The happy-go-lucky world of free music on the Internet took a massive blow on June 27 as the Supreme Court ruled that the makers of peer-to-peer (P2P) file-sharing programs like Grokster, Kazaa and Morpheus could be held responsible for the illegal activities (i.e., downloading copyrighted material) of their users.
Not that this will even put a dent in the millions of files being shared across cyber-space, but it is a major moral victory for several giant corporations. And that’s the best kind of victory.
Until now the makers of these P2P programs had been hiding behind the precedent set in 1984’s Sony Corp of America v. Universal City Studios, Inc.
Universal and several other movie and TV studios took Sony to court to try and stop the manufacture of the VCR. The studios believed that the VCR would be used to infringe on copyrights, thus resulting in millions of dollars of lost revenue.
The Supreme Court, however, ruled this new device had substantial non-infringing and legal uses and therefore could be legally sold.
The studios were put in their place, and then the multi-billion dollar a year home video market just sort of fell into their laps because apparently, consumers needed something else to watch when they weren’t infringing copyrights by tapping TV shows.
Twenty years later, the studios and record labels joined forces to wage a similar battle against P2P software makers in Grokster v. Metro-Goldwyn-Mayer Studios, Inc. (MGM).
The studio’s argument was the same: “P2P lets consumers infringe our copyrights.†To which P2P replied, “Sony v. Universal! Go suck on it.â€
Last August, the Ninth Circuit District Court agreed with P2P, stating that though file-sharing programs like Grokster could be used to infringe copyrights, they also had substantial legal uses.
But this fight would not end until the highest court in the land got their wrinkled asses involved.
The Supreme Court agreed to hear the case, and software makers and record labels alike held their breath.
There was massive speculation that a verdict against P2P would overturn Sony v. Universal, effectively stifling tech innovation by opening the door to frivolous litigation and scaring off inventors who had neither the time nor the resources to fight legal battles to get their products to the market, especially if any corporation felt threatened by that product.
The Supreme Court’s verdict, however, came as somewhat of a surprise to those who had made predictions one way or the other.
In what could be considered taking the middle road, the high court unanimously overturned the Ninth District’s ruling while at the same time upholding the ruling it had made in Sony v. Universal.
The Supreme Court stated that the Sony v. Universal verdict did not apply in this instance, the difference being that the VCR had substantial legal uses, most notably time shifting. VCRs were not produced with the intent to infringe copyrights but to allow consumers to watch TV shows at their convenience.
In the case of Grokster and other P2P programs, the Supreme Court found that there was extensive evidence suggesting that these programs were made for the sole purpose of infringing on copyrights.
The P2P software makers also made no attempt to filter out copyrighted material. Even though the software makers did not benefit directly from infringing on copyrighted material (P2P revenue is generated through advertising streamed to program users), the software makers did promote the fact that copyrighted material was available to attract users in order to increase advertising revenue.
The case will now return to the lower courts to be retried after the new precedent set by the Supreme Court.
So what does this mean for the future of P2P and tech in general? Well, right now, not that much. You can still download P2P software, you can still download copyrighted material, but P2P is definitely changing.
As digital rights managements software and pay-for-play services continue to evolve to meet consumer demand, the programs that allow free downloads will fall by the wayside or evolve themselves and team up with the record companies to make money “legally.â€
Thanks to the Supreme Court, Sony v. Universal was upheld and innovation in tech and software sectors can continue.
And last but not least, the record labels and movie studios can go back to charging exorbitant amounts of money for their cookie-cutter pop albums, rehashed plots and other mediocre products, confident that they are still the biggest crooks in the biz.