Tuesday, April 29, 2003

News: Judge: File-swapping tools are legal
A federal judge in Los Angeles has handed a stunning court victory to file-swapping services Streamcast Networks and Grokster, dismissing much of the record industry and movie studios' lawsuit against the two companies.

In an almost complete reversal of previous victories for the record labels and movie studios, federal court Judge Stephen Wilson ruled that Streamcast--parent of the Morpheus software--and Grokster were not liable for copyright infringements that took place using their software. The ruling does not directly affect Kazaa, software distributed by Sharman Networks, which has also been targeted by the entertainment industry.

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

The ruling is the second major setback to date to the entertainment industry's efforts to keep a tight rein on online file-swapping, following a similiar decision in the Netherlands last year that found that Kazaa was not liable for its users' copyright infringements. If upheld, the decision could lead artists, record labels and movie studios to cast new legal strategies that they have until now been reluctant to try, including bringing lawsuits against individuals who copy unauthorized works over Napster-like networks.

According to the major record labels, file-swapping is a major contributor to declines in music sales over the past few years, a trend that has thrown the industry into disarray. Debt-ridden media conglomerates are now considering sales of their music divisions even as they begin to test paid online music services intended to compete with free file-swapping networks and turn the tide.

Attorneys called the ruling a blow for entertainment and record companies trying to stop the networks used to swap unauthorized copies of their works.

"This is a very serious setback for the record industry and other content industries, because they've uniformly won these cases in the U.S.," Mark Radcliffe, an intellectual property attorney at Gray Cary Ware & Freidenrich said.

While the ruling in no way validates the legality of downloading copyrighted music online, it would shield companies providing decentralized file-swapping software such as Gnutella from liability for the actions of people using their products.…

The court's ruling applies only to existing versions of the Morpheus and Grokster software. Earlier versions of the software, which functioned slightly differently, could potentially leave the companies open to liability.

A spokeswoman for the Motion Picture Association of America (MPAA) said the copyright holders were deeply disappointed in the decision and would certainly appeal.
http://zdnet.com.com/2100-1105-998363.html

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