The Lazy Genius

Security News & Brain Dumps from Xavier Ashe, a Bit9 Client Partner

Supreme Court Ruling Will Chill Technology Innovation

Posted by Xavier Ashe on June 27, 2005

From the EFF:

Copyright Liability Standard in Grokster Decision Endangers P2P and Other New Technologies

Washington, DC – Today the Supreme Court issued a ruling
that could impede makers of all kinds of technologies with expensive
lawsuits. The long-awaited decision in MGM v. Grokster states that P2P
software manufacturers can be held liable for the infringing activities
of people who use their software. This decision relies on a new theory
of copyright liability that measures whether manufacturers created
their wares with the “intent” of inducing consumers to infringe. It
means that inventors and entrepreneurs will not only bear the costs of
bringing new products to market, but also the costs of lawsuits if
consumers start using their products for illegal purposes.

“Today the Supreme Court has unleashed a new era of legal
uncertainty on America's innovators,” said Fred von Lohmann, EFF's
senior intellectual property attorney. “The newly announced inducement
theory of copyright liability will fuel a new generation of
entertainment industry lawsuits against technology companies. Perhaps
more important, the threat of legal costs may lead technology companies
to modify their products to please Hollywood instead of consumers.”

The Supreme Court has also ordered the lower court to consider
whether peer-to-peer companies Grokster and StreamCast can be held
liable under the new standard. StreamCast is confident that it will
pass muster under the new, multi-pronged test.

MGM v. Grokster was
brought by 28 of the world's largest entertainment companies against
the makers of the Morpheus, Grokster, and KaZaA filesharing software
products in 2001. The entertainment companies hoped to obtain a legal
precedent that would hold all technology makers responsible for the
infringements committed by the users of their products. The Electronic
Frontier Foundation (EFF), along with StreamCast counsel Matt Neco and
Charles Baker of Porter and Hedges, defended StreamCast Networks, the
company behind the Morpheus filesharing software.

The entertainment companies lost their case in District Court, then
lost again on appeal to the Ninth Circuit Court of Appeals. The lower
court rulings were based on the Supreme Court's landmark decision in
the 1984 Sony Betamax case, which determined that Sony was not liable
for copyright violations by users of the Betamax VCR.

» PDF of the
Supreme Court decision

» Press Release: Supreme Court Ruling Will Chill Technology Innovation
» Audio from today's press conference coming
soon
» Statement from
Public Knowledge about Grokster Decision

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