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HUNTING SUBSCRIBER X

Sarah Deutsch was working part-time for Bell Atlantic in 1995 when the document arrived on her desk. She had quit her job at the Washington, D.C., intellectual property law firm Morgan Lewis four years earlier to spend more time with her kids, and the job at Bell Atlantic was perfect. She was working the “plain vanilla” practice of electronic copyright in the days before the Internet became what we know it to be today, allowing her to split her time between the home and the office. It's hard to imagine her life being any less hectic. But that was about to change.

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The document was a “green paper” — one of those complex reports issued by government offices exploring the ramifications of current law on a particular field or technology. Law offices are flooded with them, and for Deutsch to find one of the reports in her inbox was nothing out of the ordinary.

But this one was different. It was issued by the U.S. Department of Commerce's Patent and Trademark Office and detailed the spread of new digital copying technology that had begun to seep out over the Internet. With it, people could duplicate copyrighted music and other media for distribution over the Web. Most startling was the paper's conclusion: that the only way to police this new type of intellectual property theft was to make carriers liable for all illegally copied content on their networks.

“It put the burden of enforcing copyright on the carriers' shoulders,” Deutsch said. “I was shocked. Everybody was shocked. That one statement awoke a sleeping giant.”

By the end of 1995, Deutsch was a full-time counsel with the company now known as Verizon Communications. By 1998, digital media rights were the most dominant issue in the entertainment and consumer electronics industry, leading to the passage of the Digital Millennium Copyright Act that year. The DMCA precipitated countless legislative battles and lawsuits among media giants, electronics manufacturers and ISPs, which had once worked amicably together. And in 2002, it produced the first major clash between telecom and entertainment.

The Recording Industry Association of America took Verizon to court over the identity of a DSL subscriber who RIAA claims is harboring a trove of pirated music. RIAA — a group made up of international record labels including giants such as Sony, Vivendi Universal and Warner Music — won the first round as a federal judge ordered Verizon to give up the name of so-called “Subscriber X,” but Verizon is appealing the case.

Deutsch has been in thick of the debate since the beginning and is now heading Verizon's legal defense. The significance of the case, however, goes beyond the identity of a single subscriber — carriers' basic control over their own networks and the privacy and trust of all their customers are at stake, Deutsch said. And if the entertainment industry gets its way, Verizon's — and every other carrier's — network will crack wide open, subject to any inquiry or threat of legal action from any copyright holder regardless of whether the claim is legitimate.

“A whole class of copyright holders is trying to shift the burden of policing their copyright claims to another industry — namely ours,” Deutsch said. “The irony of this situation is that both industries need each other. We want legitimate content on our networks, and copyright holders need our networks to get their content out there. We should be working together, but instead we're fighting one another.”

In October 1998, President Clinton signed into law House Bill 2281, and the Digital Millennium Copyright Act was born. The legislation was the result of intense negotiation pitting the entertainment and software industries against computer manufacturers, electronics makers and consumer groups. Seated prominently at the negotiations table was the telecom industry, and while telecom didn't have a direct stake in the digital media war at the time, it wasn't stupid. The Internet Age had redefined the industry as data traffic began flooding its networks. And while ISPs and carriers had no part in the copying and distribution of all that illegal content, they knew most of it would be traversing their networks. Their potential liability was immense, and carriers made sure the final draft absolved them of that liability.

The DMCA immediately began to draw criticism from consumer advocacy groups, civil liberties organizations and even the entertainment industry itself, which has lobbied to change provisions of the bill to aid its enforcement efforts. But telecom wasn't among those critics. It cooperated happily with RIAA, the Motion Picture Association of America and other copyright holders to shut down illegal activity on its networks.

Then came Napster. The fastest-growing Internet service in history, Napster was a new kind of file-sharing network. Instead of posting music files on a public server, Napster established direct peer-to-peer connections to its customers' computers. Carriers and ISPs became mere conduits as millions of Napster users began filling Internet pipes with entire record catalogues.

