Prelude to a Fake Complaint
Senator Orrin Hatch and his colleagues on the Senate Judiciary Committee have introduced the Inducing Infringements of Copyright Act ("The Induce Act" [PDF, 25k]) this week. They want us to think the Act is no big deal, and that it targets only the bad guys while leaving the good guys alone. They say that it doesn't change the law; it just clarifies it. But they're wrong. And this legal complaint is the proof.
» Fake Complaint against Apple, Toshiba, and C-Net for Inducing Infringement of CopyrightsTake a look. Scared yet? You should be. When the lawyers at EFF first sat down and asked "Whom could we sue under the Induce Act if we were an abusive copyright holder?" the answer was clear: pretty much everybody. Playing the devil's advocates, we knew we could draft a legal complaint against any number of the major computer or electronics manufacturers for selling everyday devices we all know and love—CD burners, MP3 players, cell phones—and that with that complaint, we could file a lawsuit that would survive any attempt to dismiss it before trial, costing the targeted company up to $1,000,000 per month in legal fees alone. The Induce Act is a nasty, brutish stick in the hands of the wrong plaintiff.
Apple's iPod music player seemed particularly vulnerable to attack. Any major record label could bring a strong lawsuit against Apple for "intentionally inducing" infringement under this new law with the iPod, both because it's plausible to argue that having an iPod enhances the lure of using P2P to download music (gotta fill all that space!) and because all the major record labels still believe that private sharing of songs from your CDs with friends is copyright infringement. We still disagree with the labels on these points, but the reality is that no court has yet convinced them that their legal theories are flawed. We also threw in Toshiba for making the iPod's hard drive and CNET for showing people how to move the iPod's music files.
Under the Supreme Court's ruling in Sony v. Universal (the Betamax VCR case), devices like the iPod and CD burners are legal as long as they have legal uses—what the Court called "substantial non-infringing uses." This has been the rule in the technology sector for the last 20 years. Billions of dollars and thousands of jobs have depended on it. Industries have blossomed under it. And any case brought against Apple or HP or Dell would be immediately dismissed because of it.
Now Senator Hatch and his allies want to tear down that rule and substitute a new one with the Induce Act. With it, the fact that a device or product has legal uses, even lots of them, is irrelevant. Filing a lawsuit under the Induce Act is like dropping a litigation bomb on any company that gives users products that have even the slightest potential to assist in copyright infringement. Technology companies will avoid being innovative, and investors will avoid supporting new technologies for fear of being sued out of existence based on the possible conduct of their customers. If this bill had been law in 1984, there would be no VCR. If this bill had been law in 1995, there would be no CD burners. If this bill had been law in 2000, there would be no iPod. If this bill becomes law in 2004, we may lose those devices and many more that we haven't even begun to imagine.
» Join EFF and our friends in the fight against the Induce Act today.
Cindy A. Cohn, Esq. (State Bar No. 145997)
Jason M. Schultz, Esq. (State Bar No. 212600)
ELECTRONIC FRONTIER FOUNDATION DRAFT
454 Shotwell Street
San Francisco, CA 94110
Telephone: (415) 436-9333 x112
Facsimile: (415) 436-9993
Attorneys for Plaintiffs
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
MAJOR RECORD LABELS ) No. __________
)
Plaintiffs, ) COMPLAINT
)
v. )
)
APPLE COMPUTER, INC., TOSHIBA CORP., )
and CNET NETWORKS, INC. )
)
Defendants. )
)
NATURE OF THE ACTION
--------------------
1. Plaintiffs, who together own the copyrights in more than 80% of all
commercially available sound recordings, bring this action under the
Inducing Infringement of Copyrights Act of 2004 to stop Defendants Apple
Computer, Inc. ('Apple'), Toshiba Corp. ('Toshiba'), and CNET Networks
('CNET') from continuing to intentionally induce, aid, abet, and profit
from the massive infringements of Plaintiffs' copyrighted works by owners
of Apple iPod music players ('iPods').
