Critically assess the strategy of the film industry in response to the problems of file sharing

Introduction The main argument of those who support piracy is (i) that every important sector of big media today was born of a kind of piracy so defined. “…If piracy means using the creative property of others without their permission, if value then right is true, then the history of the content industry is a history of piracy;” [1] (ii) piracy doesn’t necessary mean to steal: there are different forms of piracy; (iii) the great success of the Internet is in the “altruistic sharing” (Long Tail principle, says that as the cost of inventory falls, the efficient range of inventory rises; Little Brother, says that “an efficient little brother learns what I’m likely to want and he recommends new things to me based upon what he has learned”; Lego-ized Innovation, says that web services enable the invention and the building to be shared among many different entities.) [2]. These arguments have been used to explain the birth and the development of piracy in the film industry of Hollywood and the concept of free market, which is related to the right of free expression. Pirates’ supporters say that Film Industry was built by fleeing pirates: creators and directors migrated from East Coast to California in the early twentieth century in part to escape controls that patents granted the inventor of filmmaking, Thomas Edison [3]. They also point out the fact that piracy means to transform contents and the market [4]. Despite the above mentioned arguments concerning pirates, which in a way try to justify also illegal downloads and the improper use of the file sharing, data left. A study released by the Motion Picture Association of America (MPAA) found that film piracy was worse in South Korea, where broadband is commonplace. Major Film Studios say piracy on the net has cost them billions of dollars. “…Last year Hollywood’s major studios made a record $10.85bn (£5.8bn) at the international box office.” [5]. This essay is an analysis of the position of Film industry (and in general entertainment industry) in regard to file sharing and illegal downloads of copyrighted works. I will point out how Law, EU and right holders in these years have tried to fight against technology and fix the problem of file sharing. I will debate about Law, which in theory guarantees a defense for right holders, but in reality helps the proliferation of Major Studios’ monopoly, and Technology, which regulates behavoiurs (Chapter 1. Law and technology regulate behaviour.) I will highlight the position of the EU and the introduction in 2004 of a Directive for the enforcement of intellectual property rights (Chapter 2. Piracy and Films: the EU’s response to protect copyrighted works.) I will examine the doctrine (secondary liability) related to the protection of copyrighted works, that Courts used to fix the problem of file sharing and illegal downloads (Chapter 3. Courts and technology: Sony Doctrine, secondary liability and the Peer-to-peer file distribution phenomenon.) Finally I will identify the position of right holders who use a “deterrence” technique, consisted in suing individuals, to dissuade or control file sharing in Internet. (Chapter 4. The “deterrence” techniques used by right holders to dissuade or control file sharing on the Internet.) 1. Law and technology regulate behaviour Traditionally copyright protection is linked to the form of expression of the work. Nowadays however, the content of artistic or literary digital works and other subject matter can be represented in a form independent of any particular medium [6]. This characteristic of digital works is commonly referred to as the dematerialisation of works [7]. It is this dematerialisation and the attendant ease of copying, adaptation, and communication of works in digital form that has given rise to the migration of copyrighted works and their exploitation to the Internet. The said ease of copying, adaptation and communication has in turn facilitated the Peer-to-peer (P2p) [8] copyrights infringement phenomenon that forms the crux of the file sharing. P2p technology has been a source of controversy in recent years primarily because the preponderance of files shared are copyright protected and are so far shared with no restraints and still with no compensation whatsoever to the copyright owners [9]. Anyway it has to be noted that this new technology is not only used for reproducing copyrighted works. P2p technologies are also employed in other beneficial services like in facilitating telephony traffic or in broadcasting TV programmes [10]. Benefits notwithstanding, the utilization of P2p technique for sharing audiovisual works in the Internet is a controversial debate especially because it doesn’t exist any definitive regulations and also because it seems that Law cannot dominate such a fast changing mechanism like the Internet and its new technologies. File-sharing is booming, with people downloading millions of files despite efforts by the entertainment industry to stop the practice. Films and other files larger than 100MB are becoming the most requested downloads on networks around the world. It measures P2p traffic on the networks of internet service providers. It is estimated that at least 10 million people are logged on to a P2p network at any time [11]. The Courts don’t know how to solve the problem of the download of copyrighted works. There isn’t a unanimous judgment, there isn’t a decision to follow because every decision can be interpreted in many different ways, every word can mean the opposite and every sentence can be read for finding a precise allusion or suggestion to support a distinct variation of the previous thesis. Technologies grow faster than Law. Law regulates behaviour. Technology regulates behaviour. Law, technology and behavioural adaptations to them interact in a dynamic recursive process to form the parameters of human behaviour that is bound up with the technology. 