Cashing In On Grokster's Footnote 12

Grokster is cashed in by Digimarc, the first company to give yesterday's US Supreme Court's ruling a commercial twist. In the lead of a press release this DRM corporation states:

Court ruling in MGM v. Grokster identifies digital watermarking as a technology that P2P file-sharing companies could deploy to deter copyright infringement.

Together with encryption and fingerprinting technology, watermarking is directly referred to on page 16 of the Supreme Court's opinion [PDF] as one of the "new technological devices that will help curb unlawful infringement". However, more indirectly, Digimarc refers in its press release to the now (in)famous footnote 12 of the opinion and the attached paragraph that describes one of the three indicators of intent within the inducement test [see p. 22]:

The paragraph:

Second, this evidence of unlawful objective is given added significance by MGM's showing that neither company attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their software. While the Ninth Circuit treated the defendants' failure to develop such tools as irrelevant because they lacked an independent duty to monitor their users' activity, we think this evidence underscores Grokster's and StreamCast's intentional facilitation of their users' infringement.12

And footnote 12:

Of course, in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses. Such a holding would tread too close to the Sony safe harbor.

Much has been said about this paragraph and footnote. If you haven't already, read the posts linked to in the previous sentence for the bigger picture. Just focussing on this specific passage, the Supreme Court tries to keep its breath, while breathing; to suck and blow at the same time: a failure to prevent copyright infringement through technological measures does not bring intent in itself, but in combination with indications of marketing efforts (e.g. advertising) this failure may become the straw that breaks the file-sharing system's neck.

Digimarc, and the content industry, now burn this straw as part of their push for the implementation of technological measures that prevent copyright infringement and assist enforcement efforts after a copyright infringement. The message is clear: P2P file-sharing companies better patch footnote 12. They better deploy (DigiMarc's watermarking) technology, not just to prevent infringement, but to prevent being shut down just because they fail to deploy watermarking, fingerprinting, encryption. Show good intentions, instead of intent. Redesign you open infrastructure, join the DRM club and legalize. In this light the failure to develop technological measures becomes a bit more than an extra, propelling footnote to intent by indications of marketing.

Footnote 12 and attached paragraph (in that order) cater to the drive for closed, DRMed P2P networks by the content industry. And Digimarc, like other companies, are reaping the fruits and willing to cater to both parties: "Digimarc and its business partners stand ready to support copyright holders and the P2P industry as they consider the implications of this important ruling." In the meantime the catering Digimarc got today was a "coincidental" victory banquet with the Motion Picture Association of America "at a luncheon discussion with the Congressional Entertainment Industries Caucus". It must have had the sweet taste of success.