The true cost of freebies
on July 1, 2006
Updated on February 8, 2021
As more New Yorkers switch to broadband Internet connections, their appetite for music and video delivered directly to their computer is voracious. And while legal downloads of music and video are available, many consumers still steal music, video and other contraband. Steal? Yes, when you download copyright-protected music and music video without paying, it’s like walking into Circuit City and shoplifting DVDs. Get caught and you’ll face more than a slap on the wrist.
“A lot of people figure, ‘I can do this and no one will know,’” says Dale Cendali, a partner with O’Melveny & Myers and chair of the firm’s Intellectual Property & Technology Practice. “Well, you can get caught, and if you’re convicted you face a fine of $150,000 per infringement as well as other penalties.” Cendali, author of Trademark Protection and the Internet and co-chair of the American Bar Association’s Women in IP Initiative, says these sanctions will also be enforced against parents whose children engage in these practices.
New Yorkers who swap illegal files risk importing viruses and spyware onto their hard drives, too, says John F. Delaney, a partner with Morrison Foerster and co-chair of the firm’s Technology Transactions Practice Group. Delaney, who has spoken extensively on emerging copyright and intellectual property issues, says it’s relatively cheap to buy music and video legally. The few bucks you save doing it illegally isn’t worth it.
And as the law catches up with rapidly evolving technology, the sanctions might become harsher. Buying or subscribing to music and other content services online is similar to buying software. When you consent to the User Agreement terms of iTunes, for example, you don’t actually own that song or video—you own the right to use it for certain purposes.
Virtually all consumers click the “I Agree” button without reading it, which is a mistake, according to Jeffrey Neuberger, a partner with Brown, Raysman and chair of the firm’s Technology, Media and Communications Department. Neuberger is also chair of the New York State Bar Association’s Special Committee on Cyberspace law, and co-author of Doing Business on the Internet: Forms and Analysis. “Like all material that is downloaded from the computer, music and other content is just a series of ones or zeros that is subject to restrictions outlined in the user agreement,” he says. “It would be nice if you would read it before you agree, but if you don’t that’s not a defense in court if you violate the agreement.”
Agreements differ, but many share the same terms, such as restrictions on where you can install content; consent to pay monthly fees for subscription-based services; and notification that the terms can change without notice to consumers. These terms comprise digital rights management, a practice under which digital content is encoded so that its use is restricted to the licensing terms. The industry strives to balance the need for copyright holders to be compensated for the use of their creation with the need for consumers to have reasonable use of what they have licensed, Cendali says.
For more information on this area of law, see our intellectual property overview.