2. Piracy and Films: the EU’s response to protect copyrighted works The Internet has become an easy tool to connect people and share information. It is a fundamental medium that has become necessary not only to work, but also to exchange opinion, create debate and entertain. The last one is the main reason for the popularity of the file sharing, and consequently the illegal download of music and films (not to mention the fact that to download audiovisual or music contents from the Internet is cheaper than to buy a CD or a DVD.) Moreover it is undoubted that the open network nature of the Internet, combined with digitisation, enables the production at low cost of copies of equivalent quality to the original of the work. Compared to the other media, the Internet is also much more creative. Through the Internet people are able to choose all the audiovisual contents that they want, to remove from their laptops films already seen (or after having seen them) or to download only some songs from a CD or make a selection of their favourite pieces of music or films that they like, to listen, watch and then remove them. Welcome to “cyberspace” [12] the uncharted territory where freedom reigns and all the imaginations and innovations of the mind are possible and natural where copyright infringement is the “order of the social.” [13]. Within this space there is copyright law, which is often analyzed by reference to economic efficiency [14], yet dominated by allegations of copyright infringement due to its ability to acquire and disseminate copyrighted works and thus, constitute a criminal activity [15]. The Internet is an open source medium impossible to control. In particular, the possibility for users to access and copy works placed on the Internet from anywhere in the world makes enforcement of national copyright laws, whose territorial scope is limited, against infringers (both domestic and foreign) very difficult [16]. The protection of copyright on the Internet therefore raises many legal issues, including: (i) the determination of the types of work that can be protected by copyright (e.g. email, websites, computer programs, databases); (ii) the scope of copyright protection (i.e. moral and economic rights); (iii) and the exceptions to copyright protection (e.g. the ability to reproduce copyright works.) [17]. Especially the protection of copyrighted works and audiovisual contents in the Internet raises the problem of finding a common, or better said a community, regulation to protect copyright works. To address the abovementioned issues the EU has adopted regulatory initiatives based on the idea to control and regulate all the changes in the Internet [18], but the legislation is still confusing and incomplete and technology is faster than regulations, laws and prohibitions. Many questions arise. Which kind of protection the EU is trying to enforce? What is in reality the position of the EU? Is it more agreed for a free regulation of the Internet or for a complete control of it? What kind of role copyright and related rights may have in the promotion of literary, musical and artistic creativity and economic development? Is it really impracticable to find a unique and global regulation to control copyright works and illegal download in Internet? [19] And finally is it really regulations, prohibitions, limitations what we are thirsty for? It is undoubted that the ready availability on the Internet of works protected by copyright constitutes a real challenge to the enforcement of copyright law. Yet some voices are against any kind of restriction [20] and in particular, the lack of an adequate protection for works in digital form in certain Member States is considered an obstacle to the development of new products and services [21]. Legislative action at the EU level has been motivated by the perception that the maintenance of divergent national copyright rules gave rise to legal uncertainty, thereby jeopardising the proper development of the information society, especially electronic commerce, in Europe [22]. The European Commission therefore recognised the need to ensure an appropriate level of copyright protection across Europe for works on the Internet, which has to be achieved by the harmonisation of national provisions. In fact Intellectual Property Rights in the EU are covered by numerous legislations both at the Community level and the national level. In the strictest sense there is no European copyright law, rather, there are a number of directives and regulations that forms a “package” of laws that has an impact on the regulation of copyright within the EU, however, it is the Member States of the Union that have their own copyright laws [23]. In 2004 the European Union introduced a Directive for the enforcement of intellectual property rights [24], with the objective to approximate legislative systems “so as to ensure a high, equivalent and homogenous level of protection.” [24]. The Enforcement Directive concerns measures, procedures and remedies necessary to ensure the enforcement of intellectual property rights. The EU had hoped that by bringing enforcement measures into line with each other throughout the Union, the Enforcement Directive would have created a level playing field for applying intellectual property rights. The scope of the Enforcement Directive had been widely defined in order to encompass all the intellectual property rights covered by Community provisions in this field and/or by the national law of the Member State concerned. Thus, the Enforcement