Hollywood: P2P is Not About Technology

The entertainment industry urged the U.S. Supreme Court Monday afternoon not
to give the companies developing peer-to-peer (P2P) music file swapping
software a “perpetual free pass” to engage in “mind-boggling” copyright

In a 67-page brief filed in advance of the March 29 Supreme Court oral
arguments in MGM vs. Grokster, attorneys for the music and movie
studios claim Grokster exploits “this massive infringement for profit,
and petitioners are suffering extreme harms as a consequence.”

Hollywood wants the high court to reverse a district court ruling and a
Ninth Circuit Court of Appeals in San Francisco decision that say
file-swapping companies such as Grokster, Morpheus and Kazaa are not liable
for the infringement of their users.

The Supreme Court in December agreed to
hear the case that challenges the court’s landmark 1984 Sony Betamax
decision. In the two lower court decisions, judges exonerated Grokster and
its parent company, StreamCast, of secondary copyright liability based on
the Betamax decision.

The judges used the Betamax standard established by
the Supreme Court, which states that the use of new technology to infringe
copyrights did not justify an outright ban on that technology as long as the
technology had other, legal uses.

“Although the [P2P] technology can be used for lawful exchanges of digital
files, that is not how Grokster and StreamCast use it,”
the entertainment industry’s brief states. “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.

“The services are breeding grounds for copyright
infringement of unprecedented magnitude — infringement that would not occur
if Grokster and StreamCast did not make it possible,” the brief continues.

The U.S. Solicitor General, the Progress and Freedom Foundation (PFF),
the Business Software Alliance and the Christian Coalition of America
supported the music and movie industries by filing friends of the court briefs.
Grokster has until Feb. 28 to file its brief in the case.

At Tuesday’s press conference in Washington, Hollywood representatives
repeatedly stressed that case does not pit technology against the
entertainment industry.

“These people are not engaging in technological innovation,” Dan Glickman,
president and CEO of the Motion Picture Association of America,

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

In its brief to the court, the PFF wrote, “The Ninth Circuit focused totally
on the need to avoid any inhibition on technology, and in so doing it lost
sight of the equally important consumer interest in promoting content.”

James V. DeLong, the PFF counsel of record in the brief, wrote that
consumers have two basic interests in the case: avoiding technological
inhibitions and providing incentives to the creative community to foster the
production of content.

“These are complementary, not conflicting, because each is necessary to the
other,” DeLong wrote. “Technological devices are useless without content,
and content is pointless without means of delivery. But they must be
reconciled, because each, taken to the limit of its logic, can do serious
harm to the other.”

DeLong contends in his brief that the Ninth Circuit was mistaken in
application of the Betamax case.

“No one in this case argues that P2P as a technology should be banned. The
issue, rather, is the business practices which the file-sharing companies
are wrapping around this technology,” he wrote. “This can and should be the
subject of judicial inquiry, and condemned when they create business models
that can fairly be classified as deliberately dependent on infringement.”

MGM vs. Grokster began more than two years ago in Los Angeles. U.S.
District Court Judge Stephen Wilson ruled in favor of Grokster, saying the
file sharing companies cannot control how people use their software if the
product has legitimate applications.

“Grokster and StreamCast are not significantly different from companies that
sell home video recorders or copy machines, both of which can be and are,
used to infringe copyrights,” Judge Wilson wrote in his decision.

Wilson also made a distinction between the original Napster and its
successors. In Napster’s case, an index of material available for
file-swapping was maintained on a central server. Grokster does not use
central servers. In that situation, the court said, Grokster had no control
over the actions of its customers.

Hollywood appealed the decision but got the same results from the Ninth

“The technology has
numerous other uses, significantly reducing the distribution costs of public
domain and permissively shared art and speech, as well as reducing the
centralized control of that distribution,” Judge Sidney R. Thomas wrote in his opinion.

The three-judge panel acknowledged that copyright violations do occur on the
decentralized P2P networks, but the companies owning and distributing the
enabling software cannot be held liable for the infringements.

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