Copyright Crackdown

Court Sets File-Sharing Limits

The long-brewing court case of MGM v. Grokster finally came to a head in late June, when the U.S. Supreme Court ruled in favor of the recording industry. Movie and recording companies had sued Grokster and StreamCast Networks (owners of the Morpheus peer-to-peer service) for encouraging users of their peer-to-peer services to download and trade copyrighted songs without paying for them. Grokster argued that it wasn't liable for the actions of consumers using the service, but the Supreme Court disagreed.

Why should you care about this decision? For starters, the Grokster ruling will change the way courts interpret the precedent set by the famous Sony v. Universal (or Betamax) case of the mid-1980s. Movie companies had sued Sony, claiming that the VCR could help consumers break copyright laws; but the Supreme Court ruled in Sony's favor, declaring that if a product had significant legal uses, the creator was not responsible if some people used it illegally.

The Grokster ruling could affect the way companies design their products in the future, discouraging innovation.

It will probably be some time before the ruling's exact impact becomes clear. U.S. appellate courts must apply this Supreme Court opinion to cases before them. (For more on the ruling, see "Technology on Trial: What's at Stake").

What the Grokster decision won't do is shut down online piracy, says Forrester Research vice president Josh Bernoff. And record companies are still free to sue individuals for piracy.