Upholding a lower court ruling last year, a three-judge panel of the 9th U.S. Circuit Court of Appeals has held unanimously that at least two peer-to-peer file swapping programs – Grokster and Morpheus – cannot be held legally liable for materials swapped by their users.
Key to the panel ruling was the point that, because Grokster and Morpheus do not have central servers that guide their users to the music, films, and other materials in question, they were not directly responsible for facilitating such copyright infringement, unlike the original Napster, in that company's days as the granddaddy of the peer-to-peer world.
"Today's ruling will ultimately be viewed as a victory for copyright owners. As the court recognized today, the entertainment industry has been fighting new technologies for a century, only to learn again and again that these new technologies create new markets and opportunities," said Fred von Lohman, a senior intellectual property attorney with the Electronic Frontier Foundation, who defended Morpheus parent StreamCast in the case. "There is no reason to think that file sharing will be any different. This is a victory for innovators of all stripes. The court's ruling makes it clear that innovators need not beg permission from record labels and Hollywood before they deploy exciting new technologies."
"From the advent of the player piano, every new means of reproducing sound has struck a dissonant chord with musical copyright owners, often resulting in federal litigation…The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through wellestablished distribution mechanisms," wrote Judge Stanley Thomas for the unanimous panel in the case called, officially, Metro-Goldwyn-Mayer v. Grokster.
"Yet, 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," he continued. "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 entertainment companies in the case are expected to appeal the 9th Circuit Court panel's ruling. The outgoing president of the Motion Picture Association of America, Jack Valenti, said after the ruling that the group was weighing its options and promised to use all avenues available to fight "those who illicitly profit from our members' valuable property."
Thomas wrote that if products like Grokster and Morpheus were incapable of non-infringing use, copyright owners would only have to show they "had constructive knowledge" of such infringement. "On the other hand, if the product at issue is capable of substantial or commercially significant noninfringing uses," he continued, "then the copyright owner must demonstrate that the defendant had reasonable knowledge of specific infringing files and failed to act on that knowledge to prevent infringement."
Thomas also said this kind of issue was more for Congress than the courts to decide upon in the end. He supported that view by citing the U.S. Supreme Court in Sony v. Betamax: “The direction of Art. I is that Congress shall have the power to promote the progress of science and the useful arts. When, as here, the Constitution is permissive, the sign of how
far Congress has chosen to go can come only from Congress,” said the high court in that landmark case.
