File-sharing software distributors score victory over music industry
San Francisco - Affirming a lower court decision, a federal appellate court ruled Thursday that the distributors of software used by millions of people to exchange music files over the Internet cannot be held liable for aiding copyright infringement.
The decision, by a three-judge panel of the 9th U.S. Circuit Court of Appeals, upholds a ruling issued in April 2003 by a federal judge in Los Angeles.
The decision gives distributors of peer-to-peer file-sharing software a significant victory in their long-standing battle with the record and movie industries, legal experts said.
Judge Sidney R. Thomas, writing for the panel, found that the two distributors, Grokster and StreamCast Networks, which offers the Morpheus file-sharing software, are not liable for aiding copyright infringement because they do not have the ability to monitor or control how users of their software exchange files.
"David's won another round," said Wayne Rosso, president of Grokster, comparing the record industry to Goliath.
The plaintiffs in the case, the music and movie industries, have argued that file-sharing networks are forums for mass copyright piracy. The software of both companies, which can be downloaded over the Internet, allows users to share music, video and other digital files stored on their computers. Ninety percent of the files shared, according to music and movie industry executives, include copyrighted material.
Mitch Bainwol, chief executive of the Recording Industry Association of America, issued a statement saying the appellate court ruling "does not absolve these businesses from their responsibility as corporate citizens to address the rampant illegal use of their networks."
Bainwol said the record industry would continue to seek legal and legislative remedies to address the "ongoing illegal activity." Bainwol did not say whether the industry would appeal.
Critics of the software distributors say they make money by selling advertisements that appear on computer screens when users exchange files. Thus, they benefit financially when more people exchange files, including those that contain copyrighted material.
The appellate court, however, said it is not up to the courts to adapt copyright law to the effects created by new technologies.
"We live in a quicksilver technological environment with courts ill-suited to fix the flow of Internet innovation," Thomas wrote. "The introduction of new technology is always disruptive of old markets, and particularly to those copyright owners whose works are sold through well-established distribution mechanisms. 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 added that "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. Indeed, the Supreme Court has admonished us to leave such matters to Congress."
Jonathan Zittrain, an expert in Internet law at Harvard Law School, said the court's ruling may compel copyright holders to focus more energy on lobbying legislators to change the law.
In fact, the lawsuits are only part of a multipronged attack by the record and movie industries to prevent copyright infringement.
The record industry also has filed suit against about 3,900 individuals, accusing them of illegally downloading copyrighted files.
(Source: http://www.jsonline.com/bym/news/aug04/252455.asp)
