P2PNews - Peer-To-Peers’ Supreme Challenge: Grokster, MGM and The Big Court

[JackSpratts]

This week the United States Supreme Court is hearing an appeal by entertainment companies who have lost three times in lower courts in their attempts to shut down Peer-To-Peer. These are the days highlights as reported by various organizations.

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******Tuesday******


Supreme Court Weighs in on File-Sharing
Ted Bridis

Justice Stephen G. Breyer said the same software that can be used to steal copyrighted materials offered at least conceptually "some really excellent uses" that are legal. Justice Antonin Scalia maintained that a ruling for entertainment companies could mean that if "I'm a new inventor, I'm going to get sued right away."

The Supreme Court expressed concerns today over allowing entertainment companies to sue makers of software that allows Internet users to illegally download music and movies, questioning whether the threat of such legal action might stifle Web innovation.

During a lively argument, justices wondered aloud whether such lawsuits might have discouraged past inventions like copy machines, videocassette recorders and iPod portable music players -- all of which can be used to make illegal duplications of copyrighted documents, movies and songs.

Legal Uses

Justice Stephen G. Breyer said the same software that can be used to steal copyrighted materials offered at least conceptually "some really excellent uses" that are legal.

Justice Antonin Scalia maintained that a ruling for entertainment companies could mean that if "I'm a new inventor, I'm going to get sued right away."

While seeming leery of allowing lawsuits, the court also appeared deeply troubled by efforts of the companies that manufacture so-called file- sharing software to encourage Internet piracy and profit from it.

Justice Anthony M. Kennedy pressed a software lawyer on the question of whether profits from trafficking in stolen property can rightfully be used to help finance a young technology business. "That seems wrong to me," he said.

Two lower courts have sided with the software makers, Grokster and StreamCast Networks. How the justices rule could redefine how consumers can watch television shows and films and listen to songs that increasingly are delivered in digital formats.

Supporters of file-sharing technology say a ruling against the software companies could effectively give the entertainment industry a legal veto over up-and-coming gadgets; they fear the threat of expensive lawsuits could hamper development of new devices.

The case has star power on both sides.

Copyrights Remain

Don Henley, Sheryl Crow, the Dixie Chicks and other musicians are backing the major recording labels, saying their livelihoods are threatened if millions of people can obtain their songs for nothing.

About 20 independent recording artists, including musician and producer Brian Eno, rockers Heart and rapper-activist Chuck D, support the file-sharing technology. They say it allows greater distribution of their music and limits the power of huge record companies.

Regardless of the outcome, it still won't be legal to download copyrighted materials over the Internet without permission, though tens of millions of computer users do so each day. And any ruling won't affect thousands of copyright lawsuits filed individually against Internet users caught sharing music and movies online.

But a victory for the entertainment companies would allow lawsuits that could drive companies that make file-sharing software out of business. It also would effectively overturn rules that have governed technology companies for more than two decades: Manufacturers can't be sued for copyright violations committed by customers using their products illegally.

Dan Glickman, head of the Motion Picture Association of America , said the film industry will keep trying to get consumers to buy legal digital movies. "Consumers want a legal, hassle- free, reasonable-cost way to get their products online," he said in an interview yesterday with editors from The Associated Press.

Mitch Bainwol, chief executive of the Recording Industry Association of America , told the AP editors: "We are doing all the things we should be doing to move into this digital age. That is true no matter what the outcome" of the case.

Uphill Battle

Still, the entertainment companies face an uphill battle with the high court.

The trial judge and a U.S. appeals court quoted the Supreme Court in ruling the same file- sharing software millions of people use to steal music and movies also can be used for "substantial" legal purposes, such as giving away free songs, free software or government documents. They reasoned that gave the software's manufacturers protection from copyright lawsuits based on acts by their customers.

The trial court in Los Angeles and San Francisco-based U.S. Court of Appeals for the Ninth Circuit based their decisions on the 1984 Supreme Court Betamax case. The justices ruled Sony (NYSE: SNE) couldn't be sued for copyright infringement if some customers used their VCRs to make illegal copies of movies.

Entertainment companies argue the file-sharing companies should not have blanket protection from copyright lawsuits, especially when they know about and profit from wide-scale piracy. Court documents said some file-sharing software companies earned millions of dollars annually from advertisements built into their software, and ad revenues climb as more people use the software.
http://www.technewsworld.com/story/software/41853.html


Top U.S. Court Weighs Internet File-Sharing Case
Andy Sullivan

Supreme Court justices questioned on Tuesday whether the recording industry's attempts to shut down online file-sharing networks would deter inventors from developing new products like Apple's iPod music player.

But the justices also suggested that peer-to-peer networks could be held accountable for copyright infringement because they attracted users by telling them that they could copy music and movies for free.

Record labels and movie studios have sued to shut down peer-to-peer software makers like Grokster and Morpheus, arguing that the millions of songs and movies copied each day over these networks have cut into sales.

Lower courts have ruled that Grokster and Morpheus can't be held responsible for the activities of their users because, like a videocassette recorder, their software can be used for legitimate as well as law-breaking purposes.

The Supreme Court seemed sympathetic to that line of reasoning. Justice Steven Breyer noted that other inventions, from the movable-type printing press to the iPod digital-music player, could be used to illegally copy protected works but have proven beneficial to society.

If the court found Grokster liable for the infringing practices of its users, it could have a chilling effect on other inventors, Breyer and several other justices said.

"There's never evidence at the time when the guy's sitting in his garage figuring out how to invent the iPod," said Justice David Souter in open court Tuesday.

Zero In On A Question

But the court also zeroed in on a question that has figured less prominently in previous cases: Whether Grokster and its ilk should be held liable for encouraging, or "inducing," widespread unauthorized copying.

Grokster attorney Richard Taranto argued in court that the network should be judged by its current behavior, not its actions several years ago when it was initially trying to attract users.

But Souter termed that argument "ridiculous." Even if Grokster no longer advertises the fact that users can easily find copyright material, it still benefits from its past advertising, he said.

"Sales of a product on Friday are a result of inducing acts on Monday through Thursday," Souter said.

Justice Ruth Bader Ginsburg suggested that a lower court should hold a full trial to investigate whether Grokster was liable for inducement.

Recording-industry attorney Donald Verrilli suggested that Grokster wasn't entitled to the protection afforded the video cassette recorder because it is mostly used for infringement, not legitimate uses.

"Their massive actual infringement gets a free pass so long as they can speculate that there are non-infringing uses out there," Verrilli said.

Revenues in the recording industry have plunged by roughly 25 percent since file-sharing networks emerged in 1999, though the industry posted a slight sales increase last year.

Non-infringing uses are now widespread, Taranto said. Hundreds of thousands of songs and millions of video games have been sold through a system called Altnet that allows copyright holders to exert some control over their material, while musicians who don't want to sell songs and music videos have been able to distribute them for free, he said.

Verrilli said that those figures pale in comparison to the 2.6 billion songs that are reproduced without permission each month.

The Justice Department's Paul Clement, arguing on behalf of the recording industry, suggested that a product should enjoy protection if it was used for infringement less than 50 percent of the time.
http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=8026695&pageNumber=18 026695&pageNumber=1[/url]