Usenet.com says RIAA 'whittling down' Betamax
July 1, 2009 11:06 AM PDT by Greg Sandoval
"Usenet.com lawyers lost their copyright infringement case to the music industry on Tuesday and now must prepare for what the judge decides Usenet must pay in damages. The judgment could could be hundreds of millions.
In the long list of copyright cases brought by the Recording Industry Association of America, this one stands out for all the drama it provided, and depending on which side you talk to, the amount of precedent-setting decisions. Usenet.com lawyers argue the presiding judge diluted the Betamax case. RIAA attorneys sigh, and say their opponents are just trying to inflame the public.
In what became a provocative sideshow during the proceedings, the RIAA alleged that Usenet.com destroyed evidence and prevented employees from being questioned by RIAA lawyers, going so far as shipping some of them off on extended trips to Europe. Baer was unamused and sanctioned Usenet.com.
Usenet.com is a company that enables users to access the Usenet network, an early electronic discussion forum and formerly popular way to share binary files. In October 2007, the RIAA filed suit against Usenet.com, which charges up to $19 for access "to millions of MP3 files and also enables you to post your own files the same way and share them with the whole world."
That was how Usenet.com advertised itself and while that may have lured customers, the claim certainly didn't help in the defense against a copyright suit. U.S. District Judge Harold Baer, of the Southern District of New York ruled in favor of the RIAA on Tuesday and found Usenet.com liable for direct, contributory and vicarious infringement. Sometimes in the next three weeks, the judge will hear from both sides on what they think damages should be and what steps Usenet.com must take to prevent copyright violations.
Both sides agree that there is a vast amount of infringing material that Usenet.com helps make available. Baer could assess damages anywhere from $1,500 per infringing work to $30,000, Baker said. The total award to the RIAA theoretically could be in the hundreds of millions. Already, one of the three defendants in the case has filed bankruptcy. There are serious questions about whether Usenet.com can survive a significant damage award.
"The court needs to balance the fact that you can't simply shut us down," said Baker, said, "because the technology itself has substantial non-infringing uses. On that everyone agrees."
For other media services, nothing in the case is more important than the judge's decision to prevent Usenet.com from arguing a Betamax defense, Baker said. The Betamax case refers to the Supreme Court decision in Sony Corp. of America vs. Universal City Studios, which decided that makers of video recorders could not be held liable for copyright infringement.
That ruling has been interpreted to mean that companies can't be held liable if the devices they create are "capable of significant non-infringing uses." It is a decision that tech companies have long relied on to shield them against copyright complaints. But the RIAA now has Betamax in its crosshairs, according to Baker.
Judge Baer said in his 38-page decision that the chief difference between Usenet.com and Sony in the Betamax case is the latter company cut ties with customers once they purchased a VCR. After that, Sony had no part whatsoever in illegal acts committed by customers. Usenet.com on the other hand maintains a relationship with customers. For Usenet.com subscribers, the company is the gatekeeper to the Usenet network.
"You do see a whittling down of the (Betamax) policy unfortunately," said Baker, with the lawfirm of Fulbright and Jaworski. "I think because the court found that we were more actively involved in our users than they were in the Sony case itself. Yes, we maintained a relationship with our clients but we tried to point out Sony also maintained a relationship by keeping up with customers through warranties, and providing 800 numbers and by contacting their customers. In this situation the court may have gone too far in finding that Sony Betamax was not available to us as a defense."
Another precedent set by Baer, according to Baker, is that distributing material within a closed network was a violation.
"This is something new the judge bought off on their argument," Baker said. "The way Usenet works is there is copying going on in the servers, there's multiple copies being made. When a user uploads a file it goes into a server and subsequently those binary files move from server to server as they go through the Usenet network. The court has held that was a violation of the right of distribution and no court has gone there before." "
Source: C|NET News.com