RIAA went after Napster with a vengeance, and in July 2001 the federal courts effectively pulled the plug. But the damage had already been done. While RIAA succeeded in persuading the courts to shut down Napster progeny Aimster in late 2002, other imitators thrived: Kazaa, Grokster, BearShare, and Morpheus among them. Most of these new file-sharing services learned from Napster's mistakes.

Napster's downfall was that its peer-to-peer operations were centralized on its own servers, so every file uploaded across Napster's vast network registered on the company's monitors. RIAA's lawsuit succeeded because it was able to show that Napster not only knew the details about the millions of illegal downloads taking place, but also that it allowed the activity to continue unabated. Napster's peer-to-peer offspring saw the loophole and exploited it: They decentralized their networks, divvying up all database information among customer computers. They effectively blinded themselves to the activities on their network, and when RIAA came knocking, they could plead ignorance to which files its customers were swapping.

Lawsuits did little to slow this new generation of file sharing, so a frustrated RIAA began looking for other avenues of enforcement. RIAA began suing companies that allowed file-sharing on their networks and took its case back to Congress, lobbying to have the DMCA amended. But the entertainment conglomerates ran into walls when their efforts to shut down piracy led to accusations of zealotry and vigilantism from civil liberties and consumer advocacy groups. Hackers even routinely attacked RIAA's Web site. (RIAA officials and the labels it represents declined Telephony's repeated requests for interviews.)

By 2002 RIAA was fed up, so it decided to go after the one group it had avoided: the file-sharing customers themselves. And to get to them, they had to go through the carriers.

Sarah Deutsch got the subpoena in July 2002. RIAA had identified the IP address of a Verizon subscriber who was suspected of downloading more than 600 digital music files in one day. RIAA wanted Verizon to give up the subscriber's name and address, as well as shut off his access to the Internet.

Deutsch had received dozens of subpoenas from RIAA and other entertainment trade groups, all of them fairly routine requests. But this one was different. Subscriber X wasn't hosting illegal content on Verizon's network; he was a Kazaa client that used Verizon for Internet access, and the disputed content was stored on his hard drive. Verizon had no way of verifying RIAA's allegations. Deutsch refused to give up Subscriber X's name.

“We're not going to become the Internet police for RIAA,” Deutsch said. “There's a delicate balance between copyright holders' rights and our customers' rights that needs to be preserved. RIAA crossed over the line.”

RIAA immediately sued Verizon, claiming the carrier was violating the same provisions of the DMCA it had helped draft. At the center of the debate was Section 512 of the act, which allows a copyright holder to subpoena customer information from a service provider when infringement is in question.

The DMCA's powers go far beyond those of the typical subpoena, however. No judge has to sign off on the order — it only requires the stamp of a clerk of the court. Nor does a copyright holder have to prove that copyright infringement has occurred. The holder only has to allege infringement.

In court, Deutsch led Verizon's defense, arguing that the DMCA's subpoena power only applies to cases in which the infringing content is stored on Verizon's network. And because Subscriber X had no illegally copied content hosted on the carrier's servers, Deutsch argued the DMCA subpoena provisions do not apply.

Verizon claims RIAA still has recourse — it can file what's called a John Doe lawsuit in court, which in effect would allow RIAA to sue Subscriber X without knowing his name. John Doe lawsuits, however, are much more complicated, requiring a courtroom hearing to determine if a copyright holder has a legitimate complaint against an alleged pirate. RIAA said the argument was moot, as its subpoena powers were clearly spelled out in the DMCA, and Verizon's insistence that it resort to John Doe lawsuits would only serve to prevent the trade group from enforcing its copyrights.

U.S. District Court Judge John Bates was sympathetic. “Under Verizon's reading of the act, a significant amount of potential copyright infringement would be shielded from the subpoena authority of the DMCA,” Bates wrote in his 37-page decision. “That would, in effect, give Internet copyrights infringers shelter from the long arm of DMCA power, and allow infringement to flourish.”

