National Public Radio News Report on MGM v. Grokster
Ruling on File Sharing Does Not Make Industry Immune
Click here to listen to an NPR news report on the U.S. Supreme Court ruling in the MGM v. Grokster file-sharing case, including commentary by Matthew D. Brown, associate in our Litigation practice.
To view the transcript, see below.
SHOW: Morning Edition
DATE: June 28, 2005
RENEE MONTAGNE, host:
This is MORNING EDITION from NPR News. I'm Renee Montagne.
RENEE MONTAGNE, host:
Among the decisions the Supreme Court handed down on the last day of its term was a much anticipated case on file sharing over the Internet. The music and film industry cheered yesterday's ruling which found that the makers of peer-to-peer software can be prosecuted if they promote illegal activity. But as NPR's Laura Sydell reports, the Supreme Court did not offer the final word on file sharing.
LAURA SYDELL reporting:
On one side of this case, two peer-to-peer networks, Grokster and Streamcast. Both companies make software that allows users to share all kinds of files over the Internet. On the other side, MGM, which has been trying to hold these companies legally responsible for the millions of people who use their software to share music and movie files without permission. In a unanimous ruling, the Supreme Court held that companies that promote the use of their software to steal copyrighted material can be held libel. That's a victory, says Dan Glickman, president and CEO of the Motion Picture Association of America.
Mr. DAN GLICKMAN (President and CEO, Motion Picture Association of America):
This Supreme Court sent a strong and unanimous 9-0 decision, and that was, if you build a business that aids and abets theft, you will be held accountable. The Supreme Court gave us common sense rules for the road based on hundreds of years of common law.
SYDELL: But this is not the end of the road.
Mr. MICHAEL WEISS (CEO, Streamcast): What this means is that we're going to have our day in court; perhaps we're probably going to have several days in court.
SYDELL: Michael Weiss is CEO of Streamcast, one of the defendants in the case. Weiss does not see the decision as a victory for the entertainment industry. In 2004, a lower court found in favor of Streamcast and Grokster without a trial. That's known as a summary judgment. The Supreme Court decided there needed to be a trial.
Mr. WEISS: So what they've done was send it back for the lower court to determine the facts in the case. And that's exactly what they're going to do and we're confident that when the facts are brought forward that we'll prevail again as we have up to now.
SYDELL: The lower courts issue the summary judgement in favor of Grokster and Streamcast in light of a 1984 Supreme Court decision known as the Betamax case. In that case, the movie industry sued Sony for making the VCR because consumers were using it to record copyrighted programs. But the high court ruled that the technology was protected as long as it had a substantial number of legal uses. The court left that ruling in tact yesterday but said if a company distributes a technology with the intent of promoting copyright infringement, they are libel. Many technology companies, which filed briefs in support of Grokster and Streamcast, were relieved that the court let the Betamax decision stand. Matt Brown is an attorney who represents several of those small companies.
Mr. MATT BROWN (Attorney): The decision continues to provide a fair amount of protection for legitimate and technological innovators who create products that have valuable non-infringing uses.
SYDELL: Still, Brown worries that the decision opens the way for more lawsuits if a technology can be used for something illegal, even if that wasn't the intent of its designers. One of Brown's clients is Michael Malcolm, CEO of Kaleidescape Inc., which makes home entertainment systems. He's worried the entertainment industry will go after companies just because they don't like a particular technology.
Mr. MICHAEL MALCOLM (CEO, Kaleidescape Inc.): They seem to have a strong desire to control whatever technology is developed. So that is my main concern, and it can cost a fortune to prove that you have no liability.
SYDELL: And that, says Malcolm, could bankrupt legitimate businesses. Still, some small-tech companies were celebrating yesterday's decision. Wayne Rosso, the former president of Grokster, has gone to the other side. He now runs a company called Mashboxx, which is working with the entertainment industry to come up with file-sharing software that protects against copyright infringement. He thinks the decision will help him, but he says there is another group that's likely to profit.
Mr. WAYNE ROSSO (Mashboxx): By all means, lawyers won. So, I mean, that's the sad thing about all of this is that lawyers will basically be determining the future of technology.
SYDELL: Rosso and many other observers say there was enough ambiguity in the Supreme Court's decision to guarantee years' worth of lawsuits. Laura Sydell, NPR News, San Francisco.
MONTAGNE: This is MORNING EDITION from NPR News.
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