LEGAL CONSIDERATIONS ON PEER-TO-PEER FILE SHARING

Introduction

Aaron Schwartz, a college student from MIT, tried to download almost all the research
articles from JSTOR and put it on the public domain. The reason for such initiative was that
he felt deeply about how the information was commercialised by big capitalist business in
their blind race of earning profits and how such a race was making it difficult for the people
to access research materials owing to its expensive prices. Many of us may think that what he
did was commendable but the law authorities of US government had a different opinion in
mind. Robinhood might have been successful in the medieval century but thats definitely not
the case in the modern version of the Robinhood story in this modern, industrialised world
where all that matters is profit. Aaron Schwartz was charged with a million dollar fine plus a
jail term for 35 years under the laws of U.S. It was a lethal blow to him to which he
succumbed and committed suicide. 1

Lets look into why such laws are made in order to analyse how justifiable the authorities
were in charging him with such a harsh criminal sanctions. Such laws are there to protect the
business interests of copyright holder because, as the theory goes, the profit which they earn
from getting exclusive rights over the distribution and sale of copyright goods(limited
monopoly rights) gives them an incentive to create more and more and thus creating a cycle
that keeps adding to the public value.2 But here is one thing that one needs to remember that
rewarding the copyright holder is not a primary aim but a subsidiary aim to promote the
ultimate objective of promoting creativity and to maintain access to information in the public
domain thus adding to the public domain.3

1 Jennifer Chan, To Honour Aaron Schwartz, Let Knowledge Go Free (October 11th, 2015),
http://www.northwestern.edu/newscenter/stories/2013/02/opinion-usnwr-
chanswartz.html#sthash.mJIrlK1W.dp/

2 ROBERT P. MERGES, JUSTIFYING INTELLECTUAL PROPERTY 31(Ist ed. 2011).

3 See 347 U.S. 201, 219 (I954) Mazer v. Stein, 422 U.S. 151 (1975), Twentieth Century
Music v. Aiken, 499 U.S. 340 (1991) Feist v. Rural
This research paper argues that peer-to-peer file sharing not only helps in maintaining the
ultimate objective of the Copyright law but as counter-intuitive it may seem but it also helps
the business interests of the copyright holder. Despite this the researcher argues that when
dealing with the question of legalisation of P2P sharing emphasis should be more on the
ultimate objective of the copyright law and not the subsidiary aim.

The researcher further argues that, even if assuming the merits of prosecuting file-sharers,
such regulation is actually unworkable because of the fact that it is virtually impossible to
prevent file-sharing and the government would achieve little if tries to drain its economic
resources on regulating such phenomena.4

Core Analysis

Peer-to-Peer File Sharing and the perceptions (misconceived) about it

Let me seize the opportunity to give a very basic idea of what actually is Peer-to-Peer file
sharing. Crudely put, Peer-to-Peer file sharing is a mechanism to share files among each other
that are connected to a network. Each computer in a network files and acts as a server and
has equal responsibility for providing information.5 The popular examples of peer-to-peer file
sharing are Bit Torrent, The Pirate Bay etc. The advantage of using such services is that its a
handy method to share large files with each other which a convention Client-Server method
cant provide. One can share personal videos and sophisticated and advanced games to each
other without any kind of hassles.

It is found by the industry that such method is often a platform for sharing unauthorized
copyrighted materials that leads to a significant loss of revenues to the industry, according to
most of the industrys voice. It is disturbing for the big businesses that include publishers,
production houses, recording houses etc. to see that many of its copyrighted materials are
getting distributed without them getting any share in the revenues. And thats why we see a
spate of law-suits forcing such services that provide peer-to-peer file sharing to shut down its

4See Internet Pirates will always Win(August 4 th, 2012),

http://www.nytimes.com/2012/08/05/sunday-review/internet-pirates-will-always-win.html?
_r=0

