Legal Battle Over File Sharing Continues

Tuesday afternoon in Pasadena, Calif., the country's major movie studios, music publishers, and recording studios renewed their fight against Grokster and Morpheus, two of the Internet's leading peer-to-peer file-sharing services.

Last April 25, the U.S. District Court in Los Angeles ruled that the companies overseeing Grokster and Morpheus — Grokster Ltd. and StreamCast Networks — were not responsible for the movie and music copyright infringement that regularly occurs on the services.

On Tuesday, the U.S. Court of Appeals for the Ninth Circuit heard an appeal from the Motion Picture Association of America (MPAA), the National Music Publishers Association of America (NMPA), and the Recording Industry Association of America (RIAA).

Since the rise of Napster, the first large-scale file-sharing service, the MPAA, NMPA, and RIAA have fought to shut down the services, which allow millions of Internet users to freely exchange songs, movies, and other digital files. Such file sharing, they claim, infringes copyrights held by their member companies and results in millions of dollars in lost revenue.

The Betamax Defense

Yet in April, U.S. District Court Judge Stephen Wilson held that Grokster and StreamCast were not responsible for copyright infringement, citing a famous 1984 case involving Sony Corp., makers of the Betamax videocassette recorder.

In its ruling, the Supreme Court found that although the Betamax let consumers copy and share television programs and movies, it was not in violation of copyright law because in most cases people simply used the VCR to time-shift programs, watching shows a few hours or a few days after they were aired and then taping over them.

According to the court, the VCR had two uses — one that infringed on copyrights and one that did not — and Sony had no way of controlling which its customers chose.

"The court felt that it ought to provide some shelter from liability if — and only if — the product being distributed has substantial noninfringing uses and the company has no control over how the product is used," says Evan R. Cox, intellectual property attorney and partner in the San Francisco office of the international law firm Covington & Burling.

Last spring, Judge Wilson ruled that the same argument applied to file-sharing services like Grokster and Morpheus. They could be used to share copyrighted material, he said, but they could also be used to share files unprotected by copyrights.

Who's In Control?

In appealing to Ninth Circuit, the MPAA, NMPA, and RIAA will claim that, unlike Sony, Grokster and StreamCast have complete control over how their services are used and can prevent people from swapping copyrighted songs and movies.

Napster was shut down in 2001 for this very reason. Its service was not a true peer-to-peer network — file-swapping was controlled by a group of central servers operated by Napster, and the company had complete control over what could be swapped and what couldn't.

"Napster tried to say it was just like Sony," explains Cox. "But, unlike Sony, Napster stayed involved after it distributed its product."

The MPAA and its sister organizations claim that, although Grokster and Morpheus lack a server-based architecture, their parent companies can still filter what gets traded on their networks.

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