it with the court's permission and i would like to speak for close to fifteen minutes as i can my colleague mr ramos who represents the places in the lever case rebuttal your honour's in our view there is one single overarching question before the court and that is whether the defendants can be permitted to knowingly build and operate and profit from a business that is built on and hands on preventable i underline preventable here massive probably right infringement a business that could be operated lawfully if the defendants chose to but which they choose not to in fact to ignore the ability to operate the business law of these things that you sunny was a business that at the end of the day according to the united states supreme court operated largely in primarily lawfully for time shifting find in favor of a minority number of plaintiffs here ten percent who want a minority amount of copyrighted works that's the end of the technology it's shut down it's over it's done with and under those circumstances at the very least it is not just or proper or appropriate or fair to permit a minority number of the founder has to close off a technology number to judging and in a difference to what manner like put it this way that the infringements could be separated out from the non infringement it was an all or nothing situation number three judge noone in sony there was no ongoing relationship the supreme court makes a point of saying that sony made a product put it into the stream of commerce so really it got its money when it sold its product and that was the end of it the defend purpose of capitalizing from is ongoing relationship advertising relationship that they have you know i'm going relationship that i would submit to the court  and i and supported by the record it's based on a ninety percent infringement in a situation where they could have filtered precisely the same way that this was that doesn't matter and it doesn't matter for a couple of reasons it doesn't matter number one because the platers aren't trying to stop those not infringing uses only the infringing use and it doesn't matter number two this because because of actual specific knowledge of infringing activity that's the way this court read the sony decision because at the end of the day your honor everything i said about the defendants here i would submit i could have and indeed three years ago did say about napster ever the end of the day we have to look at the supreme court i think  absolutely so absolutely showing and in fact i i want this court to look to the supreme court in that regard just like this court and that's to look to the supreme court this court has a lengthy discussion after the impact the sony decision in this particular case and i would i would agree and from that two things at least number one that this court had an interpretation of selling which i would submit consistent with sony that said that sony stands for the proposition that the court may not infer simply from the mere fact that a product and of course  a product it's a it's a system in a business but a product from the mere fact that a product may be used for infringement the court may not infer knowledge this court the of online infringement and what this court said was there we don't have to rely on the plate to start asking us to rely on the mere fact that a product maybe to infringe they've got overwhelming evidence and we in the court cited it in napster in a footnote including actual notice of twelve thousand files well here we gave actual notice of eight million files they have overwhelming both actual  constructive knowledge and that makes that simply make some money in applicable as a defense here and if and and what this court ended up saying in that regard if i can direct the course to the end of the sony discussion and as i'm page ten twenty one regardless of the number of users infringement of pointers copyrights and that's why this court said sony is a little assistance now that the district court judge wilson ignored this issue and this standard and in addition to ignoring it i would submit your honour's the dumper one saying that there was no issue as to substantial not infringing us here under now after one that doesn't matter because there was no way to ask the actual specific knowledge it was seriously contested the only evidence in the record is the evidence that we put in ninety percent infringing use the defendants who had at least equal access to their systems into their indexes chose not to put in any evidence at all of the infringing we had anecdotal evidence that's all it was i think when you examine the evidence well when you examine that anecdotal evidence you see one work of shakespeare here lots of references to peer to peer systems are generally not to these systems very nonspecific when we did our survey and we picked out i think it was sixteen hundred  random there wasn't a single public domain material there if you look at judge wilson's examples in his opinion they are indeed not nine infringing uses he talks about distributing movie trailers that's not nine infringing that's an infringing use that's copyrighted work it talks about using the software where it's legal well it's it may be legal outside the united states but that this is a us piece based on u s copyright law u s infringers us copyright us point this or sharing the works of shakespeare in which in the record there is maybe a single work of shakespeare or a couple that were found not only that your honor what the supreme court says is not only must it be substantially non infringing use it much the a commercially significant non infringing use which is to say it has to be something that they can base of business on there was absolutely no evidence here that this business and one would expect absolutely no evidence that a business that is based on maps that are they started out based on napster open now bringing open napster record you have to have a commercially significant use they had barely any use it certainly was not commercially significant