Record Labels Lose Court Case on Privacy

A federal appeals panel Friday handed a victory to privacy advocates and a costly setback to the major record labels, outlawing a technique that the music industry had used to identify -- so it could then sue -- people accused of pirating music.

The decision by the U.S. Court of Appeals for the District of Columbia is the latest in a series of rulings that may embolden music fans to share songs online and download them illegally. But Cary Sherman, president of the Recording Industry Assn. of America, stressed that the appeals court’s decision wouldn’t stop the labels from filing lawsuits; it would simply make the process more cumbersome and expensive.

“This is a very big step,” said Gigi Sohn, president of Public Knowledge, an advocacy group for more limited copyright laws, calling the decision “an early holiday gift from the court to Internet users.”

Opponents of the RIAA said the ruling would protect Internet users against an array of potential abuses. In particular, they said, it ensures that copyright law cannot be used to force Internet service providers to disclose their customers’ names and addresses unless a federal judge is supervising the process.

The decision is the latest in a series of court decisions that makes it more difficult for copyright holders to cut off online piracy at the level of Internet service providers or file-trading networks.

A federal judge in Los Angeles ruled this year that the Grokster and Morpheus file-sharing networks aren’t by themselves illegal, even though much of the trading that occurs on those networks violates copyright laws. And early Friday, the Supreme Court of the Netherlands upheld a similar ruling in favor of the Kazaa file-sharing software.

The ruling in The Hague isn’t binding on U.S. courts, but it could influence judges here, Grokster lawyer Michael Page said. It also could make it impossible to enforce any judgments awarded in the U.S. against the creators of Kazaa, which is based in the Netherlands.

The RIAA’s campaign has been highly controversial and widely criticized, with targets ranging from a 12-year-old student to a 66-year-old grandmother. But recent surveys indicate that it may be having the effect the labels intended: raising public awareness about copyrights and driving some people off networks such as Kazaa.

Friday’s ruling throws a wrench into the RIAA’s litigation machinery. It also complicates the task for Hollywood studios, game developers and any other copyright owner that decides to sue people who are sharing and downloading their goods without permission.

At issue is the subpoena provision of the 1998 Digital Millennium Copyright Act. Under the law, a copyright holder can obtain a subpoena from a federal court clerk and force an Internet service provider to reveal the name and address of a customer accused of piracy.

On most file-sharing networks, it’s relatively easy to spot people who appear to be sharing songs without permission. But because users are anonymous, the most that a record company can determine about them is their Internet addresses and their Internet service provider. Only the ISP can match the address to a specific customer.

In July 2002, the RIAA found a Verizon Internet Services customer who had made several hundred copyrighted songs available on Kazaa. Citing the copyright act, it obtained a subpoena from a federal court clerk in Washington and sent it to Verizon, demanding the name and address of the person whose account matched the Kazaa user’s Internet address.

Verizon balked, saying the subpoena provision didn’t apply because the songs in question weren’t stored on any of its own computers. The RIAA sued, and U.S. District Judge John D. Bates ruled in January that the subpoena was proper.

Verizon appealed Bates’ ruling and argued that the subpoena provision was unconstitutional because, among other things, it didn’t sufficiently protect Internet users’ 1st Amendment rights to speak and associate freely.

Writing for the appeals court panel, Chief Judge Douglas H. Ginsburg said there was no need to consider such constitutional issues. Instead, he said, the panel was reversing Bates’ ruling because he had misinterpreted the law -- the subpoena provision applies only to material an Internet provider stores on its own equipment, not to items stored on a customer’s computer.

“We are not unsympathetic either to the RIAA’s concern regarding the widespread infringement of its members’ copyrights, or to the need for legal tools to protect those rights,” Ginsburg wrote in the 3-0 decision. “It is not the province of the courts, however, to rewrite the [1998 copyright act] in order to make it fit a new and unforeseen Internet architecture, no matter how damaging that development has been to the music industry or threatens being to the motion picture and software industries.”

Attorneys who specialize in copyright law said the labels’ only lawsuit option now was to file “John Doe” cases against unidentified defendants. Then, after a judge agrees that a proper copyright-infringement claim has been presented, the labels can issue subpoenas to Internet providers demanding the name and address of the customer who was assigned the Internet address in question.

That’s exactly what the RIAA plans to do, Sherman said.

And because the process will be more expensive, he said, the RIAA may demand higher payments from defendants in order to settle the cases.

Sarah Deutsch, associate general counsel for Verizon Communications Inc., said the process would provide much more protection for Internet users against frivolous or fraudulent subpoenas in general.

Wendy Seltzer, a staff attorney at the Electronic Frontier Foundation, added that it could lead to fewer erroneous claims by the RIAA. “If it makes them think just a little bit harder before filing each one, I think that’s a good thing for the Internet-using public,” she said.

Jonathan Band, a partner at Morrison & Foerster who specializes in copyright law, said the shift to John Doe lawsuits would significantly increase the labels’ expenses, such as attorney fees. That’s likely to reduce the number of lawsuits they file and raise the number of pirated songs needed to trigger a suit, he said.

Sherman, however, said the RIAA planned to keep up the pressure on file sharers. “This program has had a significant deterrent effect,” he said. “It wasn’t because the litigation proceeded promptly. It was because it was proceeding at all.”

He added that the trade group hadn’t decided whether to appeal the ruling, or how to proceed against the alleged pirates it has already identified through subpoenas. Internet users who have already been identified by their ISPs will have no way to protect their identities retroactively, Band said.