What Does the RIAA File-Sharing Verdict Imply for DRM?

October 11, 2007
By Bill Rosenblatt

RIAA's victory last week in court against Jammie Thomas, a Minnesota woman accused of uploading files to the Kazaa file-sharing network, has given rise to much speculation about the verdict's effect on DRM. The October 4 verdict of US $222,000, or $9250 per incident, was almost two orders of magnitude higher than the typical out-of-court settlements that the RIAA has been proffering to alleged online infringers -- yet far below the maximum statutory damages of $720,000 that the jury could have assigned.

One theory we have heard says that the major record companies are less likely to rely on DRM now that they have an actual verdict in hand to strengthen their legal anti-piracy strategy. We disagree with this theory, because it assumes that the majors run their anti-piracy efforts as if they were investment portfoilios. This has not really been the case. Instead, they tend to operate on the principle of "fight the battle on all fronts." We don't expect this verdict to cause the majors' attitudes about DRM to change. Revenue and file-sharing data from the DRM-free download experiments of EMI and UMG are much more likely to determine the future course of DRM in music.

Yet one aspect of the trial's outcome already has very interesting implications for the future of digital rights technologies for music. In his jury instructions, the trial judge told the jury to consider uploading to a P2P network to be infringement without any evidence that other people actually downloaded the tracks; this is known as the "making-available theory."

Different countries have taken different positions on whether uploading, downloading, or both are illegal. The making-available theory has legal precedent but is not considered settled law in the US. Therefore, Thomas is appealing the verdict in hopes of getting a higher court to disallow the theory, perhaps sending the case back to the original district court for a retrial.

If Thomas's appeal is successful, then the onus would be on the RIAA to provide evidence that someone actually downloaded the exact files that Thomas put up -- not some other copies of the same material. Without technologies for tracking sources of online content, such as certain types of digital watermarking, this would be much more difficult, thus doing serious damage to the RIAA's litigation strategy. Therefore, if the music industry is to think rationally about legal and technological ways to curb piracy, it ought to be thinking (even) more seriously about watermarking.


http://www.drmwatch.com/article.php/3704706