Legal Supplementary Material (Rachael Winchester)

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 [1]. More recently, a case has been filed against Apple alleging that they engaged in anticompetitive behavior [2]. 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” [2].

Bit Torrent Related Cases:
A. The Aimster case [3]
Aimster was a P2P file sharing service that appeared in Napster’s wake. Like Napster and the proposed iTunes/Bit Torrent technology, the site was centralized (like iTunes), but went bankrupt before a trial could occur. A premilimanary injunction found them guilty of vicarious liability and contributory infringement claims. Because Aimster failed to show any evidence of noninfringing uses and had shown clear knowledge of the infringing activities, an appeals court found them guilty of contributory infringement.
The proposed iTunes/Bit torrent technology would easily demonstrate noninfringing uses and Apple has been diligent in the past about limiting infringement.

B. The Grokster case [3]
The MGM v. Grokster case was different that the Napster and Aimster cases because the software was decentralized in nature, making it more difficult to regulate. While the entertainment industry and plaintiffs originally argued that the defendants were liable for both contributory infringement and vicarious liability, the Supreme Court found there was also enough evidence on inducement as well.


By putting a warning in their terms of use, Apple has put more responsibility on their customers:
Usage Rules [4]
Your use of the Products is conditioned upon your prior acceptance of the terms of this Agreement.
You shall be authorized to use the Products only for personal, noncommercial use.
You shall be authorized to use the Products on five Apple-authorized devices at any time.
You shall be entitled to export, burn (if applicable) or copy Products solely for personal, noncommercial use. You shall not be entitled to burn Video Products.
You shall be authorized to burn an audio playlist up to seven times.
You shall be able to store Products from up to five different Accounts on certain devices, such as an iPod, at a time.
Any burning (if applicable) or exporting capabilities are solely an accommodation to you and shall not constitute a grant or waiver (or other limitation or implication) of any rights of the copyright owners in any audio or video content, sound recording, underlying musical composition, or artwork embodied in any Product.
You agree that you will not attempt to, or encourage or assist any other person to, circumvent or modify any security technology or software that is part of the Service or used to administer the Usage Rules.
The delivery of Products does not transfer to you any commercial or promotional use rights in the Products.
In our report we mentioned the possibility of iTunes applying to be a safe harbor under the DMCA. 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)) [5]
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.


Bit Torrent Sites that have been shut down [6]:
I. Finreactor
This case is currently before the courts and 32 people are facing charges. Media companies are seeking damages worth 3.5 million euros.
II. Suprnova.org
This was one of the most popular early BitTorrent sites. It closed in December 2004 when its computer servers were confiscated by Slovenian authorities.
III. LokiTorrent
The biggest torrent source after Suprnova, and it closed down after alleged threates from the MPAA. Webmaster of the site, Edward Webber, was ordered to pay a fine and supply the MPSS with the IP addresses of visitors.
IV. EliteTorrents
This site was shut down by the FBI and Immigration and Customs Enforcement.

Sources:
[1] “Apple Lawsuit Over iTunes”. [Online document]. Available at HTTP: http://www.lawcore.com/legal-information/09-05-06.html
[2] “Judge Approves Antitrust Case vs. Apple”. [Online document]. Available at HTTP: http://www.macnn.com/articles/06/02/09/antitrust.case.vs.aapl/
[3] Fred von Lohhman, “What Peer-to-Peer Developers Need to Know about Copyright Law” EFF January, 2006
[4] “Terms of Service”. Itunes Store. Available at HTTP: http://www.apple.com/legal/itunes/us/service.html
[5] “Copyright of Digital Information”. Available at HTTP: http://digital-law-online.info/lpdi1.0/treatise33.html
[6] “Bit Torrent”. Wikipedia. [Online Dictionary]. Available at HTTP: http://en.wikipedia.org/wiki/Bit_torrent