January 24, 2005 | By Fred von Lohmann

Once More Into the Betamax Breach

EFF has represented StreamCast from the beginning of the MGM v. Grokster case. Why? Because from the beginning, this case has been about the entertainment industry's effort to re-fight its war against the Betamax VCR.

The stakes are high: the legal rules laid out in the 1984 Supreme Court ruling in the Betamax case have been the main shield protecting innovative technologies from copyright "strike suits." For the last 20 years, whether you made photocopiers, cassette recorders, personal computers, CD burners, Cisco routers, or the iPod, you've relied on the Betamax precedent.

The brief [PDF] filed by Hollywood and the major labels yesterday makes it clear that MGM v. Grokster could change all that.

The Betamax principle is simple: so long as your product is capable of substantial noninfringing uses, selling it will not put you on the hook for every infringement a customer may commit with it. If copyright owners want a different rule for any particular technology, they can go to Congress and ask (since 1984, Congress has passed specific rules for VCRs, digital audio recorders, and webcasting, among other things).

The brief filed by the Petitioners today is nothing less than a frontal attack the Betamax ruling. According the entertainment industries, the Betamax defense "should not apply when the primary or principal use of a product or service is infringing" (see page 31). They specifically reject the "mere capability" test (see page 35) that the majority of the Supreme Court endorsed in 1984.

Why does this distinction matter to innovators?

Consider the Slingbox. This great gizmo, recipient of a 2005 Innovations Design and Engineering Award at the Consumer Electronics Show (CES), is an example of an innovative new product category called a "personal broadcaster." The Slingbox "placeshifts" the TV signal from any cable box, satellite receiver, or personal video recorder (e.g., TiVo) in your living room to your laptop at the office, your PDA on the road, or any other device connected to the internet. Sounds harmless enough, especially since it is designed for personal use. But ask the MPAA whether transmitting recorded TV over the Internet is noninfringing, and you are likely to get a very different answer. In fact, the MPAA recently fought TiVo?s efforts to add similar "personal broadcaster" functionality to its next-generation digital PVRs.

If "primary use" is the test, and is measured from the point of view of Hollywood lawyers, the innovators behind the Slingbox will have stare down the lawyers before they ever reach the market. If "mere capability" is the test, in contrast, the makers of the Slingbox need only prove that a significant number of copyright owners (no need that they be MPAA members) do not mind "personal broadcasting." That should be a much easier hurdle to clear.

Perhaps most importantly, "primary uses" for new technologies change over time. During the early days of the VCR, for example, all of the major movie studios refused to license their works for release on pre-recorded video cassettes. This, of course, drove demand for hand-to-hand trading of tapes duped by fans. When the studios finally figured out the $12 "sell-through" market for pre-recorded tapes (a bit of learning possible only because they lost the Betamax case), the incidence of infringement with VCRs dropped precipitously.

So the Betamax principle has the salutary effect of encouraging the incumbent entertainment industry giants to adjust their business models to see whether there is money to be made using new technologies. The "primary use" test, in contrast, gives them an incentive to let slip the dogs of litigation as early as possible, before a new technology starts proving its noninfringing potential.

The entertainment industry cartels have, thus far, collectively turned their backs on the opportunities created by P2P. Fortunately, independent artists, assisted by J!VE Media, GigAmerica, the Jun Group, Weed, Altnet, Snocap, and others, are beginning to capitalize on P2P opportunities. These early experiments are incontrovertible evidence that P2P file-sharing software is capable of, and frequently used for, noninfringing purposes. According to Betamax, that should be enough.

Moreover, that's the right answer. Because only if unrestricted, decentralized P2P file-sharing technology is allowed to continue to flourish and mature will we ever find out what its ultimate "primary use" may turn out to be.

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