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Supreme Court Rules to Hold Internet File-Sharing Companies Liable

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The Supreme Court ruled that file sharing companies, like Grokster and StreamCast, could be held liable if their product encouraged computer users to illegally share copyrighted material. We speak with an intellectual property lawyer with the Electronic Frontier Foundation. [includes rush transcript]

The Supreme Court also issued two major rulings that could shape the future of the Internet.

One ruling dealt with sharing music and film files on the Internet. In that one, the entertainment industry won.

The other is about consumer choice among Internet providers. In that one, the cable companies won.

First, we look at MGM vs. Grokster. The Supreme Court ruled that file sharing companies, like Grokster and StreamCast, could be held liable if their product encouraged computer users to illegally share copyrighted material.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: We are joined by Fred Von Lohmann, senior attorney at the Electronic Frontier Foundation, which specializes in intellectual property. The E.F.F. defended StreamCast Networks, the company behind the Morpheus File Sharing Software. Your response to the Supreme Court decision on Monday.

FRED VON LOHMANN: Well, we were very disappointed that the Supreme Court missed an opportunity to clarify for all technology companies what the line is between building a technology that is useful for lots of legitimate purposes on the one hand and doing something that exposes you to potentially ruinous copyright infringement liability on the other. They had a chance to clarify the rules; instead they muddied the waters really by saying there is this new form of liability if you do anything to promote or encourage infringement. Now we all go back to the district court, where we began this case for a trial, and frankly, we’ll probably end up having to re-litigate many of the same questions that everyone had hoped the Supreme Court would answer for us yesterday.

AMY GOODMAN: What happens now, for example, with the company you defended?

FRED VON LOHMANN: Well, the Supreme Court clearly said that there needs to be a trial in this case to evaluate all the evidence. All that the ruling yesterday really established is that there was enough evidence here to get to trial. The Supreme Court really only heard one side of the evidence in this case because in the lower courts, they had said there wasn’t enough to go to trial, and so the entertainment companies here came forward and said, 'Well, here are all of the reasons why we think there's enough.’ The Supreme Court agreed with them. So the next step is to go back and have a trial. But in my mind really the important question here is what does the rest of the technology sector make of this decision. Now this really creates a situation where they have to keep one eye over their shoulder wondering when the Hollywood lawyers arrive. Instead of focusing on, you know, taking care of the demand that — the needs of American consumers, they will be in part taking care of the needs of Hollywood lawyers.

AMY GOODMAN: What about the charge that the entertainment industry is losing so much money, the charge of basic theft from these companies with this file sharing?

FRED VON LOHMANN: Well, the Supreme Court opinion yesterday was not primarily addressing the question of whether file sharing, downloading music and movies is legal or is not legal. The court certainly suggested that it might be hurting the entertainment industry. The reality, however, is a lot more complicated. We have seen, for example, for each of the last five years the motion picture industry has posted record revenues and record profits. So certainly the movie industry is not hurting. The music industry has had a harder time, but most experts say it’s very difficult to isolate how much of that is due to their having file sharing out there and how much of it is due to the fact that this is a business that has a wide array of problems, not least of which is their long term unwillingness to really come forward into the digital age and meet the music fan in the marketplace instead of relying solely on more lawyers and more lawsuits.

AMY GOODMAN: And the implications beyond music and film?

FRED VON LOHMANN: Yes. I think, in fact, this lawsuit will have relatively little effect on file sharing, at least the reality that it’s going to continue to be out there. Obviously there are tens of millions of Americans that are using file sharing software to download music. I don’t think this decision is going to magically change that. In fact, I think the most likely outcome here is the rest of America’s technology sector are now in a position where they’re less certain about when they can innovate, what new products they can bring to market. And so that’s, I think, where you will feel the chill. The Supreme Court really has left open the possibility that the entertainment industry can pursue a variety of technology companies on the theory that their products either encourage infringement, enable new kinds of infringement or perhaps that they should be designing their products differently to prevent infringing uses.

AMY GOODMAN: Fred Von Lohmann, I want to thank you for being with us, senior staff attorney with the Electronic Frontier Foundation.

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