[Cross-posted to SCOTUSblog]

If someone asks you what the Supreme Court thinks about the internet today, you've got a couple of responses.

1. In Grokster, the Court seems to understand that the case before it isn't just about P2P, and that the development of technology is really at issue. It doesn't want to let one industry -- the content industry -- use its statutory copyright monopoly to control the growth of another industry. On the other hand, the Court also recognizes that going after individual filesharers is very difficult, and that it may be necessary to go after intermediaries where sufficient evidence of intent is present. (This could be called the "There Must Be Liability In Here Somewhere" argument.) Result: some risk of liability for copyright infringement by technology providers, and a roadmap for what evidence is relevant when those cases come up.

2. In BrandX, the Court takes an entirely different approach. Using homespun analogies to pizza and dogs, and based on some fundamental misunderstandings about technology, the Court defers to the FCC's determinations about internet services. (This could be called the "This is Really Hard And We Want Out" tack.) Result: unfettered discretion lodged in the FCC to do what it wants with all internet services.

Now, the BrandX case is about a classification question. Should cable modem services be classified as "telecommunications services" or "information services"? If cable modem internet access is a telecommunications service, then many common-carrier obligations kick in -- like the obligation to allow others to plug into your network, to charge only set rates, and to contribute to the costs of rural telephone systems. The FCC didn't want to impose all of those costs on the cable industry, and so they said that cable internet access is really an "information service." This means that the FCC can apply "social policies" to the service (which can be very onerous and costly -- just as costly as the common-carrier rules), but won't set prices or require interconnection.

The problem with this classification by the FCC is that the statutory definition of "information service" doesn't fit with what internet access actually is. Information services are supposed to be things that generate, acquire, store, transform, process, retrieve, or make available information across telecommunications connections. The FCC reasoned that cable modem service is an information service because it gives people the ability to manipulate information using the internet across high-speed telecommunications. But that's not really right. Cable modem service allows people to reach online information, but doesn't necessarily allow them to manipulate it.

Your browser software allows you to see graphical online pages. Your email program allows you to receive and send email. Your IM client allows you to chat with friends. None of these things are necessarily provided by your cable service company. The 1996 telecom act, which contained these definitions, didn't foresee what the internet would become or how it would be used.

The Court defers to the FCC's classification, and along the way drops some very powerful dicta that gets ahead of the rewrite of the telecom act that is now in progress. Federal telecommunications policy, the Court says, should be set by the Commission. Everything accessed online is an information service. The Court says "the Commission has jurisdiction to impose additional regulatory obligations [on information service providers] under its Title I ancillary jurisdiction to regulate interstate and foreign communications."

The opinion has no limiting principles. The FCC can call anything that processes information an "information service," including any application you can think of. And it can impose any rules it wants to on that information service. We'll be relying on the Commission's self-restraint from now on.

That should be good cocktail-party banter.

[UPDATE:  In response to emails and comments -- I agree with the Court's holding to the extent that it will result in freeing both naked DSL and cable modem access from Title II obligations.  What I'm arguing about here is the FCC 's assumption that the world is divided neatly into two things -- information services and telecommunications services -- that it has jurisdiction over all of 'em (including web sites), and that it can impose "social policies" without limit.  The Court's dicta in BrandX supports this FCC adventurousness.  I understand that many people believe the 1996 Act did this in the first place, but I don't agree with that assumption for reasons I've explained in Shortness of Vision.]

[Cross-posted to SCOTUSblog]

Ed Felten is right to focus on Footnote 12. That's the key footnote that technologists will be waving to say "don't allow the content industry to get into the business of designing our products and services." If there is no other evidence of intent and the device is capable of substantial noninfringing uses, you can't tag a technology with secondary infringement liability based on mere reluctance to filter.

Another legal-beagle point on this "don't design" argument is that the Court specifically says it is not talking about vicarious infringement. Vicarious infringement is based on "profiting from direct infringement while declining to exercise a right to stop or limit it," according to the Court. Vicarious liability doesn't require intent.

But we're in the contributory infringement box, which is based on "intentionally inducing or encouraging direct infringement." So the Court focuses on evidence showing an "affirmative intent" that the product be used to infringe. Contributory infringement looks at active steps evidencing intent, while liability for vicarious infringement might only require a failure to act (such as failure to filter). The classic example given by the Court of active steps is advertisement -- which is a corporate message encouraging infringement.

