Importing Kazaa - Exporting Grokster

This paper examines some of the international implications of the U.S. Grokster litigation and the parallel Kazaa case that was recently decided by the Federal Court of Australia. Neither court addressed the international aspects of the holdings. This is a significant gap: P2P products and services are disseminated globally; many of the users of these products and services and a number of the defendants in the cases were located beyond the forum; P2P business models often involve division of corporate activities between different jurisdictions; and the files that are shared on P2P networks often traverse international borders. The paper analyzes Australian and U.S. copyright legislation and doctrine to assess what the law on P2P products and services might look like if courts confronted more directly the international character of copyright issues that arise in the P2P context. It then identifies a distinction between de jure and de facto extraterritoriality. De jure extraterritorial application of domestic copyright law occurs when legislatures and courts develop liability theories that involve the direct application of one nation's copyright laws to activities that occur in foreign territories. The communication tort recently enacted into Australian copyright law is an example of de jure extraterritoriality: Australian copyright law expressly applies to communication of copyright protected material to and from Australia - thereby offering the potential for Australian copyright law to apply to communication of copyright material that reaches the public in foreign jurisdictions. The concept of de facto' extraterritoriality is illustrated by Justice Breyer's Grokster concurrence. Justice Breyer's concurrence suggests that the Sony safe harbor should be capacious, with the probable result of more unlicensed circulation of copyright protected works. One problem with Justice Breyers approach, a problem not addressed in the Grokster opinions, is that circulation of copyright protected works on networks with global reach may have the effect of imposing a policy balance that is struck with U.S. conditions in mind on the rest of the world - including countries in which the balance between technological development and copyright protection is viewed differently. The paper concludes by suggesting that the Berne Convention offers legal actors a source for principles that might assist in resolving the tension between extraterritorial application of domestic copyright law and territorial sovereignty. This paper was presented at the Santa Clara University School of Law Conference on Third Party Liability in Intellectual Property Law on October 7, 2005, and will be published in a Symposium issue of the Santa Clara Computer & High Technology Law Journal in 2006