Tech Supplementary Material (Eric Hartzog)

First look: BitTorrent video download store

http://arstechnica.com/news.ars/post/20070227-8929.html

I think a good example to look at to see what problems iTunes may is the current problems with the current BitTorrent video service. Although BitTorrent is supposed to be far faster than normal download speeds, the user who reviewed the service found that while the download speed was good it wasn’t much greater than current traditional services, and the DRM system used took much away from the user’s experience.

It’s the small details like this that could make or break the iTunes service, and upgrading to the BitTorrent solution can complicate things while providing minimal benefit to the user. The need for BitTorrent depends almost entirely on the type of demand placed on the iTunes video download system, and if iTunes rarely experiences flash crowds who all demand the same content in a short time period.

Business/Economic Supplementary Material (Mike Fischer)

Though Apple is competing with different companies like Wal-Mart and BitTorrent in the online movie downloading market, many believe these competing companies do not have strong enough products to actually become a threat. The dismissal of Wal-Mart is quite simple. The first problem with Wal-Mart’s service is that if you can easily purchase the DVD of a movie you can put that file onto your computer much easier than it would be to wait until the movie was downloaded onto your computer. Secondly, people who want to watch a certain movie on an iPod don’t realize that Apple has protections to prevent movie files from being played that were not purchased through Apple. Finally, even if you have another media player like Zune, it takes forever to download movie files through Wal-Mart’s service. If you are lucky you might be able to get a movie in an hour or two, but it is not unlikely to have some movie take up to six or seven hours.

Similarly, BitTorrent has some problems with their service that will ultimately not allow them to compete with Apple. BitTorrent simply has protections on their files to really make them appeal to consumers. For example, buyers are not able to watch the downloaded movies on a TV and they limit the number of computers the particular DVDs can be played on.

However, just because BitTorrent and Wal-Mart do not have the ability to directly compete with iTunes, that does not mean there will never be an easy Internet movie downloading cite. In fact, in “Apple's P-to-P Movie Downloads To Eclipse Wal-Mart and BitTorrent”, we are given a simple outline of what iTunes provides that enables it’s customers to download movies easily. iTunes has a critical mass of users, it is very simple to use, it works with TVs and portable devices along with PCs, and it provides user accountability and billing.

References:

Howe, Carl. “Apple's P-to-P Movie Downloads To Eclipse Wal-Mart and BitTorrent”.
http://media.seekingalpha.com/article/21433. 2/28/07.
Singer, Michael. “Apple to Open Tiger”. http://www.internetnews.com/dev-news/article.php/3486261. 3/1/07.
Choi, David. “Online Piracy and the Emergence of New Business Models”. http://www.sbaer.uca.edu/research/sbi/2006/pdffiles/papers/cases/016.pdf. 3/3/07.

Ethics Supplementary Material (Guen Han)

The following is extra background information on each of the ethical considerations Apple must make about a partnership with BitTorrent.

First, Apple must evaluate whether it is right to force customers to use up all their computing resources and bandwidth to download a product from iTunes with potentially no compensation, as well as the impact this may have on business [1].

Users with BitTorrent have the ability to download files quickly because uploading is automatically built into the BitTorrent system [1]. Because of this, running BitTorrent can take up a vast percentage of computing resources and available bandwidth. Sometimes, as company experiments have shown, it is enough so that users cannot engage in common applications, like surf the Internet or play online games, while downloading a file with BitTorrent. As a result, customers may prefer to use another client besides BitTorrent or turn off the peer-to-peer option so they may use their computers while their file is downloading.

Second, Apple must evaluate whether customers should be forced to download their purchase with BitTorrent or whether the company should offer 1) an alternative client or 2) an option that disables all P2P features at the risk of slower downloads [1].