THE INDUCE ACT
--------------
2. The Inducing Infringement of Copyrights Act ('Induce Act') was
recently signed into law. The Act provides that '[w]hoever intentionally
induces any [copyright infringement] shall be liable as an infringer.'
3. The Induce Act further defines the term 'intentionally induces' to
mean 'intentionally aids, abets, induces, or procures, and intent may be
shown by acts from which a reasonable person would find intent to induce
infringement based upon all relevant information about such acts then
reasonably available to the actor, including whether the activity relies
on infringement for its commercial viability.' Under this law, the
Defendants are liable for up to $150,000 for each song illegally copied by
iPod users and all iPods must be declared illegal.
DEFENDANT APPLE COMPUTER'S INFRINGING CONDUCT
---------------------------------------------
4. The iPod is the most popular and successful portable digital music
device in the world. As of April 2004, nearly three million iPods had been
sold, driven by an international marketing campaign that has vaulted the
'mp3 player' from a small, obscure market into a must have item for every
music fan.
The Commercial Viability of Apple's iPod Relies on Copyright Infringement
-------------------------------------------------------------------------
5. A substantial element of the iPod's commercial viability can be
traced to its ability to play infringing music files, whether downloaded
over the Internet from peer-to-peer ('P2P') networks or the result of
promiscuous hand-to-hand copying of sound recordings among friends and
acquaintances.
6. Apple has been fully aware, as has most of the world, that for the
past several years, millions of computer users have been engaging in
unauthorized reproduction and distribution of music files using P2P
software such as Napster, Audiogalaxy, Aimster, KaZaA, Morpheus, Grokster,
Limewire, Bearshare, and eDonkey. These networks have been described by
some as the biggest piratical bazaar in world history.
7. In addition, computer users illegally reproduce and distribute
music files in person using the iPod. As detailed further in the report of
Professor Joe Expert, attached hereto as Exhibit A, many iPod owners copy
CDs from, and use their iPods to 'share' their music with, their friends
and acquaintances. Plaintiffs maintain that this promiscuous 'hand-to-
hand' reproduction also constitutes copyright infringement.
8. Before the introduction of portable digital music players, the
value of the music files derived from infringing sources was limited by
the fact that computer users generally had to be sitting at their
computers in order to play and enjoy them. Defendant Apple knew this and
hence made the calculated decision to intentionally induce and enhance the
attractiveness of infringement by providing these infringers with a device
to enhance the rewards of their illegal labors – the iPod.
9. As detailed further in Professor Expert's report, the iPod would
have been much less attractive to consumers had it been incompatible with
the music files downloaded from P2P networks and had it not allowed
consumer- to-consumer transfers. Professor Expert's report also makes it
clear that the iPod, in turn, enhanced the attractiveness of P2P networks
by offering iPod owners expansive storage capability and lightning- fast
data transfer, allowing them to listen to any number of infringing music
files when away from the computer.
10. Surveys conducted by Professor Expert establish that a majority of
iPod owners have used at least some significant portion of their iPods to
store and play infringing music files, whether derived from P2P networks
or promiscuous hand-to-hand copying. Upon information and belief, Apple
was certainly aware of this fact from its own internal marketing research.
Apple's 'Rip, Mix, Burn' Campaign Demonstrates
Its Intent To Induce Infringement
----------------------------------------------
11. Apple has directly encouraged music piracy through its 'Rip, Mix,
and Burn' campaign used to sell both its Macintosh computers and iPod
player. There can be no better evidence of inducing infringement than to
literally spell out the steps to one's customers. The Apple iPod's Storage
Capacity Demonstrates Apple's Intent to Induce Infringement
12. The iPod's remarkable storage capacity also demonstrates Apple's
intent to induce, aid, and abet infringers. For example, Apple itself
advertises that its 40 GB iPod can hold 'up to 10,000 songs.' This amount,
over 500 albums, far exceeds the capacity necessary to hold the total CD
collection owned by the vast majority of Americans. This suggests that
Apple knew and intended that iPod owners would be getting their music from
elsewhere, including P2P networks and promiscuous hand-to-hand copying.
