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Lastly, like any legal issue, these questions about the relative virtues of indirect liability have to be evaluated dynamically. When the Ninth Circuit indicated that Napster would be liable for its role in online music piracy, new senices arose to take Napster's place. Some of those senices attempted to avoid liability by basing their operations outside the United States. Others designed their technologies such that there was no clear central party to hold accountable in court. These sorts of responses were both predictable and inevitable. They do not argue against indirect liability; but they cannot be ignored when deciding how much the copyright regime should rely on indirect liability as a substitute for other types of marginal incentives.

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The reason, according to the court, is that Napster had the ability to limit copyright infringement in ways that VCR manufacturers do not. For example, in applying the doctrine of contributory infringement, the court determined that Napster likely had the requisite level of knowledge because, first, Napster had "actual knowledge that specific infringing material [was] available using its system," and, second, Napster could have used that knowledge to identify and block at least some of the infringing material. Similarly, in analyzing the applicability of vicarious liability, the court emphasized Napster's ongoing relationship with its customers. At any time, Napster could have refused senice to users who were violating copyright law. VCR manufacturers, by contrast, have no such power; their relationship with any customer ends at the moment of sale.

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One can quibble with all of these arguments. For instance, this analysis seems to blur the line between the requirement under contributory infringement that a culpable party have kno-ruledge of the direct infringement and the requirement under ~lcarious liability that a culpable party have control over the specific infringer. Still, the opinion seems to get the basic logic right. Napster is different from a VCR manufacturer because it has low-cost ways of discouraging piracy without impinging on legitimate use. As we discuss next, that is the core insight necessary for the design of an efficient indirect liability regime.

Further update: figures in from Nottingham too

M%ether one agrees or disagrees with these results, there is much to criticize in the Court's analysis. On vicarious liability, the Court took a needlessly restrictive view of what it means for a manufacturer to "control" its purchasers. For example, the Court did not consider whether a relatively simple technology solution-say, making the fast forward button imprecise and thus diminishing the ease with which purchasers can skip commercials-might have gone a long way toward protecting copyright holders without interfering unduly with legitimate uses. On contributory infringement, meanwhile, while the Court was certainly right to focus on the fact that the VCR is capable of substantial noninfringing uses, the Court erred when it failed to put that fact into context. Full analysis requires that the benefits associated with legitimate use be weighed against the harms associated with illegitimate use. The Court failed to consider that balance. Instead, its ruling implies that VCR

Further update: figures now in from Oxford

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Plaintiffs have raised and continue to raise significant questions underthis statute, including: (1) whether Napster is an Internet service provideras defined by 17 U.S.C.