Directive (i) applies to any infringement of intellectual property rights as provided for by Community law and the national legislations of Member States; (ii) requires Member States to ensure the implementation of access to evidence, preservation of evidence, right to information, precautionary measures, corrective measures, injunctions, damages and publicity measures; (iii) implements at the Community level “best practice” measures, which can be found in national laws of the Member States [25]; (iv) the Enforcement of the Directive is the EU’s response to the illegal download of copyrighted works, yet to enforce restrictions is not the right defense and persecute individual downloaders is an impracticable way to fight illegal downloads and it is also against the right of privacy. Copyright enforcement refers to the various processes undertaken by right holders after the tracking phase of their battle against P2p ?le sharers. These processes generally include further investigation to unveil the users of identi?ed IP addresses by obtaining their detailed information from their ISPs, the serving of  ‘cease and desist’ notices and the judicial prosecution of identi?ed offenders [26]. Actually the Internet is an unregulated space where everybody is allowed to express himself anonymously. 3. Courts and technology: Sony Doctrine, secondary liability and the Peer-to-peer file distribution phenomenon. The peer-to-peer file distribution phenomenon has started with the introduction of Napster, but the legal starting point that is still a fundamental legal decision and main rule in the area of copying and copyright is the Sony decision, often referred to as the Betamax case. The Sony decision has played a substantial role in the legal dispute over P2p services like Napster and its progeny, such as Aimster, Grokster, Morpheus and Kazaa. It was the first concerted legal response of the American film industry to the home video revolution and after this decision the entertainment industry aimed on one side to set a precedent to use against other technology companies (P2p and otherwise) [27]; on the other side the Courts have struggled to apply Sony doctrine to solve the question of whether companies who operate P2p networks are liable for the massive amounts of infringement that take place on them. In fact for the last twenty years the Supreme Court’s decision in Sony Corp. of America, Inc. v. Universal City Studios, Inc. has guided lower courts’ analysis of the potential liability of the technology providers whose products may be used to infringe copyrights. It’s undoubted that Law, Courts and Justice related to files sharing, P2p and copyright in general, appear divided between the need to protect new technologies and the need to provide remedies against copyright infringements and illegal downloads. The application of Sony rule to digital technologies, however, has been less than straightforward. The exam of it proceeds from several premises “… first, copyright promotes an important public interest in authorship and creativity together with granting authors exclusive rights as an incentive to create and disseminate new works of authorship. Second, there is nothing in the copyright law — or elsewhere, for that matter — that automatically subordinates that public interest to the important public interest in technological progress. Third, it is unjust to build a business on the infringement of other people’s copyrights.”[28]. Sony involved the question of whether a manufacturer of a Videocassette Recorder (VCR) could be held liable under the doctrines of secondary liability for the infringing actions of the customers who buy the VCR [29]. The legal case arises many questions concerning the concept of secondary liability [30]. Secondary liability is an accepted and established rule in copyright law, but the Court in Sony concluded that this doctrine had not been applied to a situation presented by the VCR, where the manufacturer did not have actual knowledge of the infringing activity for which customers used the device, but only “constructive knowledge of the fact that its customers may use that equipment to make unauthorized copies of copyrighted material.” To solve the case, the Court looked to patent law, specifically the “staple article of commerce” doctrine, embodied in Section 271(c) of the Patent Act, which provides that sale of a “staple article or commodity of commerce suitable for substantial non infringing use” is not contributory infringement, on the grounds that patent rights should not extend the patentee’s control to allow it to control the sale of staple articles or commodities [31]. Applying this concept to the copyright context, the Court explained that: “…[t]he staple article of commerce doctrine must strike a balance between a copyright holder’s legitimate demand for effective – not merely symbolic – protection of the statutory monopoly, and the rights of others to engage freely in substantially unrelated areas of commerce.” Based on this reasoning, the Court adopted the following approach to address the question of whether Sony could be held liable for copyright infringement. The sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses [32]. To conclude, in Sony, the Court held that the manufacture and sale of the Betamax videotape recorder did not subject Sony to liability for contributory copyright infringement resulting from infringing uses by purchasers of the device, because the Betamax VTR was capable of “substantial non infringing uses.” The Sony decision provoked a dichotomy between people who support the decision and people who are against it and after the decision it stimulated the discussion about the need of changing the Sony’s rule [33]. Fans of the Sony decision insist that the legal rule announced in the case made the world safe for innovation [34]. The Sony standard is “the only thing that protects your right to own a VCR, tape recorder, CD-burner, DVD-burner, iPod, or TiVo.  