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AN UPDATE ON THE CURRENT STATE OF THE FILE TRADING WAR FOR UNIVERSITIES: LEGAL UNCERTAINTY AND EDUCATIONAL OPPORTUNITY

-by Susanna Frederick Fischer, Assistant Professor, The Columbus School of Law, The Catholic University of America

As I stroll across The Catholic University of America on this crisp February day, the leafy campus looks tranquil, a place of peace and scholarly reflection.  And it truly is all of those things.  But, as an American university, it is also a battlefield in a legal conflict over digital copyrights.  As 2004 begins, the fight continues to rage over the peer-to-peer software systems (“P2P services”) that many university students use to trade music, films and other digital media over the Internet.

          The music and motion picture industries believe that students and others are using free P2P services to commit major copyright piracy.  Users of these services were not, however, the entertainment industry’s first legal target.  Instead, the music industry’s initial legal strategy was to sue P2P services themselves, on the basis that these services were contributorily or vicariously liable for their users’ copyright infringements. 

This strategy had some initial success.  A group of recording companies and music publishers obtained a preliminary injunction against the hugely popular free P2P service Napster. See A& M Records, Inc. v. Napster, Inc., 284 F.3d 1091 (9^th Cir. 2002); A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9^th Cir. 2001).  As a result, Napster was forced to go offline, and eventually went bankrupt.  Recently, Napster was revived in an industry-sanctioned form as a legal online music file trading service that charges fees for downloading and transferring copyrighted music to CD or MP3 players. See Napster 2.0 site at: http://www.napster.com.  Napster’s fate did not deter many file traders, who turned to other free P2P services like KaZaA, Morpheus, Grokster, and BearShare.  

            These other P2P services are structured differently than the original Napster.  While Napster had a library on its server that users could use to search and identify files for download, services like Grokster, Morpheus, and KaZaA lack this centralized feature. Users of one of these decentralized P2P services can instead directly search the other computers on the network to locate files to download.

            This decentralized structure led a federal district court to deliver a major blow to the entertainment industry’s strategy of suing P2P services rather than users. In April 2003, Judge Stephen Wilson of the United States District Court in Los Angeles ruled that the operators of Grokster and Morpheus could not be liable for contributory or vicarious copyright infringement, because they lacked direct control over the files swapped on their networks and also lacked the ability to supervise their users’ conduct.  Judge Wilson stated: “Grokster and StreamCast [the operator of Morpheus] are not significantly different from companies that sell home video recorders or copy machines, both of which can be and are used to infringe copyrights.” See Metro-Goldwyn-Mayer Studies, Inc. v. Grokster, Ltd., 259 F. Supp.2d1029, 1043 (C.D. Cal. 2003).

          Faced with this setback, the entertainment industry plaintiffs fought on. They appealed Judge Wilson’s decision to the Ninth Circuit, which heard oral arguments in early February 2004.  They also made a significant change to their litigation tactics: they decided to pursue individual users of P2P services for directly infringing copyrights. 

There were a number of potential and actual problems with this strategy.  A potential public relations problem was that the entertainment industry risked alienating potential purchasers of their products by suing them.  It is too early to tell how significant this problem will prove to be.  Another problem was practical: it was difficult for the entertainment industry to identify the individuals that they believed to be large-scale copyright infringers. Tracking software could identify the Internet protocol (“IP”) addresses of the computer used to trade copyrighted works.  To identify a user associated with an IP address required additional information from the user’s Internet service provider (“ISP”).  For help, the entertainment industry turned to a relatively new law, the Digital Millennium Copyright Act of 1998 (“DMCA”).

            The DMCA seeks to strengthen copyright law to combat the problem of easy and cheap digital piracy.  It gives new rights to copyright owners of digital works.  It also provides for an expedited subpoena procedure that the entertainment industry believes provides authorization to obtain the identities of unknown file traders who are allegedly trading copyrighted music and other media online.  See 17 U.S.C. § 512(h)(1).  Under this provision, a copyright owner may “request the clerk of any United States district court to issue a subpoena to [an ISP] for identification of an alleged infringer.”  Unlike conventional subpoenas issued in pending lawsuits in federal court, the DMCA subpoena procedure does not require judicial oversight because the subpoenas are issued before a lawsuit is filed.