Even though BitTorrent is lauded for the rapidity of its downloads, this is not always the case. The speed at which a file downloads depends on factors such as number of peers and when the file is posted as opposed to when it was first aired or released [1]. In fact, company experiments show that certain files downloaded on BitTorrent can be slower than if they were downloaded on current Apple software. For this reason, customers may not prefer the BitTorrent client for their particular download. This is especially the case for older or less popular files, since files are dependent upon a large number of peers in order to download quickly [1].

Third, Apple should evaluate whether it should broaden its offerings to other countries, especially since BitTorrent is a universal downloading client [2, 3, 1].

The BitTorrent technology is universal. This means that anyone from anywhere in the world can download BitTorrent and use it to share files. Because of this, oftentimes, BitTorrent users will be downloading pieces of a file from people from various locations around the globe, such as Japan, Germany, Canada, and France [2]. However, iTunes purchases are only offered to customers in select countries [3]. It is in Apple’s business interest to offer the Store to all countries, especially since they are dependent on more peers for speedier downloads [1].

Fourth, Apple must consider whether it is right to use non-customers to ensure speedy downloads without giving them any benefit, as well as how movie and production companies will feel about this business method [1, 4].

Apple cannot control the speed at which their products download with the BitTorrent client. As a result, certain files may download slowly, which would frustrate their customer base and hurt their business. One way Apple could solve this issue is to allow non-customers to keep pieces of the files on their computer to ensure speedy downloads to buyers [1]. However, this may not be fair to the non-customers, especially if they do not gain any compensation for helping Apple. Moreover, movie and production companies will not like having pieces of their media stored on many computers. Even if the files are wrapped in DRM technology, users can break the DRM, and piracy may only proliferate [4].

Fifth, Apple must evaluate how it can ethically balance demands from both users and movie/production companies when it comes to DRM technologies [5, 6, 7, 8].

Apple protects products purchased through iTunes with DRM like Fairplay [5]. However, some argue that DRM technology restrict fair use rights. Because of this, an internal study shows that only 34% of BitTorrent’s current clientele would willingly switch to a legal option for obtaining its movies [6]. Users from the remaining percentage say they want to be able to do anything they want with their purchased file, like play their movies on any device, like computer or DVD player, and burn their own DVDs [7]. DRM would prevent this, and therefore, these users prefer to continue obtaining their files illegally because it allows total ownership and control. However, movie companies require Apple to employ DRM technology to protect the files if Apple wishes to license agreements with them [8].

Sixth, Apple must decide whether it is ethical to employ technology to track their customers, and how this will affect the privacy of their customer base [9, 10].

In order to allow a customer to download iTunes Store files, Apple must obtain his/her IP address so the file is released appropriately. Similarly, BitTorrent works by employing trackers that coordinate BitTorrent clients who are identified by their IP address [9]. However, Apple may feel the need to gather further information once it employs the BitTorrent technology—especially given BitTorrent’s capacity for piracy—as a way to guarantee that their users are not using the movies illegally. This is especially relevant because there will be someone who will be able to break the DRM of their products [10].

Seventh, Apple must consider what rights they have over BitTorrent and how much control they can have over the client [2].

BitTorrent is an open source technology, and thus, anyone can modify and distribute it [2]. This could potentially pose several problems for Apple. The fact that the source code is open to the public may lead to security issues in face of hackers armed with knowledge. Because of this, Apple may want to attempt to centralize BitTorrent so they have more control over the software in order to prevent piracy. However, this would change the nature of BitTorrent, and Apple must keep in mind that BitTorrent is used by millions of other non-customers too.

References:

[1] S. Schiesel, “File Sharing’s New Face,” The New York Times, February 12, 2004. [Online]. Available: http://tech2.nytimes.com/mem/technology/techreview.html?res=9805E2DE133AF931A25751C0A9629C8B63. [Accessed: February 26, 2007].

[2] “What is BitTorrent?,” BitTorrent, March 2007. [Online]. Available: http://www.bittorrent.com/what-is-bittorrent. [Accessed: March 3, 2007].

[3] “iTunes 7,” Apple, March 2007. [Online]. Available: http://www.apple.com/itunes/store/. [Accessed: March 3, 2007].