13. Apple does sell authorized music that is specifically licensed for
use with iTunes and its iPod from its iTunes music store. However, the
number of songs sold comes nowhere close to the number of songs that Apple
knows or reasonably should know are on its customers' iPods. To fill up a
40 GB iPod with authorized songs from the iTunes music store would cost
the average user $9,999. It is inconceivable that any iPod user would
spend almost $10,000 in order to fill a $499 iPod. In contrast, there is
no question that the iPod's $499 price is made more palatable to buyers by
the availability of the infringing no-cost music available on P2P networks
or via friends.
14. Thus there can be no doubt that Apple materially relies on illegal
infringement by its customers to support the commercial viability of its
iPod and to maintain its high price in the marketplace.
Apple's Design Choices Demonstrate its Intent to Induce Infringement
--------------------------------------------------------------------
15. Moreover, Apple has also demonstrated its intent to induce
copyright infringement through the decisions it made when designing the
iPod and related iTunes software. For example, Apple chose to allow the
iPod to reproduce, store, and perform copyrighted works in 'MP3' file
format, knowing full well that this is the most popular unprotected format
used by pirates on P2P networks. Because this format includes no content
protection or digital rights management features, it also encourages
promiscuous hand-to-hand copying by iPod owners. This decision cannot be
seen as anything but an invitation to infringe.
16. Apple could have, at a minimum, designed its iPod to play only
music files with content protection and further, could have designed its
iTunes software to only rip CDs into a protected format that would not
allow further promiscuous hand-to-hand copying. Of course, an iPod that
only played authorized and protected files such as Apple's own AAC format
would be far less popular in the marketplace, and thus, less commercially
viable. The iPod's ability to play unprotected MP3 files not only enhances
its own value to infringer users but also encourages such users to
increase the amount of infringement they perpetrate.
17. Plaintiffs are pressing a claim under the Induce Act and not a
claim of contributory or vicarious infringement. Hence, the Supreme Court
ruling in Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984)
has no application to this case, nor is it a defense that Apple has no
control over the activities of iPod owners.
DEFENDANT CNET'S INFRINGING CONDUCT
-----------------------------------
18. Defendant CNET Networks, Inc. ('CNET') is a media company that,
among other things, reviews digital music players and instructs its
readers on how to use the devices they have purchased.
19. As part of this instruction, CNET has intentionally induced,
aided, and abetted its readers to infringe Plaintiffs' copyrights.
Specifically, in posting a review of Apple's iPod music player on its
website, CNET explicitly suggested not only that users 'rip' their entire
CD collection onto their computers and into their iPod device, but even
specifically instructed users on how to make further unauthorized
reproductions of these infringing files by copying them between multiple
computers:
You can use the iPod Mini to share music between multiple computers,
but it's not easy, as the player syncs to only one version of iTunes.
But there's an alternative. We were able to copy MP3 files from the
Mini to a second computer's hard drive in Windows by turning on "View
hidden files and folders" and browsing the Mini's internal directories
in My Computer until we found the music. Mac OS X users can do the
same thing if they install TinkerTool.
[http://www.bresink.de/osx/TinkerTool.html].
The iPod Mini has no compatibility problems transporting data files
between computers (Macs or PCs) when you activate the Enable Disk Use
function. In this approach, the Mini mounts as a data drive, but it
hides music files unless you use the above-described workaround.
20. This so-called 'work around' is nothing less than a set of
specific instructions to aid and abet users in further acts of
infringement, including promiscuous hand-to-hand copying among friends and
acquaintances. The link to the 'TinkerTool' product in an explicit
invitation to conduct such infringements.