          A copyright owner must file three things with its request to the clerk of a district court for issuance of a subpoena: (1) a notification identifying the copyrighted works that have allegedly been infringed and the allegedly infringing material, as well as providing enough information for the ISP to locate the material; (2) the proposed subpoena; and (3) a sworn declaration that the subpoena’s purpose is to identify an alleged infringer and that it will not be used for any purpose other than to protect copyright rights.  17 U.S.C. s. § 512(h)(2)(A)-(C).  If the request contains these three things, the clerk of the district court is required to “expeditiously” issue a subpoena for delivery on the ISP.  17 U.S.C. § 512(h)(4).  Once the ISP receives the subpoena, it is required to “expeditiously” disclose the identity of the alleged copyright infringer to the copyright owner. 17 U.S.C. § 512(h)(5).

            From 2002 to 2004, the recording industry trade association, the Recording Industry Association of America (“RIAA”), issued hundreds of § 512(h) subpoenas and sent them to a broad range of ISPs, including many universities.  One very large wave of several hundred subpoenas was issued and sent in July 2003.  Many ISPs complied with the subpoenas and provided the names of subscribers to the RIAA.  The RIAA then filed lawsuits in courts around the country against many of these subscribers.  They included college students, a grandmother, and even a 12-year-old girl.  Many of those sued complained that they lacked any warning in advance of suit. Other defendants first received notification of the lawsuits from reporters.  Several other waves of lawsuits followed in the autumn of 2003 and the winter of 2004, but this time the RIAA provided advance warning.  Many subpoena recipients settled shortly after being warned that they were going to be sued.
             Not every ISP was as compliant. Many were concerned that the DMCA’s expedited subpoena procedure failed to guarantee due process, did not adequately respect privacy, and failed to protect against fraudulent or abusive claims.  One ISP, Verizon, challenged the RIAA’s use of § 512(h) subpoenas to obtain the identities of two Verizon subscribers that the RIAA alleged were trading hundreds of copyrighted works without permission.   When Verizon refused to disclose these subscribers’ names, the RIAA sued to compel production.  Verizon objected, making a statutory interpretation argument in one case, and two constitutional arguments in the other case. Verizon’s first constitutional argument was that the district court lacked jurisdiction under Article III of the United States Constitution to issue a § 512(h) subpoena, because it is a form of judicial process that cannot be issued in the absence of an actual or pending case or controversy. The second constitutional argument made by Verizon was that § 512(h) violates the First Amendment by failing to adequately protect Verizon subscribers’ anonymity, as well as by not providing appropriate procedural protections for their expressive and associational rights.  Verizon’s statutory interpretation argument was that § 512(h) is inapplicable to an ISP that merely acted as a conduit for individuals using P2P networks to trade files.  The district court rejected all these constitutional and statutory arguments, and upheld both subpoenas.  See In re Verizon Internet Servs., Inc, 240 F. Supp.2d 24 (D.D.C. 2003);   In re Verizon Internet Servs., Inc., 257 F. Supp.2d 244 (D.D.C. 2003).  Verizon appealed both orders.
        Very recently, in December 2003, a three-judge panel of the United States Court of Appeals for the District of Columbia reversed the district court.  The appellate panel held that the correct interpretation of § 512(h) is that Congress has only authorized § 512(h) subpoenas when infringers store infringing material on the ISP’s network, not where such materials are simply transmitted across the ISP’s network and are stored on the user’s home computer.  The panel did not reach Verizon’s constitutional arguments.  See Recording Industry Association of America,Inc. v. Verizon Internet Services, Inc., 2003 U.S. App. LEXIS 25735 (D.C. Cir. Dec. 19, 2003). The eventual outcome of this dispute is still uncertain. The RIAA has petitioned for rehearing en banc, by all the judges on the appeals court.  In its Petition, the RIAA contends that the panel erred in its restricted interpretation of the statute because this interpretation makes the subpoena authority effectively useless and would run entirely counter to the goals of the DMCA. 

