File-Sharing Complaints Highlight Copyright Uncertainties

On April 4 2006 the Portuguese Phonographic Association announced that it had filed 28 criminal complaints against unidentified individuals for sharing music files using peer-to-peer (P2P) networks. The action was taken in association with the International Federation of the Phonographic Industry as part of a global strategy to fight music piracy. Almost 2,000 complaints have been filed in 10 countries so far.

This is the first time that criminal complaints have been filed against P2P users in Portugal. Until recently, almost all music copyright cases brought to court involved the sale of counterfeit material. The fact that file sharers are now at risk of prosecution surprised many people who either did not realize that sharing music files was illegal or thought that it was impossible to be caught doing so.

The strategy was to identify the Internet Protocol (IP) addresses of high-volume sharers (ie, people who allowed thousands of music files to be downloaded by other P2P network users). It is now up to the police to identify the individuals from their IP addresses. Given the scarcity of publicly available decisions in Portugal regarding access to internet traffic data, the outcome of the investigations will be of widespread interest, as it will clarify whether a person who allows others to download copyrighted material is breaking Portuguese law.

If a P2P user has the right to own all of the music files stored on his or her computer (either because the files were legally purchased or because they correspond to tracks ripped from media legally purchased for personal use), it is debatable whether the sharing of such files is in itself a violation of copyright. Another user of a P2P network may own the same work in another format, but may have no means of making a copy. Given that the right to make copies of licensed works for personal use is fairly consensual nowadays, would either user be violating copyright by uploading or downloading a work for which both have a valid licence?

Of course, this example is an extreme case; it is unlikely that a P2P network user sharing tens of thousands of files would hold licences for all of the works, and even less likely that a user would refrain from downloading works which he or she was not licensed to own. However, the authorities and the music industry would probably have to prove the point in both cases, as the mere sharing of files over a network might not be considered sufficient to warrant a conviction.

The escalation in hostilities between music pirates and the recording industry poses broader questions: if the situation must change, as seems certain, how will this happen? Will the conflict be settled through stricter enforcement of copyright law? Are new trends slowly but inexorably making the issue of file sharing irrelevant?

The solution to music piracy could come from a combination of stricter enforcement to deter potential infringers and lower prices and taxes, which might lead to an increase in sales. However, a third, more radical solution would involve the increased dematerialization of musical works and the end of the album as a product. This would allow for a further reduction in prices by eliminating the need for physical media and shortening the distribution chain. A number of artists have already embraced a system of exclusive online distribution, notably through 'netlabels' - online music labels which are often particularly associated with permissive licensing. Music websites have been applying the concept of selling individual tracks for some time with conspicuous success; the global market is believed to have been worth over $1.1 billion in 2005.

The Internet has made it possible for billions of individuals to download and share music for free; little can be done to attack the problem of copyright infringement on an individual basis. Furthermore, in attempting to protect its legitimate rights, the music industry has previously taken steps which have alienated some consumers, who protested against the implementation of copy protection mechanisms on CDs (which rendered them unplayable on certain players) and the automatically installed rootkit software which controlled the use of CDs in personal computers.

The music industry has yet to adapt successfully to new trends, which in part explains the extent of music piracy. Although copyright infringement is undoubtedly illegal, the enforcement of performers' and publishers' rights is extremely difficult in the virtual world of the Internet.

For further information on this topic please contact César Bessa Monteiro or Guilherme Mata da Silva at Abreu Cardigos & Associados by telephone (+351 21 7231800) or by fax (+ 351 21 7231899) or by email (cesar.b.monteiro@abreucardigos.com or guilherme.m.silva@abreucardigos.com).