A new U.S. court decision puts big DOJ criminal copyright prosecutions in jeopardy

Last week, Judge Richard Posner of the U.S. Court of Appeals for the Seventh Circuit issued an opinion in Flava Works v. Gunter, a copyright case involving myVidster, a “social video bookmarking” platform that allows users to embed videos — including videos that infringe copyrights — on their personal web pages.  Plaintiff, a producer of porn videos aimed at gay, black men, sued myVidster for contributing to copyright infringement. In a lengthy but lively opinion, Judge Posner rejected those claims, holding that allowing users to link to and embed infringing videos could not lead to liability for myVidster.

This is a big decision. Not least because it throws into jeopardy the U.S. government’s criminal copyright prosecutions in the Megaupload, and O’Dwyer cases, which we’ve written about previously here. The O’Dwyer case in particular is based on the premise that providing links to infringing material is criminal.  But in the Flava Works case, Judge Posner held that that conduct cannot even give rise to civil liability. And, as Jennifer Granick (pictured at left), the Director of Civil Liberties at Stanford’s Center for Internet and Society, explains in this post, the criminal charges against U.K. student Richard O’Dwyer shouldn’t survive (nor, for different reasons, those against Megaupload and its CEO, Kim Dotcom). Granick should know what she’s talking about. She’s one of very few people with deep expertise in both copyright (in her role at CIS she has, among other things, helped litigate a bunch of important copyright cases) and criminal defense law (she spent more than a decade doing that).
All of this illustrates a point that we emphasize in The Knockoff Economy: there are very tight limits to what copyright law and copyright lawsuits can do to curb illegal copies. Industries that face knockoffs are going to have to find other ways to cope with them — and perhaps even profit from them.  And they can.

Is the U.S. DOJ pushing its luck with aggressive criminal copyright prosecutions?

Our book, The Knockoff Economy, argues that in a lot of instances innovation and creativity can co-exist quite nicely with imitation — even when it takes the form of copyright piracy. But of course not everyone agrees with us. And lately the U.S. government has been pushing very hard to criminally prosecute copyright infringers. Back in January, the DOJ indicted the principals of Megaupload, a big filesharing service based in New Zealand and Hong Kong (the pic above is of Megaupload’s Kim Dotcom speaking to the press after being released on bail).  And in May 2011, the DOJ indicted U.K. student Richard O’Dwyer, who ran a search engine, TVShack.com, that provided links to pirated American TV programs and films. But in the end, these prosecutions will most likely do little to curb piracy.  In fact, it’s more likely they will come to represent the limits of criminal copyright enforcement.

Why?  In the Megaupload case, a New Zealand High Court judge recently ruled that the search warrant used to seize assets and data from the Aukland home of Megaupload impresario Kim Dotcom was illegally obtained, and the materials wrongfully taken. And the colorful and articulate Kim Dotcom himself is quickly becoming a New Zealand folk hero, which threatens to complicate the DOJ’s bid to have the New Zealand government extradite him to the U.S.  Worse, even if the DOJ succeeds in bringing Kim Dotcom to the U.S., it’s far from clear that they can convict him in federal court — as Stanford Law School criminal law specialist Jennifer Granick has pointed out, the government’s theory of criminal liability in the Megaupload case has some real problems.

The DOJ faces even bigger difficulties in the O’Dwyer case. The U.K.’s Home Office has just ruled that it will not block O’Dwyer’s extradition, but O’Dwyer will continue to pursue relief in the U.K. courts. And it’s possible that he may prevail. His website did not host infringing content, but merely provided links, which is something that U.K. courts have already ruled is legal. O’Dwyer cannot properly be extradited to the U.S. for engaging on U.K. soil in an activity that is not a crime in the U.K. This is true especially because there are precious few links between O’Dwyer’s conduct and the U.S. that would justify the DOJ’s extraterritorial assertion of criminal jurisdiction. The sole link asserting in the U.S. indictment is that Verisign, the official registrar of all .com sites, is located in the U.S. Which would mean that the United States government is claiming worldwide criminal jurisdiction over intellectual property violations committed using any .com website. That’s a pretty big claim. There just might be some pushback.

The broader point is this: criminal copyright enforcement is expensive and uncertain, and the difficulties are magnified enormously where, as in the Megaupload and O’Dwyer cases, the allegedly infringing conduct occurs abroad. For those reasons, the DOJ is unlikely ever to devote enough resources to criminal copyright prosecution to put a serious dent in the rate of copyright piracy. So it’s time for people to start thinking about how creativity and innovation can thrive in a world where there is piracy — even if there’s a lot of it.  And that’s what The Knockoff Economy is about.