          It is also still unclear what effect these recent RIAA initiatives have had on the volume of student use of P2P services to trade copyrighted material.  Definitive statistics are not available.  One survey, released in January 2004 by the Pew Internet & American Life Project, reported a significant drop in online file sharing after the RIAA began filing lawsuits against individual users of P2P services. See Lee Rainie et al., The impact of recording industry suits against music file swappers, Pew Internet & American Life Project (Jan. 2004), available at http://www.pewinternet.org/reports/toc.asp?Report=109.  This survey, conducted between November 18 and December 14, 2003, stated that the percentage of online Americans downloading music files fell to 14% from the 29% reported by an earlier survey, conducted between March 12-19 and April 29-May 20, 2003.   The January 2004 survey also found a reduction in the percentage of those online that were trading other types of files. This reportedly fell from 28% (measured in June 2003) to 20% (measured in November-December 2003).  The same survey also reported a sharp drop in music downloading by students, from 56% of those online in a period between March and May 2003 to 24% in a period between November and December 2003. But a very recent survey in The Chronicle of Higher Education described student file trading as remaining “rampant” on university campuses.  See Brock Read, The Downloading Beat Goes On, The Chronicle of Higher Education A25 (Feb. 6, 2004), available at http://chronicle.com/ [subscription required].  Even if there has been a large reduction in the percentage of online students who are trading files, a significant number of students still appear to be engaged in file trading.  The Pew Internet & American Life Project January 2004 survey reported that nearly a quarter of online students were using P2P services like KaZaA, Grokster and BearShare to trade files in November and December 2003.
         This means that it is not safe for universities to assume that the RIAA’s actions are deterring their students from file trading.  At least for the time being, universities remain on the front lines of the legal war against file traders.  Many university students still remain at risk of being sued by the entertainment industry for copyright infringement. Universities may also be at risk of being sued for indirect copyright infringement, for facilitating their students’ direct infringement. 

       Universities' general counsel offices should ensure that they are actively following the twists and turns of ongoing legal developments in the file trading war.  Although at the moment the RIAA cannot use DMCA subpoenas to obtain the identities of student file traders from universities, this may change if the D.C. Circuit grants en banc review of the recent panel decision. 

          Universities should also not assume that the panel decision has stopped the RIAA from pursuing individual downloaders whose identities are unknown to the RIAA.  In January 2004, the recording industry filed several “John Doe” lawsuits in New York and Washington D.C. against over 500 unnamed file traders across the country, and then served various ISPs with conventional subpoenas to obtain their names.  Failure to obey a valid subpoena without adequate excuse is a contempt of the court issuing the subpoena.

          Some universities that receive subpoenas seeking the identities of student file traders may have concerns about compliance with the Federal Educational Rights and Privacy Act (“FERPA”), 20 U.S.C. § 1232g, a law that protects against disclosure of personally identifying information about students.  In the summer of 2003, Boston College and the Massachusetts Institute of Technology (“MIT”) refused to comply with several RIAA DMCA subpoenas due, in part, to concerns about a conflict with FERPA.  Boston College and MIT saw a conflict between the DMCA’s requirement of “expeditious” compliance with the subpoena and FERPA’s requirement that a university can only disclose student information in response to a lawfully issued subpoena after the university makes a reasonable effort to notify the student, if aged 18 or above, or if the student is younger, his or her parents. 

MIT and Boston College moved to quash the DMCA subpoenas on the basis that the subpoenas were invalid for violating federal procedural rules, because they had been issued by a district court in Washington D.C. but served in Massachusetts, more than 100 miles away.  In moving to quash on this basis in July 2003, MIT and Boston College simultaneously moved for protective orders providing that, if and when they received valid subpoenas, they would be granted reasonable time to notify students in order to ensure compliance with FERPA.  On August 7 2003, Judge Joseph L. Tauro of the United States District Court for the District of Massachusetts granted these motions to quash and for a protective order.  The RIAA then served MIT with a new subpoena issued by the Massachusetts federal district court that gave MIT time to provide prior notice to the alleged infringer, and MIT complied with that subpoena.  The RIAA also served a new subpoena, issued by the Massachusetts federal district court, on Boston College requesting the identity of a student,  “Jane Doe.”  Boston College notified her of the subpoena, and she moved to quash, making similar statutory interpretation and constitutional arguments to those raised by Verizon in the case discussed above.  Before the court ruled on “Jane Doe’s” motion, the RIAA announced that it had entered into a settlement with her in October 2003.