It’s that important.” [35]. Sony’s detractors read the decision more narrowly [36]. If consumers have some “right” to own or use a VCR, tape-recorder, CD-burner, DVD-burner, iPod, or TiVo, that right certainly doesn’t emanate from Sony, which recognized a limited consumer privilege to make temporary analog tapes of free broadcast television programs, and declined to hold the maker of a copying machine liable where the machine was used primarily to make those temporary tapes [37]. The Court avoided comments on the debated definition of the substantial “noninfringement uses”, affirmed the Sony doctrine without modifying it, and characterized the new inducement theory as a classic case of common law secondary liability [38]. For decades, Courts have recognized that those who assist and facilitate copyright infringement are liable just as those who actually commit the acts of infringement [39]. Sony doctrine says the opposite and for that reason, just to fix the problem of file sharing and illegal downloads, Courts have contrived the doctrine of secondary liability, but another time all the area and the regulation of the issue is multiform and really confused and complicated. After Sony decision Courts try to solve the problem of file sharing recognizing that one individual can be accountable for the actions of another [40] and differentiated three different kind of liability. Thus under copyright law, this indirect, or “secondary” liability can take three distinct forms: inducement, contributory infringement and vicarious liability. The Inducement Liability is described in MGM v. Grokster (June 2005) in this way:”… [O]ne who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” That recent decision regarding the legality of distributing P2p file sharing software with In re Aimster Copyright Litigation, reached sharply different outcomes and thus left open the questions of the correct legal standard to apply in assessing secondary liability or indirect infringement [41] for copyright infringement over the Internet. In the case of Grokster and Morpheus, a district court found that secondary liability did not apply to those P2p services [42], in large part because of the Sony decision [43]. In the case of Napster and Aimster, the Courts have held the operators of those services liable under theories of secondary liability. In the Napster case, the music industry plaintiffs admitted that Napster did not, itself, make or distribute any of their copyrighted works. Instead, they pressed contributory infringement and vicarious liability theories [44]. Contributory Infringement is when one who knowingly contributes to another’s infringement may be held accountable. Or, as the courts have put it, “…one who, with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another, may be held liable as a contributory infringer.” Vicarious Liability is imposed in virtually all areas of the law, and the concept of contributory infringement is merely a species of the broader problem of identifying the circumstances in which it is just to hold one individual accountable for the actions of another. Thus, vicarious liability requires two elements: (1) the right and ability to supervise or control the infringing activity; and (2) a direct financial benefit from that activity. It is closely related to the doctrines of enterprise liability. This approach and doctrine of secondary liability is not true and it is not applicable in the countries regulated by civil law. In Italy, for example, Courts don’t recognize any secondary liability and normally rule that those who assist and facilitate copyright infringement are liable just as those who actually commit the acts of infringement. There is any room for the concept of secondary liability [45]. Different Courts’ approaches in fighting file sharing make the match between legal and illegal downloads much more difficult because there is not a common rule and the Internet, which is a global medium, is eventually unregulated and out of control. 4. The “deterrence” techniques used by right holders to dissuade or control file sharing on the Internet. While Courts try to stop downloads of copyrighted works in Internet through unusually interpretations of law and the creation of new law’s theories, right holders, in particular the Major Film Studios, take measures to prevent illegal’s downloads and protect their films using different methods to discourage people from downloading copyrighted works. The general deterrence theory aims to reduce the success rate of the “criminal enterprise.” Widely used control mechanisms include (i) copyright education campaigns; (ii) indirect legal action targeted on Internet operators (secondary liability, take-down procedures etc.), and (iii) direct legal actions against file sharers themselves. On regard to copyright education campaigns, Major Film Studios basically spread around fear and awe saying that to download a film from Internet is like stealing and that who does something like that can be prosecuted as an individual consumer [46]. The technique consists in educate people, showing an advertisement before the beginning of the film. The advertisement shows someone while he is stealing a bag or a car or a DVD and these actions are compared to download a copyrighted work (a film) from Internet. The idea to compare a car theft to a film’s download it is not very appropriate first of all because of the dematerialisation of works and second because it is common sense that downloading a film it is not considered like stealing. It is more