________________________________________________________________________________ Wired 8.10 David Boies: The Wired Interview By John Heilemann David Boies isn't on email. He doesn't even use a PC. And if you played him tracks by Chuck D and Metallica, he might not know which was which, let alone how to download either of them from the Net. So it might seem strange to find Boies smack in the middle of the great Napster debate - unless, of course, you can get your head around the fact that Napster is about more than music. It's the focus of a pitched legal battle that's fast unfolding into a landmark case for the digital age. And landmark cases where technology and the law come crashing together are among David Boies' primary passions. A 59-year-old native of rural Illinois, Boies spent 30 years at the white-shoe law firm Cravath, Swaine & Moore before bolting four years ago to set up his own New York-based shop, Boies, Schiller & Flexner. He has thinning brown hair, bright blue eyes that sparkle, a flat Midwestern twang, and a reputation as the most brilliant litigator of his generation. He rarely loses at trial and has never had a victory reversed on appeal. Over the years, he has represented IBM, AOL, and CBS, as well as Garry Shandling, Don Imus, and George Steinbrenner; his opponents (some would say victims) have included Michael Milken, Ted Turner, William Westmoreland, and Carl Icahn. But it was Boies' recent evisceration of Bill Gates and Microsoft on behalf of the Department of Justice that made him a legend - and prompted the folks at Napster to call him in June, when the company's legal crisis came to a head. Several weeks later, Boies found himself in the San Francisco courtroom of US District Judge Marilyn Hall Patel, defending Napster against the attempt by the Recording Industry Association of America to shut down the service with a preliminary injunction. Boies lost that argument, and badly, but then quickly persuaded the 9th Circuit US Court of Appeals to stay the court order until a hearing is held, probably sometime early this fall. (The hearing will address only the injunction; a full trial on the RIAA's copyright-infringement claims against Napster is likely to start next year.) A few days after Napster won its reprieve, Wired contributor John Heilemann caught up with Boies at the Silverado Resort in Napa Valley, California, where they sat in the sun, drank near- fatal quantities of Diet Pepsi, and talked for several hours about the lawyer's strategy for the case, the future of intellectual property and free speech in a networked world, and how it feels for this David to be taking on yet another Goliath. Wired: How did you get involved with Napster? Boies: I got a call from the Napster people, and I was out of town when they called. So their initial conversations were with Jonathan and Christopher Boies, my 32-year-old twin sons. When they raised it with me, I had never heard of Napster. At this point, my firm wasn't taking on any new clients. My sons said, "This is a really important issue." And the more I got into it, the more I thought that was right. The case raised, as the 9th Circuit said, important issues of first impression. We really made the decision to take the case on that basis. Because we got involved in June, and there was an already scheduled preliminary injunction argument, we didn't have a lot of time - we had to divert people from other things to work on it. It was tight. It was a strain for the firm. I don't think we would have done it except for a case of this importance. W: Why did it seem so significant to you? B: When you think of Napster, you think of music. But the first thing that struck me was that this was an important case not only for the music industry but for the whole of the Internet. Here you have a new technology - in terms of peer-to-peer sharing of information - and if that technology is going to work, you must allow people to provide central indexes of the data. Somebody's got to maintain those indexes. I mean, it's just like a newspaper that publishes classified ads. You've got to have a place where people can go who want to participate in that kind of activity. And if you, in effect, impose on the directory-service provider liability to investigate, monitor, and control what the users are doing, it is very difficult to see how that kind of technology is ever going to work. W: Can you walk us through the case and the arguments you're making? B: Sure. There are four basic issues, and the recording industry has to win on each of them in order to prevail. If Napster wins on any one of the four, Napster prevails. The first issue is: Are Napster's users engaged in copyright infringement? If they are not, that's the end of the matter, because nobody alleges that Napster directly infringes any copyright. Napster's only alleged liability is for contributory or vicarious infringement. You cannot have contributory or vicarious infringement without having some underlying infringement. So when Napster's users engage in noncommercial sharing of music - noncommercial copying of music - is that activity copyright infringement? We say it is not, for two basic reasons. The first is that this kind of noncommercial consumer copying is recognized as fair use under common-law theories and doctrines, and under the Supreme Court's