Legal Matters: Verizon Ruling Misses Forest For Trees, Industry Says

The new year has barely begun, and record companies already have their backs up, thanks to a stunning new court decision.

Using a razor-sharp interpretation of the Digital Millennium Copyright Act (DMCA), the U.S. Court of Appeals for the D.C. Circuit on Dec. 19 dismissed the recording industry's subpoenas for file-sharers' identities.

The case, Recording Industry Assn. of America vs. Verizon, is now being hailed as a victory for privacy rights.

With the latest ruling, the appellate court reversed two orders of the D.C. federal district court that had directed Verizon to identify a file sharer who was allegedly infringing copyrights on 800 songs.

The RIAA filed 3,000 subpoenas in Washington, D.C., as a prelude to lawsuits against 382 individual users. The appeals court has ruled that those subpoenas are not authorized by the DMCA.

"Internet users are the winners in the Verizon case," says Wendy Seltzer, an attorney with Electronic Frontier Foundation (EFF).

"The effect of the decision is that we do not lose our privacy simply by connecting to the Internet. The ruling stops the record labels from taking our free speech rights as collateral damage in the campaign against the American music fan," Seltzer adds.

The EFF filed an amicus brief supporting Verizon on behalf of 45 consumer, privacy and Internet industry groups

But the ruling has some legal experts baffled.

"Although the court was certainly justified in performing a highly technical analysis of the statute, its result seems to miss the forest for the trees," says Jay Handlin, a partner with Howrey Simon Arnold & White in Los Angeles.

According to Section 512(h) of the DMCA, a copyright owner may "request the clerk of any United States district court to issue a subpoena to [an Internet service provider] for identification of an alleged infringer."

To get the subpoena, the copyright owner must include with the request a notification identifying the copyrighted works alleged to be infringed.

The notification of the infringement must include six categories of information. One is the "identification of the material that is claimed to be infringing . . . and that is to be removed . . . and information reasonably sufficient to permit the service provider to locate the material."

Verizon argued that with peer-to-peer file sharing, there is no material for the ISP to locate or remove.

Therefore, by definition, a copyright owner seeking a subpoena to identify a P2P file sharer cannot satisfy the statutory requirements because they cannot provide that category of information.

The appeals court agreed with the literal interpretation of the statute and concluded that the DMCA does not authorize such subpoenas.

In response, the RIAA has vowed it will continue to pursue individual copyright infringers.

"This is a disappointing procedural decision, but it only changes the process by which we will file lawsuits against online infringers," RIAA president Cary Sherman said in a statement.

"This decision in no way changes our right to sue or the fact that those who upload or download copyrighted music without authorization are engaging in illegal activity. We can and will continue to file copyright infringement lawsuits against illegal file sharers," Sherman stressed.

A major shift is that the RIAA can no longer notify illegal file sharers before filing lawsuits against them to offer them the opportunity to settle outside of litigation.

The RIAA will now have to file "John Doe" lawsuits based on e-mail addresses of suspected infringers, a tedious process that requires significant judicial oversight.

Critics contend the appeals court never confronts a simple question.

"Why isn't the notification of infringement sufficient if, in response to the request for identification of material 'to be removed or access to which is to be disabled,' the copyright owner simply answers 'None?' " Handlin asks.

After all, the purpose of the subpoena provision is to enable copyright owners to identify and pursue legal remedies against infringers.

Let's assume a case where an ISP did have infringing material stored on one of its servers.

If for some reason a copyright owner wanted to obtain the infringer's identity but did not want to ask the ISP to delete the offending files, surely that choice would be up to the copyright owner.

The fact that a copyright owner chose not to ask the ISP to delete files should not negate the owner's ability to subpoena information that they will use to pursue the infringer, Handlin reasons.

The point of Section 512(h) is to let copyright owners discover the information they need to pursue and prosecute infringers.

Members of the record industry are asking why should that purpose be thwarted just because they do not—or, in the case of P2P file sharing, cannot—tell the ISP to delete anything?

Good question.