The Use of Defendant Class Actions to Protect Rights in the Internet
| Autor | Nelson Rodrigues Netto |
| Cargo | Professor of Law, FMU University, São Paulo, Brazil; Visiting Scholar, Harvard Law School; J.D., LL.M. and S.J.D., PUC University, São Paulo, Brazil. |
| Páginas | 59-79 |
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One of the most1 extraordinary advancement in the contemporary society has been the creation and diffusion of the Internet. To have an idea of the immeasurable growth of the users of the Internet is enough to reveal that in the United States, in four years, it has reached the number of 50 millions while to achieve this number, television took 13 years, personal computer 16 years, and the radio 38 years. 2
The possibility of, from a computer connection, people communicate to each other, access banking data, accomplish business, all over the globe, is a phenomenon of integration and development of the civilization.
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The Information Society generates a new step in the relationship among nations, influencing political and economical systems and even the sovereignty of each the people.
The Information Society Program in Brazil intends to impose a shared responsibility among private initiative sectors (entrepreneurial and civil society) and the public sector, aiming at “integrating, coordinating and incentivizing actions for the use of communication and information technologies as a mean to contribute to the social inclusion of all Brazilian citizens in the new society and, at the same time, to contribute to the country economy to gain conditions to compete in the global market”. 3
The great challenge is to make use of Internet to promote the enrichment of the modern culture within a human and ethic perspective and not just employs it as a technological device without aggregating better life conditions to the entire information society.
The Law operator much more than being alert to the mentioned phenomenon shall act affirmatively, proposing changes, trying to furnish normative elements for the relationships created by the Internet.
In this sense it is interesting to analyze a case recently decided by the United States Supreme Court.
The case involves, on one side, as plaintiffs, a group of music studios and other copyrights holders, and, on the other side, as defendants, companies that distribute free software that allow computer users to share electronic files through peer-to-peerPage 61networks, so-called because the computers communicate directly with each other, not through central servers. 4
The lawsuit had been filed as a bilateral class action.
The case is well known as Metro-Goldwyn-Mayer Studios Inc. and others versus Grokster, Ltd. and others (certiorari to the US Court of Appeals for The Ninth Circuit nº 04.480; decided on June 27 th , 2005).
The plaintiffs brought the lawsuit seeking damages and an injunction alleging that respondents knowingly and intentionally distributed their software to enable users to infringe copyrighted works in violation of the Copyright Act.
The respondents alleged, as principal reason to their defense, that they had no control whatsoever of the uses of the software that they freely distributed.
The U.S. Court of Appeals for the Ninth Circuit (a federal Court of Appeals that corresponds to the Brazilian “Tribunal Regional Federal”) affirmed the District Court decision, granting the defendants summary judgment holding them not liable for the copyrights’ infringement. 5
The decision was based on a precedent from the Supreme Court (Sony Corp. of America v. Universal City Studios, Inc., 464 U.S.) in which Sony has been able to show that the invention of the VCR did not have the purpose to violate copyrights or to increase the company profits by unlawful taping. As a matter of fact, in the defense of the Sony case, accepted by the Court, it has been demonstrated that the VCR principal use was time shifting, which means, one could tape a program for later viewing at a more convenient time.
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In the Sony case, the Supreme Court applied the “fair use” theory, as explained in the Syllabus of the MGM case: “Because the VCR was ‘capable of commercially significant non-infringing uses’, the Court held that Sony was not liable. Id., at 442. This theory reflected patent law’s traditional staple article of commerce doctrine that distribution of a component of a patented device will not violate the patent if it is suitable for use in other ways. 35 U. S. C §271(c). The doctrine absolves the equivocal conduct of selling an item with lawful and unlawful uses and limits liability to instances of more acute fault”.
Discording with the decision, the plaintiffs file a writ of certiorari and the Supreme Court held that: “Because substantial evidence supports MGM on all elements, summary judgment for respondents was error. On remand, reconsideration of MGM’s summary judgment motion will be in order”. 6
The Court decided that the Ninth Circuit had misread the decision on Sony “to mean that when a product is capable of substantial lawful use, the producer cannot be held contributorily liable for third parties infringing use of it, even when an actual purpose to cause infringing use is shown, unless the distributors had specific knowledge of infringement at a time when they contributed to the infringement and failed to act upon that information”.
The grounds of the decision in the MGM case were that the defendants have a secondary liability on a theory of contributory or vicarious infringement because, as the Supreme Court explained: “when a widely shared product is used to commitPage 63infringement, it may be impossible to enforce rights in the protected work effectively against all direct infringers, so that the only practical alternative is to go against the device’s distributor (…)”.
In 2005, we celebrated 20 years of the enactment of the Public Civil Action LawPCAL (Law nº 7.347, enacted on July, 24 th , 1985).
A long journey has been traveled to protect the collective rights, since the enactment of the Popular Action Law – PAL (Law nº 4.717, enacted on June, 29 th , 1965), until the conception and definition of the diffuse rights, collectives rights stricto sensu and individually homogeneous rights in the Brazilian Consumer Code – BCC (Law nº 8.078, enacted on December, 12 th , 1990), elevating the collective rights to a constitutional status as provided in various rules of the Brazilian Federal Constitution of 1988.
It seems to be valid to recognize the existence in the Brazilian juridical order of a “Brazilian collective procedure system”, which shall be heading toward to the development of a Brazilian Collective Procedure Code. 78
It is a moment to celebrate the victories achieved but also for reflection in order to implement aspects that still require a satisfactory solution.
One can not fails to mention the experience of more than a hundred years of the United States with class actions whose first federal statue – the Federal Rules of Equity – dates back to the year of 1842 9 , and the dimension of the relationships arising out of the Internet. Both are very strong arguments to validate the resort to the Page 64“MGM v. Grokster” case as a paradigm for a critic consideration about some topics of the Brazilian class actions.
In this essay our focus is toward to the preambulary class actions’ issue involving violations of rights through the Internet: the real parties in interest.
The Rule 5, of the PCAL establishes that have standing to file a class action lawsuit [action lawsuits?] or to obtain a provisional remedy, the public prosecutors, the Union; the States (and shall be included the Federal District considering that it has equal status to the States within the Federation); the Municipalities; entities and agencies of the Public Administration; and, non-profitable associations legally constituted for at least one year (this latter requisite may be dispensed by court according to the Rule 5, §4) and which bylaws establishes as institutional purposes the defense of diffuse and collective rights.
Because the PCAL disciplines only the standing to file a lawsuit, a literal and strict interpretation may induce the understanding that the rule provides only for the real parties in interest to “file” a class action.
On the other side, the BCC disciplines the matter in a slightly different way, not having any rule that explicitly provides for the standing to bring a class action.
Firstly, the Rule 81 establishes that the consumers’ and other victims’ rights and interests “defense” shall be exercised either individually or collectively in court.
Following, the Rule 82 points out the real parties in interest for the aforementioned “defense”, including others than those stipulated in the PCAL, such as entities and agencies of the Public Administration, even if unincorporated.
It is important to recollect that the Public Civil Action Law – PCAL and the Brazilian Consumer Code – BCC function under a collective procedure system enforced by the Rule 21 of the PCAL and the Rule 90 of the BCC.
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The abovementioned statutes do not designate the real party in interest to initiate the procedure; therefore there is no prohibition to plaintiffs’ or defendants’ class actions. It does not seem that providing for the “defense”, the BCC had the intention to limit the meaning of the word to be used only for plaintiffs’ classes, preventing the defense of claims of defendants’ classes. 10
We have to stress out that a restrictive interpretation of the term “defense” in the law, does not...
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