criteria. And second, with respect to audio recordings - that is, music - the Audio Home Recording Act directly says that noncommercial copying by consumers is lawful. The 9th Circuit, in RIAA v. Diamond Multimedia Systems, in 1999, read that statute as permitting all - and all is the word of the opinion - all noncommercial consumer copying as lawful. W: The second issue? B: The second issue is whether Napster can be held responsible if some users engage in copyright infringement. We maintain that Napster cannot be guilty of vicarious or contributory infringement, because the service unquestionably involves substantial noninfringing uses. In the 1984 decision in Sony v. Universal Studios, where the entertainment industry had tried to stamp out VCRs, the Supreme Court said that even though VCRs were predominantly used to copy copyrighted materials, because there were substantial uses that did not infringe copyrights - either because the material was not copyrighted or the copyright owner did not object - you could not find that Sony was guilty of contributory or vicarious infringement. Now, the recording industry sometimes seems to argue that what matters is which use of the technology predominates. That has never been the law, and, indeed, in the Sony case, it was absolutely clear that more than 80 percent of the use was copyright infringement. So the issue is not, Which is the predominant use, but rather, Is there any substantial noninfringing use? And in fact, in Sony, the Supreme Court did not say there had to be any actual substantial noninfringing uses - it said that the technology merely had to be capable of substantial noninfringing uses. One noninfringing use is space-shifting. [Music listeners space- shift when they copy songs they already own onto more portable media.] The 9th Circuit has held that space-shifting is clearly a noninfringing use, and both Napster's expert and the RIAA's expert say space-shifting is a very substantial use by Napster users. Another noninfringing use is to distribute music that is either not copyrighted at all, or whose copyright has been lost, or whose copyright holder doesn't object, and that kind of music represents another use of the Napster system. Yet another related use is sampling. Assume you've got copyrighted material, the copyright is valid, and the copyright holder has not given permission. Even under those circumstances, sampling has always been held to be a fair use. Now, there was some suggestion in the RIAA's court filings that sampling is not a fair use, which is not consistent with what the Supreme Court said in the Sony case. But even if sampling were not a fair use - and we think it is - certainly space-shifting, the sharing of uncopyrighted music, and the sharing of copyrighted music where permission has been granted all would be fair uses. There's no question that these are already very substantial uses on the Napster system, and there's no question that these uses are growing. For example, when we put in our court filings, there were 15,000 to 17,000 artists who had expressly authorized Napster to permit its users to share their music. By the time we got to the hearing stage, it was more than 24,000. And it's over 25,000 today. W: Issue number three? B: The third point is the Digital Millennium Copyright Act, which we have argued that we are covered by, and which was specifically designed by Congress to give a safe harbor to Internet service providers so that they would not be held liable for their users' activities. The RIAA argues that if, as a general proposition, you know your users are engaging in some copyright infringement, you can't take advantage of the DMCA. But that can't be what the DMCA meant, because if you didn't know your users were doing it, you wouldn't have any liability anyway. The Digital Millennium Copyright Act was designed by Congress to say, "You know, service providers, even though you may have knowledge that some users are engaged in unlawful activity, that doesn't mean you have to monitor what each of your users is doing." The DMCA also set up a notification procedure, through which service providers like Napster can say, "Look, if you believe somebody is infringing, you bring us a notice. We will then shut them down unless they give a counternotice. If they give a counternotice, it's up to the court to decide." And that system has worked with Napster. Hundreds of thousands of users have been terminated because of those notices. Congress set up a system. That system works. W: Isn't there some debate about whether Napster has fully complied with that system? B: There is a question as to whether Napster was in compliance in December 1999, in terms of having an appropriate take-down notice and statement of policy. But there's no question that it is now in compliance. And although that issue, as the court says, may be relevant to the question of damages for the earlier period, it's absolutely clear that there should be no injunction now that Napster is in compliance. W: OK. The fourth and final issue? B: Copyright misuse. The 9th Circuit has made it clear that if copyright holders use their copyrights for anticompetitive purposes - to try to gain control over something they do not control directly through their copyrights - that's copyright misuse. It is clear that the RIAA has set out to