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Court to Hear Landmark P2P Case 


By Katie Dean  |   Also by this reporter Page 1 of 1

02:00 AM Feb. 02, 2004 PT

A federal appeals court is poised to hear arguments in a landmark case that could decide the future of peer-to-peer services, and may affect whether technology companies can be held liable for their customers' behavior.

On Tuesday, lawyers for the entertainment industry will face off against attorneys for peer-to-peer operators Grokster and StreamCast Networks in front of a three-judge panel from the 9th Circuit Court of Appeals in Pasadena, California.

The plaintiffs, including more than 20 movie studios, music labels represented by the Recording Industry Association of America, and song writers and publishers from the National Music Publishers' Association, hope to convince the court that the peer-to-peer services should be liable for copyright infringement occurring on their networks.

In April 2003, a U.S. district court in Los Angeles decided that Grokster and StreamCast Networks' Morpheus were not liable. Judge Stephen Wilson ruled that, unlike the now-defunct Napster (which has re-emerged as a legal, paid music service), the peer-to-peer operators do not have direct control over the files swapped on their networks.

Without evidence of their active and substantial contribution to copyright infringement, Wilson wrote, the file-trading services -- which also serve legally permitted purposes -- cannot be held liable.

The ruling was a huge setback for the recording industry, and paved the way for a nationwide campaign to sue music fans instead. Since September, the RIAA has sued 914 people for allegedly using such services to share copyright music.

At Tuesday's hearing, each side will have 30 minutes to present its arguments and answer questions from the three judges. The judges will likely take several months to issue an opinion on the matter.

In their appeal, movie-studio and recording-industry plaintiffs argued that if the court does not reverse Wilson's ruling, "it will gravely threaten any possibility for meaningful copyright protection in the digital era."

"The services are profiting to the tune of millions of dollars from music that is written by songwriters who are not getting a dime from the use of their music on these services," said Carey Ramos, a lawyer representing songwriters and music publishers in the appeal. "We believe that the (lower court's) conclusion is fundamentally unjust."

"This is not just a case about peer-to-peer," countered Fred von Lohmann, who represents Streamcast and is senior staff attorney for the Electronic Frontier Foundation. "It is a case that will determine whether technology companies are allowed to innovate or whether they have to ask permission from copyright owners before they build new products."

The legal doctrine tested in this case is the same one that protects companies like Hewlett-Packard and Microsoft from being held liable when someone uses HP CD burners or Internet Explorer to commit copyright infringement, von Lohmann said.

"It's important to protect the Betamax doctrine, so the price of innovation doesn't become a huge lawsuit from the entertainment industry," he said.

In the landmark Sony Betamax case in 1984, the Supreme Court ruled that Sony was not liable for contributory copyright infringement for selling VCRs that allowed consumers to tape content from their televisions.

Ramos said the two cases can't be compared.

"The Betamax was a product that allowed consumers to make copies," he said. "The defendants operate services which facilitate both unauthorized distribution as well as copying, and that continuing network is fundamentally different from the sale of a consumer electronics product, which was the subject of the Betamax case."

But von Lohmann believes it is unlikely appellate judges will find reason to reverse the lower court ruling that allowed Grokster and Morpheus to stay in business.

"The district court ruled in our favor and wrote a very clear opinion explaining why," he said. "We are hopeful that the (appeals) court will agree that the district court got it right."

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