Bates ordered the carrier to cough up Subscriber X's name. Verizon immediately filed for a stay of the judgment so it can pursue an appeal. Both RIAA and Verizon have filed their arguments, and now they can only wait.

Verizon and RIAA have now taken their fight to the streets, battling it out before the media and their industry peers. Verizon charged RIAA with trying to violate the privacy and civil rights of its subscribers, accusing them and other major copyright holders of ham-handed vigilantism on the Internet. RIAA and the entertainment industry accused Verizon and other ISPs of harboring music pirates, turning a blind eye to their activities because of the network traffic that file-sharing services generate. RIAA President and CEO Hilary Rosen even went so far as to suggest ISPs be forced to pay a fee to copyright holders for permitting file sharing on their networks.

RIAA has definitely felt the brunt of the backlash from the case. Not only has the entire telecom industry rushed to Verizon's defense, but organizations including the American Civil Liberties Union and the Consumer Federation of America have filed briefs in Verizon's defense. Consumer and technology advocacy groups have rallied against RIAA, and the entire entertainment industry has found itself shrouded in a public relations nightmare. But despite those public obstacles, RIAA appears to be holding all of the legal aces.

The fact remains that Verizon helped negotiate the laws it's currently disputing, said Denis Mroz, an intellectual property attorney who worked in RIAA's legal department until 1999. Deutsch herself sat at the bargaining table when the bill was being written, and despite Verizon's protests that the act was written before file sharing came to the forefront, Mroz said the law is very clear.

“If they did balk during negotiations, they certainly didn't balk very loudly,” Mroz said. “It's pretty simple: If the ISPs don't want to be liable for their customers' infringement, then they have to give them the customers themselves. Verizon can't have it both ways.”

The subpoena powers of the DMCA are the only weapons copyright holders have to fight individual music pirates. Filing a John Doe lawsuit is an option the record labels and movie studios want to reserve as last resort. And in most cases, copyright holders only want infringers to stop downloading illegal content, not take them to court, Mroz said.

Even with the subpoena powers of the DMCA, there is no possibility RIAA could go after each and every one of the millions of users swapping digital music on the Internet, Mroz said. While Verizon insists that subpoena power can be easily abused, Mroz said the carrier's claims are far exaggerated.

“You could misrepresent yourself as a copyright holder or misrepresent your case for infringement, but then you're talking about perpetuating a fraud upon the federal court,” Mroz said. “That's a serious crime that no one can take lightly.”

While RIAA may have won the first courtroom battle, Verizon's case isn't entirely lost. Many legal experts believe Verizon has a convincing constitutional civil liberties case on its hands. During the trial, civil liberties groups filed numerous briefs stating that the DMCA's subpoena powers violate First Amendment rights to privacy. Judge Bates even hinted in his ruling that Verizon had constitutional grounds to dispute the DMCA at its disposal. The problem is that Verizon — until now — has failed to argue them.

“The court didn't really decide the heart of the issue: a user's right to privacy,” said Sean Sullivan, an attorney for the intellectual property firm of McDonnell Boehnen Hulbert & Berghoff. “Verizon waved the constitutional arguments like a patriotic flag, but it didn't argue those issues in court. The decision the court made was probably the right decision based on the construction of the DMCA itself. What Verizon didn't challenge was whether that provision of the DMCA was constitutional.”

Why Verizon didn't make that challenge puzzles Sullivan and other legal experts, but Sullivan posited that Verizon might not be willing to take up the constitutional issues because it has a lot of stake in the DMCA itself. The act, after all, does protect Verizon and all other ISPs from copyright liability. If that part of the DMCA is declared unconstitutional and the act itself is revisited in Congress, Verizon might find its liability shield tossed out along with the DMCA's subpoena provisions. Another possibility, Sullivan said, is that Verizon may not be in any position to fight for the constitutional rights of its subscribers. It's Subscriber X whose privacy would be violated, not Verizon's. “This may not be Verizon's fight,” Sullivan said.