control the Napster media. They have written documents saying they want to shut Napster down and then take over the technology. The RIAA's members are acting in concert. They have pooled, according to their own statistics, 90 percent of the copyrights on music. All of those kinds of activities constitute copyright misuse. And if they are engaged in copyright misuse, they cannot enforce their copyrights. W: Where does the preliminary injunction fit in here? B: You give a preliminary injunction to prevent harm that will occur between the time of the injunction and the trial. But all of the RIAA's claims of harm concern what will happen much further out - they claim that things are going to be bad for them in the future. W: Because there isn't a whole lot of evidence that things are going bad for them today? B: There's no evidence. In fact, the evidence is to the contrary. So when they say, "Things will go bad in the future," well, the answer to that is: "If things will go bad in the future, you don't need a preliminary injunction. Make those arguments at trial, but don't terminate the service without giving it its day in court." W: You made these arguments before Judge Patel. B: I did. W: And she rejected them rather forcefully. B: Forcefully and immediately. W: Looking at the transcript of the hearing, it seemed to me that she didn't fully grasp the technology. Do you think that's a fair assessment - that she's basically clueless about how Napster actually works? B: I think that's fair. In the Microsoft case, I think we did a really good job of explaining the technology. So far, in the Napster case, we haven't done that. I don't know exactly what we could have done, but it was clear that we just didn't do an adequate job of explaining the technology to this judge. W: For one thing, Judge Patel kept saying that when people use Napster, they're sharing music "with the world" or "with 79 million people," not seeming to understand the peer-to-peer nature of the service. B: Exactly. It is one-to-one sharing. And one of the things I tried to do was say that there wasn't any evidence that the average user shares with a lot of people. There are a lot of Napster users. And so the total amount of sharing is large, but the number of copiers, if you will, of any individual file is not so large. The recording industry wants to make it seem like somebody puts up a file and it's shared by 79 million people. But there's no evidence that happens. W: The record companies also played up the piracy angle. And that word, piracy, seemed to resonate with her. B: The use of the term piracy - partly by the plaintiffs, but also in some documents from the teenage founders of Napster - I think gave her a way of focusing on something other than how the technology works. And, as I tried to urge the judge, the question of whether the activity is lawful or unlawful is a matter for the courts to decide. It's not supposed to be decided by the exuberant outbursts of teenagers, no matter how talented they may be at designing software. But I obviously didn't get that point across adequately. W: Judge Patel also seems not to have fully understood that in issuing the preliminary injunction she would force the service to shut down. B: Yes - we were talking about the scope of the injunction, and she said she did not want to shut the system down. She had said that before. And yet, the scope of the injunction inevitably required the system to be shut down. W: You got the injunction stayed, but no matter what the appeals court eventually says about that, you're going to be back in front of Judge Patel for the trial on the merits. B: Ah, yes. [Laughs.] W: And presumably you'll make the same or substantially similar arguments. B: Absolutely. I think the arguments will be basically the same. On the other hand, I think we'll have two factors going for us. By the time we go to trial, the 9th Circuit will take up this appeal issue. And while the court could reverse the preliminary injunction on a variety of grounds - and it might reverse without addressing the merits - I think that, in a case of this importance, there is a reasonable chance that the 9th Circuit will at least give some guidance as to what the law is. The second thing we have going for us is that, at a trial, a decision has to be made on the basis of record evidence. Proof has to come in. Judge Patel will listen to the proof. I think it is always an uphill battle to persuade any human being to change his or her mind. However, judges are particularly good at it, and they are trained to set aside what they have believed in the past when new evidence comes in. I also fundamentally believe that if she understands the technology, she'll understand this is not the kind of copyright infringement she originally thought it was. W: So you're confident you can educate this judge? B: One of the things I've said before is that when the Microsoft case started, neither John Warden - Microsoft's lawyer - nor Judge Jackson nor I was exactly the epitome of technological literacy. But we learned the technology together. We all worked hard at it, and it took us time. And that's what a trial's for. W: Do you think the current standards for fair use can hold up in the future, in the face of these new technologies? B: I think there are substantial questions about that. And I think