5 http://www.bbc.co.uk/education/guides/zh4whyc/revision/7
operations. One of the most controversial casualties of such law-suits was Napster which had
to shut down its operation because of the law-suit which it lost

It is necessary to understand how they are getting held liable for copyright infringement. It is
commonly acknowledged that peer-to-peer file sharing in itself is not an illegal activity.6 It
can be used entirely for legal purposes within the limitations of Copyright Act and that is the
sheer advantage of it. Such mechanism gives a platform that helps in sharing the information
and promotes freedom of speech and expression a tenet vital to any democratic country.
However, it is beyond dispute that such platform is also used to distributed unauthorized
materials among the peers who are connected to the network. This happens particularly
among the university students. Liabilities in such case can be divided into two parts: Firstly,
the primary liability of the end-users who directly infringes the copyright by sharing,
distributing the resources without the authorization of the copyright holder and there are
secondary infringing group, liable for contributory infringement or vicarious liability, who
provides the platform of such file sharing tool. There is much contestation going on as to
when they should be held liable but that is beyond the scope of the research paper.7

What is more important is that a continuous attempt has been made to suppress any kind of
peer-to-peer file sharing through legal suits or extra-judicial measures taken by the copyright
holders. It is done by perpetuating an illusory discourse that copying is stealing, a discourse
that is repeated enough to make it an unquestionable truth. It was prudent for them to present
unauthorized sharing as theft in order to invoke moral condemnation from the public of such
acts little realising or deliberately overlooking the fact that such distribution is non-
excludable and non-rivalrous unlike the theft case. So, for example, when I steal a car from
someone I deny him the possession of it but when I share a book of someone online that
person can still use and sell the book with as much comfort. In fact, one of the major cases
Downling v. United States affirmed the view that copying is not stealing.

HURTING YOUR BUSINESS INTEREST, REALLY?

6 MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

7 Pirate Bay sinking ship for Hollywood(February 27 th, 2012)

http://spicyip.com/2009/02/pirate-bay-sinking-ship-for-hollywood.html. See the case Sony
Corporation v.Universal Studio(464 U.S. 417 (1984), Also see A&M Records v.
Napster( 239 F.3d 1004 (2001).
While there are lot of self-serving reports made by the various interest groups to establish the
harm caused by such copyright infringement8 but the truth is that it is actually a difficult task
to establish the harm. There is no conclusive set of data as to how much economic harm does
the copyright infringement cause to the various stakeholders. The method to measure harm
adopted by the vested interests is that they take it as a loss every unauthorised copy made of
the original. But the problem with this is that it makes a patently untenable assumption that
the people who are enjoying the unauthorised copy must have bought the original copy in the
absence of unauthorised copy.9 So, for example, a person from a lower-middle class used to
download Economist magazine from the Utorrent but it does not mean that in the absence of
Utorrent he is definitely going to buy it because of the expensive price of the magazine which
a lower-middle class person cant afford to buy.

There was a landmark studies done by the two economists, whose conclusion was further
supported and corroborated by other economists, which by using complex mathematical
formulas have concluded that spikes in illegal downloading had no discernible effect on the
sale and even in the worst case it takes 5000 illegal downloads to reduce a sale of single
copy.10

On the other hand, there are successful examples of business that by endorsing the peer-to-
peer file sharing are making gains and profits in their business. This may result from an
exposure effect, where advertising or sampling from unauthorized copies induces sales of
legitimate copies.11 Or it may get encouraged by the network effect because of the reliance
placed by the users on the number of individuals who uses the goods. 12 So, the creator of
very popular TV show said that piracy has helped the show to become so popular among the

8 See http://www.riaa.com/physicalpiracy.php?content_selector=piracy_details_online.

9 DAVID LIEBERMAN(2002), How dangerous is pirates? Music industry blames dying sales on copying, USA
TODAY.

10 http://www.nytimes.com/2004/04/05/technology/05music.html

11 [1957] A.C. 602, Board of Trade v. Owen.

