Internet file-sharing services will be held responsible if they intend for their customers to use software primarily to swap songs and movies illegally, the U.S. Supreme Court unanimously ruled Monday.
At issue in the case – Metro-Goldwyn-Mayer Studios v. Grokster – was whether file-sharing services should be held liable even if they have no direct control over what millions of online users are doing with the software the services provide for free.
The decision sends the case back to a lower court, which had ruled in favor of file-sharing services Grokster Ltd. and StreamCast Networks Inc. on the grounds that the companies couldn’t be sued.
The ruling rejected warnings from software supporters that the lawsuits will stunt growth of high-tech gadgets such as the next iPod.
“It’s an interesting decision; the courts are going to look at what individuals are doing on a case-by-case and what peer-to-peer software developers are doing,” said Ian Saffer, partner in Denver for the law firm Townsend and Townsend and Crew. “The court will make a determination, in terms of the intent: whether they were actually encouraging illegal sharing of music.”
Grokster claimed that there were legal uses of its software and file sharing and that infringement laws didn’t apply. But there is evidence that it was trying to emulate Napster, Saffer said. Napster was shut several years ago for allowing users to illegally download music. It has since relaunched as a legitimate, fee-based service.
More people, particularly college students, may migrate to fee-based file sharing services in light of the ruling, said Brett Goldberg, president of Cdigix, an Englewood company that allows college students to legitimately download music, films and television programs. The company licenses the content and encrypts it, limiting what people can do with the downloaded files.
“The ruling is really about tools that are being used to create copyright infringement situations, and (about) those tools being unacceptable in their usage,” Goldberg said. “It further ensures that the type of user experience we’re creating will see further acceptance on the Internet.”
Companies will have to pay music and movie artists for up to billions in losses if they are found to have promoted illegal downloading.
The decision also reaffirms the music and movie industries’ crackdown on individuals who download copyrighted content.
“The Supreme Court has helped to power the digital future for legitimate online businesses – including legal file-sharing networks – by holding accountable those who promote and profit from theft,” said Mitch Bainwol, chief executive of the Recording Industry Association of America, the trade group for the largest labels.
Since September 2003, the RIAA has sued 11,700 people nationwide for obtaining protected music illegally. The organization has settled 2,500 cases to date.
The entertainment industry said it needed protection against the billions of dollars in revenue they lose to illegal swapping. As much as 90 percent of songs and movies copied on the file-sharing networks are downloaded illegally, according to music industry filings.
The individual lawsuits were a deterrent for Mike Blick, 26. The Denver resident used to use Napster and other illegal services, but stopped as he got older and had a change of heart about downloading music for free.
“I thought it wasn’t quite right, to take songs without paying for them,” he said. While he noted that there are legal forms of file swapping, there is a blurred distinction between which actions are legal and illegal.
But a small group of young adults interviewed in Denver on Monday said that the ruling would do little to stop them from sharing music files, citing high prices for CDs and what they consider an increasingly poor quality of popular music.
“The recording industry was against the radio and, look, it generates record sales,” said Miriam Ziltna, 20 of Denver.
“I don’t think I should buy a CD if I only like one or two songs,” said Ziltna’s friend Vanessa Robinette, 20. The record companies need to lower CD prices and “everything music-related,” she said
The women said some peer-to-peer services they use charge a small fee. Legal threats to these sites will only encourage people to find new, more subversive technologies, they said.
“If someone wants (music) bad enough, they’ll get it,” Robinette said.
The Associated Press and Denver Post staff writer Kimberly S. Johnson contributed to this report. She can be reached at 303-820-1088 or kjohnson@denverpost.com.
