View Full Version : Peer to Peer may become illegal

09-28-2005, 11:12 PM
I couldnt sleep so was doing some surfing and found these thought some might be interested. Here is the first article both from Weds the 28.

WASHINGTON--A California senator has suggested that because file-sharing networks continue to house illegal files, they should be shut down.

Intellectual property protection "can't function in a country where the high-tech services become such that you can't protect copyright," Sen. Dianne Feinstein, a California Democrat, said Wednesday at a U.S. Senate Judiciary Committee hearing. The session centered on the landmark Supreme Court decision on MGM v. Grokster, which ruled that file-sharing services can be liable for their users' infringing behavior.

Pointing to what she called a "rise in peer to peers" since the Grokster decision, Feinstein said current law is not effective enough to deter illegal file swapping and the government must enact stronger enforcement measures. "If we don't stop it," she said, "it's going to destroy these intellectual property industries."

It remained unclear what remedies the senator would seek, though she said she didn't think any lawmakers supported an approach that would involve "going out and arresting high schoolers" who subvert copyright rules. Even so, her statements marked somewhat of a departure: When the Grokster decision initially came out, members of Congress said they were inclined to take a hands-off, wait-and-see approach.

Committee chair Arlen Specter, a Pennsylvania Republican, indicated that Congress was better suited than the courts to address the matter. But at the close of the hearing, he announced, "At least in the short term, I think we'll carry out the wishes of those who want us to do nothing."

That, indeed, was the sentiment senators generally heard from members of a panel representing the peer-to-peer, recording industry, consumer electronics and legal realms--echoing statements similar entities made at an earlier Senate hearing.

But Mary Beth Peters, registrar for the U.S. Copyright Office, said Congress needs to take immediate action on reforming what she deemed an "antiquated" section of copyright law that provides an "inefficient process to license musical works."

The law's "one at a time" approach for licensing individual musical works creates a tremendous roadblock for legitimate online services looking to add large amounts of media to their catalogs, she said. She--and later, Recording Industry Association of American President Cary Sherman--said a "blanket" licensing approach may be an option.

Lawmakers and panelists alike also indicated interest in promoting one-stop, third-party copyright registries--such as Snocap, created by Napster founder Shawn Fanning--that would amass terms of distribution from copyright holders and make them available to interested online retailers. Such a process is designed to save retailers time by erasing their need to broker large numbers of individual deals.

09-28-2005, 11:17 PM
This is the second. It is Edonkeys Chief's statement that he made before the committee Weds.

eDonkey Chief Blasts Litigators In Senate Testimony
By ExtremeTech Staff
9/28/2005 8:05:00 AM
Following the Supreme Court decision in MGM v. Grokster, the United States Senate Committee on the Judiciary has asked an additional two panels of speakers to testify on "Protecting Copyright and Innovation in a Post-Grokster World" Wednesday morning in Washington, D.C.

The speakers will include Mary Beth Peters, head of the U.S. Register of Copyrights; Cary Sherman, president of the RIAA; Debra Wong Yang, chair of the Attorney General's Advisory Committee on the Cyber/Intellectual Property Subcommittee; and Ali Aydar, president of SNOCAP, among others. Also scheduled to speak is Sam Yaga, president of MetaMachine, which developed the eDonkey and Overnet network.

A copy of Yagan's testimony was provided to ExtremeDRM before Yagan is scheduled to speak this morning. Below is the text of Yagan's speech, in full.

Sam Yagan's testimony:

Chairman Specter, Ranking Member Leahy, Senators, and staff: thank you for inviting me to testify this morning on this issue that will undoubtedly have broad and lasting ramifications for both the content and technology industries.

For the last three years, I have served as president of MetaMachine, the developer and distributor of the peer-to-peer file-sharing application eDonkey. From my vantage point I have witnessed and participated on the front lines of the confrontation between technology and content. I hope my experience on this cutting edge will be valuable to the Committee.

