The RIAA turns off its lawsuit machine

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Here’s how bad the recession is: Even some RIAA lawyers are racking up fewer billable hours. As reported by the Wall Street Journal -- with surprisingly little fanfare -- the major record companies have abandoned the lawsuit campaign they began a little more than five years ago. In fact, they stopped filing new claims -- which targeted roughly 600 new defendants a month -- this summer.

An RIAA spokesman said the labels decided to stop the suits because Internet access providers have agreed to do what they weren’t willing to do before: act as intermediaries in the disputes over suspected online piracy. Although details still need to be worked out, the system will work much as it does in the RIAA’s current effort on college campuses: When RIAA contractors trace unauthorized file-sharing to a particular Internet address, the association will send a notice of apparent infringements to the relevant Internet provider. The ISP will determine which of its customers’ accounts was assigned to that address at the time the infringements were observed, then send the RIAA’s notice to that customer with a warning. Repeat offenders will face escalating sanctions from their ISPs and, potentially, a lawsuit by the labels.

What’s not to like? Simply put, it’s the potential for another copyright enforcement program that runs on autopilot, to the detriment of innocent Internet users. The risk of misidentifying the source of infringements is just as great in the new system as in the lawsuit campaign, for this simple reason: On the Internet, nobody knows you’re a dog. Even if the RIAA’s contractors correctly identify the Internet addresses providing songs for the world to download illegally, they can’t tell who was sitting at the computer taking the actions necessary to make infringements happen (e.g., downloading songs without authorization, or putting songs into shared folders and connecting to a file-sharing network). Dynamically assigned IP addresses, network-address-sharing software and wireless routers all add mystery to the process of identifying which computers were involved, let alone which people. ...

But let’s be honest here. In most John Doe lawsuits, the RIAA correctly identified the account involved. The only question was which member (or members) of the household was responsible. For many, the arrival of a lawsuit was the first signal that a child, roommate or guest was doing something online that was not only illegal but carried huge financial penalties. Lawsuits should be the last resort, not the first step toward correcting a problem. And to its credit, the RIAA knew this. It tried years ago to get the ISPs to act as intermediaries so that it wouldn’t have to file lawsuits against suspected infringers. But led by Verizon and the company then known as SBC (now AT&T), ISPs refused to identify the customers associated with the Internet addresses suspected of infringing activity. Verizon fought this issue through the courts, and a federal appeals court agreed that the RIAA couldn’t subpoena the names of account holders without filing suit first.

Let’s also be honest about another point, however. Verizon and other ISPs had good reason not to unleash the RIAA’s lawyers on their customers without the oversight of the courts. The labels’ hired guns used the statutory penalties provided by copyright law -- $750 to $30,000 per infringement, exposing people with a few dozen shared songs to financial ruin -- to bully many of the people they sued into settling. Given the cost of defending against a lawsuit, it made more sense for people to pay a few thousand dollars in settlement than to fight a claim, even a questionable one. The RIAA effectively automated the whole mechanism, turning the campaign over to law firms that had little incentive to give their targets the benefit of the doubt. The Hollywood studios, by contrast, have taken a much less confrontational approach to online piracy, even though they face just as much bootlegging online today as the labels do. The MPAA has long relied on administrative solutions, such as warning letters and takedown notices, instead of lawsuits.

The RIAA’s aggressiveness was especially distasteful when you consider how many file-sharers were either kids (who couldn’t really be expected to understand the difference between the free legal stuff online and the free illegal stuff) or fans who bought lots of music and concert tickets after sampling the wares through p2p. In the last year, the courts started to push back against the RIAA’s tactics and legal claims; for example, judges were starting to question whether it violated copyright law to make songs available for others to download through a p2p network. If that line of reasoning were to prevail, the RIAA would be in the tougher position of having to prove that unauthorized downloads had actually occurred. Another emerging issue was whether account holders who were sued but hadn’t themselves infringed -- i.e., someone else had used their Internet connection to bootleg music -- could recover their legal fees from the RIAA. The switch in tactics takes the RIAA out of its ‘sue first, ask questions later’ posture. The new club it wields -- if you don’t stop infringing, you’ll lose your broadband account -- is nothing like the threat of millions of dollars in damages. Nevertheless, it’s still a hefty one, especially if the recipient is a small-business owner, a telecommuter or someone who relies on the Internet for phone service. It will be incumbent on the ISPs to insist on a reasonable way to resolve the inevitable disputes over infringements. Otherwise, the RIAA’s new approach will just be a new way to bully Internet users into accepting responsibility for things they didn’t do, just to make the threats go away. For now, at least, the RIAA is saying the right things about this issue. Here’s what Cary Sherman, the RIAA’s president, offered via e-mail:

The cooperation between the labels and ISPs could also presage more aggressive efforts by Internet providers to block the transmission of copyrighted works. That’s the Holy Grail for the entertainment industry: to stop rampant copying online through filtering technology. In fact, the industry tried in vain in the last congressional session to require certain colleges to block piracy technologically, but lawmakers agreed only to require colleges to develop plans for such measures. Trying to filter Internet traffic, however, is fraught with problems, both technically and socially -- the filters are relatively easy to evade, but they’re also intrusive and insensitive to the distinction between illegal and fair uses. That’s why it would be better for ISPs and their customers alike if the new system of warnings proved effective in reducing online piracy.

The RIAA makes no apologies for having sued about 35,000 people, and it won’t abandon the cases that are still pending (although it’s not likely to pursue them with much vigor). The lawsuits were a necessary part of getting to this point, the group says, because they helped raise public awareness about copyright law and blunt the growth of file-sharing. They also helped buy time for legitimate online music sources to mature into real businesses that will account for an estimated $3 billion in sales -- or about 30% of the industry’s ever-shrinking revenue. Of course, there’s no way of knowing what would have happened if the labels had moved just as aggressively to monetize file-sharing and other sources of free music online, rather than simply trying to stop them. But let’s not quibble. The end of the lawsuit campaign is a good thing, even if long overdue. The question now is whether the new approach will be just as hell-bent as its predecessor was on penalizing those whose accounts are used for unauthorized copying.

-- Jon Healey

Healey writes editorials for The Times’ Opinion Manufacturing Division.