            Now that the RIAA has abandoned the use of DMCA subpoenas and switched to the use of conventional civil subpoenas issued in John Doe lawsuits, as a result of the D.C. Circuit’s December 2003 ruling in the Verizon case (see Recording Industry Association of America,Inc. v. Verizon Internet Services, Inc., 2003 U.S. App. LEXIS 25735 (D.C. Cir. Dec. 19, 2003)), it is unlikely that a university can successfully challenge such a subpoena on the basis of a conflict with FERPA. Unlike the DMCA subpoenas that were issued before litigation was filed, a judge will be supervising these John Doe lawsuits. The John Doe process thus offers more due process and privacy protections to anonymous users than the DMCA’s expedited subpoena procedure, although some observers fear that it is still not protective enough. John Doe subpoenas have frequently been served on ISPs in lawsuits filed against anonymous individuals based on a variety of online activities other than file trading, such as suits for online defamation. Some ISPs have complied with these subpoenas without providing notice to their users, raising concerns about lack of due process and insufficient privacy protections. Universities that receive a subpoena issued in a John Doe lawsuit should take care to make a reasonable effort to provide notice of the subpoena as required by FERPA. Universities should also ensure that the notice given to students or parents allows reasonable time for them to move to quash the subpoena before any identifying information is disclosed. If necessary, universities should move for protective orders to ensure that students’ due process and privacy rights are adequately protected.

          The best way for universities to avoid the problems posed by subpoenas seeking the identities of student file traders is to avoid getting them in the first place. Some universities, such as Penn State, have attempted to encourage their students to trade files legally.  Penn State has signed a deal with Napster 2.0, Napster’s reincarnation as a legal, pay online music trading service.  Under this arrangement, Penn State will pay a fee to Napster 2.0 in exchange for providing its students with free subscriptions to Napster 2.0’s online library of half a million songs.  Students can download any of the songs in this library for free, and can copy the music to a CD or MP3 player at a cost of $.99 per track or $9.95 per album. The Penn State/Napster 2.0 arrangement is still at the trial stage, and it is unclear whether it will deter Penn State’s students from using other P2P file trading services.  It will be hard for students to accept paying for music they have previously obtained for free. If students do not substantially change their behavior, Penn State may still be at risk of being sued by the entertainment industry. 

            University lawyers would be well advised to follow the progress of the Penn State experiment in deterring illegal student trading of copyrighted material.  While Penn State’s approach may not be the best approach for every university, implementing some procedures to educate students about copyright law and the legal perils of file trading is essential for all universities.  Although it is not clear precisely what kind of education will work to deter students from infringing copyrights online, all universities should take steps to ensure that all students are educated about the basics of copyright law, as well as the potential legal and disciplinary consequences for students who infringe copyrights.   Universities should also monitor the effectiveness of these educational initiatives and have the flexibility to try a different approach if they are not working.  Additionally, universities need to have the flexibility to adapt their educational initiatives to rapidly developing new technology.  For example, newer software such as BitTorrent allows easier downloading of very large files, such as digital video.  This means that, in the near future, student file trading in digital movies may become a much larger problem than it is now.  Other, as yet unforeseen, digital technological developments will likely pose additional challenges for universities.

            But universities should also not forget that digital file trading technologies also pose great educational opportunities for students.  The Chronicle of Higher Education recently reported that several academic institutions, including Yale University, have entered into a trial arrangement with Cflix (www.cflix.com), a company that provides a service for legal file trading in academic courses.  See Brock Read, Online, The Chronicle of Higher Education A25 (Feb. 6, 2004).  The Cflix service permits professors to post multimedia course materials, such as films, online, allowing students to easily download and view them at a convenient time.  Although universities are faced with a difficult challenge on the front lines of the digital copyright wars, they are also in an exciting place: a new technological frontier with wonderful opportunities for educational benefit.