P-to-P Networks Head Back to Court

Attorneys for entertainment companies and peer-to-peer software makers will return to court in Pasadena, California, Tuesday to present arguments in a case testing the legality of popular Internet file-sharing services.

A three-judge panel of the 9th U.S. Circuit Court of Appeals will review a lower court ruling against media publishers, which want to hold P-to-P software makers culpable for illegal file trading on their networks. At issue in the case is whether P-to-P software companies can be held legally responsible when their products are used to commit illegal acts.

The plaintiffs, including the Motion Picture Association of America, the National Music Publisher's Association of America, and the Recording Industry Association of America, are appealing an April 2003 ruling by U.S. District Court Judge Stephen Wilson. That ruling dismissed their lawsuit against the software companies Grokster and StreamCast Networks, which makes the Morpheus P-to-P software.

Citing a 1984 U.S. Supreme Court ruling involving VCR technology, Wilson ruled that P-to-P software has uses other than swapping copyright material that inoculate software makers from liability and that P-to-P companies did not have direct knowledge of illegal swapping.

Remembering Napster

Lawyers representing the music and motion picture industries are expected to argue on Tuesday that today's P-to-P products are subject to the same scrutiny as the earlier Napster software and that companies are capable of monitoring and filtering copyright content on their networks.

Appeals court briefs submitted by the RIAA and MPAA note that the P-to-P companies maintain "regular, systematic control of the system and their business," filtering out pornography, viruses, and bogus files, according to the MPAA.

Representatives from P-to-P software companies adamantly deny those charges.

"The plaintiffs are misleading Congress, the public, and the courts," says Mike Weiss, chief executive officer of StreamCast.

Unlike the Napster network, contemporary P-to-P networks are decentralized gatherings of software users and don't have a centralized architecture that helps users locate and negotiate downloads, he says.

"There's no way to [filter copyrighted content] without a centralized architecture, like Napster. You cannot filter out decentralized communications," he says.

StreamCast is no different from companies that sell home video recorders, which can be used to infringe copyrights, but have other uses as well, he says.

Working Together?

Weiss envisions a system in which entertainment companies license their content to P-to-P software companies for distribution on P-to-P networks, then apply a tax on those who use P-to-P networks that could be used to pay artists and copyright holders, he says.

The entertainment industry's case against the P-to-P vendors is just another example of that industry's inability to embrace new technologies, even when they hold the promise of greater profits, says Rod Dorman, a partner in the law firm of Hennigan, Bennett & Dorman LLP, who is representing Sharman Networks, maker of the Kazaa P-to-P software, in a separate but related case.

"They tried desperately to kill videotape and now much of their profit comes from that technology source," he says.

Whatever the outcome of the hearing on Tuesday, the case will probably be appealed to the U.S. Supreme Court, according to Dorman and Weiss.

A ruling there might be the only way to end, one way or the other, the legal uncertainty surrounding a popular technology that could revolutionize the sale and distribution of media, Weiss says.

"I want to find out how to make this thing work. If it takes a Supreme Court ruling to make that happen, then so be it," he says.