P-to-P Case May Have Far-Reaching Impact

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When the entertainment industry faces off against two peer-to-peer software vendors in the U.S. Supreme Court next week, nothing less than the future of technological innovation is at stake, according to some technology trade groups.

Lawyers for the plaintiffs--Motion Picture Association of America, the National Music Publisher's Association of America, and the Recording Industry Association of America--say they're simply trying to get the court to recognize that the Grokster and Morpheus P-to-P software packages were created primarily to encourage users to illegally trade copyright songs and movies. They argue that while users are responsible for copyright violations, P-to-P vendors share a secondary liability.

The issue before the Supreme Court in the MGM vs. Grokster case focuses on a relatively narrow question: whether movie and music companies should be able to sue the P-to-P distributors for the copyright violations of their users.

Broader Implications

Critics of the entertainment industry's position, including some technology trade groups, say the case has much broader implications: If copyright owners are able to sue inventors of new technologies for the sins of their users, few tech companies would be safe.

"Demanding that innovators guess how people use a new technology, and holding them liable retroactively if they fail to anticipate what users will do ... is a radical new definition of secondary liability that will chill innovation," says Mark Cooper, research director of the Consumer Federation of America, a consumer rights advocacy group. "The tyranny of copyright risk and the liability it will bring will make innovators timid in inventing new communications technologies."

If the Supreme Court allows entertainment companies to sue P-to-P vendors, it will overturn its own 21-year-old ruling that has balanced the rights of copyright owners with those of the creators of innovative new technologies such as the VCR, the copying machine and the MP3 player, say critics of the entertainment industry's position.

"This case is not just about peer-to-peer, it's fundamentally about trying to change the rules for all of the technology industry," says Fred von Lohmann, senior staff attorney at the Electronic Frontier Foundation and lawyer for Morpheus distributor StreamCast Networks in this case.

The case centers around the Supreme Court's 1984 Sony Betamax ruling, in which judges rejected claims of a movie studio brought against Sony, maker of the Betamax VCR. The court ruled against Universal City Studios, saying that makers of technologies with significant uses other than infringing copyrights were not liable for their users' copyright violations.

Unsuccessful Attempts

The entertainment industry has lost its previous attempts to sue Grokster and StreamCast Networks. The 9th U.S. Circuit Court of Appeals, citing the 1984 Betamax decision, ruled in August that the P-to-P vendors were not liable for their users' copyright violations.

Lawyers for the entertainment industry say they're not trying to overturn the Betamax decision, but want the court to recognize that the Grokster and Morpheus software is designed specifically to allow users to steal music and movies. Many P-to-P vendors have designed software that doesn't track the files users are trading and refuse to make changes that would filter out copyright files, says Charles Ortner, a lawyer representing the National Academy of Recording Arts & Sciences.

"Grokster designed this system to attract a large audience to get free music that they otherwise would have to pay for," says Ortner, who filed a brief in the case supporting the plaintiffs. "They have deliberately avoided any kind of screening mechanism."

The 9th Circuit Court failed to recognize the "pervasive" copyright violations through Grokster and Morpheus, instead suggesting that minor legal uses of the P-to-P software constituted a "substantial noninfringing use" as described in the Betamax decision, Ortner says. "It's cynical for them to say the principles of Betamax apply in this case," he adds.

But 17 computer science professors and tech trade groups, including the Information Technology Association of America and NetCoalition, have questioned the tactics of the entertainment industry. The NetCoalition group asked the Supreme Court to uphold the Betamax standard in a neutral brief filed in the case in January, suggesting the court send the case back to lower courts to measure the liability of P-to-P vendors using different standards.

If a P-to-P vendor promises users they can download all the latest hit songs for free, the entertainment industry can sue on those claims without determining the noninfringing use of a technology, says Markham Erickson, general counsel for NetCoalition, a trade group representing Internet companies such as Yahoo and Google. The court shouldn't punish the P-to-P technology itself, which has many legitimate uses, Erickson adds.

In many ways, the Internet itself is a P-to-P medium, he says.

If the entertainment industry gets its way, e-mail service providers could conceivably be required to monitor their customers' sent e-mail for copyright materials, or a photo storage Web site like Snapfish.com could be required to check its customers uploaded files for copyright content, Erickson says. New rules supported by the entertainment industry would affect the "entire Internet and most of the technology industry," he says.

"Venture capital would dry up for cool [technologies] that people can do illegal things with," Erickson says. "It would require technology companies to consult with lawyers for the entertainment industry at the development stage. It's just an impossible solution."

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