Japanese Court's Reversal in File-Sharing Case is a Clear Win for Software Innovators

A Japanese appeals court yesterday reversed a lower court ruling against file-sharing software developer Isamu Kaneko related to his "Winny" program. This ruling is a departure from recent rulings in both the US and Sweden, and clearly demonstrates that Japan's courts have an eye toward fostering innovation rather than protecting the status quo on behalf of content owners.

The criminal proceeding against Kaneko turned on the issue of whether the Winny program "encouraged" file-sharing and copyright infringement. This approach is directly analogous to the idea of contributory infringement here in the U.S. The doctrine of contributory infringement basically goes like this: If you know that your actions/products/etc. are used for infringing activity and you intentionally induce or encourage people to participate in the activity or use the product, you are also liable for any infringement that they commit. The case law in this area has been developing for over two decades, but was codified in 2005 by the Supreme Court in the landmark MGM v. Grokster case. However, it is the 1984 Sony Betamax case that provides an escape. In that case, the Supreme Court said that a product is not designed for contributory infringement as long as it has significant non-infringing uses. Yesterday's ruling from the Japanese high court clearly recognizes the goal of Sony, which is the continued encouragement of technological innovation.

Worldwide, the big content companies have seemed to fear this encouragement of technological innovation in the area of file-sharing. Rather, they have attempted to place civil and criminal liability upon file sharers, software developers and tracking site hosts in order to cut off the supply of unauthorized copies of music, movies, software, etc. Big Content has seemingly ignored the tack whereby they would become participants in the technological foot race and lead the next iteration of development in order to protect their own content without resort to legislation. The reversal of Kaneko's conviction demonstrates to Japanese content providers that the courts of that country are not going to be as cooperative as some other courts in policing file-sharing related copyright infringement if it means stifling innovation. This ruling is a clear win for software developers in that country and should be a strong signal to Big Content that - at least in Japan - their next move must come on the technological front rather than the legislative or judicial approaches employed to this point.

RIAA's Bad Week

The Recording Industry Association of America hit a couple bumps this past week in its anti-file sharing litigation march. In two separate cases, the RIAA was ordered to pay $103,000 in legal fees to defendant Tanya Andersen and also learned that the judge in the Jammie Thomas case is leaning toward granting a new trial to the woman who has so far been the biggest loser in the RIAA law suits.

In Atlantic v. Andersen (Oregon)the RIAA had filed a John Doe suit based upon the discovery of files shared through a Kazaa user account having Andersen's IP address. Andersen denied any involvement and even produced her computer's hard drive for review. She also denied that her 7-year-old daughter, the only other person in the house, had shared music online. Nearly two years into the litigation, the RIAA voluntarily dismissed its case. Andersen then sought nearly $299,000 in legal fees and approximately $5,000 in costs. In a 33-page opinion, the court thoroughly investigated the number of hours expended and the rates charged, finally concluding that Andersen should be awarded $103,175 in fees and $4,659 in costs. The RIAA will likely object by the May 27 deadline. However, the cautionary tale may have some slowing effect on the RIAA's filing of John Doe suits.

In the infamous RIAA case against Jammie Thomas, the trial judge is considering granting a new trial to Thomas, who was previously found liable for copyright infringement and ordered to pay the RIAA $222,000. The judge has stated that he is leaning toward granting the new trial based on a faulty jury instruction, which told jurors that simply making files available for download constitutes infringement.

For Thomas, this may prove to be only a small victory. The fact is, even though the court has clarified that its jury instruction was wrong and that actual distribution is required, the RIAA may be able to prove actual distribution based solely on the downloading by its investigator, MediaSentry. In the end, Thomas may end up being found liable again. The bigger impact of this 180 by the court is that if the court vacates its earlier judgment, it removes the largest victory the RIAA has on the books to date - a victory that is certainly making people think twice about downloading music online without paying for it.

For more of my thoughts on this decision, see the E-Commerce Times story "RIAA's Legal Steamroller May Grind to a Halt.