Supreme Court Weighs Internet File-Sharing Case

By Andy Sullivan
Reuters

March 29, 2005

WASHINGTON - Supreme Court justices questioned on Tuesday whether the recording industry's attempts to shut down online file-sharing networks would deter inventors from developing new products like Apple's iPod music player.

But the justices also suggested that peer-to-peer networks could be held accountable for copyright infringement because they attracted users by telling them that they could copy music and movies for free.

Record labels and movie studios have sued to shut down peer-to-peer software makers like Grokster and Morpheus, arguing that the millions of songs and movies copied each day over these networks have cut into sales.

Lower courts have ruled that Grokster and Morpheus can't be held responsible for the activities of their users because, like a videocassette recorder, their software can be used for legitimate as well as law-breaking purposes.

The Supreme Court seemed sympathetic to that line of reasoning. Justice Steven Breyer noted that other inventions, from the movable-type printing press to the iPod digital-music player, could be used to illegally copy protected works but have proven beneficial to society.

If the court found Grokster liable for the infringing practices of its users, it could have a chilling effect on other inventors, Breyer and several other justices said.

"There's never evidence at the time when the guy's sitting in his garage figuring out how to invent the iPod," said Justice David Souter in open court Tuesday.

ZERO IN ON A QUESTION

But the court also zeroed in on a question that has figured less prominently in previous cases: Whether Grokster and its ilk should be held liable for encouraging, or "inducing," widespread unauthorized copying.

Grokster attorney Richard Taranto argued in court that the network should be judged by its current behavior, not its actions several years ago when it was initially trying to attract users.

But Souter termed that argument "ridiculous." Even if Grokster no longer advertises the fact that users can easily find copyright material, it still benefits from its past advertising, he said.

"Sales of a product on Friday are a result of inducing acts on Monday through Thursday," Souter said.

Justice Ruth Bader Ginsburg suggested that a lower court should hold a full trial to investigate whether Grokster was liable for inducement.

Recording-industry attorney Donald Verrilli suggested that Grokster wasn't entitled to the protection afforded the video cassette recorder because it is mostly used for infringement, not legitimate uses.

"Their massive actual infringement gets a free pass so long as they can speculate that there are non-infringing uses out there," Verrilli said.

Revenues in the recording industry have plunged by roughly 25 percent since file-sharing networks emerged in 1999, though the industry posted a slight sales increase last year.

Non-infringing uses are now widespread, Taranto said. Hundreds of thousands of songs and millions of video games have been sold through a system called Altnet that allows copyright holders to exert some control over their material, while musicians who don't want to sell songs and music videos have been able to distribute them for free, he said.

Verrilli said that those figures pale in comparison to the 2.6 billion songs that are reproduced without permission each month.

The Justice Department's Paul Clement, arguing on behalf of the recording industry, suggested that a product should enjoy protection if it was used for infringement less than 50 percent of the time.

Reuters 2005. All Rights Reserved.