File-sharers: 1, studios: 0
Court ruling for file-sharing companies in copyright case is blow to movie studios, music companies.
August 19, 2004: 3:57 PM EDT
LOS ANGELES (Reuters) - A federal appeals court Thursday delivered a stinging blow to the anti-piracy efforts of major movie studios and music companies, ruling that several major online file-sharing software companies are not liable for copyright infringement.
The three-judge panel of the U.S. 9th Circuit Court of Appeals found in favor of Grokster Ltd., StreamCast and others, and said that the relief from piracy sought by the movie and music studios would amount to a renovation of the existing copyright standards, which the court called "unwise."
In a nod to the rapid changes in the online media industry over the last few years, the judges further said history has proven that with new technology, markets have a way of correcting themselves.
"Thus, it is prudent for courts to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude," the judges wrote in their opinion.
At stake in the dispute are future revenues in the expanding market for digital downloads of movies and music, a business the record labels have now embraced and the movie studios have begun to explore in earnest.
The music industry has suffered through a sales slump in recent years and blames much of that on illegal file sharing, although file sharers blame bad music.
The movie industry, through the Motion Picture Association of America, claims analog piracy -- such as illegal copying of videotapes -- costs it some $3.5 billion a year and is concerned that digital piracy will do far more harm.
File swappers elated
The MPAA, which represents the movie studios, was not immediately available to comment, nor was the Recording Industry Association of America, which represents the record labels.
The Distributed Computing Industry Association, which represents a broad range of file-sharing companies, including Grokster, greeted the court's ruling.
"We're absolutely thrilled," spokeswoman Kelly Larabee said.
At issue was whether the defendants were liable for vicarious and contributory copyright infringement, that is, whether they knew of and contributed to copyright infringement, and whether they benefited from it and had the authority or ability to supervise the infringing parties.
The court found the defendants did not "materially contribute" to copyright infringement, and also held that "the sort of monitoring and supervisory relationship that has supported vicarious liability in the past is completely absent in this case."
In arguments to the court in February, the studios and record companies said Grokster, StreamCast Networks, Sharman Networks and others should apply software filters to prevent online file trading of copyrighted works, but the services countered that using filters would effectively shut them down.
http://www.abc.net.au/news/newsitems/200408/s1181007.htm