The Supreme Court handed movie studios and record labels a sweeping victory against file-swapping, ruling Monday that peer-to-peer companies such as Grokster could be held responsible for the copyright piracy on their networks.
In a unanimous decision, the justices ruled companies that build businesses with the active intent of encouraging copyright infringement should be held liable for their customers' illegal actions.
"We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement," Justice David Souter wrote in the majority opinion.
The decision comes as a surprisingly strong victory for copyright companies and stands to reshape an Internet landscape in which the presence of widespread file swapping has become commonplace.
Monday's ruling will give the recording industry and movie studios immediate ammunition to file lawsuits against other file-trading companies. It could also be a boon for legal music services such as Apple Computer's iTunes, which could see their strongest competitor--freely downloadable songs--driven further underground
The justices were reviewing a pair of lower court decisions in which both courts said that file-swapping companies such as Grokster were not liable for the copyright infringement of people using their software. The nation's top court heard oral arguments on the case in late March.
With the potential to rewrite the Supreme Court's 1984 Sony Betamax ruling that made VCRs--and by extension any technology with "substantial noninfringing use"--legal to sell, the decision has been closely watched across Silicon Valley.
Technology companies have feared that a new copyright-focused standard aimed at controlling peer-to-peer networks might result in a rise in lawsuits aimed at blocking new products. The Betamax ruling had protected generations of products, ranging from CD burners to Apple's iPod to personal computers.
Hollywood studios and record labels had argued that allowing file-swapping networks to continue with a free pass on copyright issues would undermine any business-producing copyrighted works and, by extension, a large portion of the U.S. economy.
The decision focused clearly on the issue of whether Grokster and StreamCast Networks had entered the file-swapping business knowing that copyright infringement would be a major component of activity on their networks. The companies had taken no steps to mitigate the piracy, the justices noted.
"There is no evidence that either company (Grokster or StreamCast) made an effort to filter copyrighted material from users' downloads or otherwise impede the sharing of copyrighted files," Souter wrote. "Each company showed itself to be aiming to satisfy a known source of demand for copyright infringement, the market comprising former Napster users."
Souter wrote that the lower courts had misinterpreted the 1984 Sony ruling as saying that any non-infringing use, no matter how minimal, was enough to relieve a company of liability for copyright infringement.
Instead, Souter pointed to a history of decisions that focused on "inducement" of infringement. If active steps are taken to "encourage" copyright infringement, he wrote, then a company can still be held liable under the framework of the Betamax decision.
The decision does not immediately order the file-swapping companies to shut down or begin filtering swaps in any way. The justices instead sent the case back to the lower court--which had initially thrown out the case before reaching a full trial--in order to restart the legal process under the Supreme Court's new analysis of the issues.
"The most important message from today's historic decision is that progress and innovation do not have to come at the expense of recording artists, songwriters and the people who make their living in the entertainment industry," Warner Music Group CEO Edgar Bronfman said in a statement. "This important decision will allow artists and the creative community to prosper side by side with the technology industry."
Digital civil-liberties groups that had backed the file-swapping companies noted that the decision was crafted to avoid expanding potential liability to other technology companies and start-ups, a doomsday scenario that some in Silicon Valley had feared.
"The court is clearly aware that any technology-based rule would have chilled technological innovation," said Gigi Sohn, president of Washington D.C.-based Public Knowledge. "That is why their decision today re-emphasized and preserved the core principle of (the Betamax decision)--that technology alone can't be the basis of copyright liability--and focused clearly and unambiguously on whether defendants engaged in intentional acts of encouraging infringement."
Source:CNET News.com
In a unanimous decision, the justices ruled companies that build businesses with the active intent of encouraging copyright infringement should be held liable for their customers' illegal actions.
"We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement," Justice David Souter wrote in the majority opinion.
The decision comes as a surprisingly strong victory for copyright companies and stands to reshape an Internet landscape in which the presence of widespread file swapping has become commonplace.
Monday's ruling will give the recording industry and movie studios immediate ammunition to file lawsuits against other file-trading companies. It could also be a boon for legal music services such as Apple Computer's iTunes, which could see their strongest competitor--freely downloadable songs--driven further underground
The justices were reviewing a pair of lower court decisions in which both courts said that file-swapping companies such as Grokster were not liable for the copyright infringement of people using their software. The nation's top court heard oral arguments on the case in late March.
With the potential to rewrite the Supreme Court's 1984 Sony Betamax ruling that made VCRs--and by extension any technology with "substantial noninfringing use"--legal to sell, the decision has been closely watched across Silicon Valley.
Technology companies have feared that a new copyright-focused standard aimed at controlling peer-to-peer networks might result in a rise in lawsuits aimed at blocking new products. The Betamax ruling had protected generations of products, ranging from CD burners to Apple's iPod to personal computers.
Hollywood studios and record labels had argued that allowing file-swapping networks to continue with a free pass on copyright issues would undermine any business-producing copyrighted works and, by extension, a large portion of the U.S. economy.
The decision focused clearly on the issue of whether Grokster and StreamCast Networks had entered the file-swapping business knowing that copyright infringement would be a major component of activity on their networks. The companies had taken no steps to mitigate the piracy, the justices noted.
"There is no evidence that either company (Grokster or StreamCast) made an effort to filter copyrighted material from users' downloads or otherwise impede the sharing of copyrighted files," Souter wrote. "Each company showed itself to be aiming to satisfy a known source of demand for copyright infringement, the market comprising former Napster users."
Souter wrote that the lower courts had misinterpreted the 1984 Sony ruling as saying that any non-infringing use, no matter how minimal, was enough to relieve a company of liability for copyright infringement.
Instead, Souter pointed to a history of decisions that focused on "inducement" of infringement. If active steps are taken to "encourage" copyright infringement, he wrote, then a company can still be held liable under the framework of the Betamax decision.
The decision does not immediately order the file-swapping companies to shut down or begin filtering swaps in any way. The justices instead sent the case back to the lower court--which had initially thrown out the case before reaching a full trial--in order to restart the legal process under the Supreme Court's new analysis of the issues.
"The most important message from today's historic decision is that progress and innovation do not have to come at the expense of recording artists, songwriters and the people who make their living in the entertainment industry," Warner Music Group CEO Edgar Bronfman said in a statement. "This important decision will allow artists and the creative community to prosper side by side with the technology industry."
Digital civil-liberties groups that had backed the file-swapping companies noted that the decision was crafted to avoid expanding potential liability to other technology companies and start-ups, a doomsday scenario that some in Silicon Valley had feared.
"The court is clearly aware that any technology-based rule would have chilled technological innovation," said Gigi Sohn, president of Washington D.C.-based Public Knowledge. "That is why their decision today re-emphasized and preserved the core principle of (the Betamax decision)--that technology alone can't be the basis of copyright liability--and focused clearly and unambiguously on whether defendants engaged in intentional acts of encouraging infringement."
Source:CNET News.com
. Also I'm not sure how a case agains a file sharing service will stand in court as they probably would have to prove that censoring file swapping is possible in the first place.