Verizon's explanation is much simpler. Deutsch said Verizon believes the DMCA in no way intended to give copyright holders such broad-reaching subpoena powers. If the courts interpret that the DMCA does in fact grant those powers, there is no way they could be constitutional, Deutsch said. While she acknowledged that Verizon wants to keep the DMCA preserved as much as possible, she said Verizon would not balk from First Amendment matters if necessary.

“In the lower court, we did spend more time arguing the statutes of the law, but it's fair to say on appeal we'll be highlighting the constitutional issues,” Deutsch said. “We want to protect the privacy of our users. If necessary, we will go all the way to Supreme Court to do so.”

For all of the controversy he's stirred up, Subscriber X may not even know he has become the figurehead in the war between telecom and the recording industry. Verizon claimed it has not told him, and doesn't plan to unless forced to divulge his name. And there could be dozens more Subscriber Xs out there. Verizon wasn't the only ISP to receive RIAA's subpoena — it just happened to be the first one to take RIAA to court. Many legal experts believe RIAA has littered the telecom industry with them, waiting to see which ISP would be the first to blink. EarthLink Communications has received one such subpoena for information on a subscriber. The ISP has yet to answer, and according to Dave Baker, EarthLink's vice president of law and public policy, RIAA hasn't made any moves to enforce it.

Baker said he believes the Verizon suit is RIAA's test case to see how far it can push the DMCA. If Verizon's case fails, RIAA will have court precedence on its side, Baker said, opening the door for copyright holders to run a virtual dragnet through the ISP industry. And ISPs and carriers would have no way of stopping it.

“Our real concern is that this could open the floodgates to hundreds, if not thousands, of subpoenas for information on our customers — people who might not even be EarthLink subscribers,” Baker said. “I appreciate RIAA's concerns, and I want to make it perfectly clear that EarthLink is not advocating music piracy on our networks. But there's got to be some way we can work this out without throwing open our whole network to scrutiny from any person who claims to have a copyright dispute.”

In addition to targeting individual customers, RIAA and MPAA have sued corporations and universities to get them to stop their employees and students from running file-sharing clients on their networks. Under pressure from lawmakers sympathetic to the copyright community, the U.S. Justice Department in August said it would begin prosecuting peer-to-peer pirates under the little-known No Electronic Theft (NET) Act, a law passed in 1997 designed to prevent electronic reproduction of software, movies and music. A violation of the NET act is punishable by a sentence of one to five years in federal prison.

One of the practices that consumer rights groups have found most distasteful is the use of “bot” programs that comb through peer-to-peer networks, searching out copyrighted material and automatically generating e-mail complaints to ISPs.

In one well-publicized case, in 2001 AOL Time Warner (which faces the added conundrum of being both an ISP and a media conglomerate) hired a bot company called Mediaforce to prowl peer-to-peer networks searching for unauthorized Time Warner content and contact service providers about stopping the infringement. In December of that year, MCI's UUNet division received an e-mail from Mediaforce demanding it cut off access to a UUNet subscriber who was allegedly distributing a copy of the Warner Bros. movie “Harry Potter and the Sorcerer's Stone” from his hard drive. At the bottom of the e-mail was a detail of the file in question: a one-kilobit text file titled “harry potter book report.”

“They're detecting infringement using automated methods, and those automated methods are notoriously unreliable,” said Joe Krauss, who started Web portal Excite.com and is now co-founder of fair rights advocacy group Digital-Consumer.org. “When you combine that automated process with a subpoena process that doesn't require judicial review, there are bound to be abuses. It encourages a dragnet philosophy that you don't need to prove guilt to get accountability — you only have to accuse.”

In August 2002, RIAA and its member record labels also filed suit against WorldCom (now MCI), Cable & Wireless, AT&T and other backbone carriers, seeking to force them to shut down traffic to a Web site in China. The site was called Listen4Ever.com, and it was offering boatloads of pirated Bruce Springsteen and Christina Aguilera songs for free. RIAA wanted the carriers to shut off access to the specific IP addresses used by Listen4Ever, effectively blocking all U.S. traffic to a specific node on the Internet. What RIAA wanted, the carriers said, was a practical impossibility.

