Seventh Circuit rules in BMG v. Gonzalez: downloading music via P2P is not fair use

The lawsuits filed by the music industry against individual users of peer-to-peer (P2P) software are beginning to make their way through the court system. The Seventh Circuit has affirmed a lower court’s grant of summary judgment against a user of Kazaa, holding that the downloading of copyrighted music files is not fair use under the Copyright Act.

Defendant-appellant Gonzalez used the Kazaa P2P software to obtain over 1,300 copyrighted sound recordings, some of which were contained on CDs she owned. BMG music and others filed a federal lawsuit against Gonzalez in 2003 alleging copyright infringement. Gonzalez’s defense was that by downloading the songs, she was merely sampling them to see whether she would want to purchase the entire CD. Accordingly, Gonzalez argued, she was not liable for infringement, because her conduct was protected under the doctrine of fair use.

The District Court disagreed, and granted summary judgment in favor of the recording industry plaintiffs. The District Court enjoined Gonzalez from engaging in any further infringement, and ordered her to pay over $22,000 in damages. Gonzalez sought review with the Seventh Circuit, which affirmed.

Judge Easterbrook’s opinion is unequivocal in rejecting Gonzalez’s fair use argument. The Court easily distinguished the present case from Sony Corp. of America v. Universal Studios, Inc., 464 U.S. 417 (1984) (also known as the Betamax case).

“This is not a form of time-shifting along the lines of [the Betamax case]. A copy downloaded, played, and retained on one’s hard drive for future use is a direct substitute for a purchased copy – and without the benefit of the license fee paid to the broadcaster.”

The Court’s analyzed Gonzalez’s claim in light the effect of P2P file-sharing on the potential market for the music. The Court emphasized that downloading unlicensed copies of music, even if for the purpose of testing whether one would want to later buy it, directly competes with legitimate means for consumers to sample music they might like.

For example, broadcast radio allows potential music purchasers to listen for free – and the artists and publishers profit in this scenario not only from future sales, but from the royalties paid by the broadcaster. Similarly, in legitimate online services such as iTunes and the revived Napster (who pay artists and publishers agreed-upon royalties), potential purchasers can sample music for little or no cost and later buy the tracks.

The Court noted that these modes of previewing music in an authorized manner “share the feature of evanescence.” Because downloading unlicensed permanent copies from the Internet directly competes with these legitimate means for artists and publishers to generate profit, the only relevant fair use factor weighed against Gonzalez. Accordingly, the District Court was correct to have found that Gonzalez committed copyright infringement.

BMG Music v. Gonzalez, — F.3d — No. 05-1314 (7th Cir., December 9, 2005).

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