like borrowing. Another common technique used by Major Studios to control file sharing, which is strictly connect to Courts’ doctrines of secondary liability, is to file a suit against the alleged infringer and claim for damages. The alleged infringer can be an individual consumer or owners of websites that facilitates illegal file sharing and downloading [47]. General deterrence from the threat of being sued does not help in the end either because people are risk seeking in the face of making a decision between a certain and probable loss. However, the empirical evidence seems to imply that lawsuits fail to send a strong signal to individuals about the society’s supposedly negative attitude towards file sharing [48]. In the first phase, the entertainment industry used legal action against Internet service providers (e.g. Napster, KaZaa, Grokster). The result was only partial success: file sharing moved to distributed networks out of reach from traditional service providers, software companies and middlemen. In the second phase, the entertainment industry doesn’t have many options left, besides education, than to start court cases against individuals. Yet the question is: can lawsuits control file sharing on the Internet? [49] Why the music and movie industries have started to wage lawsuits against individual consumers instead of making better and more affordable products? One of the answer might be that: “The classical utilitarian theory of deterrence assumes that individuals – acting as rational decision makers – will share files if they do not fear the negative effects of (legal) punishment more than they value the benefits of sharing. (e.g. Beccaria 1764, Becker 1968).” [50]. The classical model seems to imply that in the end the music and film industry is fighting a futile fight with its lawsuits. However, if the entertainment industry could argue that lawsuits actually present the position of the majority, the human tendency for conforming to the majority’s perceived position could help the music and movie industries to sway individuals away from file sharing. This does not seem to be the case [51]. The court strategy cannot be used to establish any social norm with a long lasting effect on individual behavior as long as the peer pressure works towards the opposite direction [52]. Despite the economic evidence that the litigation strategy of right holders rests on an incorrect assumption and may be economically harmful, some right holders have proven the contrary and triumphs in the courtroom. The litigation of copyright cases highlights another central argument in the debate between the law and economics of cyberspace and copyright infringement, “distributive justice” and therefore copyright law should serve the purpose of transferring segments of proprietary legal entitlements from artist and distributors to the public at large [53]. Conclusion My conclusions unfortunately will describe a complicated and unresolved situation. Every effort conceived by Courts, Law and Major Studios to fight against file sharing and illegal downloads appears absolutely derisory. It appears that Courts attempted to create a balance of “creative pursuits” and the promotion of “innovation of new technologies”, but in reality they seemed to have erred in its ruling. Without the Betamax doctrine developed in Sony, technology companies would be subjected to claims that they “contribute” or “induce” infringement, but after the introduction of the Internet and P2p technology, Courts had to mislead the original decision with the theory of secondary liability, which basically denies the Sony doctrine. Meanwhile in the EU, the introduction of the Enforcement Directive has increased the remedies available to the intellectual property owner, however the Directive indicates a number of factors, which the Courts may need to bear in mind when ordering damages or injunctions [54]. The amendment does not appear, however, to have introduced a doctrine of punitive or exemplary damages. The awardable damages will continue to compensate the claimant for only the actual prejudice suffered, which now includes “moral prejudice.” [55]. If we look into the past and present of file sharing on the Internet it is easy to see that nothing is really new. Only the scale and scope have changed. After the information has once been digitised and released to the Internet, it is impossible to get the “genie back to the bottle.” [56]. The more aggressive methods are used to stop the distribution, the stronger the resistance becomes. Lawsuits however fit into the industry’s multi-pronged offensive strategy against file sharing, which has utilized also lobbying and technical protection measures or digital rights management [57]. Film industries have gained short-term wins with their lawsuit strategy, but any substantial long-term impact. The sheer numbers, technological progress, and the economics of scale clearly favour file sharers. Many file sharers are most likely risk takers. Thus, the industry seems to be losing their proposition of establishing a stronger social norm against sharing among those who share. The industries seem to have taken the facts into consideration in their deterrence campaign when they press that it is only a minor group of individuals who share movie files. What they don’t mention is that this group may never disappear and it is impossible to control. The entertainment industry aims “to keep honest users honest” (or “to keep lazy users honest”), yet at the same time admits that it is impossible to end all unauthorised copying and it would be futile to believe so [58]. The download of copyrighted works will continue to exist and provide low cost, high-quality service to a large group of consumers. This means that in