July 9, 1999


In Court's View, MP3 Player is Just a 'Space Shifter'

Couch potatoes have long enjoyed the precious right to use a videocassette recorder to tape a television program so they can watch it at a more convenient time. Under a landmark 1984 Supreme Court decision in the "Betamax" case, this practice of "time-shifting" is considered "fair use" and is not an infringement on the program owner's copyright.

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But do consumers have a similar right to use their computers to make personal copies of digital works they have already purchased or legitimately downloaded?

In an important decision, a Federal appeals court has partially answered that question by declaring that just as television viewers have the right to time-shift, computer users have the right to "space-shift" -- they can make additional copies of digital files they have obtained lawfully in order to listen to them in different places.

The court's pronouncement came in the closely watched case of RIAA v. Diamond Multimedia, in which a panel of three judges from the United States Court of Appeals for the Ninth Circuit in Pasadena, Calif., were called upon to determine the fate of Diamond's Rio, a portable gadget which stores music in digital form and plays it back through headphones.

Rio users download songs in the form of compressed MP3 files from their computer hard drives into the player's memory. The Recording Industry Association of America (RIAA), a trade group representing record companies, has fought the Rio, saying it encourages music piracy.

Judge Diarmuid F. O'Scannlain, writing for the unanimous panel, said that the cigarette-pack-sized player "merely makes copies in order to render portable, or 'space-shift,' those files that already reside on a user's hard drive." Such copying, as with time-shifting, "is paradigmatic non-commercial personal use," which is entirely consistent with the copyright law, the court said.

Some copyright lawyers have been quick to hail the significance of the court's opinion, which, they say, clarifies a disputed area of the law and will lead to more widespread distribution of digital music via the Internet.

Consumers are free to space-shift.

"The court has endorsed the point that it is entirely proper for consumers to make copies of digital recordings that they own or have acquired properly," said Andrew P. Bridges, a lawyer who represented Diamond Multimedia in the case. The RIAA has long denied that this privilege exists, he said.

Bridges added that under the ruling, consumers may, for example, legitimately transfer music from their audio CDs to their hard drive, convert the files to MP3 format and either play them on the computer or download copies of the files to the Rio or to other devices.

Consumers may also download authorized MP3 files, like promotional freebies or non-copyrighted works, from the Internet and make copies of them on their hard drives and in the Rio, said Bridges. He cautioned that in his view "space-shifting" does not extend to the downloading of unauthorized or pirated MP3 files.

Shari Steele, legal director of the Electronic Frontier Foundation, which recently launched a special task force dedicated to protecting the rights of digital audio consumers, said the court's decision was "wonderful news."

"Consumers are free to space-shift," said Steele. They can take an authorized recording on their hard drive and make a copy for their car stereo, a copy for their portable Rio player, or a copy for their home stereo, making as many copies as they want, she said.

A spokesman for the RIAA declined to comment on the court's opinion, which was issued June 15. In a press statement, the group said it was "disappointed" by the ruling and would pursue its efforts with the Secure Digital Music Initiative, which is developing standards for downloaded music with copyright protection. In past comments, the RIAA has said that the Rio, which costs less than $200, would further encourage the online exchange of pirated music.

Last year, the RIAA and another group representing artists and recording companies brought suit to stop the production of the Rio, saying that the device violated the Audio Home Recording Act of 1992.

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That law, which applies to "digital audio recording devices," generally allows consumers to use products like digital audiotape players to make digital copies of songs for personal use. The hitch is that manufacturers of the recording devices must pay a royalty to artist organizations, generally 2 percent of the machine's wholesale cost. In addition, each recorder must contain a system that prevents the devices from making serial copies -- copies of copies. In its lawsuit, the RIAA charged that because the maker of the Rio paid no royalties and failed to install the copy management system, the portable player was an illegal product that would lead to more piracy in cyberspace.

In affirming the district court's denial of an injunction against Diamond, the appeals court held that the Audio Home Recording Act did not apply to the Rio, which is not a "digital audio recording device" at all but rather a computer peripheral. In addition, the court held that the hard drive of a personal computer, which also makes copies of MP3 files for downloading to the Rio, is not governed by the act.

Accordingly, the court reasoned, under standard fair-use principles outlined in the Betamax case, consumers are free to make unlimited copies of authorized audio files on their hard drives for portable, private and non-commercial use -- without any royalty payments to the music industry and without a chip that limits the number of copies that can be made.

"One of the most important aspects of this decision was the court's holding that computer hard drives are not subject to the Audio Home Recording Act," said EFF's Steele. This means that computer manufacturers can continue to design their products without any restrictions from the audio industry, she said.

One veteran copyright lawyer pointed out that if the Audio Home Recording Act does not apply to personal computers, which are important copying devices in the digital age, the law becomes almost meaningless and offers little or no protection to copyright holders, who worry about online music piracy.

"This leaves the record industry in trouble," said Robert Osterberg, a New York lawyer with Abelman, Frayne & Schwab who specializes in the area of copyright and music. "Unfortunately, they have a wide gap to fill." Osterberg said he believes the RIAA will seek to lobby Congress to have the law amended to extend to computers and computer peripherals.

Robert Zissu, a copyright lawyer at Fross Zelnick Lehrman & Zissu in New York and a past president of the Copyright Society of the United States of America, said he believed the appeals court was correct in its "space-shifting" conclusion. He added that the logical implications of the ruling are quite wide.


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They might also seem a bit strange. If a consumer has a fair-use right to make a copy of a digital work that he owns for portable use, reasoned Zissu, then the consumer might also have the right to make a copy of a work that he does not own for portable use. In each case, the consumer's "fair use" is determined with regard to his use of his copy, not with respect to the source of the copy.

The record companies can go after a college student who maintains a pirate Web site with unauthorized MP3 files, Zissu said. "That guy is going beyond home use. But if I make a copy of one of those songs for home use, that's fair use."

Osterberg, who said he disagreed with the court's conclusion about the legitimacy of "space-shifting," agreed with Zissu about the ruling's wider implications. "The mere fact that a copy is taken from an unauthorized source" does not negate fair use, he said.

"This is an important case," said Osterberg. "It is something that has surely captured the attention of the record industry."

CYBER LAW JOURNAL is published weekly, on Fridays. Click here for a list of links to other columns in the series.

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