Hollywood Strikes Back At Infringment
Proprietary Downloads After MGM v. Grokster — an interview with Jeremy Williams of Warner Bros. Entertainment Inc.
Andrew Zee | UC Davis School of Law
Posted Sunday, January 1, 2006
6 U.C. Davis Bus. L.J. 7 (2005)

Jeremy Williams is Senior Vice President and Deputy General Counsel of Warner Bros. Entertainment Inc. As head of the company's Intellectual Property Department, he works regularly on copyright, trademark and related intellectual property matters, including those involving legislation, litigation and production clearances. He has taught copyright and entertainment law at Franklin Pierce Law Center and at the University of Southern California Law School.

Q: Why do you think the problem of Internet piracy in the entertainment industry has become so widespread in the last ten years?

A: First of all, I think that intellectual property is hard for people to understand and until very recently I think people have basically been unaware of its existence. I have often put it this way when I've spoken to people: Everyone owns personal property. A fairly large number of people own or at least live in real property, but very, very few people own intellectual property. Almost everybody uses it, but they are aware of it as recordings and movies. They are not aware of it as property. Someone who has written a song has more of a sense of intellectual property than the average person. So you start out with a lack of awareness of what it is, a lack of awareness that it exists in most cases, and therefore people's activities with regards to it and their expectations with regards to it are very different than in the realm of personal property.

Now, you couple that with a technological change in which the reproduction and, even more important, the distribution of copyrighted works has become so easy, and it's understandable that people would start shipping intellectual property around the world, around the dorm, and around the country. There is only a nascent awareness that they are even exchanging property and they're doing so with an ease that is so great now, with a sense that "since I can do it so easily, it must be okay to do it." The Internet grew up in a world in which you get free stuff. If I want a free search, I go to Google and I put the name in and I get it. There's obviously a place for that as there has been on television. So if you put these three things together - the ability to distribute intellectual property and a lack of awareness and a sense of permissiveness - I think it's inevitable that things started out that way.

Q: When you talk about the "right to free stuff" do you think that consumers, once informed and made aware of intellectual property rights, would continue to reproduce and redistribute copyrighted material?

A: Well obviously we have to be careful when we talk about the "right" to free stuff and what people are making available for free. So the reason I can use Google for free is because Google has a business that lets me do that, and the same thing when I watch "ER" on NBC. But the fact of the matter is, and this requires education and awareness, that it is not free. It costs millions of dollars to make an episode of "ER," being paid for by advertising, as is Google. We have to make an effort to make people aware that these things aren't free.

Over time, if you combine the availability of legitimate works in the "new store" of the Internet with increased awareness, I think that legitimate product and the use of legitimate product is going to have its substantial success. It's not going to be 100%. It wasn't 100% in the old days either. But I think the market share of legitimately distributed works on the Internet is going to be rising. We're going to get a generation of people beyond this initial one of the Internet babies that is going to come into a different world where they find lots of great stuff in a much better, easier, and more reliable form. If I can get "Desperate Housewives" for 99 cents on my iPod, that's what I'm going to do.

Q: Will Hollywood eventually embrace online distribution of films as a viable means of distribution?

A: It's more than eventually. We're doing it now. We already have licensed movies to a couple of online services - Movielink and CinemaNow. We have announced "In2TV" - TV episodes to be available on AOL. What's going on behind the scenes is that we at this studio - and I have to imagine at others as well - we have been readying our libraries to make those libraries available. We all know how rapidly the capacity of servers has grown, and the ability to deliver has also grown. Whereas a few years ago, one could imagine an online service that was only capable of storing and delivering a limited number of movies, what you have now is a technological change that's enabled us to greatly expand that capability, plus an effort to clear our libraries for that purpose. You're going to see, almost immediately, great increases in the number of films and television shows online.

Not only in the sense of websites like Movielink, but we are already exploring using peer-to-peer services to enable delivery both in this country and in some foreign countries. I used the word "store" before. We want to put our goods in the stores that people are coming to. P2P is one of them. The studios are not against P2P distribution. We want it used as a great legitimate tool for delivering our works. We are actively engaged around the world in negotiating deals with Internet service providers, telecoms, and so forth for delivery in foreign countries. Our company has just undergone a major business reorganization plan that highlights digital distribution and tries to put it under one coordinated roof.

Q: Can you elaborate about the form that a studio-endorsed peer-to-peer service might take?

