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P2P networking is a groundbreaking technology, helping usher in the era of decentralization. Thanks to it, we no longer have to always rely on intermediaries to exchange data.
But is it legal?
To answer this and many other pressing questions about P2P tech, let’s flesh out what it is, how it works, and the legal parameters of its uses.
What is Peer-to-Peer (P2P)?
A P2P network consists of interconnected individual computers that don’t rely on a central server to communicate and share resources such as files, bandwidth, processing power, and storage with each other. Each device is called a peer, hence the name of the network.
It’s the alternative to the traditional client-server network where individual devices (clients) get resources from the central server, but not the other way around.
In a P2P environment, all participants are both the client and the server, although it’s possible to set some computers to play only one of the roles.
How P2P networks work
Peers can network through USB, copper wires, or software that sets protocols to manage the online connections between multiple devices from different locations across the world.
USB-based P2P networks are very simplistic. They only establish ad hoc connections that allow just a handful of devices to transfer files between each other.
The copper wire configuration represents a more permanent infrastructure. But it can only link a limited number of devices in a small area, usually in an office setting.
The most advanced kind of P2P network depends on sophisticated protocols and apps that establish direct relationships between peers over the internet.
Since there’s no single server that governs the access rights of all clients, P2P network participants regulate who can access what by setting permissions on individual devices. For example, you can set your computer to share certain files or folders with other peers and simultaneously block requests to use your printer.
Types of P2P networks
P2P networks can be unstructured, structured, or hybrid.
- Unstructured P2P networks allow random devices to join and make equal contributions.
- Structured ones use software that organizes the network’s virtual layer. They make it easy to distribute content, but they’re more susceptible to high churn, which is when a large number of users enter and leave the network.
- Hybrid P2P networks feature the qualities of a client-server network. By definition, hybrid networks can come in different forms since the people behind them enjoy free rein to build them as they see fit. For instance, a hybrid P2P network may use a central server to aid user search.
P2P network advantages
Compared to client-server networks, P2P networks are more adaptable, powerful, reliable, efficient, and affordable.
Their decentralized nature means they become more robust as more participants join since peers pool their device resources for the benefit of everybody. P2P networks can accept new users with ease and stay operational even when one or more computers fail.
Moreover, the performance of P2P networks goes up as their number of peers increases. The bigger they grow, the more proof they become against bottlenecking. The contrary happens to centralized networks whose servers could get overwhelmed by floods of traffic from large quantities of clients.
In terms of cost, P2P networks have minimal. To set up one, you don’t have to buy an expensive dedicated server nor do you have to hire a system admin full-time.
Is P2P Legal?
P2P is generally legal across the world as long as you don’t use it to commit a crime. That’s why many countries regulate P2P tech by use case only.
A good example is the banning of Bitcoin, a P2P cash payment system, by China and Saudi Arabia. In Bolivia, P2P crypto trading is illegal while more than 20% of nations in the Asia Pacific prohibit P2P lending. When it comes to P2P betting in the US, it’s only legal in states that allow sports gambling.
Naturally, the above policies of certain countries have stalled the adoption of specific P2P networking use cases within their jurisdictions.
One of the most well-documented results of these was the Bitcoin miner exodus out of China. This event indicates that decentralized digital currencies have no future in the Middle Kingdom.
Perhaps the most controversial P2P networking use case of them all is file sharing or torrenting. P2P file-sharing protocols like BitTorrent have revolutionized the way the world distributes electronic media. But not everyone is happy about it. In particular, copyright holders don’t embrace torrenting as it supercharges piracy.
That said, not all countries prohibit torrenting.
Poland, Spain, and Switzerland consider P2P file sharing for personal use benign. Canada, India, and the Netherlands feel the same way toward this use of torrenting, but only for some downloaded copyrighted content.
The long list of countries that don’t actively go after torrenters includes Argentina, Greece, and Mexico. The Marshall Islands and Somalia don’t have any law that criminalizes downloading copyrighted material.
Some of the least safe countries for torrenting are Australia, France, South Korea, the United Kingdom, and the United States. They prosecute anyone who illegally downloads protected media.
What is the Digital Millennium Copyright Act (DMCA)?
The DMCA protects copyright holders against pirates who unlawfully reproduce or distribute their works. It’s a piece of American legislation, but most of the world follows its takedown procedure to remove pirated content from the internet.
Primarily, the DMCA targets illegal torrent hosts and copyrighted material uploaders. It complements the No Electronic Theft Act, which goes after protected content downloaders.
In a nutshell, the DMCA sets a system in place to help copyright holders report infringement to online services providers, making it seamless to take down the illegally-distributed copyrighted material.
In fact, Google can, has, and will delist entries from its search results in response to DMCA takedown requests.
Likewise, this law limits the liability of online service providers whose users engage in copyright infringement. At the same time, it provides copyright owners with enough legal protections in order to encourage them to make their works more widely available digitally.
Also, it prohibits the use of incorrect copyright management information like a false name of the author.
P2P file sharing and copyright infringement
Copyright infringement is when you violate the rights of others’ original creative works. What constitutes a copyright infringement may vary from jurisdiction to jurisdiction. But in general, you may commit it when you copy, distribute, or modify media without the permission of its copyright holder.
Common examples are as follows:
- Using music for a video without getting the nod from its owner.
- Editing and/or displaying copyrighted images, like a logo, on your site.
- Recording a movie in a theater.
- Downloading premium tunes without paying for them.
- Reproducing an artistic or literary work without obtaining a license from its creator.