I read the decision as saying that IF there is evidence of advertising AND other marketing and promotional indicia of intent, THEN failure to filter might be relevant. But failure to filter on its own (as Footnote 12 suggests) would never be enough.

Now, of course, it's not hard to do discovery and find evidence of intent. So this gives the content industry substantial ammunition. And that's why this is a balanced opinion that doesn't completely please either side.

[Cross-posted to SCOTUSblog]

Humble metaphors make for bad internet policy. The Grokster 9-0 opinion doesn't use them.

But the BrandX guys -- my, all that talk about pizzas v. pizza delivery and dogs v. leashes. Just painful. And the use of this simplifying (but really obfuscating) set of metaphors indicates that the Court really didn't know what it was talking about when it started defining everything online as "information services" provided by the access provider.

So I'm hoping that we can categorize everything said about "information services" other than cable modem access as "dog dicta."

In my next entry, I'll go back to musing about Grokster, and, in particular, the meaning and import of fn. 12. We may have another fn. 4 of Carolene Products in the making.

The consequences of BrandX (also decided today) are more important than those of Grokster. Grokster keeps the status quo in place. BrandX opens up a whole new world of regulatory power.

"What?" you ask. "I thought BrandX was just about the access of little ISPs to big mean cable systems."

No. In fact, both opinions are the reverse of what they purport to be. The Grokster opinion gives certainty to tech companies. And the BrandX opinion takes it away again.

In BrandX, Justice Thomas gets very confused about the internet and ends up essentially announcing that everything a user does online is an "information service" being offered by the access provider. DNS, email (even if some other provider is making it available), applications, you name it -- they're all included in this package. And the FCC can make rules about these information services under its broad "ancillary jurisdiction."

This is very very big. This means that even though information services like IM and email don't have to pay tariffs or interconnect with others, they may (potentially) have to pay into the universal service fund, be subject to CALEA, provide enhanced 911 services, provide access to the disabled, and be subject to general consumer protection rules -- all the subjects of the FCC's IP-enabled services NPRM. I've blogged about this a good deal, and now it's coming true: the FCC is now squarely in charge of all internet-protocol enabled services.

The implications of all this are staggering. This is the real news from today. After the DC Circuit's ruling in the broadcast flag case, people may have thought that the FCC's "ancillary jurisdiction" was in trouble. No longer -- the FCC has been given an enormous jurisdictional surge in power.  Even though its statute -- in my view, at least -- doesn't really give it this authority.

Whoof.

Today's Grokster opinion is a victory for content AND for technology. I was afraid that Sony would be undermined -- and it wasn't. The content guys were afraid that they wouldn't be able to go after bad guys -- and they've been given ammunition. What we've got is an opinion that is balanced and middle-of-the-road. It leaves Sony's "substantial noninfringing use" standard alone (yes, the concurring Justices snipe back and forth about what that standard means, but that doesn't matter), it doesn't adopt any formless Aimster balancing test, and it says strongly that you can't impute intent to technology. A good day for innovation. And a good day for Congressional staff, who won't have to deal with some request for Induce legislation -- we're done.

Now, that's not to say that there aren't some clouds here for technology companies. If you've got a stated intent to help others infringe, and a bunch of "bad" ads, and lots of other evidence of culpable intent, and THEN someone writes to you and encourages you to adopt their filtering technology, and you don't -- well, then you might be liable for inducement. There are certainly ways that this opinion might spark litigation.

But for the moment, tech companies can breathe easy. Distribution of a general-purpose copying device, by itself, is simply not an infringing act. And that was the right decision. Happy summer vacation, Justices.

[Cross-posted to SCOTUSblog]

[I'm proud to have been part of the team that worked on an amicus brief arguing for the same middle ground adopted by the Court today in Grokster. The brief was filed by the Digital Media Association, Netcoalition, CDT, and the ITAA.]

Still waiting for the opinions.  A big day for the future of the internet.

FCC's victory in BrandX means that it will be pushing ahead with classifying IP-enabled services as "information services" over which it has jurisdiction for "social policies" purposes. 

And the content industry's victory in Grokster means that inducement is officially recognized as part of contributory infringement.  I'm hopeful that the test for inducement is straightforward enough that technology innovators have some certainty.

But we really need those opinions to say more.