HITS Daily Double
"Defendants distribute and support software, the users of which can and do choose to employ it for both lawful and
unlawful ends."
——Federal Judge Stephen Wilson


Streamcast, Grokster Can’t Be Held Liable for Users’ Illicit File-Sharing—Biz Orgs to Appeal
Whatever you do, don’t say the word "Betamax" to the RIAA folks today. They’re a little cranky.

A Los Angeles Federal court has ruled that peer-to-peer services Streamcast (the folks who brought you Morpheus) and Grokster are free from liability for copyright infringements by their users, according to a CNET report.

The RIAA, in tandem with the MPAA, sued Streamcast and former Morpheus purveyors Music City way back in 2001 (see story).

The decision, which the RIAA says it plans to appeal, doesn’t directly affect bete noir-of-the-moment KaZaA, though that application’s parent, Sharman Networks, may try to use the ruling in its favor.

"Defendants distribute and support software, the users of which can and do choose to employ it for both lawful and unlawful ends," wrote Judge Stephen Wilson in his opinion. "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."

Wilson also asserted that Congress may need to step in and balance the competing interests involved in the online dissemination of content.

The logic of Wilson’s ruling recalls the attempt by file-sharing’s champions to use the Supreme Court’s notorious 1984 "Betamax" decision (Universal vs. Sony) as a precedent. In that case, the court ruled that because the technology in question—ironically, a version of the VCR that would soon go the way of all flesh—could not be suppressed despite the potential for piracy, because it had "substantial non-infringing use."

Movie industry machers fretted that VCRs would kill the movie business. Instead it made them much, much richer. Go figure.

By underscoring that, unlike Napster, decentralized file-sharing services like Grokster and its ilk cannot control users’ actions, Wilson implicitly put the legal accountability for copyright violations squarely on P2P-using individuals. Napster’s centralized database permitted the "blocking" of specified materials from user queries, but the current generation of P2P applications do not.

Of course, content guardians have already moved on to chasing down individual copyright scofflaws, and the support this week of John Ashcroft’s Justice Department, along with an adverse District Court decision, seem likely to force ISP Verizon to rat out one of its subscribers (see story).

"We are pleased with the Court's affirmation that individual users are accountable for illegally uploading and downloading copyrighted works off of publicly accessible peer-to-peer networks," proclaimed outgoing RIAA ruler and scourge of illicit swappers Hilary Rosen. "This is precisely the issue we have been seeking to focus the public's attention on, and yesterday's decision in the Verizon matter makes clear that individual infringers cannot expect to remain anonymous when they engage in this illegal activity.

"We also note that the District Court in the Grokster matter recognized that the Defendants 'may have intentionally structured their businesses to avoid secondary liability for copyright infringement, while benefiting financially from the illicit draw of their wares,’" Rosen added.

"Businesses that intentionally facilitate massive piracy should not be able to evade responsibility for their actions," her statement concludes. "We disagree with the District Court's decision that these services are not liable for the massive illegal piracy that their systems encourage and we will immediately appeal to the 9th Circuit Court of Appeals."

The MPAA also registered its dismay. "We feel strongly that those who encourage facilitate and profit from piracy should be held accountable for actions," reads a quote from organization rep Marta Grutka in the CNET report. "We’re hoping that people aren’t taking this as an invitation to continue along the path of what is clearly illegal activity."

Dream on, Marta. But look at the potential bright side: CNET’s John Borland—one of the most knowledgeable correspondents on the subject—hypothesizes in his story that today’s ruling might lead to new licensing talks between the entertainment biz and file-sharing apps. Who knows? This could end up being like the VCR saga in more ways than one.