[4] L. Manly and J. Markoff, “Television; Steal This Show,” The New York Times, January 30, 2005. [Online]. Available: http://select.nytimes.com/search/restricted/article?res=F40E17FB3D5F0C738FDDA80894DD404482. [Accessed: February 26, 2007].

[5] R. Singel, “The Year of Living DRMishly,” Wired, January 24, 2006. [Online]. Available: http://www.wired.com/news/culture/0,70049-0.html. [Accessed: March 3, 2007].

[6] B. Stone, “Software Exploited by Pirates Goes to Work for Hollywood,” The New York Times, February 25, 2007. [Online]. Available: http://www.nytimes.com/2007/02/25/technology/25bit.html?_r=1&ref=technology&oref=slogin. [Accessed: February 27, 2007].

[7] S. Hansell, “Media; Forget the Bootleg, Just Download the Movie Legally,” The New York Times, July 4, 2005. [Online]. Available: http://select.nytimes.com/search/restricted/article?res=F40B11F63A5E0C778CDDAE0894DD404482. [Accessed: February 26, 2007].

[8] S. Lohr, “Keeping Moviegoers Away From the Dark Side,” The New York Times, June 18, 2005. [Online]. Available: http://select.nytimes.com/search/restricted/article?res=FA0E15FC3E5F0C7B8DDDAF0894DD404482. [Accessed: February 26, 2007].

[9] B. Dessent, “Brian’s BitTorrent FAQ and Guide,” www.dessent.net, October 5, 2003, . [Online]. Available: http://www.dessent.net/btfaq/#terms. [Accessed: March 3, 2007].

[10] B. Stone, “A DVD Copy Protection Is Overcome by Hackers,” The New York Times, January 17, 2007. [Online]. Available: http://select.nytimes.com/search/restricted/article?res=F50611F73B540C748DDDA80894DF404482. [Accessed: February 26, 2007].

Legal Supplementary Material (Rachael Winchester)

Lawsuits involving iTunes have primarily involved the origin of the technology and antitrust accusations. In 2006 case settled out of court, Apple agreed to pay $100 million to Creative Technology to use the patent for the application design of iTunes [1]. More recently, a case has been filed against Apple alleging that they engaged in anticompetitive behavior [2]. This motion was approved by Judge James Ware of the U.S. District Court of Northern California, who agreed that Apple has “an 80 percent share of the market for legal digital music files and more than 90 percent of the market for portable hard-drive digital music players”. While one antitrust expert called the suit a long shot, another said that the key to the case would be the court’s perception of a product brand like iTunes as “a market in itself separate from the rest of the online music market” [2].

Bit Torrent Related Cases:
A. The Aimster case [3]
Aimster was a P2P file sharing service that appeared in Napster’s wake. Like Napster and the proposed iTunes/Bit Torrent technology, the site was centralized (like iTunes), but went bankrupt before a trial could occur. A premilimanary injunction found them guilty of vicarious liability and contributory infringement claims. Because Aimster failed to show any evidence of noninfringing uses and had shown clear knowledge of the infringing activities, an appeals court found them guilty of contributory infringement.
The proposed iTunes/Bit torrent technology would easily demonstrate noninfringing uses and Apple has been diligent in the past about limiting infringement.

B. The Grokster case [3]
The MGM v. Grokster case was different that the Napster and Aimster cases because the software was decentralized in nature, making it more difficult to regulate. While the entertainment industry and plaintiffs originally argued that the defendants were liable for both contributory infringement and vicarious liability, the Supreme Court found there was also enough evidence on inducement as well.


