By Andy Sullivan
WASHINGTON (Reuters) - The U.S. Supreme Court on Friday agreed to
consider whether Internet file-trading networks should be held
responsible when their users copy music, movies and other protected
works without permission.
Online networks like Grokster and Morpheus allow millions of computer
users to copy music and movies for free from each others' hard
drives. Recording labels and movie studios say that cuts into their
sales.
But the Ninth Circuit Court of Appeals ruled in August that peer-to-
peer networks cannot be held liable for copyright infringement
because, like a videocassette recorder, they can be used for legiti-
mate purposes as well.
Even as record labels challenge the appeals court's decision, they are
tentatively embracing peer-to-peer networks as a way to cut
distribution costs and reach out to listeners.
By the time the Supreme Court hears the case next spring, all four
major labels -- Vivendi Universal, EMI Group Plc, Sony BMG Music
Entertainment and privately held Warner Music -- could be distributing
their songs over a new generation of peer-to-peer networks like Snocap
and Mashboxx that promise to collect payment for songs.
The court is expected to issue a decision by June.
Entertainment-industry trade groups said Grokster and other rogue
networks need to be shut down if industry-sanctioned services like
Snocap and Apple Computer Inc.'s iTunes can flourish.
"Without strong rules of the road, there will never be a level playing
field for the multitude of legitimate online music services trying to
do the right thing," said Mitch Bainwol, chairman of the Recording
Industry Association of America.
The head of a peer-to-peer trade group said the entertainment industry
would be better off negotiating with his members rather than trying to
sue them out of existence.
"Decentralized peer-to-peer technology will forever be with us even if
every presently operating company goes out of business yesterday,"
said Adam Eisgrau, executive director of P2P United, which counts the
parent companies of Grokster and Morpheus among its members.
The entertainment industry managed to shut down the first file-trading
network, Napster. But Grokster and other networks that have sprung up
in its wake claim their decentralized design prevents them from
blocking copyrighted songs or otherwise controlling user behavior.
While the entertainment industry has been unable so far to
shut down peer-to-peer networks through the courts, it has sued
more than 5,000 individual users for copyright infringement.
The industry has also lobbied Congress for tougher copyright laws and
warned peer-to-peer users they may be exposed to computer viruses,
unwanted pornography and privacy risks.
But traffic on file-trading networks continues to rise.
An average of 7.5 million users were logged on to peer-to-peer
networks in November 2004, up from 4.4 million in November 2003,
according to the research firm BigChampagne.
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Lisa Minter (lisa_minter2001@yahoo.com)