21. The CNET review has been inducing and continues to induce all
users of the Internet through its review at:
[http://reviews.cnet.com/Apple_iPod_Mini__4GB__Green_/
4505-6490_7-30657036-4.html?tag=top].
DEFENDANT TOSHIBA'S INFRINGING CONDUCT
--------------------------------------
22. As alleged in previous paragraphs, Apple's iPod is being used to
induce massive and uncontrolled copyright infringement.
23. Defendant Toshiba supplies the 'micro' hard drives that Apple uses
in the iPod. Toshiba ships in excess of 100,000 such hard drives to Apple
each month.
24. At all times relevant to this complaint, Defendant Toshiba knew or
should have known that Apple's iPod would be used to induce infringement.
Plaintiffs specifically brought the facts detailed herein to Toshiba's
attention and asked that Toshiba cease supplying Apple with hard drives
until Apple took steps to address the infringing capabilities of the iPod.
Toshiba refused Plaintiffs' request.
25. With this knowledge, Toshiba intentionally chose to aid, abet, and
induce copyright infringement by iPod owners by continuing to supply Apple
with hard drives intended for use in iPods.
26. The commercial viability of Toshiba's 'micro' hard drives depends
substantially on consumer demand for the iPod and similar music players
that could store thousands of works at a time and could import them
quickly from a variety of sources, including illegal music file-sharing
and promiscuous hand-to-hand infringement. By supplying tiny hard drives
for portable music players not even capable of recording original music,
Toshiba clearly knew it was abetting reproduction of copyrighted works on
a massive scale.
27. Thus, Toshiba materially relied on infringement for the commercial
viability of its 'micro' hard drives and has clearly demonstrated intent
to induce infringement of Plaintiffs' works by continuing to supply Apple.
CLAIM FOR RELIEF
(Against All Defendants, for Inducing Copyright
Infringement Pursuant to 17 U.S.C. § 501(g).)
-----------------------------------------------
28. Plaintiffs repeat and reallege each and every allegation contained
in paragraphs 1 through 27 as if fully set forth herein. Based on these
facts, each Defendant has intentionally induced, aided, or abetted the
massive copyright infringement committed by iPod owners as defined under
the Induce Act.
29. As a direct and proximate result of Defendants' infringement of
Plaintiffs' copyrights and exclusive rights under copyright, Plaintiffs
are entitled to dama ges as well as Defendants' profits pursuant to 17
U.S.C. § 504(b) for each infringement committed by iPod owners.
30. Alternatively, Plaintiffs are entitled to the maximum statutory
damages, pursuant to 17 U.S.C. § 504(c), in the amount of $150,000 for
each work infringed by any iPod owner or, in the case of CNET from each
person who read and acted on information contained in CNET's iPod product
reviews.
31. Plaintiffs further are entitled to its attorneys' fees and full
costs pursuant to 17 U.S.C. § 505.
32. Defendants' conduct threatens to cause, and is causing, and unless
enjoined and restrained by this Court will continue to cause, Plaintiffs
irreparable injury that cannot be fully compensated for or measured in
money. Pursuant to 17 U.S.C. § 502, Plaintiffs are ent itled to
preliminary and permanent injunctions halting all future sales of the iPod
and any Toshiba 'micro' hard drive, requiring that Apple take steps to
update all iPods sold to date, and prohibiting publication of any material
on the CNET website discussing use of the iPod in any manner that would
induce further infringement by iPod owners.
DATED: June 24, 2004
By _________________________________
Cindy A. Cohn, Esq. (SBN.145997)
Jason M. Schultz, Esq. (SBN 212600)
ELECTRONIC FRONTIER FOUNDATION
454 Shotwell Street
San Francisco, CA 94110
Telephone: (415) 436-9333 x112
Facsimile: (415) 436-9993
Attorneys for Plaintiffs
MAJOR RECORD LABELS