that is what led Congress in 1992, with respect to the music industry, to pass the Audio Home Recording Act. Now, there's an argument that says you don't need the AHRA, because what the AHRA covers is already protected under common-law fair use anyway. However, I think what Congress believes - and I think rightly, given the technology - is that some of these decisions as to what constitutes fair use require the balancing of very difficult interests. That's a balance Congress ought to strike, not the courts. The courts apply the law, Congress makes the law, and at some point with new technologies, you've got to make the law. What Congress did with the AHRA is, I think, a precursor to what Congress is going to have to do more broadly with Internet-related technologies. W: How soon? B: I wouldn't be at all surprised if, a couple or three years down the road, there were sufficient changes brought about by peer-to-peer to make it sensible for Congress to look at it. For example, the court is obviously very concerned about the scale of the sharing. And the AHRA doesn't say anything at all about scale. It doesn't say two is OK, three isn't; ten is OK, a hundred isn't; a thousand is OK, a million isn't. Those are the kinds of judgments Congress has to make, not a court. W: So size does matter? B: Size and scale. Scale does matter. But one of the things we don't know in the Napster case is what the scale of the sharing really is. Because if you have 25 million users, each with 10 files, that's 250 million files. If 250 million files are downloaded twice, that's 500 million downloads. But each user has shared a file only twice. W: Which is no different from what many of us have been doing with our records and CDs for years. B: And which Congress, with the AHRA, clearly intended to authorize. However, it is quite possible that, given its scale, the Internet could permit noncommercial consumer copying on a scale Congress did not contemplate. W: Every time a new media technology comes along, the same questions seem to wind up in Congress' lap. B: Look at cable television. Cable television came along and copyright owners said, "Oh, this is terrible. They're reproducing our copyrighted shows and not paying us." They sued to stop it. And the Supreme Court said, "No, we're not going to stop it. It's up to Congress to make a legislative judgment." And, of course, the explosion in cable viewing and the consequent explosion in the demand for content has tremendously enriched copyright holders. The same thing happened with the VCR. Copyright holders came in and said, "This is terrible. They're copying our works." The court said, "If there's a problem here, it's up to Congress." And the VCR, again by exploding the demand for content, has enriched copyright holders. The law is designed to strike a balance between the interests of copyright holders on the one hand and the interests of consumers on the other. With music, Congress has struck the balance to say that if there is commercial copying, the copyright holder controls it, and if there is noncommercial copying, the copyright holder does not control it. Is that the right balance? I think it's a pretty good balance. W: There used to be a fashionable view in some circles that antitrust laws were anachronistic, outmoded; that they needed to be rewritten or scrapped entirely due to the dynamics of the new economy. In the Microsoft case, you said, No, high tech markets may behave differently, but the old laws are still perfectly applicable. Is the same true of copyright law? Or does it need to be fundamentally rewritten? B: I think copyright law is different from antitrust law in the following respect: The Sherman Antitrust Act was passed in 1890 and has essentially remained the same; the Copyright Act has been significantly amended four or five times in just the last 20 years. The Copyright Act is somewhere in between the Sherman Act on the one hand and the IRS Code on the other. It's more regulatory than the antitrust laws, but it's more charter than the tax laws. W: By regulatory, you mean specific? B: Yes, more precisely specified. And it probably has to be that way, because what you're talking about with the antitrust laws is, Does a company have a monopoly power, or is the company engaged in anticompetitive conduct? Under the Copyright Act, one question is, Is there copying? But that's only the beginning of the analysis, because you're trying to find out the economic consequences of that copying. That's the judgment Congress is making. Everything is designed to protect the consumer: We never would have passed copyright laws in this country unless we believed they helped consumers by generating creative activity. We know there needs to be a fair return to do that, but we don't want an excessive return, because the ultimate beneficiary is designed to be the consumer. Remember, it wasn't so long ago that there was no copyright protection for musical recordings. There was the music-publisher copyright, but you didn't have a copyright for the sound recording. And what Congress did in my lifetime - not only my lifetime, but during the time I've been practicing law - was to change the law to expand that. I think what Congress does in the copyright area is to keep thinking every few years, Do we need to adjust the balance between the consumer and