The Empire Strikes Back: Hollywood Appeals Grokster Decision

Groups representing motion picture studios, record companies and music publishers filed their long expected appeal Thursday of an April Los Angeles district court ruling that cleared file-swapping services Grokster and Morpheus of copyright infringements occurring on their networks. The appeal claims the court “dramatically departed from well-established copyright law.”

The groups are asking the U.S. Court of Appeals for the Ninth Circuit to overturn the decision and hold Grokster and Morpheus liable for infringements.

In the April lower court decision Judge Stephen Wilson said Grokster and Morpheus can not control how people use their software, which could also have legitimate applications. The court cited the landmark Sony Betamax case of 1984, where the Hollywood studies tried to outlaw VCRs but ran into a Supreme Court ruling that said use of new technology to infringe copyrights did not justify an outright ban on that technology.

The ruling did not cover the peer-to-peer networks’ liability for damages from past versions of the software or from other past activities. It also does not cover Sharman Networks’ Kazaa Media Desktop, which is also being sued by the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA).

The appeal briefs have been filed under seal due to the inclusion of certain evidence designated confidential by the defendants, but the motion picture studios, music publishers and record companies are expected to ask the court to unseal the briefs.

“The predominant use of these services is massive copyright infringement, causing tremendous harm to the songwriters and music publishers who form the bedrock of the music industry,” said Edward P. Murphy, president of the National Music Publishers’ Association. “The district court’s ruling represents a serious blow to musical creativity, discouraging the creation of new musical works. The real losers here include the general public, who will never get to hear those songs. We appeal to the Ninth Circuit to see that does not happen.”

Jack Valenti, president and CEO of the MPAA, said, “This nation is founded on the fundamental principle that taking property that belongs to someone else is wrong, legally and morally, whether you do the stealing yourself, or you aid others in stealing. It is on that simple, undeniable fact that we are appealing this decision.”

In October 2001, the plaintiffs sued Kazaa, Grokster and StreamCast Networks (owners of Morpheus) for contributory and vicarious copyright infringement, and nearly a year later, each side moved for an expedited ruling on liability. The district court ruled in favor of Grokster and Streamcast on April 25. The claims against Kazaa and Sharman Networks, which later acquired the Kazaa business, are still pending before the district court.

In his decision, Wilson stressed the court did not condone file sharing.

“Just as in Napster, may of those who use (Grokster and Morpheus) software do so to download copyrighted media files, including those owned by the plaintiffs and thereby infringe Plaintiffs’ rights of reproduction and distribution,” Wilson wrote. “Thus, for purposes of these motions, plaintiffs have established direct infringement of their copyrighted works by some end-users of Defendants’ software.”

Wilson found that Morpheus produced evidence that its P2P network was used to search for public domain materials, government documents and authorized media content.

“We appreciate that the district court affirmed that the underlying activity of downloading or distributing copyrighted works is illegal, but the ruling on the services themselves rewrote years of well-established copyright law,” said Cary Sherman, president of the RIAA. “It was wrong. These are businesses that were built for the exclusive reason of illegally exchanging copyrighted works, and they make money hand over fist from it. The Court of Appeals should hold them accountable.”

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