and ultimately your honor i would submit in my my portion of significant and if ten percent is commercially significant then let them build their business on the ten percent and they can go on and do it with a simple facts they can all the mandate the ninety percent infringement sink kind of simple facts that napster was required to implement and the copyright law cannot and ought not to power eight ninety percent infringing ninety percent infringement system would eventually degrade and it would disappear it would close down certainly grokster all they have to do is stop paying their sixty percent of their license for we saw what happened to music city when it stopped  important i think it also in a sense is asking the wrong question after all when napster was closed down by this court it continued open now they say they used open now after continue that didn't mean that this court ought not to shut down napster for work for massive infringement but the fact of the wrong the wrong has been done and the putting together of the system the operating of the system the fact of the matter as we pointed out to judge w is they haven't walked away and they're not going to walk away because that's how they make their money and finally i guess the question is especially we're talking not open source programs that's not in the stream of commerce it's going to be interact with gnutella the evidence in the record by the way is it is not gnutella it is the majority of that program is proprietary to stream cast but the fact that if they walk away nothing might happen it doesn't answer the question of the ability to control they can be ordered by this court as nafta was to do something to control  if i leave my office with the light on without flipping the switch the lights going to stay on but eventually it will burn out that's what we've said here eventually this this will disappear but i also have the in essence flip the switch that the finance controller let and the evidence certainly is that even though it is based on gnutella even though it isn't the centralized system first and blocks can be put into place that will limit the infringement over that aspect of the system and based on that after war based on  that is not only something that alternately we believe the district court should order after this case is reversed but it's not and i don't lacked we're dealing with millions and millions and millions of users here who can may please the court monies terry ramos and i'm here today on behalf of over twenty seven thousand songwriters and music publishers who owns the rights to her ninety percent of the music record in the us they've been certified as a class in this case i'm just going to begin by talking about how effectively defend its services are built in the backs of my clients music that's what moore's people to these sites they don't go there because they think their technology is cool they go there because they want to get music in movies and that is reaching into to  client's pockets but i'd like to address some of the core one of the points that came up the chuck norris had asked me out and focus on a couple of very specific issues and then step one thing i want to clarify with regard to we were able to determine ninety percent were infringing they did not put forward any competing surveys so there's no opposing evidence from the other side saying ten percent is not infringing or any other numbers on the french and that is the sole record here it is with the fact  all irrespective of whether they were careful to be sure they weren't physically present at the moment the goods changed hands because they want to argue later we couldn't stop that sale we were there they would be liable so why is it any different here your problem is you can use these harsh terms but you are dealing with something new and the question is does the statutory monopoly that congress has given you reach out to that som regard i can speak on behalf of my clients in one thousand nine hundred five congress and then did the copyright act specifically to say that the regime probably right applies to musical works which my client's rights to would apply on the internet as well as in this is in the physical world and i think that makes it absolutely clear that list congress is intent congress anticipated that technology would change and in fact  facts and other things it is a very right it is a summer all right once my clients write songs they can't put them back into a locked box they are out in the world and they rely on the courts on the war the record here is replete with undisputed evidence that the morpheus and grokster software products are being used today to distribute millions of authorized video games millions of authorized songs media has distributed hundreds of thousands of authorized music videos for one artist alone famous bands such as widespread panic pearl jam phish dave matthews band have all authorized the sharing of their live concert recordings among their fans in fact contrary to mr practice representation have held its own expert in searching the network was unable to avoid finding the bible the koran and the communist manifesto demonstrating the use of these capability for non infringing use instead they make the same arguments that two of their number made before the supreme court twenty years ago they argue they argued then that sony's executives knew that the betamax would be used for infringement they argued then that proportion should be the test that primary views should be the test and they argued again contrary to mr pregnant representation that the data max could be easily modified so as to prevent or reduce the incidence of infringing on that point in particular i direct the course attention to page four ninety four of the sony ruling justice blackmun sense in which he discusses the so called possibility and i would agree with your earlier question your honor that of course just ruling must control but i will say this i think the napster gloss is not nearly the problem that