You might be curious about what kind of person would run a peer-to-peer company, so I'd like to tell you a little about my background. Prior to joining MetaMachine I co-founded and served as CEO of an educational publishing company called SparkNotes. In that role, I was a rights owner and my job was to sell physical content not so different from the goals of the record labels and movie studios. I share this background with you to give you comfort that I am not an anarchist and I have no ax to grind with owners of intellectual property. I hold a bachelor's degree in Applied Mathematics from Harvard and an MBA from Stanford.

Before I get to the core of my opening statement, I'd like to make it clear to the Committee that we have replied to the RIAA's cease-and-desist letter and I have personally committed to Mr. Sherman which I reiterate today that we are in the process of complying with their request.

Therefore I am not here as an active participant in the future of P2P, but rather as one who has thrown in his towel and with no interest in replaying past issues. I hope that as a result of my pending retirement from the P2P industry, I can speak with more candor and that you will accept my testimony not as pushing any self-serving agenda but merely as sharing with you my views on this Post-Grokster world.

I'd like to comment on three elements of the Grokster case that I find most important.

First: Because the Grokster standard requires divining a company's "intent," the decision was essentially a call to litigate. This is critical because most startup companies just don't have very much money. Whereas I could have managed to pay for a summary judgment hearing under Betamax, I simply couldn't afford the protracted litigation needed to prove my case in court under Grokster. Without that financial ability, exiting the business was our only option despite my confidence that we never induced infringement and that we would have prevailed under the Grokster standard.

Second: The court specifically cites that Grokster's marketing to "former Napster users indicates a principal, if not exclusive intent to bring about infringement." Is this really proof of intent to induce infringement? Does this mean that every advertiser that has advertised in the eDonkey software also has a similar intent? I should hope not, because last summer the campaigns of both President Bush and Senator Kerry ran advertisements on eDonkey. Were they really both courting the "swing infringement vote" or could they have had some other "intent?"

My final point on Grokster is that its inducement standard cannot serve as a long-term equilibrium. Imagine if since eDonkey's inception not only had we not made any statements inducing infringement but also that we made no statements at all and instead simply put up a website that read "eDonkey is a peer-to-peer file-sharing application." It seems to me that would not qualify as "affirmatively and actively inducing infringement." If we had never made any other statements would we be in the clear now? If so, new P2P applications will inevitably spring up and easily satisfy Grokster in this way. If we would not be in the clear than the effect of Grokster will go far beyond merely chilling innovation it will almost certainly freeze it in its tracks.

I'd like to wrap-up by humbly stepping beyond my area of expertise and making four observations that may be beneficial as you continue your oversight:

First, encourage a market solution. I don't think anyone knows which specific outcome would be best to mandate, but I have limitless trust in our free market system to generate numerous new business models to take advantage of the tens of millions of Americans who use P2P to quench their thirst for content and other data. Imagine if for the last ten years we had been able to convert just 1% of the estimated tens of billions of shared files into paid downloads. There is a market solution to be found it may well be one that fits in to the business model of the incumbent entertainment industry, but it also may not. It's not for anyone in this room to decide; only the market can.

Second, on this issue be especially aware of unintended consequences. With many P2P applications offshore or simply open sourced, the entities that will end up being most devastated by Grokster will be those like us that set up shop in the US, abided by American laws, paid taxes, and, at least in eDonkey's case, tried to license content from the entertainment industry. I fear that the winners in Grokster will not be the labels and the studios, but rather the offshore, underground, rogue P2P developers who will have just lost half a dozen of their biggest competitors.

Third, clarify the Court's decision in Grokster. As it is, many companies and would-be entrepreneurs simply cannot be sure of where they will stand with respect to the law. As you know, eBay recently acquired the P2P company Skype for more than two billion dollars. Note that Skype was founded offshore; it would be a real tragedy and a blow to our economy should all technology entrepreneurs take their innovations offshore.

And finally, I've started a few companies in my career and if I have one overriding passion it is for entrepreneurship the driving force of our economy. I urge you to try to empathize with entrepreneurs trying to innovate in nascent industries. I hope you will do all that you can to nurture and encourage entrepreneurs and provide them with a legal environment in which they can face the myriad challenges that startups do without the additional burden of having to wonder how a judge many years in the future will construe their every email, every phone call, and indeed every thought.