[Infowarrior] - Universal, MySpace set for landmark battle

[Richard Forno]

Universal, MySpace set for landmark battle

By Joshua Chaffin in New York

http://www.ft.com/cms/s/f2fcd922-83c7-11db-9e95-0000779e2340.html

Published: December 4 2006 19:00 | Last updated: December 4 2006 19:00

The legal battle brewing between Universal Music and MySpace could shape the
broader commercial relationship between traditional media companies and a
new generation of internet start-ups that rely on them for content.

Last month Universal accused MySpace of infringing its copyrights by
allowing its customers to post music videos from artists such as Jay-Z on
the site without permission.

The lawsuit followed similar claims by Universal a few weeks earlier against
two other sites that feature user-generated content, Bolt.com and
Grouper.com.

Yet, as lawyers prepare for battle, they do so on uncertain legal ground.
The legislation at the heart of the debate, the Digital Millennium Copyright
Act, was written years before social networking sites such as MySpace even
existed.

That fact has injected considerable uncertainty into the matter, according
to copyright experts, and helps explain why lawyers from both sides are
proclaiming that the DMCA, as it is known, is on their side.

“There’s a lot of grey area here,” said Lee Bromberg, a partner at Bromberg
& Sunstein, a Boston-based law firm that specialises in intellectual
property.

Mr Brom­berg views the most recent suits as the latest chapter in copyright
law’s long history of failing to keep pace with new technology. It is a
tension that emerged more than 200 years ago when the printing press made
obsolete regulations devised for hand-drawn maps and charts.

Kraig Baker, a partner at Davis, Wright, Tremaine in Seattle, agreed.

“It’s part of the continuing struggle between content owners and developers
of technology,” he said. “People are trying to find out where the line is.”

The DMCA was passed in 1998 to strengthen intellectual property rights for
software, films and other materials. One of its key provisions was a “safe
harbour” lobbied for by telephone companies, who were worried that they
might be held liable for copy­right violations on the internet since they
supplied the trunks and phone lines that were its basic infrastructure.

The safe harbour protec­-ted so-called “dumb pipes” from prosecution as long
as their owners did not have prior know­ledge of infringement and complied
expeditiously with requests to remove copyrighted material.

Grouper, Bolt and MySpace, owned by News Corp, insist that they meet those
conditions.

In addition to responding to requests to remove material, they have sought
to insulate themselves by installing new filtering technologies that would
make it less bur­densome for traditional media companies to monitor their
sites.

“We are in full compliance with the Digital Millennium Copyright Act and
have no doubt we will prevail in court,” MySpace said. But some lawyers say
social networking and user-generated content sites are not the passive
carriers ­ like an internet service provider ­ that the drafters of the law
had in mind.

For one thing, they tab and index materials to make them easily searched on
their sites. “Services like YouTube and MySpace aren’t dumb pipes,” said
Jeffrey Liebenson, a partner at Herrick, Feinstein. “These may be beyond the
scope.”

Another debate hinges on how much these services should know about copyright
infringement before it occurs. While it is true that they would not know
what material individual users are posting on their sites at any moment, a
review of their content reveals that much of it is illegal.

“The content people will say, ‘Come on, the search term the person entered
was ‘David Lettermans Show’. Of course they knew it was copy­righted’,” said
Jonathan Zittrain, professor of internet governance and regulation at Oxford
University.

Mr Zittrain said that the DMCA probably favoured the user-generated sites
but that their case was hardly airtight.

“If I had to place a bet, I think they would probably pull it off. But there
is plenty of room for a judge to rule on the equities,” he said.

Content companies could also be bolstered by the Supreme Court’s ruling last
year against Grokster, an online file-sharing service.

In that case, the court found that software and technology companies could
be held liable for copyright infringement when customers use their
technology to download films and songs.

A key part of their ruling was that Grokster and other companies named in
the suit had encouraged copyright violations as part of their business
strategy to attract users and then sell advertising based on that traffic.

Whether a court would conclude that copyright infringement is part of
MySpace and other sites’ business model or a mere consequence is an open
question. In the meantime, there is a good chance that the sides will
settle.

After threatening to sue earlier this year, Universal ultimately struck a
distribution deal with YouTube, the leading internet video site, in which it
receives a share of advertising revenue and a licensing fee for its content.
It also received equity in the company worth tens of millions of dollars.
But in the longer term, it seems likely that both content companies and the
software and technology industries will lobby for revisions to the DMCA as
they attempt to strengthen their positions.

“I think there’s a tension between the law as written, and the law as
intended,” Mr Liebenson said. “The DMCA was enacted in a very different
era.”

Copyright The Financial Times Limited 2006