June 27, 2005 | By Fred von Lohmann

Fear Mongering

Today, during an interview on the News Hour with Jim Lehrer, lead counsel for the movie studios and record labels, Don Verrilli, accused me of "fear-mongering." While I suspect his barb may be something out of MPAA/RIAA talking points, others who I respect have suggested that the ruling in MGM v. Grokster is good news for technology companies.

Color me skeptical. As I see it, things are at least as bad as they've ever been, and maybe a bit worse.

As a technology company (and I'll incorporate by reference here the companies listed in the emerging technology company amicus brief, as well as the ones listed in Prof. Tushnet's post), you can still be sued for contributory infringement. Thanks to today's ruling, it's as hard as ever to determine whether the Sony Betamax ruling might protect you. Your lawyers are left to choose between the vacated Ninth Circuit MGM v. Grokster ruling and the Seventh Circuit Aimster dicta to divine the scope of the Betamax defense. And before you rely on the Ninth Circuit's Napster ruling, remember that was the foundation of the Ninth Circuit's now-vacated ruling in MGM v. Grokster.

You can also still be sued for vicarious liability. The Supreme Court refused to address this theory, so your lawyers have to parse the statements of the Ninth Circuit in Napster ("Turning a blind eye to detectable acts of infringement for the sake of profit gives rise to liability") and the ambivalent dicta in Aimster ("How far the doctrine of vicarious liability extends is uncertain").

Finally, you now have to wrestle with the new inducement theory, newly imported from patent law. Many lawyer hours will be spent reading the patent precedents, trying to figure out how you might be able to resist discovery into every facet of your business, as plaintiffs try to prove "intent."

I agree that things certainly could have been worse, from the technology sector's point of view. But I don't see how the Supreme Court ruling creates any new comfort for innovators on the contributory infringement or vicarious liability fronts.

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