Makin' Copies

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“Cloud computing” is the new information technology buzzword. But while the term is new, the concept is old. Cloud computing simply allows companies to store data and run programs remotely.

There is now a noisy push toward providing consumers with similar remote-server storage. Locally, Amazon.com offers its Amazon Cloud Player, which allows customers to upload digital purchases to their own “cloud space” for access via their portal of choice.

Apple, Google and Best Buy have similar services. The race to provide “cloud storage” has also been a boon to local companies such as Isilon, which provides the architecture for such storage.

Despite the resources and energy being poured into developing these consumer services, their future legality may ride on the acumen of a man whose previous attempts to sell similar services resulted in a huge judgment for copyright infringement. That man is Michael Robertson.

Before the turn of the century, Robertson founded MP3.com to give consumers remote access to their music. He took the company public in July 1999, in what was then one of the biggest internet IPOs in NASDAQ history.

MP3.com allowed subscribers who already owned a legitimate copy of a recording to access that music via the internet from anywhere, via any device. To get that access, MP3.com purchased tens of thousands of popular songs and copied those recordings without a license onto its computer servers. Almost immediately, MP3.com was sued. When the smoke cleared, MP3.com was ordered to pay $54 million. In the terse words of the trial court judge: “The complex marvels of cyberspatial communication may create difficult legal issues; but not in this case. Defendant’s infringement of plaintiffs’ copyrights is clear.”

Now Robertson is back with MP3tunes, a new company that appears to offer exactly the same service. Once again, the recording industry has sued, in the same New York court where it was victorious before. But unlike the previous lawsuit, this time Robertson has support from some cloud providers, who are afraid that another defeat for Robertson could kill a nascent industry.

So what makes Robertson (and Apple, Amazon, Google and many other companies) confident that things will be different this time? The answer lies in two developments—one technological, one legal.

Technologically, bandwidth and server capacity have grown exponentially. Rather than having MP3tunes (or most other cloud services) make a copy of something for the consumer (as did MP3.com), it is now the consumer who directs copying and storage of the media to the cloud. While the end result is the same—access anywhere, anytime—who makes the copy is an important distinction for purposes of copyright liability.

Legally, several trial courts have held that similar services are not liable for their users’ infringement. Under copyright law, with only a few exceptions, any copy that is not authorized by the copyright holder is infringing. When a consumer uploads media to the cloud, he or she is copying those media, so such uploading is likely infringing unless the consumer has a license permitting such copying. But while consumers may be infringing copyright, a number of trial court decisions—most notably the YouTube decision last fall—have held that online services that only facilitate consumers’ storage and remote access—without making copies themselves—are not liable for copyright infringement.

But bad facts can make bad law, and the recording industry is counting on using its $54 million judgment against Robertson’s previous company to convince the court that his new service is no different. If it wins that argument, as it might, the precedent set could mean massive liability for many other such service providers.

So what is the future of such consumer cloud storage services? Only time, and a whole lot more litigation, will tell. But while the attorneys argue, companies are forging ahead with plans to commercialize the cloud in the hopes that profits will eventually rain down.

Brian Esler is a partner of Miller Nash LLP in Seattle, where he advises clients on intellectual property law, internet law and other legal issues affecting technology. He organizes and chairs the annual MobileNorthwest Conference. Reach him at brian.esler@millernash.com.

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