Copyright infringement has been a thing since before the 21st century. But the advent of P2P file-sharing platforms has made it much more rampant.
Is P2P legal when you don’t profit from using the media?
No, P2P file sharing may still be unlawful even when you don’t benefit financially from the copyrighted assets of others.
The safest act of sharing files through a P2P network is by distributing your own content. You won’t get a copyright infringement strike when you own the rights to it.
What are the penalties for illegal P2P file sharing?
In the US, the penalty for illegal P2P file sharing is $200 to $150,000 per copyright infringement violation in statutory damages. Plus, you may face up to 10 years in prison.
In terms of the civil and criminal penalties for DMCA violations, the fines range from $750 to $250,000, and jail time of up to five years.
If the plaintiff hires a lawyer, you may be obligated to shoulder the attorney’s fees and court costs.
To keep you from committing future infringement offenses, the authorities may confiscate all illegal copies of the copyrighted material and seize and destroy your equipment.
It doesn’t matter if you’re ignorant of the law or you infringe on the rights of others by accident. You’ll still be subject to the same punishments since the copyright holder may suffer from your actions one way or another.
Notable P2P file-sharing copyright infringement cases
Organizations like the Recording Industry Association of America (RIAA), Motion Picture Association, Music Canada, the British Phonographic Industry, and the International Federation of the Phonographic Industry want copyright-infringing torrenters punished.
After all, piracy has cost them untold amounts of money. The US entertainment industry alone loses no less than $29 billion in revenue every year.
One of the most famous copyright infringement cases involving a P2P platform in history is Atlantic Recording Corp. vs. Tanya Andersen, a disabled single mother from Oregon.
The RIAA accused Andersen of engaging in music piracy by illegally downloading a gangster rap tune over the P2P network Kazaa.
The plaintiff dropped the charge before the deadline the court set to present evidence to back its claims. Despite the loss, this 2005 case is proof that entertainment interests would sue even the most vulnerable of individuals to fight for their rights.
Another high-profile copyright infringement legal battle was between a group of six music labels, which included Sony BMG and Warner Brothers, and Minnesotan Jammie Thomas-Rasset.
This six-year case ended with a victory for the record industry. The U.S. Court of Appeals upheld the jury award of $9,250 per each of the 24 pirated songs, totaling $222,000.
In pursuing P2P pirates, media giants rely heavily on ISPs.
What’s the role of ISPs?
The role of ISPs in combating copyright infringement is to help rights holders stop piracy through various methods.
In the early days of the internet, copyright holders wanted to hold ISPs responsible for the actions of those who illegally share protected media over P2P platforms using their networks. But the DMCA’s safe harbor regime has shielded ISPs from liability, provided that they meet the conditions needed to qualify for the protection.
These days, ISPs and copyright holders work hand in hand to catch P2P pirates and stop them from committing further infringement offenses.
ISPs can send copyright infringement notices to their customers upon the request of rights owners. Since your ISP monitors your online activity, it may be forced to reveal your identity through your IP address when subpoenaed to avoid being held in contempt by the court.
If you live in a country that has embraced the “three strikes” policy, your ISP will send you warnings after allegedly infringing someone’s copyright.
You may receive a series of notifications to inform you that copyright holders know what you’re doing and educate you about your legal entertainment alternatives and the consequences if you don’t shape up.
How to use P2P legally
To use P2P legally, you need to understand the relevant laws in your country. This way, you’d know what is allowed, especially in the US where the authorities may regulate P2P use differently on the federal and state levels.
However, there are various use cases that are beneficial for both businesses and individuals and won’t get you in trouble with the law:
- Content delivery – P2P provides a quick and cost-effective way to distribute your content or services to a large number of users.
- Collaborative file sharing – It can also allow collaborative work on documents, spreadsheets, and other files, allowing multiple users to access and edit the same file simultaneously.
- Backup and storage – P2P networks can also be set up for decentralized backup and storage, which is often more secure and reliable than centralized storage solutions.
What’s more, companies can access more capital through P2P lending products and explore more payment options using P2P remittance solutions in order to hire remote talent and reduce payroll expenses.
When it comes to software that facilitates P2P file sharing, the same rules as above apply.
Apps like BitTorrent, uTorrent, and eMule are completely legal on their own. But, using them to share pirated or otherwise prohibited content is not.
P2P tech is just a tool. It’s as neutral as guns and money. It only becomes illegal when you use it in a way that breaks the law.
Despite the issues involved with it, P2P networking promises more good than bad. Although the legal status of its use cases is in the hands of policymakers and regulators, this tech has a future.
P2P is legal in most of the world. However, countries may prohibit or restrict its uses like lending, trading, and file sharing.
Some of the illegal uses of P2P networking include downloading copyrighted content in the US and mining Bitcoin in China.
This, however, depends on the country’s laws. Both of these activities may be (and are) legal in other places.
P2P activity is legal when complying with the laws in your country. For example, Sports betting and crypto trading are some of the legal use cases of P2P in the US.
P2P can be traced by your ISP. Your ISP can monitor what apps you’re using and the sites you’re visiting. Without a P2P VPN, the authorities may identify you and go after you using your IP when you illegally download or upload torrents.
P2P isn’t anonymous because you broadcast your IP during your online activity. If you mask your IP using a P2P VPN, you may be able to protect your identity as long as your VPN vendor doesn’t log your data.
Yes, a VPN can effectively hide your P2P traffic by encrypting it and cloaking your device’s IP.