DIGITAL RIGHTS MANAGEMENT Mark A. Lemley & R. Anthony Reese, Reducing Digital Copyright Infringement Without Restricting Innovation, 56 STAN. L. REV. 1345 (2004) In the traditional economics of deterrence, raising the sanction is a simple matter of increasing the legislated or judicially imposed penalty for a particular offense. With digital copyright infringement, things are a bit different. Copyright law already includes substantial supracompensatory sanctions in both civil and criminal law. Any copyright infringer—even one who acts innocently—can be held liable for statutory damages in lieu of actual damages at the plaintiff’s sole election. Those statutory damages normally range from $750 to $30,000 per work copied at the factfinder’s discretion. The court has the discretion to lower the amount to $200 per work for innocent infringers and to raise it to $150,000 per work for willful infringers. These damage amounts reflect recent increases by Congress and dealing with large-scale infringement over p2p networks offers no reason to raise these damage amounts further. Because the most likely targets of a civil lawsuit in the p2p context are the “keystone” uploaders, who often have several hundred different songs on their computer, existing statutory damages can easily run into the tens of millions of dollars per individual. This is likely to be an ample deterrent for the individuals who most often hold keystone positions on p2p networks. Indeed, it’s arguably far too high already to do much good. College students do not have tens of millions of dollars to lose, and conversely those who do have that kind of money do not tend to spend their time trading music files on p2p networks. But civil suits with potentially enormous statutory damages may deter uploading because college students (or more likely the parents of teenagers) will fear bankruptcy. Indeed, the RIAA may have been able to eliminate some file sharing merely by threatening to sue some p2p users, and more when it actually filed a few hundred suits. But if so, existing statutory damages will be more than sufficient to achieve that deterrence. College students are perhaps even more likely to be deterred by the prospect of going to jail. Copyright law includes rather substantial criminal penalties, including prison time, for willful copyright infringement. Under the 1976 Act as originally enacted, copyright infringement was a criminal offense only if the defendant acted willfully and for purposes of commercial advantage or financial gain. Congress expanded criminal penalties rather substantially in the No Electronic Theft Act of 1997, however. The law now provides that willful infringers are criminally liable either if they act for financial gain, a term now defined to include the expectation that others will reciprocate by providing copies of other works, or if they reproduce or distribute works worth more than $1000 retail value in any six-month period. This latter provision is likely to reach most keystone uploaders on a p2p network, so long as they act willfully. As with civil penalties, it doesn’t seem that the existing criminal penalties need to be augmented. The reason the already substantial civil and criminal penalties have only begun to have a deterrent effect is that for the most part they have not yet seriously been pursued against alleged direct infringers on p2p networks. As Stuart Green put it, “if the state is serious about enforcing intellectual property laws, it cannot simply expect to impose harsh criminal sanctions, stand back, and wait for compliance.” Only in September 2003 did sound recording copyright owners begin to pursue civil infringement suits against individual p2p uploaders. In this subpart, therefore, we consider whether a small number of high-profile civil suits against, or criminal prosecutions of, file traders could substantially reduce widespread online infringement. The prospect of spending several years in prison or owing millions of dollars in damages is likely to serve as a substantial deterrent to digital copyright infringement by end users. The more difficult empirical question is how many people the government must prosecute, or copyright owners must sue, in order to create a credible deterrent to illegal activity. We think the number of cases may actually beISSUES IN IT LAW 2relatively small, and indeed the empirical evidence to date offers some support for that view. There are several reasons for this. First, while the number of users of p2p networks such as Morpheus and (before the injunction) Napster is massive, the overwhelming majority of those users engage only in downloading. Indeed, by one estimate, 3% of the users of a p2p network upload 97% of the files on that network. These high-volume uploaders also seem to be the users most likely engaged in uploading illegal content, rather than providing access to legal files. They are easy to identify, both because they will repeatedly appear in content searches and because many run so-called “supernodes” that facilitate fast downloads. Reducing infringement on a p2p network doesn’t require targeting downloaders, who may in any event have a legitimate reason for downloading some copyrighted content. It just requires targeting uploaders, and in particular the much smaller number of high-volume uploaders. If there are 3 million users logged onto Morpheus at any one time, perhaps 90,000 of them are high-volume uploaders. Second, many high-volume uploaders are likely to be easily deterred. They are not paid for uploading files and indeed contribute substantial bandwidth and perhaps time on a voluntary basis in order to make files available to others. They are persuaded to do so in part because the p2p community inculcates a “norm” of sharing, though the fact that most people do not upload indicates that that norm is not a particularly strong one in the community at large. But it is possible to participate in the p2p system without uploading, and the threat of bankrupting civil suits or criminal prosecution may induce a substantial number of high-volume uploaders to become passive downloaders instead. This is particularly true with criminal prosecution because the sort of individuals who tend to be high-volume uploaders seem likely to fear jail more than the average criminal. Willful digital copyright infringement over p2p networks is a crime apparently committed in
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