By putting a warning in their terms of use, Apple has put more responsibility on their customers:
Usage Rules [4]
Your use of the Products is conditioned upon your prior acceptance of the terms of this Agreement.
You shall be authorized to use the Products only for personal, noncommercial use.
You shall be authorized to use the Products on five Apple-authorized devices at any time.
You shall be entitled to export, burn (if applicable) or copy Products solely for personal, noncommercial use. You shall not be entitled to burn Video Products.
You shall be authorized to burn an audio playlist up to seven times.
You shall be able to store Products from up to five different Accounts on certain devices, such as an iPod, at a time.
Any burning (if applicable) or exporting capabilities are solely an accommodation to you and shall not constitute a grant or waiver (or other limitation or implication) of any rights of the copyright owners in any audio or video content, sound recording, underlying musical composition, or artwork embodied in any Product.
You agree that you will not attempt to, or encourage or assist any other person to, circumvent or modify any security technology or software that is part of the Service or used to administer the Usage Rules.
The delivery of Products does not transfer to you any commercial or promotional use rights in the Products.
In our report we mentioned the possibility of iTunes applying to be a safe harbor under the DMCA. To become a safe harbor, the OSP must not:
not have actual knowledge that the material or an activity using the material on the system or network is infringing (512(c)(1)(A)(1)).
not be aware of facts or circumstances from which infringing activity is apparent (512(c)(1)(A)(2)).
upon obtaining such knowledge or awareness, must act expeditiously to remove, or disable access to, the material. (512(c)(1)(A)(2) and 512(c)(1)(C))
When it is discovered that people are using iTunes content for illegal purposes, updates are created immediately to end this.
not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity (512(c)(1)(B)).
This would not be hard to prove. When people break the DRMs on iTunes music, the company actually loses money from potential customers.
have a Designated Agent registered with the US Copyright Office to receive notifications of claimed infringement (often called takedown notices). If the designated agent receives a notification which substantially complies with the notification requirements, the OSP now has actual knowledge and must expeditiously disable access to the work. The OSP must make available to the public through its service, including on its web site substantially this information:
the name, address, phone number and electronic mail address of the agent.
other contact information which the Register of Copyrights may deem appropriate.
I could not find evidence of this
adopt, reasonably implement, and inform subscribers and account holders of a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers (512(i)(1)(A)) [5]
iTunes users are required to register to purchase music. I’m not sure if they have the ability to track who is circumventing the DRMs though.


Bit Torrent Sites that have been shut down [6]:
I. Finreactor
This case is currently before the courts and 32 people are facing charges. Media companies are seeking damages worth 3.5 million euros.
II. Suprnova.org
This was one of the most popular early BitTorrent sites. It closed in December 2004 when its computer servers were confiscated by Slovenian authorities.
III. LokiTorrent
The biggest torrent source after Suprnova, and it closed down after alleged threates from the MPAA. Webmaster of the site, Edward Webber, was ordered to pay a fine and supply the MPSS with the IP addresses of visitors.
IV. EliteTorrents
This site was shut down by the FBI and Immigration and Customs Enforcement.

Sources:
[1] “Apple Lawsuit Over iTunes”. [Online document]. Available at HTTP: http://www.lawcore.com/legal-information/09-05-06.html
[2] “Judge Approves Antitrust Case vs. Apple”. [Online document]. Available at HTTP: http://www.macnn.com/articles/06/02/09/antitrust.case.vs.aapl/
[3] Fred von Lohhman, “What Peer-to-Peer Developers Need to Know about Copyright Law” EFF January, 2006
[4] “Terms of Service”. Itunes Store. Available at HTTP: http://www.apple.com/legal/itunes/us/service.html
[5] “Copyright of Digital Information”. Available at HTTP: http://digital-law-online.info/lpdi1.0/treatise33.html
[6] “Bit Torrent”. Wikipedia. [Online Dictionary]. Available at HTTP: http://en.wikipedia.org/wiki/Bit_torrent

Business/Economic Checkpoint 2 (Mike Fischer)

BitTorrent has just recently gone public with it’s legal movie and TV show downloads. BitTorrent’s legal downloads will allow people to either purchase or rent the movie or TV files using their unique P2P technology. Files downloaded through BitTorrent would be limited to one PC, protected by DRM, and currently has no ability to be played on TVs. Aside from quality downloading speed, BitTorrent also offers “softcore” pornography. Though the definition of “softcore” pornography may mean different things to different people, BitTorrent is grabbing a different community of online downloaders that iTunes does not appeal to.

