On Grokster and Brand X

The Supreme Court recently decided to review two cases with important Internet and intellectual property law implications, and it’s worth talking about both of them at the same time.

The case that’s better known in the popular press is MGM v. Grokster, in which the Ninth Circuit ruled that the developers of the Grokster file sharing software were not liable for copyright infringement being committed by Grokster users. The media spin has been that the Supreme Court will decide whether or not music and movie file sharing is legal, but that’s not quite correct. Back to that in a moment.

The related case, which is well-known only in the specialized legal circles that deal with telecommunications law, is Brand X Internet Services v. FCC. In Brand X, the Ninth Circuit (again!) ruled that cable broadband Internet service should be classified as part “information service” and part “telecommunications service” under the Telecommunications Act of 1996. The court disagreed with the FCC, which took the position that cable broadband should be treated as an “information service.” The court agreed with the FCC that cable broadband does not amount to a “cable service.” That’s a pretty obscure and apparently insignificant distinction. But I suspect that Grokster and Brand X may have a lot to do with one another.

The conceptual connection here is this. Both cases have to do with how the law deals with communications networks, and specifically with who gets to build them, and who gets to set the rules for how they’re built. The lower court in Grokster ruled that Grokster developers weren’t liable for user copyright infringement because the Grokster network is constructed using “genuine” p2p architecture. Unlike the original Napster, Grokster doesn’t use a set of central servers to manage and match upload and download requests. So, in legal terms Grokster didn’t (and doesn’t) “know” about infringing file transfers at the time they happen, and because of that lack of “knowledge,” it can’t control (or stop) allegedly infringing transfers. Lack of knowledge, and lack of control, means lack of liability.

The key here is the architecture itself. The court is arguing, in effect, that decisions about the design of the Grokster network are, and should be, left to the Grokster developers. If there is copyright infringement going on, it’s up to copyright owners to track miscreant users and pursue remedies directly against them. File sharing may still be unlawful, but its lawfulness isn’t really Grokster’s problem.

In Brand X, the distinction among “cable service,” “information service,” and “telecommunications service” comes down to this. Who gets to regulate the design of cable broadband networks, and how extensively should those designs be regulated? If cable broadband is a “cable service,” then local governments have a large say-so, just as franchising authorities in cities and towns across the country regulate local cable TV operations. This might make sense if we thought that local governments could and should promote competition among cable broadband providers (that is, you’d have one cable to your house, but you could still choose your broadband ISP). If cable broadband is a “telecommunications service,” then local governments have virtually no regulatory role, but cable broadband would be regulated more or less as a “common carrier,” like the phone company. This means more intrusive regulation of rates and services at the federal (FCC) level, and it would (in theory) limit the power of the cable ISP to “discriminate” among different kinds of “content” on the pipes. Your phone company can’t charge you more for talking about certain kinds of things on the phone, and it can’t ban you altogether from using the phone for certain activities. Regulation of cable broadband as a “telecommunications service” would go down the same path. The third option, and the position taken by the FCC in this case, is to treat cable broadband as an “information service,” which means federal regulation, not state or local regulation, but without the heavy regulatory framework that comes with “telecommunications service” classification. This means that cable ISPs have much more flexibility in network design and in network administration.

From a telecommunications law standpoint, then, the FCC’s position would treat cable broadband networks much like the court in Grokster would treat p2p networks from a copyright law standpoint, and it’s possible for the Supreme Court to decide the cases using what amounts to a single principle: How the network is designed, and how it is administered, is largely a question for the developer itself, and not a question for courts or administrative agencies. That means reversing the lower court in Brand X, and affirming in Grokster.

Having written that, I’m not certain (at least not yet) that this is the right result. Both cases raise many additional issues, and students and scholars of communications networks will note that I haven’t invoked or applied “e2e,” or “layers” analysis. (For a useful discussion of the distinction, as applied to legal problems, take a look at Lawrence Solum’s recent s paper.) E2E and the layers principle each might lead to a different analysis. But however the cases should come out, and however they do come out, it seems right to me to think of them as parts of a single problem.

UPDATE: Law dean Rod Smolla has a well-written and thoughtful essay posted at Slate.com that illustrates the vastly different ways that one can talk about the Grokster case.