MGM, Grokster to go Under Supreme Scope

The U.S. Supreme Court said today it would hear oral arguments in MGM vs. Grokster
beginning in March 2005. The case weighs the merits of the
contentious legal battle between music publishers and peer-to-peer (P2P)
interests in a case that challenges the court’s landmark 1984 Sony Betamax

The music industry claims P2P companies, such as Grokster, Morpheus and Kazaa,
should be held responsible for the illegal distribution of copyrighted
material on their file-sharing networks, an argument rejected twice already
by a district court and the Ninth Circuit Court of Appeals in San Francisco.

In both cases, the courts used the Sony Betamax standard, which the Supreme Court
established two decades, that ruled the use of new technology to
infringe copyrights did not justify an outright ban on that technology.

MGM Studios v. Grokster began more than two years ago in Los Angeles. With
Napster destroyed, Hollywood turned its attention to other file-sharing

U.S. District Court Judge Stephen Wilson ruled in favor of Grokster, and
Morpheus can not control how people use their software, which could also
have 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. Neither Grokster nor
Morpheus use central servers. In that situation, the court said, the two
file-sharing software distributors have no control over the actions of their

Hollywood appealed the decision but got the same results from the Ninth
Circuit. In August of this year, Judge Sidney R. Thomas wrote in his
opinion, “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.

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.

Since P2P exploded on the scene in the late 1990s, the entertainment
industry has waged a legal war against the distributive technology.

After successfully driving the original Napster out of business, Hollywood has suffered a series of legal defeats, and Friday’s Supreme Court decision came as welcome news to the music publishers.

“We appreciate that the Supreme Court has agreed to review this case,”
Mitch Bainwol, chairman and CEO of the
Recording Industry Association of America (RIAA), said in a statement. “There
are seminal issues before the court — the future of the creative industries
and legitimate Internet commerce. These are questions not about a particular technology, but the abuse of
that technology by practitioners of a parasitical business model.”

Peer-to-peer advocacy group P2P United and The P2P industry and
digital rights group Electronic Frontier Foundation (EFF) were equally quick to predict
ultimate victory.

“P2P United and its members are
confident that the Supreme Court will continue to protect both copyright
products and the ability of creative people to innovate technologically,”
Adam Eisgrau, executive director of P2P United, told

The EFF, which represents Morpheus in the case, issued a statement saying, “The copyright
law principles set out in the Sony Betamax case have served innovators,
copyright industries, and the public well for 20 years. We at EFF look
forward to the Supreme Court reaffirming the applicability of Betamax in the
21st century.”

Editor’s note: Jim Wagner contributed to this report.

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