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Supreme Court Agrees to Hear File-Sharing Case

10 Dec, 2004 By: Holly J. Wagner

The U.S. Supreme Court today agreed to hear a dispute that will determine whether peer-to-peer (P2P) file-sharing services are fair use or just a copyright free-for-all.

The Court is expected to hear the case next March.

MGM vs. Grokster has been called the Betamax case of the 21st Century because lower courts have held that P2P services, including Grokster and Morpheus, have substantial noninfringing uses and therefore cannot be held liable for how consumers use them.

But a case against a similar firm, Aimster, yielded a different result: lower courts in the Aimster case ruled that P2P services are tools of copyright infringement and should be held liable for consumer misuse.

In 1984, the Supreme Court found that VCRs, although they could be used to copy movies for sale, also had substantial non-infringing uses, such as consumer time-shifting. The decision gave hardware manufacturers the legal green light to keep producing VCRs for consumer use.

In the Grokster and Aimster cases, studios and TV networks have argued that P2P networks have little or no saving grace, while the networks' owners have argued that the technology facilitates a variety of legitimate uses, such as sharing noncopyrighted works and tag-team projects, and should be free of liability for consumer misuse.

Both sides applauded the Court's grant of certiorari, agreeing to hear the case.

“We are pleased by today's Supreme Court decision to review the Ninth Circuit's decision. By taking this case, the Court has the ability to address the legal liability of companies that abuse and profit from technologies whose primary use is to illegally redistribute copyrighted materials,” said Motion Picture Association of America (MPAA) president Dan Glickman.

“In this rapidly evolving online marketplace, the motion picture studios each embrace and support innovative technologies that have the potential to offer consumers more ways to view the films they enjoy. However, companies such as Grokster and [parent company] StreamCast that openly profit from the misuse of copyrighted materials while attempting to avoid legal liability should not be protected by the courts. Our laws recognize that a flourishing digital economy depends upon upholding fundamental copyright principles and, therefore, such companies must be held accountable.”

The Video Software Dealers Association (VSDA) expects to file a “friend of the court” brief supporting the content providers' position."VSDA is very pleased that the Supreme Court will examine this case. Retailers are harmed first and foremost by the theft of movies over the Internet, and thus have a great stake in the outcome,” said Sean Bersell, VP of public affairs for VSDA.

“Those that have deliberately constructed networks to facilitate theft of movies over the Internet, and who profit handsomely from it, must be able to be held legally liable for their actions. VSDA asked the Supreme Court to review this case, and we anticipate participating in a 'friend of the court' brief when the Court hears the case."

The Electronic Frontier Foundation (EFF), an advocacy group that represents one of the defendant and Morpheus parent StreamCast Networks in the case, embraced the challenge.

“The copyright law principles set out in the Sony Betamax case have served innovators, copyright industries, and the public well for 20 years,” said Fred von Lohmann, senior intellectual property attorney at EFF. “We at EFF look forward to the Supreme Court reaffirming the applicability of Betamax in the 21st century.”

A similar case against Sharman Networks is playing out in Australia.

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