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When programmers at Nullsoft, Inc., rolled out a trojan horse in early March and unleashed the digital file-sharing program Gnutella, they took corporate brass at parent company America Online, Inc., by surprise. But they had to immediately see the threat to AOL’s critical acquisition target, the content-creation empire of Time Warner Inc. Gnutella enables users to swap all kinds of files — from movies to novels to the hottest diva’s latest hit single. The software lays siege to the very concept of copyright. Within hours AOL had yanked Gnutella off-line. But Gnutella’s programming code already had been picked up by some cyber-fluent geeks in the open-source community, which thrives on shareware and a free exchange of information. Now, a variety of Gnutella-derived networks are evolving, while sites with software similar in concept and design — such as phreedom.net and iMesh.com — are popping up all over the Web. Copyright infringement on the Internet is spiraling out of control. And copyright owners will be hard-pressed to find an effective counterattack. “Gnutella is a whole different breed of animal than the other file-sharing services we’ve dealt with,” admits Michael Huppe, an antipiracy attorney for the Recording Industry Association of America. It differs from distribution programs the RIAA has challenged in court — including those used by MP3.com, Inc. and Napster, Inc. — in that Gnutella operates without a central location. Rather than connect to a server to download files or search for them on other hard drives, Gnutella users connect directly to one another and trade files as they please. “The Gnutella principle,” explains Cooley Godward intellectual property litigator Michael Rhodes, “is you’re creating your own strands. There is no central server to shut off. How do you control that?” Mark Lemley, codirector of the Berkeley Center for Law and Technology at the University of California-Berkeley School of Law, agrees, noting that “the difference between Napster and Gnutella is figuring out who one would sue.” Says Megan Gray, a lawyer with Baker & Hostetler in Los Angeles: “Gnutella makes copyright law obsolete, because it makes it difficult, if not impossible, to enforce.” The RIAA and other media establishment groups could go after sites that distribute Gnutella. But, as Lemley points out, “there’s enough copies floating around that you’re not going to stop it.” Theoretically, copyright holders also could police and pursue individual users who infringe on their copyrights. Internet law does stipulate that statutory damages could reach $150,000 for each copyright infringed. But most Gnutella users are unlikely to have deep pockets. The resulting personal bankruptcies might be more bad press than good business. Besides, most observers cannot envision how copyright holders would be able to keep tabs on the countless daily violations that are occurring on all sorts of remote networks. Worse yet, copyright owners may find it impossible to get the courts to outlaw the program itself. According to Jeffrey Kuester, chairman of the American Bar Association special committee on patents and the Internet, as long as Gnutella has uses other than theft, it may survive the claim that it is, in and of itself, a pirating software. “Gnutella,” Kuester says, “has tapped into a very, very gray area of copyright law.” The RIAA’s Huppe maintains that his group is developing a strategy to cope with the emerging technology. The RIAA — which represents Warner Music Group, Sony Music Entertainment Inc., BMG Entertainment, EMI Recorded Music, North America, and Universal Music Group — has won at least one victory in its quest to protect the integrity of its copyrights. In May, San Francisco federal district court judge Marilyn Hall Patel ruled that Napster’s file-sharing software does not qualify as transitory digital network communications (TDNC), or a “mere conduit of information,” under the Digital Millennium Copyright Act. The TDNC safe harbor — section 512(a) of the DMCA — was meant for Internet service providers, and would have saved Napster from further copyright claims. But Patel found that Napster’s users’ files do not flow through the company’s servers. Still, Napster’s case is far from over. Napster has been sued by the RIAA — and, in separate suits, by heavy metal band Metallica and rap artist Dr. Dre — for contributory, or indirect, infringement. The critical question Patel now has to answer is whether Napster is exempt from such charges because its software possesses substantial noninfringing uses, such as distributing songs from indie bands who intend to give their music away free. Napster and Gnutella share some characteristics, but the latter may be beyond the law’s reach. Even if a distribution site were sued, Gnutella’s broader scope of file-sharing makes it far more likely that Patel and others would find substantial noninfringing uses for the program. After all, Gnutella lets people send and receive anything from vacation videos to high school multimedia projects to Shakespeare’s sonnets. Gnutella and the other emerging programs approach the pristine anarchy envisioned by netizens and hackers around the world. “The fact is that users decide how they’re going to use Gnutella. Neither the recording industry nor the administrators of the Internet are going to be in a position to control that,” says Laurence Pulgram, an intellectual property litigator at Fenwick & West who represents Napster. “I haven’t heard of a legal strategy that has been designed that would effectively target Gnutella users.” Given the impossibility of courts and legislators keeping up with the manic pace of technology, the solution to the entertainment industry’s Internet problems likely will come from somewhere other than the law. If entertainment companies plan on sustaining their profit margins, they will have to develop more complex encryption codes and other protection devices — and rev up their marketing engines to win back the loyalty of consumers. Copyright itself just may get lost in the Internet free-for-all.

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