A Federal judge set a trial date for music and video-swapping service Morpheus after its defense team failed to persuade Judge Stephen Wilson to dismiss the copyright case filed in October 2001 on behalf of 28 major entertainment studios. Also on trial are music-swapping services Grokster and Kazaa for similar infringement charges.

With many peer-to-peer networks serving as conduits for pirated movies and music, at issue is the culpability of the companies that run these services but who claim they cannot control the ultimate outcome of their technology.

A successor of controversial file-swapping music service Napster, Morpheus software is based on a similar peer-to-peer technology, although there is no central server, record of users on the system, or what data they were swapping. Morpheus users can access a broad variety of materials including shareware programs, movies, music, photos, and data files.

Basing their defense on what has been coined the "Betamax VCR Defense," a strategy that was also used by Napster, attorneys for Nashville-based StreamCast Networks, creator of the Morpheus peer-to-peer software, argued that movie and recording studios should target the people who use the software to distribute illegally obtained copies of films, music, and data over the Internet, rather than stifle the technology itself.

The Betamax Defense, a lawsuit that eventually gave clearance to the VCR industry, is based on the 1984 Sony vs. Universal City Studios case in which the U.S. Supreme Court ruled that as long as a new technology had substantial, non-infringing uses, it could not be held accountable for illicit uses.

The StreamCast defense team, led by the law firm of Wilson, Sonsini, Goodrich & Rosati, stated that in the Napster case, the court held Napster liable based on its operation of a file-indexing service, not for the creation or distribution of its software.

StreamCast believes that the entertainment industry is merely trying to snuff out technologies such as Morpheus because of the enormous threat they pose to the conglomeration of entertainment content.

StreamCast is also using the same defense strategy in litigation over its Web site MusicCity that uses Morpheus software to support another file-sharing service.

The plaintiffs, represented by D.C.-based attorney David Kendall of Williams & Connolly, argue that they are not opposed to peer-to-peer technology but to the rampant thievery that services like Morpheus promote.

Judge Wilson, who admitted to testing out Morpheus himself before the hearing, stated it was too early to rule on this defense and suggested that the plaintiff take time for "discovery."

"There is an important principal at stake here," said Fred von Lohmann, co-defender for StreamCast and senior intellectual property attorney for The Electronic Frontier Foundation (EFF), a civil liberties organization that supports rights in the digital world.

"Morpheus, as a technology company that has numerous non-infringing uses, should be legal for the same reasons that VCRs, photocopiers, MP3 players, and CD burners are legal," said von Lohmann.

"While we are disappointed that the judge thought our motion was premature, we look forward to renewing it and also welcome the prompt resolution of the case before a jury," said Andrew Bridges, partner at Wilson Sonsini and lead attorney in the case.

A trial date is set for Oct. 1, 2002.