A Supreme Chill For P2P Technology?

What will a post-Grokster world look like? Very rosy indeed, a jubilant
Hollywood says. A new era of legal headaches that will stifle innovation,
peer-to-peer (P2P) supporters moan.

In Monday’s Supreme Court decision in MGM
v. Grokster, the justices put P2P companies on notice that they can he held
responsible for the illegal acts of their file-sharing end users.

Content providers say it’s about time that companies that encourage illegal sharing of copyrighted works be held accountable.

The unanimous decision stressed that the issue was not about technology, but
bad behavior. The justices noted both Grokster and StreamCast actively
promoted their software as an alternative to the original Napster, the P2P
bad boy forced into bankruptcy over the same copyright infringement issues.

“Grokster and StreamCast’s efforts to supply services to former Napster
users, deprived of a mechanism to copy and distribute what were
overwhelmingly infringing files, indicate a principal, if not exclusive,
intent on the part of each company to bring about infringement,” Justice
David Souter wrote in the court opinion.

The opinion added, “There is no evidence that either company made an effort
to filter copyrighted material from users’ downloads or otherwise impede the
sharing of copyrighted files,” Souter wrote. “Each company showed itself to
be aiming to satisfy a known source of demand for copyright infringement,
the market comprising former Napster users.”

In other words, the court said Grokster and StreamCast are inducing users to
commit copyright infringement.

“What does it mean to induce someone to copyright infringement?” asked
Charles Baker, attorney for Porter & Hedges, which represented StreamCast in
the case. “If you think about it, any company would be liable. I think this
is going to hammer the technology industry going forward.”

Ed Black, the CEO of the Computer and Communications Industry Association,
called the decision “dangerous for technology and innovation while Fred von
Lohmann of the Electronic Frontier Foundation predicted the court action
would “unleash a new era of legal uncertainty for technology developers.”

In Hollywood, though, music and movie publishers said the decision was

“The court spoke to the culture as well as the law: thou shalt not steal,”
said Mitch Bainwol, head of the Recording Industry Association of America
(RIAA). “The legitimate marketplace has a real shot to take off now. We’ve
had a tough few years, but now the law is fair.”

Jim DeLong of the Progress and Freedom Foundation, which submitted an amicus
brief in support of Hollywood, said he saw “no way that this decision will
impede technology and innovation.”

DeLong added, “If not getting a free ride is inhibiting, then, yes,
technology may have a problem.”

Michael Weiss, CEO of StreamCast, said the decision is “certainly another
legal hurdle for our company, but the David versus Goliath battle will

Weiss and Grokster may have good reason to be worried.

“There is substantial evidence in MGM’s favor on all elements of
inducement,” The court opinion states. MGM is expected to return a district
court and seek a summary judgment against Grokster and StreamCast.

Not everyone supporting Grokster, however, was bemoaning the decision.

“Today’s Court decisionunderscores a principle Public Knowledge has long
promoted: punish infringers, not technology,” Gigi Sohn, president of the
public advocacy group said. “What this means is, to the extent that
providers of P2P technology do not intentionally encourage infringement,
they are exempt from secondary liability under our copyright law.”

Sohn was also encouraged the court upheld the legal principle it established
in the 1984 Sony Betamax case.

“The Court is clearly aware that any technology-based rule would have
chilled technological innovation,” she said. “That is why their
decisionre-emphasized and preserved the core principle of Sony v. Universal
City Studios — that technology alone can’t be the basis of copyright
liability — and focused clearly and unambiguously on whether defendants
engaged in intentional acts of encouraging infringement.”

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