Does HR 1201 overrule Grokster?

Richard Epstein has a new essay on the DMCRA, Rep. Boucher’s DMCA-reform legislation:

But means as well as ends matter in the constant struggle to deal with copyright piracy. In looking at the structural problem, the key question is just how much noninfringing use is there relative to the torrent of illegal copying. In answering this question, it’s not appropriate to look at the issue of interoperability, because that has already been dealt with first by the DMCA and second by the standard end user licenses. So it is not likely that there is much fair use to worry about.

Once the first of these two provisions is in place, then someone can circumvent the device for the appropriate purpose. But unfortunately H.R. 1201 does not say one word about how the circumvention in question will be limited just to those cases. Nor does it indicate what penalties will be given to individuals who first circumvent for fair use and then proceed, as is likely to be the norm, to circumvent for all other purposes. So if equipment can be sold for good purposes, then it can be used for bad ones, and the DMCA has lost its teeth. It is not too much to say that this stealth provision, which is never referred to in the findings of the act could work a comprehensive repeal of the DMCA. Much too much is lost, and very little is gained.

He’s wrong about interoperability: although the DMCA does purport to carve out an exemption for interoperability, that exception is of virtually no help in practice. The reasons are a bit complex, and I deal with them extensively in my forthcoming Cato Policy Analysis, so I won’t rehash them here. Suffice it to say that despite the reverse-engineering exception, the DMCA effectively makes it illegal to interoperate with DRMed products, and that’s a very bad thing.

I think the professor is being a bit too clever with his mock surprise at the “stealth provision” repealing the DMCA. I was under the impression that everyone understood that was its purpose. Indeed, I’ve heard that the primary reason that the labeling provisions were included were so that the bill could be considered in the Commerce Committee, chaired by a sympathetic Rep. Barton, rather than the Judiciary committee, which is less friendly to DMCA reform. If the Judiciary Committee were more sympathetic, Boucher would doubtless be happy to introduce just the DMCA-reform portions of his legislation there. There’s certainly nothing “stealth” about the bill, given that commentators routinely cite Boucher’s bill as effectively repealing the DMCA’s anti-circumvention provisions.

He does, however, have an interesting point about the section that codifies the Betamax rule:

New Subsection (5) fares no better, and indeed if anything it looks worse. As written, it says that manufacturing or distributing a hardware or software product–what other kinds are there?–capable of a noninfringing use it is not a violation of the copyright. The only exception is in cases of direct infringement, which is of course not what manufacturers and distributors do anyhow.

If the section only means to say that actions for contributory infringement cannot be brought for devices capable of noninfringing uses, then it is just a statutory codification of the Betamax rule. Thus read, I would oppose it, because there is enough unhappiness with the rule that we should allow for some case law that contracts its scope in some future case.

But in fact it looks as though this provision may have more bite, although one cannot be sure. Grokster was of course capable of noninfringing uses, and yet it was shut down on the purposive inducement theory. New Subsection (5) purports to say that it is no violation of the Copyright Act period to distribute hardware or software that has that power.

This does seem like a serious concern. I sometimes cite the Grokster as a better model for dealing with infringing technologies: that the courts should focus on business decisions and behaviors, not technologies as such. It does appear that Boucher’s bill might preclude this line of reasoning.

I think it’s important to keep in mind that overruling Grokster was almost certainly not Boucher’s intention. Keep in mind that this legislation was originally introduced in 2003, and was re-introduced in 2005 before the Grokster decision was handed down. The Supreme Court was widely expected to apply the Betamax test to Grokster–that is, to determine whether Grokster had “substantial non-infringing uses.” Instead, the Supreme Court ruled against Grokster on other grounds, leaving unanswered whether Grokster’s software meets the Betamax test.

Fortunately, this problem could be easily fixed by changing “not a violation of the Copyright Act” to read “not a violation of section 1201.” (or appropriate subsections) That would preserve the Supreme Court’s ability to find contributory and vicarious infringement based on other sections of the Act that are less problematic, while ensuring that legitimate device makers are not ensnared in the DMCA’s anti-circumvention provisions.

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