U.S. Supreme Court Rules Against P2P

In a long-awaited decision that could have stark repercussions for P2P networks, the United States Supreme Court on Monday gave record labels and movie studios a green light to sue file-sharing services such as Grokster and Morpheus, which maintained they were not responsible for the actions of their users.

The Court rejected arguments saying such lawsuits could quell the spread and growth of new digital video and audio devices, instead siding with companies holding the rights to copyrighted work.

"We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by the clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties," Justice David H. Souter wrote in the majority opinion.

The ruling means that the case against Grokster is sent back to the lower court, which had previously ruled that file sharing companies could not be held liable for copyright infringement. According to the Supreme Court, there is enough evidence for the case to go to trial.

Grokster and StreamCast Networks were relying on the Supreme Court's 1984 Betamax ruling that stated Sony could not be sued over customers using VCRs to record copyrighted content illegally. Justice Souter said there was a key difference in the way file sharing companies marketed their products and whether they took steps to reduce infringement.

"There is substantial evidence in MGM's favor on all elements of inducement," Souter wrote.