the copyright holder? You constantly make these trade-offs. And the trade-offs are necessarily affected by the changes in technology in a way that the antitrust laws are not. W: You've described the actions of Congress in a very optimistic way. The less hopeful take would be to say that Congress is chasing the technology, trying desperately to catch up, and in the process, creating an ever more jerry-built framework for intellectual property. B: Although it becomes increasingly difficult to strike these balances as the technology progresses, I think a legislative judgment can be made and revised that will make trade-offs in a reasonable way. Not a perfect way. W: Given the pace of change, one wonders if we're headed for a place where some of these technologies are essentially ungovernable. B: I think that's very possible. Very possible. And if it happens, it will have a lot to do with the fact that we live in a world where laws are made by nation-states but the Internet is worldwide. W: Napster goes to the Bahamas. B: Exactly. W: The next wave of peer-to-peer is Gnutella, Freenet, and other decentralized, distributed services, where no one is in charge. Ian Clarke, the principal creator of Freenet, has said, "If someone put a gun to my head and said, 'Shut this down,' I would be unable to do so." What does the law do in the face of that? B: I think the law cannot deal with that as a practical matter. However, there is a real difference between Gnutella and Freenet on one hand and Napster on the other. Central-server directories provide something that totally decentralized services do not: a much greater ability for users to make choices and decisions, because of the centralized index. I think the real danger here is that if you shut down a service like Napster, which has the potential to be much more efficient and more protective of copyright holders, you will drive everybody to a less efficient system that is less protective of copyright holders. The other possibility is to drive the peer-to-peer central index technology offshore, or to Canada. And because it is noncommercial, once they set up in Canada, there isn't anything you can do in the United States. If they were selling subscriptions in the United States, you could stop it. If they were charging people, you could stop it. If they were soliciting people, you could stop it. But the thing about this is, you don't need to solicit people. They'll just dial up that Canadian address all by themselves. There really is nothing you can do to stop it. W: Put yourself in the RIAA's shoes. How would you deal with David Boies and Napster? B: If I were running the RIAA - to which their members will quickly say, well, thank goodness he's not - but if I were running that group or advising them, I would tell them this is a battle they cannot win. Because even if they were to destroy Napster, it would be a Pyrrhic victory. W: And you think that's their goal. B: I think the goal is clearly to destroy Napster. W: Not to co-opt it? Not to work with it? B: No, to destroy it and then try to take over the technology. W: And if they succeed? B: Even if they destroy Napster, they're never going to destroy this technology. They will not be able to keep the kind of control they want. I'm not sure their actions are entirely irrational; by destroying Napster and taking control of the technology in the near term, they can preserve their market dominance for some period of years, perhaps. Certainly that has value to them. But it's a very difficult position for an industry to take. An industry that goes to war with its customers is not an industry that will ultimately prevail. W: Do you think the recording industry's behavior is an act of hubris or an act of blindness? B: I think it is an act of hubris. And it amounts to considering the short term and disregarding the long term. The Federal Trade Commission found, in a recent study, that the members of the RIAA overcharged consumers by nearly $500 million. The desire to keep that stream of money coming in isn't irrational. On the other hand, the recording industry is worth far, far, far more than a half billion dollars. I think they're endangering the long term of the industry in order to preserve the short-term high profits. Over the long term, they would be much better served by working out some kind of settlement. W: Which Napster would be open to? B: Perfectly open. I've said before that we believe this case ought to be resolved. It ought to be settled. I've also said that if the recording industry is determined to destroy Napster, we will not go quietly into that good night. We are going to litigate the issue, and litigate it forcefully. W: Elisabeth Kübler-Ross famously laid out the five stages of death and dying: denial, anger, bargaining, depression, and, finally, acceptance. The RIAA has been through denial already. They must be dealing with anger now. B: That's right. W: Which means bargaining should be right around the corner. As you suggest, the RIAA companies are trying to figure out ways to use this technology in their own services. B: The way they're bargaining right now is exactly the kind of bargaining that Kübler-Ross was talking about, which is not real bargaining. It's, "Please God, let this pass and I'll go to church." W: Bargaining based on delusion? B: Exactly. And it'll be