You can read the oral arguments in the Supreme Court case MGM v. Grokster on p2p.weblogsinc.com. A couple of brief comments from my skim of it.
Much of the early testimony surrounded the stifling effect finding in favor of MGM would have upon inventing. The justices focussed in on the idea that if you are inventor, your ability to invent and bring new products to market is effectively quelched by the standard proposed by MGM. You’d have to show that there are no substantial infringing uses, rather than what is called for in the Sony decision, which is to show that there are significant non-infringing uses.
The example of the iPod came up, and the Mr. Verrilli argued that it was more or less obvious that the iPod had significant non-infringing uses. But I think that’s incredibly unclear. If you figure out how many songs can be stored in a 20gb player, it probably is the range of 6000, which is maybe 400 CDs or so. While it isn’t unheard of for individuals to have that many cds, I sincerely doubt that the average is anywhere near that total. I think it is relatively easy to argue that the majority of individuals must have songs on their iPods which are infringing, that indeed the product design and marketing of the product itself is carefully designed to take advantage of this huge capacity and the ease with which such a player can be filled with infringing content. I think that were MGM v. Grokster to be reversed, he’d be coming right back to argue the opposite of his claim here in court.
I think similar arguments could easily have been made when the VCR was new. I’d contend that the vast majority of uses for the VCR in the early days was infringing use, and in all likelihood, that continues to this day.
Scalia seemed focussed on the issues related to stifling startup companies who are trying to bring new technologies to market.
JUSTICE SCALIA: Will you give a company ten years to establish that?
MR. CLEMENT: Well, I don’t think
JUSTICE SCALIA: I mean, what I worry about is the suit that just comes right out of the box, as soon as the company starts up. Will you give the company a couple of years to show that it’s developing a commercial use?
MR. CLEMENT: Well, Justice Scalia, we have concerns about that, as well. I don’t know that we would give them ten years of, sort of, free space to do as facilitate as much copyright infringement as possible. I think what we would say is that when you’re — when a suit targets a nascent technology at the very beginning, there ought to be a lot of leeway, not just for observed noninfringing uses, but for the capacity of noninfringing uses.
I also found this exchange interesting:
JUSTICE BREYER: I — and the country seems to have survived that standard. There is innovation. There are problems in the music industry, but it thrives, and so forth. So there is an argument for just following it, because it’s what it is. But suppose it’s totally open. Why should that be the right test, instead of some other test, like substantial use, et cetera?
MR. TARANTO: I — because I —
JUSTICE BREYER: That, I think, was the question, and I’m very interested in your answer.
MR. TARANTO: Right. Because I think any alternative is worse. A focus on intent to profit means that virtually every business which requires money and has the least bit of sensible forward-looking thinking about what the usage is going to be will be subject to litigation, arguing about their knowing that a substantial amount of the value of the product was going to be based on infringement.
JUSTICE KENNEDY: But —
MR. TARANTO: Every —
JUSTICE KENNEDY: — but what you have — what you want to do is to say that unlawfully expropriated property can be used by the owner of the instrumentality as part of the startup capital for his product.
MR. TARANTO: I — well —
JUSTICE KENNEDY: And I — just from an economic standpoint and a legal standpoint, that sounds wrong to me.
MR. TARANTO: Well, I’m not entirely sure about that formulation. Sony clearly sold many more tapes because of the illicit activity of Library. Sony presumably sold more machines, maybe even priced them higher, because there was a group of people who wanted the machine for the illicit activity. The Apple iPod, in the 60 gigabit version, holds 15,000 songs. That’s —
JUSTICE KENNEDY: So you think that —
MR. TARANTO: — a thousand CDs.
JUSTICE KENNEDY: — unlawfully expropriated property can be a legitimate part of the startup capital.
MR. TARANTO: No, I — what I think is that, as a matter of general judicially formulated secondary copyright liability law, there is no better policy balance that the Court can strike, and that only Congress can make the judgements about what the industry-wide facts are. And I — let me pause there a minute — there are no industry-wide facts in this record. Every citation in the Petitioner’s brief about the magnitude of harm to the industry is extra-record citation. There are 26 billion…