appellant's would have you believe in fact holding of the napster opinion on page ten twenty one of this court's napster ruling the court extensively discusses what more needs to be shown before a defendant can be held liable judge wilson read that portion of the napster opinion closely concluded in conjunction with other precedents on this point such as the vault vs quaid case in the fifth circuit that more is required merely the notice that there has to be specific knowledge coupled with in conjunction with the liable they after all with them have actual knowledge as the appellant's constantly reiterate actual knowledge is not enough under the sony case and under this court's napster ruling there has to be a conjunction of actual knowledge delivered to these these two companies regarding specific infringements that allegedly were occurring on a network i would agree that that would create actual knowledge under this court's napster ruling of cour i'd like to also specifically address a question the judge thomas asked regarding whether or not the software would continue running if these companies were to close their doors unplug all their computers he answer is undisputed in this record fact forced to withdraw his prior statement in his declaration in which he said sure this software would eventually the case had its own a court under examination investigation the professor was forced to concede that if the computer was running and continued to be unchanged it would continue to run barring of course the slow decay of parts that may be contained in the computer  famous american geophysical union where in fact research institution was held liable for using photocopiers in ways that was infringing in fact it was mechanical means in the sense of you're searching on the maid of files of the particular m p three files you are providing the users with a fairly sophisticated way of undisputed testimony of the experts makes that clear i agree with you that the ability to parse formatted data song title album artist and things like that makes a tool a more powerful search tool that's cool that does not include those features however there's no reason to assume that just because you have the ability to search for an artist's name that that necessarily dictates infringing uses in fact we have evidence in the record that two million songs by prodigy have been distributed with authorization that music videos by artists like little romeo are distributed with permission similarly live concert recordings by number of bands all of which were found there is clear evidence in the record that someone searched on the network we had an individual search on the network and ascertain that all of these files were in fact available on the networks so i would submit that the ability to use metadata to refine your search to find authorized files is a perfectly legitimate use and in fact these companies are always working to make their searching capabilities more powerful just as a company like google would be w what you think we ought to hold in terms of what constitutes substantial non infringing activity i believe in light of the court the supreme court's ruling it's only as well as the vault case and the patent next i think the proper formulation of the rule is whether the non infringing uses contribute independent commercial value to the product even if the commercial value list of money yes and in particular there i would direct the court's attention to the fifth circuit's ruling in the vault f case where it was conceded that the non infringing use of standing alone would not have supported a market for the product at all nevertheless the fifth circuit found that the product in question was capable of substantial non infringing use in other words the court refused to imagine a hypothetical product where the infringing in the non infringing uses had somehow been segregated and then imagine a market and attempt to figure out whether one or the other would sell quote a number of their own prior rulings saying that in order to be viewed as lacking a substantial non infringing use a product must be uniquely suited for infringement or quote have no other use than infringement that however was expressly rejected by the majority in fact i think the courts the section of the opinion and zoning decision in section four of the court's opinion is very telling on this point the court found that that so many betamax v c r was capable of substantial non infringing uses either of which would have been enough to support the court's ruling in favor of sony in section four of a the court discusses authorized uses of copyrighted works and in particular focuses on mr rogers record sports programming and points out that only seven point three percent of sony betamax users were using a v c r through a recording of sports programming for example nevertheless at the very end of section four of the court's opinion it says that alone is enough to state a substantial not infringing use so i think in fact perhaps if we went beyond the ninety three percent threshold there may be a question that would be open but plainly understanding anything below that threshold if we have a situation where as i believe judge noonan pointed out the best the accountants could do is come up with a ninety percent figure i think the decision is made by sony if you will i don't like to point out that a pounds position suffers from i think a more fundamental flaw that flaw is ignoring the animat principle behind the sony opinion in that opinion on page four thirty one and four thirty two in particular before the court goes into its analysis it explains what is motivating its concerns it's  honest family point out is who is responsible for the adjusting the court in sony ruling told us the answer to that question it is congress in the first instance the reasons for that i think are quite straightforward  bad idea to decide the fate of a technology in its infancy in fact i think it's quite plain that in the early days of the v c r when the movie studios as one