Ruling raises questions

DAVID CANTON - For the London Free Press - July 23, 2005 Read this on Canoe

The recent United States Supreme Court decision regarding the entertainment industry's lawsuit against Grokster and StreamCast has uncertain effects.

The Supreme Court held against Grokster and StreamCast, services used by people to share files over the Internet, including music and video. The case has been returned to the district court to try the two software companies for infringement.

The unanimous ruling held file-sharing networks can be liable for copyright infringement if they actively encourage customers to illegally share copyrighted material.

This decision builds on the 1984 Sony-Betamax case, which held mere knowledge of infringement is not enough to subject a distributor to liability, and that devices capable of substantial non-infringing uses were legal, even if they could be used to violate copyrighted materials.

The Grokster decision revives the doctrine of "active inducement" of copyright infringement. In effect, file-sharing services that actively induce their users to infringe on copyrights are unable to rely on the protections of the Sony-Betamax case.

It leads to uncertainty because it introduces an element of intention. The focus is more on what the business says and how it presents its technology than what the technology actually does.

Some suggest the Grokster decision essentially strikes a balance between technological evolution and the interests of copyright holders with an emphasis on punishing the infringers, not the technology.

Entertainment companies regard this as a victory that outlines a clear decision about right and wrong business practices. Major record labels and movie studios have long argued massive piracy on file-sharing networks was ruining their businesses and robbing artists and musicians of their livelihood.

However, we are left with an unclear standard of what it means for a company to induce customers to infringe copyrighted materials. The entertainment industry hopes the effect of this case will end unauthorized file-sharing services. It may, however, simply give a blueprint for other companies to follow to avoid liability.

Will it chill innovation? This is difficult to answer. Though copyright infringement is illegal, punishing Grokster could hurt the technology community and the innovation process, hence chilling innovation.

Larry Lessig, a Stanford law professor, believes innovation will be chilled because the ruling introduces a new level of uncertainty about when a technology creator has an intent to allow copyright infringement. Lessig also says the intent standard set by the Supreme Court will mean innovation will be channelled into resources the copyright holders can agree to.

Fred von Lohmann, senior attorney at the Electronic Frontier Foundation, says the Supreme Court ruling opens the door for courts to look at e-mail, marketing plans and engineering notes of companies developing the next potentially infringing device.

So what does this decision mean for the next generation of technology? Vendors must avoid showing an interest in infringing uses of their products. They must at least appear to be developing their technology for legal use and discourage unlawful copying.