Copyright Disputes and Resolutions to P2P File-Swapping Application

© Springer-Verlag Berlin Heidelberg 2015
Yimeei Guo (ed.)Research on Selected China’s Legal Issues of E-Business10.1007/978-3-662-44542-6_17

17. Copyright Disputes and Resolutions to P2P File-Swapping Application

Yimeei Guo  and Ying Luo1

Management Science Department, Xiamen University, Xiamen, 361005, China



Yimeei Guo


Because P2P networks enable unauthorized file-sharing, they are currently a significant source of copyright-infringement concerns. By doing case studies, this article wants to explore and analyze the potential legal liability assumed by different parties involved owing to unauthorized file-swapping in various jurisdictions, mainly in the USA and EU. Then, it puts forward some resolutions to the P2P copyright-infringement disputes. Finally, this article presents its conclusion with the hope to achieve the goal of triple wins of the copyright holders, P2P service providers, and users as well.

P2PFile-swappingCopyright infringementResolutions

17.1 Introduction

Peer-to-peer (P2P) networks allow individual computers to share files on the Internet. The original P2P networks were administered by a central server, which managed access to the files available on the network. Users who sent a search request to the central server for a particular file, such as a music or movie track, would receive a list of available files and their location on the P2P network. The user would then download the file directly from one of the individual computers connected to the network.

Current P2P networks, in contrast, operate in a decentralized fashion—that is, without a central server. The software that connects each computer on the network conducts the search-and-retrieval process. When a user searches for a file, the request is transmitted sequentially to individual computers connected to the P2P network. The responses from each computer are then sent to the requester, who receives a list of files and locations available for downloading.

Because P2P networks enable unauthorized file-sharing, they are currently a significant source of copyright-infringement concerns. Eventually, however, P2P technology is expected to make the Internet less vulnerable to disruption and to allow greater efficiency in transferring data and information online—for example, by facilitating collaboration among a company’s geographically dispersed workers or by reducing the cost of voice calling.

In contrast, for example, according to Screen Digest, the overall European music market has been in decline—losing 22 % of its total value since 2001. Also, IFPI said overall recorded music sales (physical and digital) fell by 3 % in 2005. The persistence and magnitude of those revenue declines are exceptional in recent history and are regularly attributed to unauthorized file-sharing across P2P systems.

The popularity of music file-swapping shows the ease with which copyrighted material can be obtained and redistributed on the Internet today. The rate of data transfer that the Internet allows currently makes the distribution of movie-length video files much more time-consuming than that of audio files; hence, illicit sharing is less common for video content than for audio files.

Nevertheless, movie and software companies (especially computer-game makers) are increasingly worried that technological advances in digital compression, transmission, and file-sharing will soon lead to piracy of their copyrighted content. According to The Motion Picture Association of America, the number of Web sites offering pirated movies increased from 143,000 in 2002 to approximately 200,000 by the end of 2003. In March 2004, video files accounted for 31.9 % of bytes transmitted over P2P networks, up from 16.4 % in March 2003.

By doing case study, this article wants to explore and analyze the potential legal liability assumed by different parties owing to unauthorized file-swapping in various jurisdictions, mainly in the USA and European Union. Then, it puts forward some resolutions to the P2P copyright disputes such as licensing schemes and digital rights management (DRM). Finally, this article makes its conclusion with the hope to achieve the goal of triple wins of the copyright holders, P2P service providers and users (i.e., consumers) as well.

17.2 Legal Action Against Companies Providing P2P Software or P2P File-Sharing Sites

17.2.1 An Overview

Initially, lawsuits were brought by record companies against P2P file-sharing sites, i.e., in a legal action against Napster Inc., in 2001, the first centralized MP3 file-sharing network. A US federal court required Napster to exclude unauthorized music files from its directory, where it had centrally coordinated distribution of music files among users. The court considered Napster to be liable for contributory copyright infringement, because Napster had actual knowledge of infringing file-sharing made possible by its software, and for vicarious copyright infringement because Napster profited financially from the infringement and had the right and ability to supervise and block infringing conduct. Facing the requirement to filter infringing files out of its network, Napster closed its operations in 2001, before reemerging as Napster 2.0, a legal music distribution service.

Similarly, in the case of Re Aimster, the US Court of Appeals for the 7th Circuit found the Aimster P2P network liable for contributory infringement, because Aimster had knowledge of the infringing activity. While recognizing that it was possible that the Aimster network could be used for non-infringing uses, the 7th Circuit seemed to find particularly important the fact that the Aimster software tutorial gives as its only examples of file-sharing the sharing of copyrighted music, including copyrighted music that the recording industry had notified Aimster was being infringed by its users.

Copyright holders have also successfully taken legal action against file-trading networks such as Audiogalaxy and Scour, to address unauthorized file-sharing activities. Moreover, a Japanese case was brought by the Japanese Society for Rights of Authors, Composers and Publishers (JASRAC) and 19 record companies against MMO Japan, a P2P network that ran a local version of the “File Rogue” file-sharing software which, like Napster, stored information about its music files on a central server. Other cases have been settled out of court (e.g., the case of iMesh) in 2004. So far, there have been several litigations involving P2P network in China including two guilty judgments against Kuro separately in Taiwan and Mainland China in 2005 and 2006 and a not guilty one for ezPeer in Taiwan in 2005, whereas the Chinese presiding authority has continuously strengthened criminal judicature protection of intellectual property.

In addition, on November 30, 2004, a Brussels Court of First Instance has ruled that Internet provider Tiscali should disconnect customers if they violate copyrights and block the access for all customers to Web sites offering file-sharing programs. The case was instituted by the Belgian Society of Authors, Composers and Publishers (SABAM) on June 24, 2004 with an appeal to consideration 59 of the European Copyright Directive (2001/29/EC).

However, legal actions for copyright infringement have proven more difficult to sustain against decentralized P2P platforms, where shared content is said not to be physically routed via centralized network computers of firms that provide P2P facilities. While Napster provided centralized P2P networks, it was quickly followed by second-generation file-sharing networks such as Gnutella, KaZaA, Morpheus, and Grokster; all designed with a decentralized structure thereby allowing users to connect directly with each other to trade files. While Napster offered a list of files on a centralized server, Gnutella operates via a network of computers that each maintains a separate list of files available on only that computer. Finally, KaZaA utilizes a “Fast Track” technology (also used by Morpheus and Grokster) to operate a super node system, in which a number of computers operate as indexing servers.

In 2002, in a case brought by the author’s collecting society BUMA/STEMRA, a Dutch Appeals Court held that KaZaA was not liable for copyright infringement committed by users who used its software to trade unauthorized music files. The Dutch Supreme Court held that makers of file-sharing software KaZaA were not liable for copyright infringement, because the software merely provided the means for accessing copyright protected works. In addition, KaZaA’s software was also used for legal purposes, such as sharing works that were authorized or were in the public domain.

17.2.2 Lawsuits Against File-sharing Networks Grokster and Morpheus

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