Apple is currently discussing whether or not they are going to introduce a new operating system, Leopard, which will empower iTunes users with the BitTorrent technology. The users would be able to not only download media files from the server, but from other people who have already purchased the file. Assuming Apple goes forward with Leopard, all of their files will expectedly have much more strict DRM protection to prevent piracy. Given stricter enforcement of the media files from DRM protection, Apple is faced with a tough question of whether BitTorrent users will begin buying movies through iTunes or if they will continue to download movies for free illegally. Though BitTorrent representatives said that 34% of their users would be willing to switch to a legal option, many people are concerned about the DRM protection that would be incorporated on the Apple files. DRM protection would prevent the buyers from feeling like they actually owned the product. For example, if someone is going to buy a movie, they want the ability to play it on whatever computer they want, which the DRM protection would prevent.

As a result, Apple is face with a serious business decision as to whether investing in the BitTorrent technology would be beneficial to their company. Many seem to think that Apple will not go through with the BitTorrent technology because of their relationship with Hollywood. Many of the Hollywood movie producing companies want to be able to sell their movies over iTunes, but do not want to be subject to all of Apple’s rules. The big issue is whether Apple will restrict the number of devices a buyer can use to play a film purchased from iTunes. Many of the Hollywood companies are concerned that by allowing iTunes to have distribution rights of their movies, illegal piracy may result. Introducing the BitTorrent technology to iTunes could be seen as a significant aid to Internet piracy of media files.

If Apple decides to adopt the BitTorrent technology, the DRM restrictions would have to be so intense that some buyers would feel like they do not even really own the own media files. Also, many other companies are going to be introducing competing download cites similar to iTunes that are inevitably going to be competing with Apple for rights to movies from the major movie distributing companies. Microsoft, among others, is going to be introducing a competitor to iTunes that also will consider using the BitTorrent technology. All of these companies are going to be forced to make a decision about whether the increased download speed that BitTorrent provides is worth the risk of crossing the movie companies.

Personally, I think Apple should adopt the BitTorrent technology even though some movie companies might feel threatened at the beginning. Computer technology is evolving so fast that if Apple does not maintain the fastest download option for Internet music and movie buyers, some other company will, and could become a serious threat to their online market. Though the costs could prove to be significant to acquire this new technology, I think the investment is worth it to leave Apple as the head of the Internet downloading market.

References:
Cheng, Jacqui. “BitTorrent to Apple: We’ve got porn! Sort of”.
http://pollux.arstechnica.com/journals/microsoft.ars/2007/2/26/7227. 2/27/07.

Faravar, Chris. “Apple, Hollywood go toe-to-toe on Movie Downloads”.
http://www.engadget.com/2006/11/30/apple-hollywood-go-toe-to-toe-on-movie-downloads/. 2/26/07.
Winer, Dave. “Next Steps for BitTorrent”.
http://scripting.wordpress.com/2006/04/24/editorial-up-bittorrent/. 2/26/07.

Tech Checkpoint 2 (Eric Hartzog)

While implementing a BitTorrent type system into iTunes wouldn’t be difficult, there are a number of seemingly minor issues which can greatly affect the efficiency of the BitTorrent solution.

First of all it is important to establish under what circumstances BitTorrent will outperform traditional client-server direct downloads. While conducting my own testing of the current iTunes video service, I was able to download an 878 MB movie, which is 1:21 worth of medium quality video, in roughly 45 minutes. This translates to an average download speed of around 320 KB/s, and as I observed the download I was able to confirm that the speed of the download was roughly constant for the duration of the download. When downloading movies from current illegitimate BitTorrent providers, the download speeds are normally much slower, averaging around 4 to 6 hours for the same 800 MB download which translates to a 45 KB/s average download rate, which is only 15% of the iTunes download speed.

