The Digital Millennium Copyright Act
In the United States, the law is strongly in favor of protecting the interests of copyright holders. The Digital Millennium Copyright Act (DMCA), passed in 1997, heightened the penalties for copyright infringement on the Internet and established the liability of the providers of on-line services for copyright infringement by their users. The DMCA made illegal the manufacture, sale, or distribution of code-cracking devices used to illegally copy software, e.g. Limewire, eDonkey and BitTorrent. Additionally, the DMCA states that service providers may not allow the illegal downloading of copyrighted materials via their systems.
The United States Code 17 U.S.C. 504. states as follows:
"Remedies for infringement: Damages and profits (2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000."
The music industry has spent millions of dollars searching for a technology breakthrough to protect copyrighted works. These technologies were often referred to as Digital Rights Management (DRM). DRM technologies attempt to prevent digital music player technology from allowing reproduction. These efforts failed to stem the tide of illegal downloading.
Beginning in 2002, the Recording Industry Association of America (RIAA), the trade group that represents the U.S Music Industry, filed the first lawsuits against individuals who were suspected of illegally downloading music.
In 2006, Free Peers Inc. closed its business due to a $30 million settlement with the recording industry. Under the DMCA, the industry has won lawsuits against Napster, Grokster, Bearshare, Limewire and many others.
By October 2008, RIAA had filed 30,000 lawsuits against individual downloaders.
Even with 30,000 lawsuits filed and millions of dollars collected, P2P traffic had still grown worldwide to represent more than 40% of all consumer internet traffic.
ISPs Have Liability If They Do Not Act
If ISPs are required to make a reasonable effort to curtail illegal activity on their networks. ISPs are given “Safe Harbor” protection as long as once the ISP is notified of a copyright infringement, they forward the notice to their customer.
Additionally, the DMCA requires ISPs to suspend the service of "repeat infringers."