Illustration: Stuart BradfordNine of the most influential people in technology don't work in Silicon Valley or Redmond, Washington--and you won't see them giving keynote speeches at trade shows or hawking gadgets on TV. They're the justices of the U.S. Supreme Court, and on June 27 they concluded their term with two opinions likely to shape tech products and services for years.
We discuss one of these rulings--NCTA v. Brand X Internet, which determined that cable companies aren't required to let other ISPs piggyback on their infrastructure--in this issue's "Proposed DSL Rules Threaten Small ISPs." The other decision was in the case of MGM v. Grokster, which pitted large media companies against Grokster and StreamCast, major purveyors of peer-to-peer software that music fans use to swap copyrighted material. In a unanimous decision overturning the Ninth Circuit Court of Appeals' judgment, the Supremes held that copyright holders could sue the two companies, and kicked the case back to the lower court.
The Grokster case is the latest in a series of courtroom clashes between Hollywood and tech companies dating back to 1984's Sony v. Universal (aka the Betamax case), which affirmed the legitimacy of Sony's VCR. Betamax flopped as a format, but the ruling has protected breakthrough products for more than two decades.
That's because it established that an invention doesn't lose its legal protections simply because it can be used unlawfully. "Your whole PC can be used for illegal stuff," points out Senior Editor Anush Yegyazarian, who looks at government's impact on technology in her Tech.gov online column. Without Betamax, it's possible that "you wouldn't have an MP3 player or a CD burner or a DVD burner, because they can all be used for illegal stuff."
Some court watchers feared that Grokster would undo Betamax's consumer-friendly precedent. It doesn't. But it does introduce a new wrinkle: A court may hold a company responsible for illegal use of its products if it "induces" such behavior.
When the original Napster service lost its legal battle, Grokster and StreamCast went after displaced Napsterians. In doing so, the court found, they unlawfully egged users on to engage in massive piracy.
The Grokster ruling leaves an array of significant questions hanging. "The Supreme Court decision is unclear enough that we'll have to see how lower courts end up interpreting it," says John Palfrey, executive director of the Berkman Center for Internet & Society at Harvard Law School. Legal tussles yet to come are likely to clarify such unsettled matters as...
What's "inducement"? Explicitly touting a product's illegal abilities is now taboo. Could a company get in hot water for slyly implying that you can use its product in questionable ways?
How substantial is substantial? The ruling reaffirms Betamax's imprimatur for products with substantial lawful capabilities, but the definition of substantial remains vague. If a new service is primarily used to swipe Hollywood blockbusters, how many fans of public-domain vaudeville footage does it need to stay in the clear?
What about copy protection? Products aren't required to include anti-piracy features such as digital rights management. But the ruling hints that ones that don't could compound any legal woes their makers run into.
The danger here is that companies--especially inventive startups without deep pockets--will avoid these murky legal waters by never developing anything that might antagonize Hollywood. "The worst fear is that innovative products...that trip up over Grokster won't get built," says Palfrey. "That's a real possibility."
Ultimately, I'm optimistic that the next generation of products won't get stuck in legal limbo forever. Content owners need technology companies; technology companies need content owners; both need paying customers. Let's hope that they remember this--and that the court of public opinion gets to render the final verdict on the future of digital entertainment.
Contact Editor in Chief Harry McCracken at mageditor@pcworld.com. Read his blog, PC World's Techlog.
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