Making Technology Visible: Liability of Internet Service Providers for Peer-to-Peer Traffic
61 Pages Posted: 15 Aug 2006
The liability of Internet Service Providers (ISPs) for infringing materials posted by their subscribers was highly controversial during the early days of the Internet. The cost of enforcing copyrights increased immensely as mass copying and distribution means became widespread and the volume of infringing materials increased. Copyright holders sought to actively engage ISPs in their efforts to enforce copyright, by making them liable for any infringing material residing on their system. ISPs opted for neutral policies and refused to undertake the role of gatekeepers. The safe harbor regime established by the Digital Millennium Copyright Act (DMCA) in the late 1990's, provided ISPs with a shield that mostly kept them out of copyright wars. The introduction of peer-to-peer networks destabilized the equilibrium achieved under the DMCA and copyright owners are now trying to draw ISPs back into the legal scene, seeking to engage them in addressing peer-to-peer piracy.
When the DMCA was adopted, the growing Internet industry sought to establish itself as a common carrier, withstanding attempts to hold ISPs directly liable for copyright infringements committed by their users. ISPs' stance helped to preserve the decentralized nature of Internet architecture, which was a key to its success in facilitating innovation, business and political deliberation. Yet, peer-to-peer design brings the interests of ISPs and those of copyright holders closely together. Peer-to-peer technology confronted ISPs with a dilemma: it boosted their business, increasing the demand for broadband and upgraded services, but at the same time created a growing burden of limitless bandwidth consumption. No single ISP can entirely eliminate peer-to-peer without risking its market share. Consequently central management of peer-to-peer traffic becomes an attractive option.
The risk involved in central management of online exchanges was one the reasons for exempting ISPs from liability. It was assumed that liability for injurious materials would induce ISPs to monitor online traffic for the purpose of minimizing their legal exposure. Consequently, liability may come at the cost of losing out on the economic and political benefits generated by peer-to-peer networks. Central management of peer-to-peer systems would turn these distributed networks into giant broadcast systems provided by ISPs, and centrally managed through their gates. Potential liability may also boost the emergence of new managing technologies and shape the design of peer-to-peer networks. Thus, liability of ISPs for peer-to-peer infringing traffic could carry long-term consequences for network architecture. The paper explores the ramifications of liability rules for design choices, focusing on the implications of ISP liability for network architecture.
Keywords: DMCA, ISP, Internet Service Providers, P2P, Peer-to-Peer, Liability, Copyright, Infringement
JEL Classification: KOO, K1, K2, K3
Suggested Citation: Suggested Citation