refused to license their films for reproduction on prerecord that the movie studios had a much more serious problem with infringement when it came to the v c r when in fact they entered the market participated in the market offered consumers choices that were non infringing uses their problem change and of course they went to congress and sought a movie or a solutions for what they perceived as the v c r problem in the end in one nine hundred ninety eight congress gave them a partial solution there is now technology mandate that applies to digital transmission of music internet radio if you will similarly in one thousand nine hundred two congress an act of the audio home recording act to address a new digital technology the digital audio tape recorder mingling a copyright owners for a violation of their exclusive rights to a quote arsenal unquote statutorily mandated remedy a court of not able to fashion freely you scare me to get regulatory solutions to address the tension between new technologies on the one hand and copyright owners interests on the other that is exactly what the supreme court recognized in the sony ruling and the animating principle for get the outcome there and i again i think it's really rather odd that copyright owners that the clients that mr ramos represents will suddenly abandon what has worked well for them for one hundred years namely legislative solutions in favor of asking a court to step in and apply what have to be much less nuanced remedies to the problem your honor i would like to leave the rest of my time to mr page to address the vicarious liability issues unless you have further question software much less control they no longer no more have the ability to control what they do and microsoft has the ability to control what people use outlook for the parents don't really what they're really saying is that roster and stream cast and later kozaki have the theoretical ability to have built a different product that would have given them that control they say that we could have built a product that involved filtering we strongly dispute that proposition there's certainly no evidence that filtering would work in fact the name based filtering in napster was a complete failure so it's very much disputed whether in fact there's any solution that an individual technology kind of could do much less a simple but that's not a question this court needs to answer or even ask it's the wrong question the correct question is do the current software give people the ability to distinguish between infringing and non infringing uses and eliminate the former and not the latter the solutions an to clicking the switch on the wall don't do that that's saying you have control because you have the ability to just go away so only had that level of control over what it used its users did it would simply stop selling r s any technology vendor has that ability if the ability to control is simply the ability to go away the problem with looking at what you could have built and whether it would control is that it expands the rule of vicarious liability without limit because right vicarious liability you need only two things you need a direct financial interest which one of the presidents has become simply attenuated financial interest and you need the ability to control it the ability to troll it just means you could build a tool that would that or suit the copyright holders interests that microsoft  what the night circuit said in that was precisely that when you get notice it gives rise to a duty to police your christmas but that extends only to your border and then i think it was very careful to say that court order on it at all and leaves every technology vendor every inventor every merchant at the mercy of copyright holders who want to look around and go you could have done something about this you're l it's also bad policy regulating technologies in their infancy is a bad idea imagine had the supreme court agreed with the pounds and had said v c r s are illegal because you could build them to have that control today v c r s corner more income for the music industry th movies they would not exist had the studios gotten their wish and had them banned they told the world that the v c r was to copyright as the boston strangler is to a woman alone at home and predicted that that it would be the death of copyright this is not a new thing every time a new technology comes along those with a vested interest in the old technology first ask the courts to ban it thankfully the courts say no and when they do the copyright holders then find a way to make money off that new technology because every time technology removes the transaction costs between the artist and the consumer that leaves money available for the artists radio was going to be the death of hockey right how can we compete with free your sending our music out into the airwaves for free for anyone  when courts declined to stock technology people find a way to develop those technologies to further develop not infringing uses of those technologies and to monetize them and in the long run it is always good for the consumers and the copyright holders efficiency is good for everybody and these systems are simply more efficient versions of distribution they have now reduced distribution cost not low but  parents have raised the issue of but didn't you once have that ability saying there were once central servers there were registration server existed because the earlier versions of the software do other things without that registrations or if we didn't have a central registration server when someone with you send it instant message to a user which shows an error on the username the existence of multiple people who has the same name made it impossible programming advances got to the point where the system was able to distinguish between those unique users and no longer needed but more to the point when that registration server existed it made no difference taking someone out of the registration server would keep them from being able