“It's our job to look at packets and IP addresses, not monitor content,” said Vint Cerf, senior vice president of architecture and technology at MCI. The carrier had absolutely no contact with Listen4Ever itself, providing only backbone services for its ISP. Blocking the site's individual IP address, Cerf said, would have required MCI WorldCom to make a separate entry for the site in each of its router tables — a costly, time-consuming procedure that could create routing problems all over the Internet. In addition, any effort to block the address could be easily circumvented by simply switching IP addresses. It's not MCI or any other carrier's job to police the content of sites across the globe, Cerf said, and forcing it to do so would be a disaster for the entire industry.

The lawsuit never got close a courtroom, however. RIAA quietly dropped the suit a few days after it was filed. Listen4Ever had disappeared from the Internet, its Chinese ISP having pulled the plug. And although the action against those international data carriers seems little related to Verizon's case, the two are inextricably linked. They show that the entertainment industry is willing and able to hold all aspects of the telecom industry accountable for electronic theft and will use any tools at their disposal, whether they be international trade laws or subpoena powers. Copyright law experts have little doubt that the lawsuit MCI faced someday will reappear in a different guise, as the sites that offer up illegally copyrighted content are numerous.

RIAA officials have stated on numerous occasions that the recording industry isn't on a witch hunt. It's simply an issue of theft. According to RIAA, CD sales were down 8.9% in 2002, from 881.9 million units shipped to 803.3 million. That translated into $865.3 million lost by the labels, its artists and the retailers that sell their music, and according to RIAA, the fault lies squarely on the shoulders of CD burning and Internet file sharing. “The judge in the Aimster case recently summed it up best when [he] said that Aimster ‘managed to do everything but actually steal the music off the store shelf and hand it to its users,’” Hilary Rosen testified last September before the U.S. House Subcommittee on Courts, the Internet and Intellectual Property. But many feel RIAA focusing on its declining CD sales is fallacy refusing to deal with the reality of the changing world of entertainment.

“RIAA's not focusing on the big picture,” McDonnell Boehnen's Sullivan said. “They're trying to stop people from embracing digital music. They're trying to bring people back to their business model: buying CDs. Well, those days are over. Digital music is the new game, and RIAA has to find a way to play it.”

In general, Sarah Deutsch tends to be reserved. She speaks mainly to the law, and isn't prone to exaggeration or the “This is America” bombast of many of her more publicly visible Verizon colleagues. But when pressed about the ramifications of the courtroom battle in which she's embroiled, Deutsch's words become uncharacteristically foreboding.

Deutsch said she believes that the moment Verizon's case begins to show cracks, RIAA and other entertainment industry groups will release an onslaught of subpoenas and other court actions that could cripple the telecom industry: subpoenas for thousands of subscribers' identities, demands to shut those same subscribers from the Internet and orders to block Web sites from their customers. RIAA is already getting antsy while the case flounders in court; Deutsch said her office has already received several more RIAA subpoenas, each testing a slightly different aspect of the DMCA's subpoena statute. She has succeeded in getting those subpoenas under the same umbrella lawsuit, but otherwise, the legal fight hasn't exactly gone in Verizon's favor.

At press time, Verizon was still battling to get a temporary stay of the district court's original decision, which would force Verizon to cough up Subscriber X's identity before its appeal is even heard. Those courtroom fights will probably continue all summer until Sept. 16, the day of the first scheduled hearing before the Washington, D.C., Circuit of the U.S. Court of Appeals.

Those hearings will be the day of reckoning for Verizon and the telecom industry as a whole. Depending on how Verizon's legal team argues its side, the court could decide to hear the carrier's case, starting a possible chain of appeals that could wend its way to the Supreme Court. And if the court refuses to hear the case?

“The floodgates will open,” Deutsch said. “RIAA will wreck havoc on the Internet.”

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© 2014 Penton Media Inc.

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