P2P Companies Set Stage for Supreme Court Appearance

WASHINGTON — The final piece fell into place today for the U.S. Supreme
Court to review its 20-year-old landmark Sony Betamax decision. On Tuesday,
peer-to-peer (P2P) networks and their supporters filed briefs for the March
29 high court date. The entertainment industry filed its final briefs in
January in a case that pits content owners against technological

“This is a direct assault on the Sony Betamax decision,” Gary Shapiro,
president of the Consumers Electronics Association, said in a press briefing.
“Sony has been our Magna Carta.”

Three years ago, the movie and music studios, along with a number of
songwriters and music publishers, sued Streamcast Networks, which owns and
distributes the Morpheus P2P software, and fellow file-sharing company
Grokster for secondary copyright infringement, claiming the companies’
software encourages infringement.

Streamcast and Morpheus rejected the charges, based on the 1984 Supreme Court
Betamax decision, which established the precedent that technology is neutral. At
the time, Hollywood contended Sony’s video recorder was encouraging
copyright infringement.
The Court ultimately sided with Sony, ruling that the new technology had
substantial non-infringing uses.

Relying on the Betamax standard, two courts have already ruled in favor of
Streamcast and Grokster. In April of 2003, a U.S. District Court in Los
Angeles said that while copyright infringement clearly happens on the P2P
networks, the technology itself has legal uses. A year later, the Ninth
Circuit Court of Appeals in Pasadena upheld the decision.

Hollywood appealed to the Supreme Court, and, in December, the high court
agreed to hear the case. A decision is likely by the end of the summer. If
Hollywood prevails in the case, it will be in a position to shut down the P2P

“For the past century, copyright litigation in this country has been an
endlessly repeating cycle. Time and again, the corporations that control
both artistic content and the current method of distributing that content
ask the courts to protect them against new and better technologies, by
banning those technologies,” said Michael Page, Grokster’s attorney.

Page added, “Time and again, the courts have refused to extend the copyright
monopoly. … That basic principle that copyrights, no matter how numerous, do
not give the holders a veto over technological progress is at the heart of
the Supreme Court’s 1984 Sony opinion.”

Streamcast CEO Michael Weiss accused Hollywood of “taking on the role of
technology gatekeepers. Hollywood would have you believe they support
technology, and they are just trying to stop the bad actors.”

Citing the two court decisions in Streamcast’s favor, Weiss said, “Morpheus
is not illegitimate software. If there are bad actors out there, it is not

Page contended that the entertainment industry in its appeal is attempting
to “grossly broaden the rules,” while Weiss claimed the outcome of the case
“will dictate the future of innovation for the next 20 years.”

The entertainment industry is not alone in pursuing the P2P companies. The U.S.
Solicitor General, the Progress and Freedom Foundation (PFF), the Business
Software Alliance and the Christian Coalition of America all supported the
music and movie industries by filing friends of the court briefs.

“Although the [P2P] technology can be used for lawful exchanges of digital
files, that is not how Grokster and StreamCast use it. They run businesses
that abuse the technology. At least 90 percent of the material on their
services is infringing, and that infringement occurs millions of times each
day,” a Motion Picture Association of America (MPAA) statement claims.

Donald B. Verrilli, the lead attorney for the MPAA, said in January, “They
[P2Ps] are abusing the technology. When you set out to run a business built
on copyright violations, you’re on the hook.”

Streamcast co-counsel Charles Baker dismissed Hollywood’s claims for a
revision of the Betamax standard.

“There is simply no need for the Supreme Court to overturn, or even modify,
its holding in the Betamax case,” Baker said in a statement. “It is good law
and has allowed the development and eventual commercialization of many
so-called ‘disruptive’ technologies, such as the VCR, the CD player,
Apple’s iPod and even the computer, all of which arguably allow the user to
make multiple copies.”

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