Property rights vs. technology

Left Unsaid

June 28, 2005

IN RULING against Internet file-sharing services widely used to illegally trade copyrighted movies and songs, the Supreme Court yesterday handed the movie and recording industries - and creative artists - a big win. Immediate losers were millions of consumers using such services as well as technology innovators who may now be chilled by legal advice before launching new products. At the heart of the matter, however, the court got it right: Facilitating stealing shouldn't be legal.

The movie and recording industries had sued Grokster and StreamCast Networks, which produce and distribute software for the sharing of files; they've helped trade billions of files, 90 percent of which have involved copyrighted content. Lower courts said the firms couldn't be sued, though, because they play no centralized role in the alleged violations and, as with illegal copying on VCRs, the technology producer shouldn't be held responsible for users' actions.

But the high court returned the case to the lower courts, saying there is a solid basis for Hollywood's lawsuit - because unlike VCR makers, the file-sharing networks intentionally marketed themselves as a means for illegal copying and were profiting from that.

This case had been considered the next legal landmark in defining intellectual property rights - after the 1984 decision that legalized one of the first VCRs, the Sony Betamax. It was billed as a California civil war, Hollywood vs. Silicon Valley. But even if yesterday's unanimous ruling does prove to be a watershed, it still leaves open a lot of questions for the litigants on both sides.

Among them is what this may mean for the creative types on the technology side, those who brought forth CDs, MP3 players, the iPod and all kinds of powerful software. Content requires copyright protection, but this nation can ill afford a slackening of the rapid pace of this communications revolution because of legal fears.

And for the movie and recording companies, will fighting such rear-guard legal battles against software producers and individual copyright violators lead to expanding their markets and profits? First of all, the Supreme Court decision does not apply to foreign-generated software, a big loophole given the global nature of the Internet. Second, even if Grokster and all other file-sharing networks were to shut down as a result of this ruling, we're not so sure that would automatically translate to more customers in movie theater seats or at music-store cash registers.

The ideal result here would be a flowering of new and legal technologies and distribution channels peddling content so desirable and so affordable that thievery is just not worth the bother. Let's hope yesterday's ruling ends up promoting that outcome.

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