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Random Musings
Vol. 1, No. 1: File Sharing Litigation Reaches The Supreme Court

Random Musings is collection of opinions, commentary, humor, satire, information and other thoughts escaping from the cluttered mind of the not necessarily well-informed Gerald "grsamf" Smith concerning news and events in the world of computers and their use.

I. Introduction

On March 29, 2005, the United States Supreme Court heard oral argument in Metro-Goldwyn-Mayer Studios Inc., et al. v. Grokster, Ltd, et al. [1] Petitioners are several motion picture and movie studios and similar businesses. The respondents are Grokster, Ltd. and StreamCast Networks, Inc. Grokster and StreamCast (Morpheus) operate internet-based peer-to-peer (P2P) file-sharing services and are among the "Big Seven" of P2P services. [2] They provide software and services at no charge, but make considerable profits by selling advertising which is then displayed to users.

The petitioners sued Grokster and StreamCast for copyright infringement. After the District Court granted partial summary judgment, the Ninth Circuit Court of Appeals found in favor of Grokster and StreamCast [3] holding that liability in this case was barred by Sony Corp. of America v. Universal City Studios, Inc. (Betamax), [4] in which the Supreme Court held that manufacturers of video copying equipment could not be held liable for incidental copyright infringement by users.

This article will briefly explore the background and developments that led to this lawsuit, summarize the Ninth Circuit's opinion on the issues presented in the case, and provide some predictions of the possible outcome.

II. Background

Only the semi-comatose can be unaware of the raging battles concerning downloading, copying, or otherwise sharing software, music, movies, and other materials protected by copyright laws. The increasing availability of broadband internet access has led to a corresponding increase in P2P downloads, with BitTorrent increasing daily in popularity. [5]

Although the reliability of specific numbers may be questioned, the fact of monumental file sharing is beyond dispute and the number of those file-shares involving illegal copyright infringement is staggering. One estimate is that 400,000 movie downloads, many of them recent releases still playing in theaters, occur daily at a loss of billions of dollars each year. [6] The music industry claims losses of anywhere from $700 million to billions of dollars every year. [7] Music CD sales allegedly dropped over 25% in the three years ending in 2003 as a result of illegal downloading or copying and nearly 50% of downloaders say they no longer have to buy CDs. [8]

An estimated 90% of all material transferred via P2P involves copyrighted material. Providers of P2P disclaim responsibility for instances of copyright infringement, asserting they cannot control what files are traded by their users. The recording and movie industries counter with the assertion that filters could be used which would identify and block the unauthorized transfer of copyrighted files. A former chief technology officer of one P2P company agrees that filters could easily be used and states the issue "is not whether file-sharing companies can filter, but whether they will." [9]

The Recording Industry Association of America (RIAA) and Motion Picture Association of America (MPAA) and their affiliates have fought back, suing both P2P providers and their users. Apparently operating from the somewhat questionable theory that suing a relatively small number of individuals will deter millions of others, several lawsuits have made their way into court or have been settled. Suing individuals has often proven to be a public relations disaster for the industries, most notably perhaps in the cases of lawsuits against children. The industry has attempted to repair the damage by granting amnesty to users who admit infringement and pledge to stop illegal downloading. [10]

The public relations fiascos have fueled an already volatile attitude among users of P2P who advance several arguments to justify trading music, movies, and other copyrighted material. Literally thousands of web sites, including discussion forums, blogs, responses to news articles, and others, contain the sometimes profane opinions of individuals about the RIAA and MPAA efforts to stem the tide of copyright infringement. None of the arguments overcome the fact that the activity is simply illegal.