12 Id.
masses and it helps the show to establish its brand. 13 Take another example of a band called
Radioband, after the release of its one of the albums it allowed the user to pay according to
their wishes. More than 2.3 million times it was downloaded only on BitTorrent within the 24
days of its release. It may seem like its a really huge loss for the band but the truth is
otherwise. According to its publisher, the album has been bought more than 3 million times
and the band also generated the largest chunk of digital income than ever before when it did
not use to adopt this scheme. One can also look at how Apple has exploited this P2P file
sharing in order to increase its profits.14

What actually harms: Strict Copyright Infringement Laws or P2P file sharing?

As already discussed, rewarding the author is not considered as a primary aim but as a
subsidiary aim to promote the ultimate objective of promoting creativity and to maintain
access to information in the public domain.15 Lets see who take the advantages of the present
copyright regime. It is found that it is not even the author/creator of the content but the
copyright holder who exploits the most advantages of the copyright regime. Let me describe
how the system of knowledge production and knowledge exploitation work in an academic
setting.

Most of the research materials of academic journals like JSTOR, Esenvier come from the
academic researchers like professor, students etc and most of them they get are given for free.
Why do the academic scholars give their material away for free? The reason behind this is
two-fold: Firstly, the mores of the profession dictates that the faculty members and students
should participate in the spreading and dissemination of knowledge and secondly there is an
integrated process in the academia where promotion and tenure depends on the production
and publication of the scholarly articles by the faculty members. Same goes for the students
who write and publish their articles mostly because that will help them get good jobs.

13 Mike Masnick, MPAA INSISTS TV PIRACY IS S1O HARMFUL, BREAKING BAD CREATOR EXPLAINS HOW
PIRACY HELPED (October 10, 2015), https://www.techdirt.com/articles/20131018/14114524930/as-mpaa-insists-
tv-piracy-is-so-harmful-breaking-bad-creator-explains-how-piracy-helped.shtml.

14 See http://www.economist.com/node/4492917?
zid=291&ah=906e69ad01d2ee51960100b7fa502595.

15 Supra, note 3.
What academic journals do with such scholarly articles is that the they put a monopolistic
price on such research articles in the name of creating incentives for creativity and production
and then sell the same articles to the same class who have generated such content. According
to a report by UC San Diego libraries, 65 percent of the total budget devoted to academics in
a university goes out to fill the pockets of the owners of JSTOR and other databases in order
to access such resources.16 This kind of business model is present in almost all the industries
wherein the profits are exploited by big capitalist businesses instead of the creators who
generate the content.

How much it is justifiable for services like JSTOR to earn such a huge profit? The situation
reminds me of a character Shylock in the celebrated novel of Shakespeare Merchant of
Venice who earn huge load of profits by lending money and in order to assure the return of
money he often takes the pound of flesh of human-being as collateral. 17 There is no one to
protest for he is the only one who can lend money to the poor borrower. He occupies a unique
and essential position in the essential market of financing. Similar is the situation of academic
publishers like JSTOR and Elsevier. Even in the area of academic publishing three dominant
giants take 42 percent share of the market having almost an oligopoly-like situation. It is
found by many Economics report that low-scale publisher who wants to challenge their
domination often have to operate at a very low level of profit or at break-even point. 18 What
these giants, which already been explained, is to act like middle-man acquiring resources at
almost negligible cost from the academicians and then charge a gargantuan fee of the
materials from them only. Even though they add nothing to the economy they acquire huge
profits, often more than 50 percent of the share of revenues of the entire academic publishing.
19
But there is no one to protest to for they acquire a unique position like Shylock. It is also
found that they lobby, successfully, for criminal charges and heavy fine to the infringers

16 GLENN S. MCGUIGAN, THE BUSINESS OF ACADEMIC PUBLISHING: A STRATEGIC ANALYSIS OF THE

ACADEMIC JOURNAL PUBLISHING INDUSTRY AND ITS IMPACT ON THE FUTURE OF SCHOLARLY PUBLISHING .

