3D Systems, which makes high end 3D printing systems is suing Formlabs and Kickstarter for patent infringement. This case can be seen as a test of the level of responsibility of content providers when disseminating content. Organizations such as Kickstarter, Ebay and Youtube are basically conduits, or middle men, through which IP sometimes flows. If an organization is basically a conduit through which IP travels, how responsible is it for monitoring intellectual property? Is the analogy like a phone line? Clearly, the phone company is not responsible for monitoring content. Or is the analogy more akin to a record company? In which case it clearly must share some responsibility for monitoring intellectual property.

One criteria to judge enforcement responsibility is the feasibility of enforcement. Presumably society and the courts would not make a phone company monitor conversations, for a variety of reasons. Youtube has a system in place for copyright holders to flag videos for infringement. On the face of it this does not seem very burdensome at all on Youtube as the process is largely automated. However, the burden is still placed on the copyright holder to make a complaint. Beyond providing mechanisms for resolving intellectual property disputes, does Kickstarter and Youtube have some responsibility to actively review content for IP issues? Does Kickstater need to do patent research? Does Youtube need to watch every new video? Presumably this would cost quite a bit of money. Also, any enforcement would mistakenly flag some legal content.

My sense is that, on the whole, we should treat these online conduits more like the phone company. It is not reasonable to ask these conduits to always share in liability for the infringement of its participants. And in the case of Kickstarter, it would clearly be burdensome on the company (and have a cooling effect on the marketplace) if Kickstarter had to do patent research on every project. However, like Youtube, they should have a process for resolving IP conflicts. According to this post, currently Kickstarter does not. I predict this will change.

However, immunity should not be a blank check. If a conduit’s content is largely illegal, then that company or industry should show it is actively working towards reducing illegal use of its products or services.

For example, in the realm of written content, there’s Copyscape which will check for originality. For music or video, perhaps software which compared new content to an established database could be implemented which would at least cut down on pirated content (or more likely flag suspicious content for further review). For patents, an automated solution might be more difficult.

IP holders have always been tasked with monitoring the playing field for infringement. However, the standard of reasonableness is always in play. Knowingly allowing IP infringement, when there is a feasible and reasonable method of sorting out infringement, should not be protected. Hopefully as we muddle through these sorts of cases involving conduits a reasonable standard will emerge. My prediction and hope, is that conduits, while generally shielded from liability, will not allowed to always plead ignorance. They must actively seek to weed out IP infringement. And that means expending real resources in examining their IP leaks and looking for solutions to plug those leaks.

As a footnote to this discussion, while it is an open question whether companies need to have any responsibility for the use of their product, I simply assume that all organizations have some responsibility to limit the illegal use of their products or services. For the vast majority of economic actors, the actual standard should be very light. Economic actors tend to error on the side of inaction since it is burdensome and it opens one up to liability if you start making judgments about who is going to act illegally. Most economic actors have a no questions asked attitude… and quite rightly I think. However, this justification has limits. If your file sharing company’s traffic is 90% pirated. It seems prima facie reasonable to expect some action. And it is within societies’ purview not to have your company around at all. For example, it seems unreasonable for a company to sell a universal key to just anyone. Again, some may argue that the buyer and sellers rights are being violated if the government steps in (or that all government interference sets a bad precedent, etc.). But I assume that a large majority of people would not accept a business’ right to sell a universal key. And most importantly for our purposes, it is accepted legally, pretty much everywhere, that government can compel organizations to monitor the use of their products and services.