[Ecommerce] WIRED: Europe Follows Grokster's Lead

[Manon Ress]

Europe Follows Grokster's Lead

By Bruce Gain
02:00 AM Aug. 05, 2005 PT

http://www.wired.com/news/politics/0,1283,68418,00.html?tw=wn_tophead_1

Little-noticed language in a European Union plan to crack down on
organized piracy could also make indirect copyright infringement a
crime across Europe, with implications similar to the recent MGM v.
Grokster U.S. Supreme Court ruling, experts say.

A directive being pushed by the European Commission would, among
other things, criminalize "attempting, aiding or abetting and
inciting" acts of copyright infringement. The EU parliament will take
up the proposal later this year.

Like the Grokster ruling, the scope of the proposal (.pdf) reaches
beyond the act of downloading or uploading copyright video, music or
software files and makes supporting copyright infringement illegal.
If the directive is adopted, software used primarily for illegal file
sharing, for example, could potentially make its developers
criminally liable in one or several EU member countries.

"The problem here is some activities, such as the creation of
software, can be used for legal and illegal purposes, as is the case
with Grokster," says Urs Gasser, professor of law at the University
of St. Gallen in Switzerland and a fellow at the Berkman Center for
Internet and Society at Harvard Law School. "It gets really messy,
because it is unclear what is legal or not legal, and it is
problematic to operate with such abstract terms."

Echoing fears voiced in the United States after the Grokster ruling,
Gasser says the directive could stifle innovation, as software and IT
firms may fear developing technologies that might later be adopted by
pirates.

"The (proposed directive) uses vague language and unclear standards
that increase or add uncertainty to (the software and IT) market that
is very much in a state of flux," Gasser said.

"This market is driven by entrepreneurs dealing with tough decisions
about whether to take a risk and work on an innovative product, to
face (stiff) competition and to raise money for their projects," said
Gasser. "So imagine a venture capitalist having a proposal on the
table from a young entrepreneur outlining the features of a piece of
software and immediately the lawyers would say, 'Well, here there
could be a problem.'"

Uncertainty over what innovations are legal or illegal would be
further confounded by different legislative interpretations of the
directive among the EU member states, said Gasser. "Just within
Europe you would have to care about many different standards and
about what they exactly mean, and what 'inducing' and 'inciting'
exactly mean," Gasser said.

A software firm, for example, could be in a messy legal situation
after designing tools that allow file sharing between only 10 people,
Gasser said. "You may have intended for the software to share files
within a company, but later (copyright) movies are exchanged," Gasser
said. "Would you want to put money in such a firm?"

However, Thomas Dillon, the Motion Picture Association's anti-piracy
legal counsel for Europe, the Middle East and Africa, contends that
the provision criminalizing indirect acts of copyright infringement
is a mere "footnote" in the European Commission's proposal.

"The armory of the directive is that they have gathered together the
different ideas of the member states of how you impose remedies,
which are not uniform across the union," Dillon said.

"In the Grokster case, if the intention is plainly to encourage
people (to infringe copyrights), then they would be guilty," said
Dillon. "In European countries where the activity of the user is a
criminal offense, then if you deliberately set out to encourage
people to do that and provide them with the means to do that, then I
would have thought that in most countries you would find yourself
liable."

The directive actually goes further than the U.S. ruling, in that it
makes indirect copyright infringement a crime, while Grokster was a
civil case.

The European Commission proposal would also set the maximum criminal
penalty for piracy by a "criminal organization" to four years in
prison and a 300,000-euro fine. Additionally, it seeks to address
disparities in anti-piracy criminal penalties across Europe by
obliging different EU member countries to draft uniform maximum
prison sentences into their sentencing guidelines.

"The (proposals) contain some useful elements, such as increased
maximum fines and enhanced cooperation, but overall there is not much
added value to existing national legislation," said a representative
for the International Federation of Phonographic Industries. "Most EU
member states already have maximum prison sentences for intellectual
property offenses that are higher than the four years proposed by the
commission. The proposals also fail to tackle a key problem for the
creative industries -- the failure of courts when applying the law to
impose truly deterrent sentences."

However, if adopted, the directive could help facilitate the task of
a U.S. firm seeking to prosecute a company or individual for
indirectly infringing on its copyright in Europe. As it stands now,
it would be difficult for a U.S. plaintiff to sue someone in Europe
by using the Grokster ruling.

A programmer who wrote software in a European member state, for
example, might be liable under Grokster if the program was created
for the sole purpose if inducing and promoting illegal downloads, and
most of the acts of infringement take place within a U.S.
jurisdiction. But pressing a trans-Atlantic lawsuit would still pose
problems for copyright owners, especially when it comes to the
physical act of serving someone with process, which must be done in
person.

"One of the problems you have with a lot of internet cases is finding
the defendant," said attorney Don Conwell, former chair of the
Computer and Internet Committee for the American Bar Association and
head of the computer law practice group at the law firm of Fowler
White Boggs Banker. "Sometimes they can be mom-and-pop shops. And it
will be difficult to find them without the rules of discovery in the
U.S."

Meanwhile, U.S. courts will likely soon decide the boundaries of
Grokster, while the Europeans ponder their definition of what
indirect copyright infringement means -- a particularly daunting task
when it comes to technology used for both legal and illegal purposes.

For his part, Gasser supports the European Commission's overall
intentions to legislate criminal sanctions against large-scale and
commercial-grade copyright violations for profit. What is needed, he
said, are more precise definitions of what is legal and illegal,
especially when it comes to the software and IT fields. "I think we
need to decide what 'commercial scale' means and to find wording that
is much more specific," said Gasser.