17 See SHAKESPEARE, MERCHANT OF VENICE.

18 Supra, note 16.

19 Id.
similar to the way Shylock took the pound of flesh in case the borrower defaults. No wonder,
Aaron Schwartz was charged with a million dollar fine and 35 years of Jail!

Moreover, it is also found that criminal prosecutions of individuals are done in order to set an
example which can deter other individuals. Threat of criminal penalties may inhibit second-
generation creators from working with material they believe may be not permissible even
though in reality it is. One may argue that there are Fair use exceptions given to cover such
purposes. However, such Fair use clause, firstly, is insufficient and secondly, it is so vague
and extremely uncertain since it needs to see each things on a case-to-case basis. The
possibility of criminal penalties for using copyrighted works could chill the dissemination of
information and may deter other productive uses of copyrighted works because of the
uncertainty regarding the legality of the use. 20The result is that it has chilling effect on the
very activities which the Copyright aims to promote i.e. the growth of learning and culture
for the public welfare For example, there are cases of ISPs (Internet Service Providers) who
also pre-emptively take-down, filter or remove user-generated content in the fear of criminal
prosecutions.21 As we can see that its the stricter laws that defeat the purpose of entire
copyright act.

Is it feasible to prevent P2P file-sharing?

There are few statements that hold true for the copyright but one of them is that it is virtually
impossible to prevent P2P file sharing without violating fundamental right to speech for as
long as people are communicating through the means of technology they are going to share
files with themselves and if you have to prevent the illegal file-sharing one needs to look into
what is being shared among the peers in that closed network before taking the action to stop

20Matt Carroll, The inside story of MIT and Aaron Swartz (October 11th, 2015)
https://www.bostonglobe.com/metro/2014/03/29/the-inside-story-mit-and-aaron/html.

21 Catherine Hart, Copyright for Creativity not Criminalization(November13th, 2015),

https://openmedia.org/blog/copyright-creativity-not-criminalization.
such file-sharing.22 That is definitely espionage on the activities of the public, a clear
violation of the right to privacy which is enshrined in our constitution.

Conclusion

Technology has changed many things in the world and it has also changed the way files and
information is getting shared among the people. It is time for the incumbents to endorse such
technology and not be in direct conflict with it because as discussed such technology is only
going to help them in the long term. Peer-to-peer file sharing through its ease of access and
sharing furthers the idea of democracy by helping exchange information, knowledge to the
public without any discrimination and at the same time providing the incentives for the
content-generator to create such contents that includes economic profits. As once quipped by
Faiz:

I give my poetry away, and give myself along with it

But first I look for people who can value what I give.23

It is not the lure of money that explains why peer-to-peer file sharers create and share it to the
public for free but its the urge to create a more equal and just society by making knowledge
and accessible to all, to all the discerning reader who values such works. Attempts to
criminalise such activity are only going to chill the dissemination of knowledge and
information without serving any fruitful purpose. Its high time for the big businesses not to
act like a bully in a society who forcibly takes the possession of the playhouse which was
built by the neighbourhood children throughout the summer and later takes the charges from
the same kid to enter and have an interaction among them. Besides, as already discussed, it is
virtually impossible to prevent file-sharing and when there are graver crimes that are taking
its toll on the society it is inexplicable why government are spending such a lot of economic
resources in preventing activities that are totally within the spirit of democracy and
liberalism.

22 Mike Masnick, Only way to Stop Piracy is to stop private communications(November

14th, 2015)https://www.techdirt.com/articles/20111006/02041616231/only-way-to-stop-file-
sharing-is-to-stop-private-communications.shtml

23 Rahul De, Like Poetry for Software(November 5 th, 2015),

http://www.thehindu.com/opinion/lead/like-poetry-for-software/article4369679.ece.