However, the speed difference can be explained by the scarcity of seeds that have as high an upload bandwidth of the iTunes servers. This means that if iTunes can sustain the proper amount of high-bandwidth seeds for a file, then BitTorrent will be able to have much higher download rates [4]. What my short testing of the current iTunes video download system doesn’t take into account is any type of “flash crowd” which suddenly increase the demand for a specific movie. As I was browsing the iTunes video library, the selection was scarce and none of the movies there would have caused such a flash crowd. Such a flash crowd would cause a dramatic decrease in the download speeds from the iTunes servers while not having nearly as negative effect on the BitTorrent download speeds.

Another important question is Apple’s current implementation of DRM and how it would need to be altered to accommodate a BitTorrent system. As it currently works, iTunes provides a DRM wrapper that is specific to each individual user who downloads content. The benefit of this system is that a user-specific DRM wrapper ensures that only the user who it belongs to can get the correct key from the iTunes servers to decrypt the content. This lowers the chance that a program like DeCSS can be created which can crack the DRM on all the content protected by the iTunes DRM. A legitimate DRM system encourages content providers to license their movies and shows to be downloaded, and if the system is easily cracked then they will withhold licenses.

This is a problem since the BitTorrent solution requires a reworking of iTunes’s current DRM, since all users in a BitTorrent swarm must be working with the exact same copy of a file. Although there can still be a general DRM wrapper around video, no longer can user-specific DRM prevent a single program from removing the DRM from any downloaded file. While this doesn’t eliminate the DRM, it potentially weakens it and may cause content providers to be less likely to give out the licenses necessary for the video service to gain popularity.

Checkpoint notes:

I will be researching more specifics on the current iTunes video DRM system so I can present some more details on how it operates. I also intend to go into more detail about how if the iTunes video system ever actually intends to be highly successful, then it almost must rely on some form of P2P system in order to maintain the same download speeds during high demand as it does during low demand.

[1] First look: BitTorrent video download store

http://arstechnica.com/news.ars/post/20070227-8929.html

[2] Some observations on bitTorrent performance

http://portal.acm.org/citation.cfm?id=1064212.1064273

[3] BASS: BitTorrent Assisted Streaming System for Video-on-Demand

http://www.ece.ucdavis.edu/~cdana/MMSP05%20-%20BASS.pdf

[4] Analytical Model for BitTorrent-based Live Video Streaming

http://www.lk.cs.ucla.edu/PS/nime07f.pdf

[5] Anyone can broadcast video over the internet

http://portal.acm.org/citation.cfm?id=1167863

Class links

Incentives Build Robustness in BitTorrent - EconP2P '03 (the Bittorrent paper) http://www.bittorrent.org/bittorrentecon.pdf

Dissecting BitTorrent: Five Months in a Torrent's Lifetime - Passive and Active Network Measurement '04

http://www.pam2004.org/papers/148.pdf

Modeling and Performance Analysis of BitTorrent-Like Peer-to-Peer Networks - SIGCOM '04

http://portal.acm.org/citation.cfm?id=1015508

Analyzing and Improving BitTorrent Performance - MS Tech Report '05

http://research.microsoft.com/~padmanab/papers/msr-tr-2005-03.pdf

A Performance Study of BitTorrent-like Peer-to-Peer Systems - IEEE Journal on Selected Areas '07

http://www.zhenxiao.com/papers/jsac2007_bt.pdf

Legal Checkpoint 2 (Rachael Winchester)

