June 28, 2005

Film, music companies hail Grokster ruling

By Bob Tourtellotte

LOS ANGELES (Reuters) - Hollywood studios and musiccompanies hailed a ruling by the U.S Supreme Court on Mondaybacking their position in a landmark copyright case, saying itcould spur the development of the Internet as a commercialplatform for distribuing movies and songs.

In a unanimous decision, the U.S. Supreme Court ruled thatfile-trading networks like Grokster and Morpheus can be heldliable when their users trade copyrighted material withoutpermission, clearing the way for a trial at a lower court.

Legal experts cautioned that it could still take years forthe trial, if it takes place, to work its way through a verdictand appeals.

But entertainment executives said the strength of theSupreme Court decision in the case against Grokster couldprompt file sharing networks to begin using filtering softwarethat would ensure songs and videos downloaded across theirnetworks are not illegal copies.

They also hope the Supreme Court decision will lead togreater use of current, legal download services like Napsterand iTunes for music or Movielink and CinemaNow for films,industry representatives said.

"If the Supreme Court ... can come to a unanimous decisionabout this case, surely the content industries like movies andmusic and the high-tech sector can come together," said DanGlickman, chief of the Motion Picture Association of America.

"This decision will help spur that process," he toldreporters.

An MPAA spokesman said the industry trade group would takea "wait-and-see" approach to filing new lawsuits but wouldreserve the right to file them.

Mitch Bainwol, chief of the Recording Industry Associationof America, said the groups also would not immediately approachthe U.S. Congress with proposals for new laws.

In recent years, content providers have sued computernetworks that offer software for downloading and trading songsand videos that have been copied without paying a fee. Throughthe MPAA and the Recording Industry Association of America,movie and music companies also sued individuals and sought newlaws to bar illegal downloads.

Content providers argue that illegal copying and swappingcosts them billions of dollars in lost revenues annually.Technology advocates contend that shutting down file-sharingnetworks will stifle innovation.

The Supreme Court decision means the lower court can goahead with a trial, and technology companies said they welcomedthe chance to argue their case in the lower court.

"We are confident it will be proven that Morpheus does notpromote or encourage copyright infringement," said MichaelWeiss, who heads StreamCast Networks Inc, which was also adefendant in the Grokster case.

Jennifer Urban, a specialist in intellectual property lawwith the University of Southern California, said a trial couldtake years if fully tried and the outcome is appealed.

"This ruling says that if you actively promote (illegaldownloading), you might be liable. Now we have to find outexactly what that means," she said.

Attorney Carey Ramos, who had argued the case on appeal forsongwriters and publishers, said the Supreme Court's decisionwas so strong that the lower court might bypass a full trial.