many markets, the illegal download will be a competitor to legal commerce [59]. In other words, “File sharing is in the end the biggest competitor to legal services. As the industries push their self-protection initiatives, court cases, lobbying etc., illegal downloads will only get more power. Thus, in the long term, unless legal services can offer clear added value, in the form of better user experience or guaranteed legal safety, a substantial user community will stay inclined to stay on the dark side.” [60]. Notes [1] Free Culture – How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity Lawrence Lessig copy @ www.lessig.org . [2] Remix, Making art and Commerce thrive in the hybrid economy, Lawrence Lessig (2008), pag.128-140 [3] Siva Vaidhyanathan, Copyrights and Copywrongs, pag.87-93. [4] See note 1, pag. 66. [5] BBC News Channel, Online film piracy “set to rise”, available at http://news.bbc.co.uk/1/hi/technology/387951 [6] When Rights Clash Online: The Tracking of P2p Copyright Infringements Vs. the EC Personal Data Directive Okechukwu, Benjamin Vincents, pag.271. [7] A sound recording could, for example, be fixed on a compact disc. Depending on the size thereof, it could also be fixed unto a floppy disc. As recent experiences have shown, such a recording may even be inscribed in no singularly identifiable medium. A good example of this is the publication by artists of their works on the Internet when they were refused publication by companies, see Okechukwu V.B., When Rights Clash Online: The Tracking of P2p Copyright Infringements Vs. the EC Personal Data Directive, International Journal of Law and Information Technology Vol. 16 No. 3 © Oxford University Press 2007, Advance Access Published on 20 September 2007, also available at www.oxfordjournals.org/page/3660/3. [8] Peer-to-peer or p2p file sharing is the trading of files in a network of peer nodes. A node is a device such as a computer, a personal digital assistant (PDA) or a cell phone, which is connected as part of a network. ‘A pure peer-to-peer network does not have the notion of clients or servers, but only equal peer nodes that simultaneously function as both “clients” and “servers” to the other nodes on the network.’ P2p networks are the opposites of client-server networks where communication is to and from a central server such as in a File Transfer Protocol (FTP) server. In an FTP server, the client always initiates the download while the server can only respond to requests. [9] See note 5, pag.270. [10] See http://www.asiaplatetv.com/ [11] See BBC News Thursday, 15 July, 2004, available at http://news.bbc.co.uk/1/hi/technology/3890527.stm [12] For a legalistic technical definition of cyberspace see, Jerry Kang, ‘Information Privacy in Cyberspace Transaction,’ (1998) 50 Stanford Law Rev. at p. 1193. [13] It may very well be that this term is not “new” however, I coined it to reflect both literally and metaphorically the usage of the internet as most of its users are aligned to a “social networking group” and where file sharing is a common practice, at the same time, “order of the social” conveys that the internet is seen as a form of rebellion against the establishment and it is used for social activists, “free riders”, creative commons among others. [14] The best place to start a reading on this analysis is the works of William Landes & Richard Posner, ‘An Economic Analysis of Copyright Law,’ (1989) 18 Journal of Legal Studies 2, at pp. 325–363 see also, Tom Palmer, ‘Intellectual Property: A Non-Posnerian Law and Economics Approach,’ (1989) 12 Hamline Law Rev. 2, at pp. 261–304. This work criticize earlier works of Posner, including, The Economics Of Justice, (Harvard College, 1981), and also the then forthcoming work at the beginning of this footnote. Later works include Steve P. Calandrillo, ‘An Economic Analysis of Intellectual Property Rights: Justifications and Problems of Exclusive Rights, Incentives to Generate Information, and the Alternative of a Government-Run Reward System,’ (1998) 9 Fordham Intell. Prop. Media & Ent. L. J., at p. 301. (arguing what types of informational works would require the promise of pecuniary compensation to induce [author’s] creation) and Niva Elkin-Koren & Eli Salzberger, Law, Economics and Cyberspace: The Effects of [15] Cyberspace on the Economic Analysis of Law, Edward Elgar, 2004) especially at pp. 90–107. [16] See, e.g., Robin Andrew, ‘Copyright Infringement and the Internet: An Economic Analysis of Crime,’ (2005) 11 B.U. J. Sci. & Tech. Law 2. [17] Garzaniti L., Telecommunications, Broadcasting and the Internet: EU Competition Law and Regulation, III Edition (2010), Chapters II and III. [18] For a detailed review of these issues, see Hance para.3–001, n.1, 81–100; and Torremans, Copyright law: a handbook of contemporary research (Edward Elgar, 2007). The following section does not discuss the issue of secondary liability for copyright infringements, particularly peer-to-peer file sharing and online infringements: see Strowel, Peer-to-Peer File Sharing and Secondary Liability in Copyright Law (2009). [19] For a discussion of other copyright directives, see Chapter II, para.2–149 et seq. [20] WIPO National Seminar on Copyright, Related Rights, and collective management organized by the World Intellectual Property Organization (WIPO) in cooperation with the Ministry of Culture Khartoum, February 28 to March 2, 2005, pag. 276. [21] Copyleft is an example. It is a play on the word copyright to describe the practice of using copyright law to offer the right to distribute copies and modified versions of a work and requiring that the same rights be preserved in modified versions of the work. [22] Towards a Network of digital business ecosystems, Fostering the local Development, Discussion