File Sharing Companies Given Green Light

A federal appeals court has struck a blow to the entertainment industry's quest to shut down file sharing networks, affirming a lower court's decision that companies are not violating copyright laws simply because users are trading music and movies.

The ruling, which comes from the same court that helped shut down Napster, means defendants Grokster, StreamCast and Sharman Networks will be allowed to continue distributing their software. The court said Grokster and Morpheus had legitimate uses, even if the majority of users are trading illegal content.

However, the RIAA will now likely intensify efforts to go after consumers using the services and seek federal legislation against file sharing. "This decision does nothing to absolve these businesses from their responsibility... to address the rampant illegal use of their networks," said RIAA chairman Mitch Bainwol.