A: I can't elaborate about specifics for obvious reasons, one of which is that I'm not a technical expert. But one might imagine what would have happened if they started out that way. There's nothing wrong with someone going to a P2P technology, typing in "Harry Potter and the Sorcerer's Stone" and having a menu come up of legitimate, authorized copies. Or, to put it differently, that the copies that peers are sharing are legitimized. So ultimately to the customer it should look very similar. It's just that what's lying behind it is not people engaging in illegal distribution. The things that are available on people's shared drives are content that has been authorized to be available. We don't know the precise technological form that it will take, but it should be easy to use and transparent to the customer. But what's on there, what's available to get, are titles that have been authorized for that kind of distribution as opposed to titles that are not authorized. There's been a lot of talk about unsigned bands. The song that might be in my shared drive is there because that band says it's okay. I think you could say that we want that too. We just want it with titles that have been authorized for that purpose.

Q: To what degree does the new store of the Internet pose a challenge to the more traditional means of distributing movies?

A: I'm a lawyer and I won't pretend to be a business forecaster. I can answer generally in this way. We are a film production company, but we are first and foremost a distributor of films. We have a vast library. The vast majority of our works are already produced. Our goal - and our livelihood depends on achieving that goal - is to get as many of our works into the marketplace for people to enjoy, whether it's some old television show from the fifties or the latest Harry Potter movie.

So we look at all of these means of distribution, at least initially, as potentially supplementary. People are going to want things in different forms - people are going to want to go to the movies, people are going to want to watch them on DVDs, people are going to want to watch them on computers, people are going to want to take them on their iPods. I'm not a business forecaster and I don't have a crystal ball to say what the mix will look like five or ten years from now, but when we look at these different media, we want to use as many of them as are viable.

Q: Is there a reason why illegal downloading services that enabled infringing use beat the services enabling legal non-infringing uses to the marketplace? Were illegal downloading services recognizing a demand or were they simply a technological innovation that enabled that kind of usage before the demand arose?

A: Napster was a lightning innovation. Some people have been very critical of the recording industry for not moving quickly enough. I haven't been one of those. In the middle of 1998 when people were thinking about copyright laws in Washington, people were not thinking about Napster because it wasn't there. It was a technology that not only came into existence rapidly, but could spread very rapidly. I think it was a lightning in the bottle thing; I don't think people could have anticipated it. It's now been five or six years since then and you now can go on iTunes, or to the new Napster service, and hundreds of thousands of songs are available. When you think that that happened in five years, I don't think that's that slow.

Q: What was the reaction of you and your colleagues within the entertainment industry to the Supreme Court's decision in MGM v. Grokster[1]?

A: We thought it was a major victory for copyright owners. We think that that's true both on the technical legal level, and on the education level. Because you have the Supreme Court of the United States, in a nine to nothing decision, making it very clear that the intentional encouragement of illegal activity is not going to be tolerated by our legal system and should not be tolerated by it. It was a ruling that was not an attack on innovation. It was not an attack on legitimate businesses. It was an attack on illegitimate businesses that were profiting from other people's works and doing so intentionally. I think that it was both a legal victory and also a social educational victory.

On the legal side I think that the effect that you're going to see, and which we're seeing already, is that people who are bringing investors and capital to an enterprise in the Internet world are going to be encouraged by the decision to get into the legitimate marketplace. They will be encouraged to work with copyright owners and to work with other technology industries - consumer electronics, Internet technologies, and so forth. I think you're going to see more of a partnership and more constructive innovation growing out of it.

For those people who do not choose to be legitimate businesses - and I don't think there will be many people who are putting real capital into those businesses - they will know that under the Grokster case, plaintiffs have a very powerful tool to go after people who are in it for the infringement, or to take advantage of the infringement. For those people who don't want to do anything about preventing or limiting it and just want to make money from it, I think you're going to see some successful legal actions by plaintiffs. But quite frankly, I think one of the best things about Grokster may be that it will be preventative, that it will be a deterrent to that sort of behavior. Ideally, we'll have less litigation because people are doing the right thing in the first place. Grokster has created something of a clearer line between the right thing to do and the wrong thing to do.

Q: Given the way in which the court handed down its decision, could a file sharing company modify the way it markets and advertises its product and still end up being liable for infringement by its customers?

A: I've thought about that quite a bit since the case. I think it would be a mistake for people in business to assume that by cosmetic changes on their website that they will be able to engage in the same sort of activity. I think that prudent lawyers advising them will advise them that that's not a good choice. There are several places in the opinion where this is quite clear and repeated. The court emphasized that the standard was whether the defendant intended to encourage copyright infringement, whether it distributed its product with the object of promoting that - that is the actual phrase. And, in several places, the court said it specifically does not matter whether the defendant communicated that encouragement to the ultimate users. Now that communication to the ultimate user is a major piece of evidence - maybe a dispositive piece of evidence - that they intended to infringe, but it's not the only piece of evidence. The court cited internal memoranda as evidence of an intent to infringe.

I think what the Supreme Court created in the Grokster case was an intent standard and not an encouragement standard per se. Simply having nice things on your website that say "Do Not Infringe Copyright" when there is other evidence that your real intent is to take advantage of copyright infringement, I don't think that's going to work. And I think good lawyers will advise their clients that it's not going to work. Aside from good lawyers, good judges also have a way of seeing through cosmetic changes.

