On its final day in session, the U.S. Supreme Court ruled Monday that distributors of file-sharing programs can be held responsible for copyright violation for their user's actions, a major development in the ongoing controversy over the use of peer-to-peer Internet file-sharing services.
In the case of Metro-Goldwyn-Meyer Studios v. Grokster, the Court ruled unanimously in favor of music and movie studios suing file-sharing companies for copyright infringement, overturning an appellate court ruling.
Arguing on behalf of the Court's majority opinion, Justice David Souter wrote, "We hold that one who distributes a device with the object of promoting its use to infringe copyright [...] is liable for the resulting acts of infringement by third parties."
Souter's opinion stated that the file-sharing developers had clearly designed their software to be used to violate copyright law.
"The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement," he wrote.
Justices Ruth Bader Ginsburg and Stephen Breyer ruled in favor of MGM, but wrote concurring opinions.
University Law Professor Thomas Nachbar said the Supreme Court in the Grokster case focused mostly on the marketing of file-sharing companies, noting they now need to prove that their programs have a legitimate use instead of uses in violation of copyright laws.
"For companies who want to make money off of marketing to copyright infringers, this is bad news," Nachbar said. "For those who want to just do file-sharing, it may be good news. The court is much more interested in looking for people who are seeking infringement than squelching technology."
Support for Grokster in the case was backed by the Consumer Electronics Association, an advocacy group which represents the interests of electronics manufacturers Dell, Sony and Phillips, according to the Washington Post.
CEA President Gary Shapiro issued a statement on the organization's Web site Monday, expressing disappointment with the ruling.
"With this ruling the Supreme Court has handed a powerful new tool to litigious content creators to stop innovation," Shapiro wrote. "Innovators must now consider new murky legal rules and potentially overwhelming legal costs before bringing their product to market -- or even moving forward with an innovative idea. It is essentially a 'full employment act' for plaintiff's attorneys and a guarantee for further lawsuits."
Nachbar said he now expects groups to be more aggressive in suing potential copyright violators, but doubts the ruling will have any major effect on portable electronics producers.
"They can make the same claim: 'We don't primarily direct the product towards infringement,'" he said.
Rick Carnes, president of the Songwriter's Associaton of America, a group which has worked conjunction with the Recording Industry Artists Association and the music united coalition in legal matters, said he does expect the industry to be more aggressive in going after copyright violators after the decision in the Grokster case.
He said the industry will plan to file suits "against the services that have been hiding behind their users as human shields."
Carnes said the decision hurts "expropriation but not innovation. You're free to put any peer-to-peer site you want to, but just ask yourself 'are the creators going to get paid?'"
The controversy behind online file-sharing came to the national forefront in 1999 with the introduction of Napster, a widely popular program which routed shared files through internal servers. Napster was shut down in 2001 after a federal lawsuit by the RIAA and later re-launched as a legitimate, pay-for-media commercial file-sharing network.
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