Paper Bruxelles, September 2002. [23] WIPO National Seminar on Copyright, Related Rights, and collective management organized by the World Intellectual Property Organization (WIPO) in cooperation with the Ministry of Culture, Khartoum, February 28 to March 2, 2005. [24] Pirates of the Internet, at Intellectual Property’s End with Torrents and Challenges for Choice of Law, P. Sean Morris, University of Helsinki – Faculty of Law, International Journal of Law and Information Technology, Vol. 17, Issue 3, pp. 282-303, 2009, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1496687 [25] The European Union (EU) directive on criminal measures aimed at ensuring the enforcement of intellectual property rights is a proposed directive aimed “to supplement Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights (Civil enforcement)” (Source: Justification for the proposal, COM(2005) 276 final, July 12, 2005). The directive was proposed on July 12, 2005 by the Commission of the European Communities. [26] Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (also known as “(IPR) Enforcement Directive” or “IPRED”) is a European Union directive in the field of intellectual property law, made under the internal market provisions of the Treaty of Rome. The directive covers the remedies that are available in the civil courts, but not criminal offenses. [27] Chapter two of the Enforcement Directive outlines the measures, procedures and remedies in a civil setting rather than a criminal one. The Enforcement Directive differentiate four categories of civil measures whenever IP right-holders suspect that there is infringement, firstly, Articles 6–7 allows for measures protecting evidence, secondly, Article 8 allows for right of information “on the origin and distribution networks of the goods are services which infringe and intellectual property right”, thirdly, Article 9 allows for “provisional and precautionary measures” for the prevention and infringement along with protection for claims for damages and fourthly, Articles 10-13 covers compensation and corrective measures following a judicially determined IP infringement regarding enforcement and the amount for civil damages. [28] See note 5, pag.289. [29] MBC, The Museum of Broadcast Communications, available at http://www.museum.tv/eotvsection.php?entrycode=betamaxcase [30] Feder J. M., Is Betamax Obsolete?:SONY Corp. of America V. Universal City Studios, Inc. in the Age of  Napster. [31] Testimony of The Honorable Marybeth Peters Register of Copyrights and Associate Librarian for Copyright Services United States Copyright Office July 22, 2004, also available at http://judiciary.senate.gov/hearings/testimony.cfm?id=1276&wit_id=307 [32] Contributory infringement, vicarious liability and the controversy surrounding peer-to-peer services revolve around the central legal issue of secondary liability for copyright infringement. [33] See http://supreme.justia.com/us/365/336/case.html. [34] The Court noted, however, that it might be appropriate to take a “fresh look” at these issues in new copyright legislation. Statement of Marybeth Peters, The Register of Copyrights before the Committee on the Judiciary, United States Senate, 108th Congress, 2d Session, July 22, 2004, Intentional Inducement of Copyright Infringements Act of 2004, available at http://www.copyright.gov/docs/regstat072204.html [35] See is Betamax Obsolete?: Sony Corp. of America v. Universal City Studios, Inc. the Age of Napster, by Jesse M. Feder [36] Protecting Innovation and Art While Preventing Piracy, Hearing Before the Senate Comm. on the Judiciary, 108th Cong. (July 22, 2004) (testimony of Gary Shapiro, Consumer Electronics Association) (“We have long referred to this holding as the Magna Carta for our industry.”), available at http://judiciary.senate.gov/hearing.cfm?id=1276. [37] Sony, they claim, has for twenty years shielded innovators from copyright infringement suits and enabled the rapid technological advances that permit us to enjoy an unparalleled wealth of media. [38] The Sony Paradox, by Litman J.pag.918; see e.g., Brief for Appellants at 40-48, A & M v. Napster, 239 F.3d 1004 (9th Cir. 2001); Reply Comments of the Recording Industry Association of America, In the Matter of Digital Audio Broadcasting Systems and Their Impact on Terrestial Audio Broadcast Services, MM Docket No. 99-325 (filed August 2, 2004); Electronic Frontier Foundation, Endangered Gizmos, at http://www.eff.org/endangered/; Theodore D. Frank, Letter to Marlene H. Dortch, Federal Communications Commission, In the Matter of Digital Audio Broadcasting Systems and Their Impact on Terrestial Audio Broadcast Services (February 7, 2004), at 2 (“the Sony decision only authorized certain recording for time shifting”); see also 2004 Senate Hearing, (testimony of Kevin McGuiness, NetCoaltion.) [39] See Jane C. Ginsburg, Copyright and Control Over New Technologies of Dissemination, 101 COLUM. L. REV. 1613, 1624, & n. 45 (2001); Trotter Hardy, Property (and Copyright) in Cyberspace, 1996 U. CHI. LEGAL F. 217, 250. [40] Excerpt from Article: THE FACT AND FICTION OE GROKSTER AND SONY: USING FACTUAL COMPARISONS TO UNCOVER THE LEGAL RULE, also available at http://www.britannica.com/bps/additionalcontent [41] Tiffany A. Parcher, The Fact and Fiction of Grokster and Sony: Using factual comparison to uncover the legal rule. [42] So, for example, if a swap meet owner rents space to a vendor with the knowledge that the vendor sells counterfeit CDs, the swap meet owner can be held liable for infringement alongside the vendor. [43] Arises when a party materially contributes to, facilitates, induces or is otherwise responsible for directly infringing acts carried out by another party. The US has statutorily codified secondary