Supreme Court to Decide P2P Legality

The United States Supreme Court will hear on Tuesday a landmark case that could have far-reaching consequences for both copyright holders and the technology industry. At issue is whether two P2P network operators, Grokster and StreamCast are liable for the copyright infringement committed by their users.

Both file-sharing companies contend that P2P networks can be used to share legal content and they cannot control, and thus are not liable for, any piracy going on. Sharman Networks, owner of Kazaa, has mounted a similar defense in a case brought by the record industry in Australia.

The entertainment industry, which will be represented in court by MGM Studios, disagrees with such claims. Hollywood and the RIAA say that P2P companies such as Grokster and StreamCast are no different from the old Napster, and have built their business by encouraging users to share illicit content.

A federal appeals court sided with the file sharing networks last August, stating that Grokster and StreamCast's Morpheus had legitimate uses, even if the majority of users are trading illegal content. But the industry refused to give up, and the case will be decided by the nation's top court.

The Supreme Court has in the past protected technologies with substantial non-infringing uses, such as the VCR and MP3 players. However, surveys show that over 90 percent of P2P users are swapping copyrighted content. Based on these numbers, entertainment firms plan to attack the networks in court, rather than the technology itself.

Nonetheless, technology companies are worried that a decision against file sharing could upset the Betamax precedent, which sanctioned the sale of videocassette recorders even though they could be used to copy television shows.

Grokster and StreamCast will be facing an uphill battle against 38 entertainment companies and over 27,000 music publishers and artists. P2P has found some major supporters, however; Broadcast.com billionaire Mark Cuban says he will finance Grokster's legal fight against MGM.

Although the court will hear oral arguments beginning this week, a final decision on the matter is not expected until June.

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