File-Sharing Sites Head Back to Court

WASHINGTON -- Three entertainment groups are appealing an April U.S. District Court ruling saying operators of two file-sharing services are not liable for any copyright infringement that may occur on their networks.

Late Monday, the Recording Industry Association of America, the Motion Picture Association of America, and the National Music Publishers' Association filed an appeal to a Los Angeles district court judge's decision. The court had ruled on April 25 that the operators of the Grokster and Morpheus peer-to-peer services couldn't know when users were trading copyrighted works.

As expected, the three groups have asked the U.S. Court of Appeals for the Ninth Circuit to overturn the decision by U.S. District Court Judge Stephen Wilson. They ask that the Grokster service and Morpheus operator StreamCast Networks be held responsible for copyright violations that occur on those P-to-P networks.

Services Rebut

Wilson's decision recognized that P-to-P services have many legitimate uses, Michael Weiss, chief executive officer of StreamCast Networks, says in a statement.

"In our case ... the federal court recognized that you can't ban new technology just because it threatens an old distribution model," Weiss adds. "We expect to prevail and if we do not, we will take this to the Supreme Court if we must. We also believe that the 63 million file-sharing, voting Americans will take the issues to Congress, so that the laws are passed to reflect social and economic realities."

New laws should require compulsory licensing similar to radio royalties, Weiss says. He also suggests a small tax on recordable media to offset the entertainment industry's claims of loss.

The judge's reasoning was similar to that of another landmark case involving new technology. In 1984, the U.S. Supreme Court rejected the entertainment industry's efforts to ban, tax, or electronically hamper operation of VCRs. The court reasoned that while people could use the recorders to infringe copyrights, the equipment could be "widely used for legitimate, unobjectionable purposes" and should not be hampered.

Seeking Their Share

The RIAA and MPAA argue in their appeal brief that the P-to-P services make a huge profit from copyright infringement.

"Defendants reap millions of dollars in revenue from their online trading bazaars by selling advertising they display to their users while they engage in infringement," the brief says.

The judge's decision "rewrote years of well-established copyright law," Cary Sherman, president of the RIAA, says in a statement. "It was wrong. These are businesses that were built for the exclusive reason of illegally exchanging copyrighted works, and they make money hand over fist from it."