infringe the plaintiff's copyrights using their peer-to-peer file sharing services. But of course, intent is not a fact that can be proven by prying open the skull of a defendant and looking inside. Intent must always be proven circumstantially. In Grokster, the most important category of circumstantial evidence cited by the Court as sufficient to create a triable issue of fact (and likely sufficient to award summary judgment to the plaintiff--which was eventually granted) was evidence tending to show that the defendants targeted the cast-off customers of adjudged secondary infringer Napster. But "complement[ing]" that evidence, the court said, was the defendants' failure to impose filtering systems on their services that Section 512(c) arguably makes legally unnecessary, as well as evidence that the defendants--gasp!--were interested in growing their user base to maximize advertising revenues.
This is what Larry Lessig once referred to as "the monster Grokster created": the inquiry into a particular defendant's state of mind is now part and parcel of the legal battle between content and distribution. And because evidence of intent is necessarily circumstantial, these cases are likely to turn on a factfinder's response to the overall story woven by the parties' lawyers--a gut reaction as to whether the defendant is a good guy or a bad guy. Facts that might otherwise seem innocuous can be cited as circumstantial evidence of intent to commit secondary infringement if the factfinder just doesn't trust the defendant.
Which brings me back back to Dropbox and its new link-to-share service. Dropbox, it seems, is not maintaining a searchable index of the files its customers share via link--the type of activity that got Napster in trouble. One might think that this fact suggests the company has no interest in attracting customers who are interested in using its services to locate and freely download copyrighted content. But take a look at Paragraph 10 of the MegaUpload indictment, which alleges that MegaUpload did not maintain a searchable index of content on its servers in order to "conceal the scope of its [copyright] infringement." That paragraph also notes that MegaUpload provided financial incentives to customers whose uploaded files increased traffic on MegaUpload's website and, thereby, increasing the company's revenue base. Dropbox, in turn provides existing customers with additional free cloud storage for referring new customers to the service. If, as Grokster suggests, a desire to broaden one's customer base is circumstantial evidence of an intent to induce infringement, should we expect the refer-a-friend program to be cited in a federal indictment or a civil complaint in the near future?
I don't think so, but I can't be sure, and that is ultimately the point. The social dynamics of information exchange that new technologies like Dropbox (and, frankly, MegaUpload) make possible are unpredictable and often out of the direct control of the service providers themselves. Such exchanges can be public or private, shared or hidden, broadcast or narrowcast, and everywhere in between. Section 512(c) attempts to account for this, for example by making knowledge of specific infringing activity a prerequisite for secondary liability. But like intent, knowledge is a thorny factual issue that courts continue to disagree about, often based on differing views of the inferences that can be drawn from a particular mix of circumstantial evidence.
For my part, I look at all this as a lawyer who, in a former life, was sometimes called on to give clients guidance as to whether a course of action they were considering for their business would be likely to generate legal liability. I have to admit, I'd have a hard time giving a client like Dropbox useful advice today. And it strikes me that a legal regime that doesn't allow a segment of our economic and social lives as fundamental as the information we exchange with one another to be planned with some degree of certainty isn't doing its job very well.
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This is far from my area (although I am a fan and user of Dropbox). I wonder about the degree to which "intent" here means something like "business model." No one could plausibly argue that infringing uses are central to Dropbox's business model. But business models evolve, especially in the world of internet companies. If MegaUpload had started out by providing a backup-and-sync service like Dropbox, and then proceeded to do exactly what it did, would there have been liability (or even a claim)? Would the answer have turned on the role infringing uses played in MU's _new_ business model?
Posted by: Joey Fishkin | Apr 24, 2012 5:05:52 PM
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Posted by: Orimark | Apr 25, 2012 5:15:59 AM
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