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Supremes protect P2P technology, then punt

Back to district court with fresh guidelines

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Analysis The US Supreme Court declined to decide the Grokster/MGM case, effectively sending it back to the district level, but not without adding clarifications no doubt intended to simplify the lower court's work, but almost certain to add another layer of confusion.

The Court did not weaken the Sony decision in any way, as had been feared, and left alone the principle that a significant non-infringing use suffices to make a technology legal.

But even though a technology might be legal under the Sony principles, a company's behavior might not be, and this is the issue that the Supremes have effectively ordered the lower court to rule on. It is possible, the Court noted, for a company whose product passes the Sony test to be guilty of inducement to violate copyrights. But P2P software is not, in itself, infringing.

Insofar as this decision focuses attention on the murky issue of intent, it is a victory for the labels and other copyright holders, because defending against accusations of inducement is difficult and expensive, even if the defendant is innocent. Thus lawsuits, or the mere threat of lawsuits, from industry behemoths with deep pockets can crush small-fry companies, however innocent of inducement they might be. But the real victors here, as usual, are lawyers. It will take considerable litigation to settle all the fine points of the Supremes' ruling.

However, it is important to note that P2P software per se has not been found illegal on any technological basis, and probably never will thanks to the Grokster decision. The courts will not be ruling on the technology overall, as the labels would like them to do, but will likely apply Sony to individual products, and, if they should pass those tests, move on to issues of inducement to infringe by the makers.

The Supremes did not rule on the ratio of infringing to non-infringing use that a product should be able to claim to qualify for safe harbor under Sony.

Meanwhile, the Center for Democracy and Technology (CDT) has applauded the decision, after having anticipated it in its amicus brief.

"Grokster's conduct in this case may well give rise to liability. Although the Sony defense shields technology vendors' design, manufacture, distribution, general advertising, and routine support activities from secondary liability, that safe harbor does not extend to a vendor's other conduct," the CDT had said.

Following the decision, CDT Staff Counsel David Sohn explained, "We never felt that Grokster and StreamCast were innocent parties that should get a free pass, but there's a principle at stake here that's much larger than the peer-to-peer issue. Since 1984, the rule has been that developers of technologies that have legal uses aren't liable when users misuse those technologies to infringe copyright."

"This decision offers a framework for the courts to distinguish bad actors from those who merely distribute innovative technologies," he added.

As for what comes next, it is possible that the case will end up back before the Supremes, if the ambiguity of their current definitions of inducement should leave the forthcoming district court decision open to appeal. And it is all but certain that the entertainment industry will be lobbying Congress ruthlessly to outlaw P2P software outright, since the Supremes have declined to do so. We can expect new life for the Inducing Infringement of Copyrights Act (Induce Act), but certainly not before the mid-term elections. ®

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