to receive advertisements it would keep them from being able to send instant messages to each other it would keep them from being able to register in chat rooms but we would not stop the file sharing functions and even if it would and it does did not that's not before this court the district court very carefully limited its rulin to the current version of the software rushers that asked for a full summary judgment ruling and instead got a partial summary judgment ruling that addressed only whether there is liability for distributing the current software standing as to any of the factual issues of previous systems or what it used to be able to do or whether something someone said to or user wants is a material assistance to infringement those issues have not been decided by the district court another comment on a talent argument that things are reasonably easily thinks of all first the right question is where does the obligation to shane one software to police other people's copyrights come from on astor came from the court didn't work and technological manner in other words the filtering was ineffective so it was something new that was attempting to napster as opposed to the architecture of that system you could just shut off they had to do some additional programming  already had that there was life within the first place the liability finding an actor does not spring from the fact that master didn't yield a different system it springs from the fact that they didn't do what they could with their exist past just if i can pick up where counsel left off there is no distinction between what this court ordered napster to do and the remedy of filtering here it is not if the court looks at the record in the napster case and actually did not have in place a filter i could time this court ordered it to filter what napster had was an index that it didn't look at what it had and it had things court says how did not have the ability to determine whether something was copyrighted or not copyrighted no that you have got you now after have to exercise you or your reserve the right to police to the fullest extent that you can and the way you exercise it is by filtering and one way you exercise it at least is by filtering and when you don't do not exercise that fully in napster to this court said you were shut down now it did some filtering napster to him after to that after came to this court and said that's beyond our architecture and the courts said no that's your duty under vicarious liability to police you have to implement a filtering system to the extent that is feasible and there is principal difference between the position that the defendants are in here and the position that napster was in in that case while we're talking about vicarious liability  al since finding that there was a direct financial benefit and number two in several ways the ability to supervise one of which one of which is the ability to  filter the other way another one of which is the ability that these defendants admitted we had and they simple themselves from implementing the registration system the registration server identical to what napster had and what this court in napster said was sufficient to impose liability it was sufficient control ability to control they disable themselves from doing their no clear case i would submit to the court of turning a blind eye can be found in having something that the court says is the ability to supervise and then saying take it away from me they have another ability to supervise that this court said was sufficient and after in front of the sonos or their terms of service they have the absolute right under their terms of servers service their end user license agreement to disable sharing by users to do away with  users to bar users they actually did it they banned users they banned by ip address they can by username they exercise that right now they're no different position i would submit to the court they had napster the day after this court ruled said we're closing our registration servers well that would not be permissible and it's not permissible here they had that ability and they have to fully exercise it stead of fully exercising it by by filtering and blocking as napster did they disabled their registration systems and said sorry we're not going to do that and i would submit to the court the ability to supervise is much anonymous distribution system it is not building a business that's based on infringement it is in that respect arguably not contributing materially in the same way as somebody who builds a business an anonymous marketplace to to to distribute copyrighted material second what these people are doing is they are they are distributing upgrading maintaining keeping an eye on a mass known infringers it's an ongoing relationship if you if you told xerox that there is a band of thieves a band of pirates out there that are using these machines to be in france and under the law of aiding and abetting and contributory infringement if they continue to supply those machines to a band of infringers upgrade them and upkeep them and tell them have used them that the distinction is that xerox would say that we are not we are not contributing we're not materially contributing we're selling a product we're getting out of the marketplace we make our money by selling  product and then we are gone we are not can we are not making the market we are not providing the material we do not have the ability to to filter and block that infringement which by the way in the against the seller of copying equipment the copyright holder may not prevail and less the relief he seeks affects only his programs or unless he speaks for virtually all copyright holders put in a system so that you will implement blocking of our works and can you continue to sell your v t r continue to distribute your software continue continue to set up your distribution of not infringing works that's the balance here that's the balance that sony mandated and that's why so many is completely different than this case