He May Shy From Tanks but Not the Massed Media Forces

One day in the early 1970s, as the Vietnam War dragged on and the antiwar movement gathered steam, students at the University of Pennsylvania seized the campus quadrangle and barricaded themselves behind its iron gates.

Mayor Frank L. Rizzo sent in the Philadelphia police. Just so there would be no misunderstanding, the cops rolled up in a Sherman tank with a 75-millimeter cannon.

“Everyone sort of assumed it wasn’t loaded, but no one wanted to find out,” Michael H. Page, a former Penn philosophy major who was among the demonstrators that day, recalled recently. “We declared victory and left.”

Page now is a lawyer at Keker & Van Ness in San Francisco, surrounded by high-tech clients instead of antiwar activists. But when he signed on to defend Grokster, the five-person company behind a controversial online file-sharing network, he ran into the courtroom equivalent of a Sherman tank: the massed force of the major record companies, music publishers and Hollywood studios.

And this time, he really did win.

Grokster and other file-sharing systems let users find and copy music, movies and software from one another’s computers. They’re like giant neighborhood garage sales, but everything is free and supplies are unlimited.

The music industry blames widespread file sharing for slumping CD sales, and the movie industry fears it will have the same problems as soon as consumers have faster connections to the Internet. The industries have sued the most popular file-sharing companies, winning pretrial rulings that shut down the popular Napster Inc. and Aimster networks.

Late last month, however, U.S. District Judge Stephen V. Wilson in Los Angeles ruled that Grokster and Streamcast Networks Inc., which distributes Morpheus file-sharing software, didn’t violate the studios’ or labels’ copyrights. Although Wilson found that songs and movies were being copied illegally on those networks, he said the two companies weren’t liable because they didn’t monitor or control users’ behavior.

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Industry Strategy

The ruling, which the entertainment companies plan to appeal, blew a gaping hole in the industry’s anti-piracy strategy and legitimized a legion of file-sharing upstarts. By helping firms such as Grokster grow stronger, the decision also may increase the pressure on entertainment companies to work with file-sharing networks.

Page doesn’t claim full credit for the victory. Two prominent West Coast law firms and the Electronic Frontier Foundation, a public interest group, did the legal heavy lifting early on before circumstances pushed Page into a more prominent role.

“I’ve likened it to drafting a bicycle behind two semis,” Page said. “All of a sudden, one of them rolls and the other turns left.”

Page helped frame the case as a battle not over piracy, but over technology. For Page and his allies, it became a fight to preserve a key principle of the law: that products with legitimate uses shouldn’t be outlawed just because they can aid lawbreakers.

That principle was established in a landmark 1984 Supreme Court decision that held that the Sony Betamax videocassette recorder didn’t violate the Hollywood studios’ copyrights: A technology with substantial, legitimate uses couldn’t be banned because of the way some people chose to use it.

The parallels between that case and Grokster were so strong, Page said, he was sure he would win.

“The thought that we might possibly lose did cross our mind,” Page said with his characteristic deadpan humor during an interview at his cramped office in a converted warehouse on the northeastern end of San Francisco’s financial district. “We didn’t think it was likely.”

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New Challenges

Now Page and his colleagues at Keker are in other battles against the entertainment industry.The firm is defending 321 Studios Inc. of Chesterfield, Mo., accused by the Hollywood studios of fueling piracy by selling a computer program that copies DVD movies. Page is defending Hummer Winblad Venture Partners of San Francisco, which two major record companies have sued for investing in the Napster music-sharing network.

He’s also handling a patent infringement lawsuit against Microsoft Corp. by InterTrust Technologies, a Santa Clara, Calif., company jointly owned by Sony Corp. and Philips Electronics. At issue is whether InterTrust’s patents were violated by Microsoft’s popular software for protecting digital music and video files against piracy.

Those cases could have a profound effect on the entertainment industry’s shift from physical products -- packaged discs and tapes -- to virtual ones delivered electronically such as on-demand movies and online jukebox services.

What the cases will help determine is key to the industry’s future: how much control copyright holders can exert over new digital technologies.

The most immediate effect of the Grokster case is on the music industry, which has seen sales plummet as file-sharing services have proliferated. Oddly enough, the music industry is where Page got his start.

Born in Dallas and raised in Westport, Conn., Page had no career plan when he attended Penn. “I wasn’t paying very much attention” in class, he said. “There was a lot of fighting and revolution, and then I got into rock ‘n’ roll.”

He befriended a student named Eric Bazilian while playing pinball on campus, and when Bazilian’s band Baby Grand went on tour, Page tagged along as an engineer.

Bazilian sang and played his way to a measure of fame in the 1980s as the leader of the Hooters. Page drove trucks, carried bags, mixed sound and worked his way up the road-crew ranks to become tour manager and accountant for Daryl Hall and John Oates.

The relentless traveling lost its appeal after Page, who had spent more than a decade in the music business, married a fellow tour manager whose schedule increasingly conflicted with his.

So after a show in Dallas in 1988, the then-35-year-old Page hopped a red-eye flight to the Bay Area. He started law school the next morning at UC Berkeley.

Despite his music industry connections, Page had no interest in becoming an entertainment lawyer. Instead, he settled on intellectual property law, a field in which new technologies often don’t comfortably fit into well-defined statutory boundaries.