acceptance only when it involves real, rational bargaining. They aren't at that point yet, partly because of how much they operate as a single entity. One of the things we will demonstrate in connection with our copyright misuse claim is that the record companies do operate as a cartel, that their approach to Napster has been coordinated. And that's exactly what the antitrust laws say they can't do. W: So this becomes an antitrust case? B: Well, you don't have to make out an antitrust claim. W: But it's connected? B: It's connected. The 9th Circuit has said that in this area, if you engage in an antitrust violation, then that is copyright misuse. But you can also have copyright misuse that does not rise to the level of an antitrust violation. In order to prove copyright misuse, we don't have to prove an antitrust violation, but if we do prove an antitrust violation, we've proved copyright misuse. W: And the argument here is that by acting as a cartel, they're using their copyrights to restrict ... B: To restrict this particular distribution medium. In addition, although every copyright holder is free to refuse to deal - as long as they refuse to deal for legitimate purposes - you cannot have a pooling of copyright owners who collusively refuse to deal. And that's what you've got here. W: You're also making some First Amendment claims. B: There are really two free-speech rights in question. One is the free-speech rights of the Napster users. And there, one of the things we argue is that the injunction - because of its overbreadth, because it would shut down the service - violates their free speech. The second is the free-speech rights of Napster. Just like a magazine or a newspaper that provides information - that provides an index or directory - Napster has the right to provide an index, a directory. It's a dissemination-of- information right. And the courts have held that directory publishers enjoy free-speech rights. W: You started off by saying that you got interested in this case because it went so far beyond music. Given the scope you've described - copyright, free speech, antitrust - it looks like a landmark case. B: I think there's a very real possibility this case will set standards of what can be done on the Internet generally. And it's an issue that's far too important, as I was saying before, to be decided on the basis of labels. People are throwing around labels - piracy, stealing. Those labels don't tell you much about what the technology is; they don't tell you much about what's really going on. All the CDs out there were bought by somebody. The industry has gotten a lot of money from it. The question is, How much more money does the industry deserve? That's a legitimate question for Congress. The danger here is if the courts try to increase the protection that Congress has given to copyright holders in this area, they will at a minimum make uncertain - and more likely prohibit - the rights of other Internet providers to provide information about a wide variety of subjects. And it's in this area that the First Amendment concerns are very serious. Because you've got Internet providers who are providing directories, search engines, lists - all of which represent information. All of which represent knowledge. All of which represent things the courts have repeatedly held to be subject to First Amendment protection in every context other than the Internet. I think it would be a terrible mistake for us to say the First Amendment stops at the computer hard drive. W: Napster's rallying cry is perceived to be "Free Music for Everyone!" But it actually takes a different position. Napster believes that artists should get paid, right? B: Absolutely. This is a company that believes in copyrights. The RIAA would like to pretend this case is about Napster wanting to eliminate intellectual property. Nobody at Napster wants to eliminate intellectual property. The question is, What are the limits to intellectual property and should those limits be changed? And if the limits should be changed, as the RIAA seems to be saying, should that be done by a court or by Congress? W: Do you think Napster will be bought by one of the record companies? B: I doubt it. For one thing, this is a cartel. I don't think the antitrust authorities would let them get together to buy the service, and it would certainly be a break from the cartel for any one of the companies to try to buy Napster. W: You've gone from taking on Microsoft to taking on the RIAA. Which do you see as the more evil empire? B: Microsoft certainly has created more value. Microsoft built monopoly power, but it did so by creating and developing. There isn't any product innovation in having multiple companies get together and decide jointly what they're going to do. The monopoly power of the RIAA comes purely from collusion. http://www.wired.com/wired/archive/8.10/boies.html ________________________________________________________________________________ no copyright 2000 rolux.org - no commercial use without permission. is a moderated mailing list for the advancement of minor criticism. post to the list: mailto:inbox@rolux.org. more information: mailto:minordomo@rolux.org, no subject line, message body: info rolux. further questions: mailto:rolux-owner@rolux.org. home: http://rolux.org/lists - archive: http://rolux.org/archive