To analyze the legality of a partnership between Apple and Bit Torrent, it was beneficial to look at the two as separate entities before examining their combined liability.
Lawsuits involving Itunes have primarily involved the origin of the technology and antitrust accusations. In 2006 case settled out of court, Apple agreed to pay $100 million to Creative Technology to use the patent for the application design of Itunes. More recently, a case has been filed against Apple alleging that they engaged in anticompetitive behavior. This motion was approved by Judge James Ware of the U.S. District Court of Northern California, who agreed that Apple has “an 80 percent share of the market for legal digital music files and more than 90 percent of the market for portable hard-drive digital music players”. While one antitrust expert called the suit a long shot, another said that the key to the case would be the court’s perception of a product brand like iTunes as “a market in itself separate from the rest of the online music market”.
The ability of hackers to break the Fairplay DRM technology on Apple music and video files is well documented. Notably, Norwegian technologist Jon Johansen has created multiple applications that can be used to circumvent Fairplay, including QTFairUse. By releasing updated versions of Itunes, Apple is able to prevent some of this hacking. DRMs can also be bypassed by manual burning of a file onto a CD and subsequent encoding. Apple’s lawyers have been diligent about sending cease and desist letters to the sites that host these projects, protecting Apple from a potential liability lawsuit. Because Apple is doing everything in their power to come up with new technology to block the DRM hacking, it is reasonably certain that they would not be held responsible for indirect liability in a court of law.
Previous cases support this conclusion.
If it hasn’t already (I couldn’t find if they had or not), Apple should consider applying to be considered a safe harbor under the DMCA. While this is primarily directed at online service providers, iTunes fits the criteria. To become a safe harbor, the OSP must not:
not have actual knowledge that the material or an activity using the material on the system or network is infringing (512(c)(1)(A)(1)).
not be aware of facts or circumstances from which infringing activity is apparent (512(c)(1)(A)(2)).
upon obtaining such knowledge or awareness, must act expeditiously to remove, or disable access to, the material. (512(c)(1)(A)(2) and 512(c)(1)(C))
When it is discovered that people are using Itunes content for illegal purposes, updates are created immediately to end this.
not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity (512(c)(1)(B)).
This would not be hard to prove. When people break the DRMs on iTunes music, the company actually loses money from potential customers.
have a Designated Agent registered with the US Copyright Office to receive notifications of claimed infringement (often called takedown notices). If the designated agent receives a notification which substantially complies with the notification requirements, the OSP now has actual knowledge and must expeditiously disable access to the work. The OSP must make available to the public through its service, including on its web site substantially this information:
the name, address, phone number and electronic mail address of the agent.
other contact information which the Register of Copyrights may deem appropriate.
I could not find evidence of this
adopt, reasonably implement, and inform subscribers and account holders of a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers (512(i)(1)(A)).
Itunes users are required to register to purchase music. I’m not sure if they have the ability to track who is circumventing the DRMs though.
It would seem that Apple is not in danger of being prosecuted for people hacking their DRMs. The largest potential lawsuit Apple faces presents is that of holding a monopoly, which they have been accused of both in Europe and the US. Steve Jobs has recently published an essay which advocates dropping DRMs altogether. While this solution does not appear likely in the near future, it does allow Apple to claim in a court of law that they want to drop the DRMs but that the other companies are not cooperating.

Previous bit torrent cases include:

a. Finreactor
b. Suprnova.org
c. LokiTorrent
d. EliteTorrents
However, the common theme in these cases is that all were sites distributing illegal content. Itunes on the other hand would only distribute legal music using Bit Torrent.


Conclusions:
The fact that movies are already being sold using Bit Torrent technology gives Apple stronger legal footing for following this move. First, they are not the only ones offering the technology, so they have no additional grounds for holding a monopoly, other than that their technology would be protected by DRMs (which it is currently). Also, because bittorrent.com is already selling movies online using their technology, this means that the matter has been looked into by their lawyers as well… At least if Apple did get sued they wouldn’t be the only plaintiff.

Sources:
http://www.lawcore.com/legal-information/09-05-06.html
http://www.macnn.com/articles/06/02/09/antitrust.case.vs.aapl/
http://digital-law-online.info/lpdi1.0/treatise33.html
http://www.nytimes.com/2007/02/25/technology/25bit.html?_r=1&oref=slogin