Thursday, March 1, 2007

Legal Checkpoint 2 (Rachael Winchester)

To analyze the legality of a partnership between Apple and Bit Torrent, it was beneficial to look at the two as separate entities before examining their combined liability.
Lawsuits involving Itunes have primarily involved the origin of the technology and antitrust accusations. In 2006 case settled out of court, Apple agreed to pay $100 million to Creative Technology to use the patent for the application design of Itunes. More recently, a case has been filed against Apple alleging that they engaged in anticompetitive behavior. This motion was approved by Judge James Ware of the U.S. District Court of Northern California, who agreed that Apple has “an 80 percent share of the market for legal digital music files and more than 90 percent of the market for portable hard-drive digital music players”. While one antitrust expert called the suit a long shot, another said that the key to the case would be the court’s perception of a product brand like iTunes as “a market in itself separate from the rest of the online music market”.
The ability of hackers to break the Fairplay DRM technology on Apple music and video files is well documented. Notably, Norwegian technologist Jon Johansen has created multiple applications that can be used to circumvent Fairplay, including QTFairUse. By releasing updated versions of Itunes, Apple is able to prevent some of this hacking. DRMs can also be bypassed by manual burning of a file onto a CD and subsequent encoding. Apple’s lawyers have been diligent about sending cease and desist letters to the sites that host these projects, protecting Apple from a potential liability lawsuit. Because Apple is doing everything in their power to come up with new technology to block the DRM hacking, it is reasonably certain that they would not be held responsible for indirect liability in a court of law.
Previous cases support this conclusion.
If it hasn’t already (I couldn’t find if they had or not), Apple should consider applying to be considered a safe harbor under the DMCA. While this is primarily directed at online service providers, iTunes fits the criteria. To become a safe harbor, the OSP must not:
not have actual knowledge that the material or an activity using the material on the system or network is infringing (512(c)(1)(A)(1)).
not be aware of facts or circumstances from which infringing activity is apparent (512(c)(1)(A)(2)).
upon obtaining such knowledge or awareness, must act expeditiously to remove, or disable access to, the material. (512(c)(1)(A)(2) and 512(c)(1)(C))
When it is discovered that people are using Itunes content for illegal purposes, updates are created immediately to end this.
not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity (512(c)(1)(B)).
This would not be hard to prove. When people break the DRMs on iTunes music, the company actually loses money from potential customers.
have a Designated Agent registered with the US Copyright Office to receive notifications of claimed infringement (often called takedown notices). If the designated agent receives a notification which substantially complies with the notification requirements, the OSP now has actual knowledge and must expeditiously disable access to the work. The OSP must make available to the public through its service, including on its web site substantially this information:
the name, address, phone number and electronic mail address of the agent.
other contact information which the Register of Copyrights may deem appropriate.
I could not find evidence of this
adopt, reasonably implement, and inform subscribers and account holders of a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers (512(i)(1)(A)).
Itunes users are required to register to purchase music. I’m not sure if they have the ability to track who is circumventing the DRMs though.
It would seem that Apple is not in danger of being prosecuted for people hacking their DRMs. The largest potential lawsuit Apple faces presents is that of holding a monopoly, which they have been accused of both in Europe and the US. Steve Jobs has recently published an essay which advocates dropping DRMs altogether. While this solution does not appear likely in the near future, it does allow Apple to claim in a court of law that they want to drop the DRMs but that the other companies are not cooperating.

Previous bit torrent cases include:

a. Finreactor
b. Suprnova.org
c. LokiTorrent
d. EliteTorrents
However, the common theme in these cases is that all were sites distributing illegal content. Itunes on the other hand would only distribute legal music using Bit Torrent.


Conclusions:
The fact that movies are already being sold using Bit Torrent technology gives Apple stronger legal footing for following this move. First, they are not the only ones offering the technology, so they have no additional grounds for holding a monopoly, other than that their technology would be protected by DRMs (which it is currently). Also, because bittorrent.com is already selling movies online using their technology, this means that the matter has been looked into by their lawyers as well… At least if Apple did get sued they wouldn’t be the only plaintiff.

Sources:
http://www.lawcore.com/legal-information/09-05-06.html
http://www.macnn.com/articles/06/02/09/antitrust.case.vs.aapl/
http://digital-law-online.info/lpdi1.0/treatise33.html
http://www.nytimes.com/2007/02/25/technology/25bit.html?_r=1&oref=slogin

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