Q: Is there a reason why there have not been examples made of infringing individuals that might deter such use in the mind of the end user himself?

A: Well, I think there have been some. They arise from the series of lawsuits which were brought under the auspices of the RIAA and the MPAA. I think that this series of lawsuits has made at least a strong start. It has greatly increased awareness of the very thing we were talking about in the beginning of the discussion - an awareness that there are intellectual property rights involved, and that the activity is illegal. There has been a sharp increase in awareness. That doesn't mean that the activity has stopped, but it's a step in the process.

We have been working with college administrators to try to develop within the campus community programs that are going to increase awareness and also contain some disciplinary action. We've certainly found that many of the college administrators that we've been in contact with, including college presidents themselves, understand that students are engaging in activity that has been held to be a violation of federal law. And it is not the policy of most American universities that that's okay. So we have found a cooperative spirit. But it's part of a program. It's not a bullet. It's designed to be part of an educational program, an awareness program. We're hopeful that over time, the behavioral norm will be affected, and people will see that they're engaging in illegal activity. And, we're hopeful that people will not just see the activity as illegal because it's illegal, but see the activity as illegal because there's a reason for it to be illegal.

Q: If you were to address that hypothetical college student end user, how would you explain why that activity is illegal?

A: One thing I'd like to do in a college class is to have the students actually watch the end credits of a movie. Instead of getting up and heading to the parking lot, let's actually sit and watch all of that stuff go by. Those are all daughters, fathers, mothers, brothers, and sisters earning a living. Movies don't grow in cans any more than asparagus does. This method is not going to appeal to everybody, but I think it's really important that people understand that jobs are on the line, investment is on the line, and hard work is on the line.

Also, I would encourage people to think about their own property. If you were in a band and you were writing songs, you might make the choice to distribute your songs on a peer-to-peer network for free because you've made the decision that that's what's in the interests of your band and the songs that you've written. But you're not going to feel that way when you don't want that to happen and people are doing that in spite of you. I think people just have to think a little bit more about the golden rule and how they would feel in similar circumstances. I'm not claiming that it's automatic or easy.

The other key element is that there are all kinds of alternatives that are going to be legitimate and they're going to be better and more reliable. When you think you're getting a movie, you are going to get a movie. And, it's going to play right, and it's going to look good, and it's not going to have viruses, and it's going to be cheap. It's pretty hard in the modern world to argue with paying 99 cents to permanently own a piece of music. Can you buy a pack of chewing gum for 99 cents?

Q: Can you explain why the Grokster decision is not a decision against technological innovation?

A: I'll answer that in two different respects: first, on the face of the decision itself, and second, what the standard it creates does. It is focused on the illegal use of technological innovation. That's clearly why you've got nine votes. This was a case about actions that were intended to encourage illegal activity. In that sense, you could say that it's not about innovation at all. Why is that different in this area than it would be in many other areas of the law?

More importantly, in addressing what you may be really getting at, is the effect of the decision and the standard that it creates. Some people, including the defendants, have characterized the decision as anti-innovation. I don't believe that it is. It seems to me that all kinds of innovators are always taking into account a variety of factors in creating technologies. There are technical factors that dictate that one choice is better than another. There are legal factors that are usually there to prevent causing harm to consumers, or to property owners, or to investors.

Compliance with various kinds of laws is expected when people are engaged in creating technologies and innovating. We expect it of people who are in the oil industry. There are environmental laws they are expected to comply with. I don't see why this is fundamentally different if one believes - as we strongly do - that copyright laws serve a valuable purpose in stimulating innovation and creativity in providing works for people to enjoy. Taking into account copyright laws and the prevention of infringement as a factor when you design products and design technology seems reasonable and very unlikely to destroy innovation. The very people that are doing the innovating rely on patent law protection to protect their investments, indeed to obtain capital in the first place. Now, why should that stop at the door of the guy who creates the product? Just as that innovator must take into account other patents in innovating, a field that involves the distribution of copyrighted works must take into account the copyright laws. That seems very reasonable, very mainstream, and very un-innovative as a principle of law.

Q: Is there anything else that you'd like to address within the decision specifically?

A: I'll close with one thought. People sometimes forget in the debate, and I think this happens a lot among people like the defendants in the case, how fundamentally involved the film industry is in technological innovation. We are always looking for new ways to get our films in front of customers. That's the only thing we do. You've heard people accuse us of locking up our works. Why would a distributor of movies want to lock up works? We make zero money from locking up works. Our goal is to have as many works as we can out there, and we think that technological innovation is certainly one of the keys to doing that.

[1] MGM Studios Inc. v. Grokster, Ltd., 125 S. Ct. 2764 (2005).