Peer-to-Peer Technology as Infrastructure: An Economic Argument for Retaining Sony's Safe Harbor for Technologies Capable of Substantial Noninfringing Uses

Abstract:     
In Metro-Goldwyn-Mayer Studios v. Grokster, the Supreme Court will decide the future of Betamax - not the technology, which is already dead, but the Betamax decision issued by the Supreme Court in 1984. As frequently occurs in copyright law, it is a new, disruptive technology - this time, peer-to-peer (p2p) technology - that tests the boundaries and soundness of existing copyright doctrine.

This essay makes two basic points. First, the Sony rule, which precludes secondary liability in situations where a technology is capable of substantial noninfringing uses, properly limits the scope of copyrights and prevents them from impeding access to and development of infrastructural technologies, such as p2p systems. Second, commercial significance is an inappropriate metric for gauging the substantiality of noninfringing uses; commercially insignificant but socially valuable noninfringing uses should be recognized as substantial. For the most part, the parties and amici have presented the Supreme Court with the arguments it ought to evaluate. I do not aim to recount or rehash those arguments in this essay. Instead, I aim to articulate an economic argument for retaining the Sony rule that has not been made fully.

Keywords: copyright, grokster, napster, peer-to-peer, p2p, noninfringing use, Sony, infrastructure, contributory liability, vicarious liability

JEL Classifications: D60, D62, D80, K10, K11, K13, K39, O30, O31, O34

Accepted Paper Series