High court to hear file-sharing dispute
WASHINGTON — The Supreme Court said Friday it will consider whether Internet file-sharing services are responsible for their customers illegally swapping songs and movies, a multibillion-dollar case testing the limits of copyright law in the digital age.
Justices will hear a challenge to a lower court ruling in favor of Grokster Ltd. and StreamCast Networks Inc. that was a blow to recording companies and movie studios seeking to stop the online distribution of their copyrighted works.
At issue is whether the file-sharing services should be held liable, even if they have no direct knowledge of what millions of online users are doing with the software they provide for free.
The entertainment industry says it needs protection against the billions of dollars in revenue they lose to illegal swapping. Consumer groups worry that expanded liability will stifle the technology revolution of the last two decades that brought video cassette recorders, MP3 players and Apple’s iPod.
“What’s at stake is basically the future of a close to $500 billion copyright industry, specifically the music recording, motion picture and video industries which have been completely hammered with the advent of the Internet,” said Michael Elkin, a copyright litigator in New York who successfully sued Napster, the original file-sharing service, for copyright violations.
The appeal hinges on a 20-year-old Supreme Court ruling in a case brought by the movie industry, which wanted to block home video recorders on copyright grounds. The high court disagreed, saying VCRs had “substantial” uses other than illegally recording movies.
Using that reasoning, the 9th U.S. Circuit Court of Appeals in San Francisco ruled in August that file-sharing services were not legally responsible for their customers’ illegal activity because the companies don’t have central servers pointing users to copyright material.
It reasoned that the firms simply provide software that lets individual users share information over the Internet, regardless of whether that shared information is copyrighted.
“History has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player,” the 9th Circuit stated. “Thus, it is prudent for courts to exercise caution.”
The fight has drawn the support of dozens of entertainment industry companies as well as attorneys general in 40 states, who fear file-sharing software will encourage illegal activity, stem the growth of small artists and lead to lost jobs.