Supreme Court Tackles P2P

Long-simmering disputes about peer-to-peer file sharing, or P2P, will finally come to a boil sometime next year. On Friday, December 10, the US Supreme Court agreed to examine whether online services Grokster Ltd. and StreamCast Networks, Inc. are liable for copyright infringement. Both services enable users to share music and other forms of copyrighted material, and both derive revenue from advertising.

Sued by Metro-Goldwyn-Mayer Studios, Inc. and several associated entertainment companies, Grokster and StreamCast were exonerated by two lower courts earlier this year, including a unanimous decision by the Ninth Circuit Court of Appeals in San Francisco. A judge in that case noted, "New technologies often disrupt mature markets."

The Recording Industry Association of America (RIAA) estimates its losses due to illegal copying at between $700 million and one billion annually. "The infringement Grokster and StreamCast foster is inflicting catastrophic, multibillion dollar harm," entertainment industry attorneys noted in their appeal to the nation's top court. "Resolution of the question presented here will largely determine the value, indeed the very significance of copyright in the digital era."

Neither of the plaintiffs actually maintains servers of copyrighted songs; rather, they simply help music fans to reach one another. To the entertainment industry's charges, they reply that US copyright law is still stuck in the age of mechanical reproduction. The court case will proceed despite the Congressional introduction of several bills that could severely curtail file sharing and other forms of digital copying. Some of these bills will be considered when Congress reconvenes in January. It is possible that a Supreme Court decision could run counter to new legislation.

Technologists and civil libertarians oppose the usage restrictions that some bills propose. Draconian legal limits on the uses of technology could cripple the next generation of computers and home entertainment gear, sowing havoc within the technology sector and nurturing an underground economy. "The question is not what is the future of peer-to-peer, but what is the future of all kinds of products like the iPod, TiVo, and next-generation home TV products," said StreamCast attorney and Electronic Frontier Foundation (EFF) spokesman Fred von Lohmann.

According to some legal observers, in MGM v. Grokster, the Supreme Court could revisit issues resolved in the 1984 Sony Betamax case, in which VCRs were vindicated as legal devices. That decision paved the way for the rise of the video rental business and ushered in an era of unprecedented profitability for the film industry.

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