liability rules for trademarks and patents; however, for matters relating to copyright, this has solely been a product of case law developments. In other words, courts – rather than Congress – have been the primary developers of theories and policies concerning secondary liability. [44] A user who downloads and installs either software possesses the protocol to send requests for files directly to the computers of others using software compatible with FastTrack or Gnutella. The request goes to a computer given an indexing capacity by the software and designated a supernode, or to some other computer with comparable power and capacity to collect temporary indexes of the files available on the computers of users connected to it. The supernode (or indexing computer) searches its own index and may communicate the search request to other supernodes. If the file is found, the supernode discloses its location to the computer requesting it, and the requesting user can download the file directly from the computer located. The copied file is placed in a designated sharing folder on the requesting user’s computer, where it is available for other users to download in turn, along with any other file in that folder. [45] Discovery in the US case of MGM Studios Inc. v. Grokster, Ltd reveal the working of two types of the 2nd generation P2p applications namely, Grokster, which runs on the ‘FastTrack’ technology; and Morpheus, which runs a similar technology known as the ‘Gnutella’ technology. Grokster was distributed by Grokster Ltd, while Morpheus, relies on what is known as Gnutella technology, was distributed by StreamCast Networks Inc. According to Justice Souter: Grokster’s eponymous software employs what is known as FastTrack technology, a protocol developed by others and licensed to Grokster. StreamCast distributes a very similar product except that its software, called Morpheus, relies on what is known as Gnutella technology. [46] Discoveries in that case indicate that Napster developed and distributed a type of software known as MusicShare.. This software operated a p2p protocol that made MP3 music files stored on individual computer hard drives available for copying by other Napster users; it facilitated the search for such files; and enabled the transfer of exact copies of MP3 files from one computer to another via the Internet. [47] See Rome Court, 26 May 2009, in Fapav v. Telecom Italia http://www.key4biz.it/News/2009/05/26/Policy/pirateria_p2p_fapav_telecom_italia_Peppermint_privacy_contenuti_audiovisivi_diritto_d_autore.html [48]  One example of this technique is the story is from Arts and media industry trade groups such as the Recording Industry Association of America (RIAA) and Motion Picture Association of America (MPAA) that strongly oppose and attempt to prevent copyright infringement through file-sharing. The organizations particularly target music files distributed via the Internet using peer-to-peer software, a practice which the RIAA says results in a reduction of profits of around $4.2 billion for the music industry worldwide, harming honest consumers, record labels, retailers and artists. The RIAA’s claims have been disputed. The RIAA sees lawsuits as a way to combat the problem of Internet-based copyright infringement. RIAA President Cary Sherman claims that the large number of lawsuits filed has “arrested the growth of a runaway solution that would have grown worse and worse.” As of July 2006, the RIAA had brought lawsuits against more than 20,000 people in the United States suspected of distributing copyrighted works. [49] Recent scholarship in both law and economics suggests that, for instance, the strategy for suing consumers directly for copyright infringement when they obtain digital media illegally is questionable. [50] See Theory of Deterrence and Individual Behavior. Can Lawsuits Control File Sharing on the Internet? Ville Oksanen and Mikko Välimäki, Helsinki Institute for Information Technology, pag.1, also available at www.valimaki.com/org/oksanen_valimaki_rle.pdf. [51] See http://www.bepress.com/rle/vol3/iss3/art4/ [52] See note 48, pag.9 [53] See note 48, pag.13 [54] The economic implications from suing consumers who share music files illegal may not result in “switching” to the markets for compact discs and suing peer to peer services for secondary liability could reduce “welfare” through eliminating a potential market for the distribution of music. See note 48. [55] See http://ijlit.oxfordjournals.org/cgi/content/full/17/3/282 Of particular note, the new assessment-of-damages provision allows claimants to receive greater compensation in cases of “knowing infringement”. [56] See UK IP Enforcement Regulations Enter into Force, June 13, 2006 available at http://www.wilmerhale.com/publications/whPubsDetail.aspx?publication=3242 [57] See http://www.bepress.com/rle/vol3/iss3/art4/  manifested in e.g. CD and DVD copy protections and copy protected file formats, see note 48. [58] The ultimate result of the offensive file sharing strategy has been illustrated in the somewhat famous paper about Darknet – authored by Microsoft researchers supposedly in charge of the company’s trusted computing initiative – which assumes that copyright violators can be separated and the business focus can be put on the well-behaving consumers. (Biddle et al, 2001) [59] From the point of view of economic theory, this has profound implications for business strategy: for example, increased security may act as a disincentive to legal commerce. [60] See Theory of Deterrence and Individual Behaviour – Can Lawsuits Control File Sharing on the Internet? Mr. Ville OKSANEN, Mr. Mikko VÄLIMÄKI, Helsinki Institute for Information Technology (HIIT), Software Business and Engineering Institute (SoberIT), pag.19.