The key is to find analogies that help extend a well-established principle to new technologies.

When the entertainment industry sued Grokster, the major studios and music labels likened the service to a swap meet that knowingly dealt in pirated goods, which is illegal.

Page responded by comparing file-sharing programs with VCRs and photocopiers, legitimate products occasionally used for illegitimate purposes.

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‘Up for Grabs Again’

Decades after the invention of the VCR, “everything is up for grabs again,” said Fred von Lohmann, an Electronic Frontier Foundation lawyer who specializes in copyrights. “Although we have a statute, how that statute gets applied to new technology is a very interesting and wide-open affair.”

Page joined Keker, a relatively young but highly regarded boutique firm specializing in intellectual property lawsuits and white-collar criminal cases, in 1995. (Co-founder John W. Keker’s clients include two of the biggest names in the recent round of securities scandals: former Enron Corp. Chief Financial Officer Andrew Fastow and former Credit Suisse First Boston investment banker Frank Quattrone.)

Affable and quick-witted, Page has shed much of the residue of his rock ‘n’ roll years, removing a “really ugly Abe Lincoln sort of beard” and trimming his long hair. The only remnant may be the hint of road-weariness around his eyes. There are also the two bookcases in his office filled with jazz, classic rock and soul CDs -- all, he noted, “lawfully purchased.”

One thing that attracted Page to the Grokster case was its potential effect on the music industry. But the main allure, he said, was the effect it could have on copyright law.

“It’s the copyright case I was waiting for,” he said. “It’s the pure Sony-in-the-Digital-Age case,” referring to the Betamax case. “I could see it was going to be the next big case, with fascinating issues.”

Founded by Daniel Rung of Palm Desert and incorporated in the Caribbean tax haven of Nevis, Grokster was one of a new breed of file-sharing companies that proliferated in mid-2001, after a pretrial injunction forced Napster to remove copyrighted music from its network. That October, the major studios and record labels sued Grokster, Streamcast and Kazaa, the three companies that shared the so-called FastTrack file-sharing network.

Hoping for free legal help, Rung called the Electronic Frontier Foundation. But it was committed to helping Streamcast, so Von Lohmann asked Page, whose work he admired, to represent Grokster.

He agreed, even though it meant deferring his usual fee of $450 an hour to let Grokster initially pay “what they can afford.”

Because there were other companies and other law firms involved, the workload promised to be lighter than if Grokster had been the sole target. While the other firms slogged through the legal trenches, Page tried to fit Grokster and file-sharing software into the bigger picture of evolving technology.

Page opened one early Grokster court filing with a fictitious tale of a 16-year-old girl named Jennifer who fills her new MP3 player with downloaded copies of songs she already owns on CD, aided by products not only from Grokster but also from AOL Time Warner Inc., Microsoft, Sony, Yahoo Inc. and AT&T; Corp.

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Point Taken

The point was to show that Grokster’s software, like the other companies’ products, was no different from VCRs. Page argued that these companies don’t control whether the products will be employed for legal purposes or illegal ones -- users do.

In mid-2002, Kazaa suspended its defense to cut its legal fees. About the same time, Streamcast switched file-sharing networks and, to trim its expenses, replaced part of its legal team. The changes meant that Page, who had started in the background, “ended up having to fight the battle on the front line,” said Judy Jennison, a partner at Perkins Coie who was one of Kazaa’s attorneys. Mark Radcliffe, an attorney in Palo Alto who specializes in copyright law, said Napster’s network was hard to defend; unlike other, decentralized services, Napster assisted piracy by maintaining indexes that helped users find and copy songs. Although the Grokster case was a much closer call, it easily could have yielded the same result.

“A judge could have looked at the massive infringement that was going on and said, you guys knew this was going to happen,” Radcliffe said. “It’s really easy to say, ‘Napster, Aimster, Grokster, they all have a ‘ster’ at the end, so they must all be bad.’ ”

Indeed, in a Los Angeles courtroom in December, Judge Wilson noted that Grokster seemed to have the same kind of knowledge about user piracy that led to the pretrial rulings against Napster. But Page told the judge there was a key distinction between the two: Napster could take that knowledge and do something to stop additional infringements, but Grokster’s technology offered no such ability to monitor and control. In that sense, he said, it was just like Xerox supplying photocopiers and toners to a shop that later made copies of textbooks for students.

That point about the timing and control was a key element in Wilson’s ruling five months later.

As Grokster and other cases help clarify copyright law for the 21st century, they influence where investors place their bets and how entertainment companies respond to the Internet.

“You don’t often see an exciting new technology essentially have no venture or public investment,” Page said. “I think that will change. And on the flip side, people will be more driven to implement viable legal alternatives [to online piracy] quicker.”

In his own home, Page tries to draw a harder line.

He said that with rare exceptions, he and his wife, Karen, don’t let their three sons -- 12-year-old twins Tyler and Cole and 10-year-old Alec -- use Grokster or any other file-sharing software. When one of them comes home with a pirated CD made by a friend, “I say, if you like this, you should go buy it.”

Of course, teaching the complex do’s and don’ts of copyright law to kids isn’t easy. And Page didn’t have much luck trying to explain to his children how Wilson found Grokster to be legal while declaring that most file sharers were pirates.

“They looked at me, like, ‘That’s crazy, Dad.’ ”