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File-Sharing Networks Relying on VCR Ruling

September 10, 2002|JON HEALEY | TIMES STAFF WRITER

As entertainment companies struggle in court to defend their music and movies against a new generation of digital pirates, one of their biggest challenges is an 18-year-old Supreme Court ruling on a defunct technology.

The major record companies and Hollywood studios have sued a series of online file-sharing companies, accusing them of fueling rampant piracy of songs and videos on the Internet. In response, the file-sharing networks have relied on the Supreme Court's 1984 ruling in the Sony Betamax case, which held that Sony Corp. wasn't liable for copyright infringement because its videocassette recorders had "substantial" legitimate uses as well as illegal ones.

Two file-sharing networks--Napster Inc. and Aimster (later renamed Madster)--sought refuge in the Betamax case with no great success. Now, three popular successors--Morpheus, Kazaa and Grokster--are relying on Betamax in a critical pretrial skirmish.

If the file-sharing companies win, the music and movie companies would be forced to turn their legal guns directly onto consumers who make pirate copies. That's a step the entertainment industry has been loath to take because it's expensive and might alienate customers. But if the file-sharing companies lose, some advocates say, the shrinking scope of the Betamax ruling could put a damper on new technology.

"If the Betamax doctrine is eroded, you end up in a situation where innovation generally suffers, and you're limited to whatever technology Hollywood thinks we deserve," said Fred von Lohmann of the Electronic Frontier Foundation, which is helping to defend Morpheus. "It's just an untenable situation if in fact copyright law makes it impossible for innovators to do what they do."

Matthew J. Oppenheim, senior vice president of business and legal affairs at the Recording Industry Assn. of America, agreed that the file-sharing cases are refining the scope of Betamax. But as the judge in the Madster case ruled, there's a fundamental difference between a VCR that works in a consumer's home and an online network that distributes files around the globe.

"There's nothing in the Sony decision that says it extends to distribution," Oppenheim said.

The lawsuit against Morpheus, Kazaa and Grokster is being heard by U.S. District Judge Stephen V. Wilson in Los Angeles. Lawyers for the entertainment companies, Morpheus and Grokster filed briefs Monday urging Wilson to decide the case without a trial, but no ruling is expected for several months.

Napster and Madster went into bankruptcy before the copyright infringement lawsuits against them were decided. Still, the record companies and music publishers won pretrial injunctions against both companies, and those rulings could prove influential in the Morpheus case.

In particular, the U.S. 9th Circuit Court of Appeals, which considered the injunction against Napster, and U.S. District Judge Marvin E. Aspen, who heard the case against Madster, declared that consumers don't have the right to copy music from strangers over the Internet, even when no money changes hands.

Based on that reasoning, copyright lawyers say, an online file-sharing company could be liable for "contributory" infringement if it knew of the copying but still assisted it, or "vicarious" infringement if it benefited financially from the copying and could have stopped it.

The 9th Circuit held that Napster couldn't be held liable simply because its technology enabled people to pirate music, but it also ruled that the company wasn't protected by Betamax because it knew what its users were doing.

The record companies and music publishers alerted Napster to more than 12,000 infringing song files available on its network, and the company failed to purge those files from its system, the court held.

The main difference between Napster and the three file-sharing networks now being sued is that Napster kept central directories of the files on users' computers. Like most of the file-sharing companies that emerged in Napster's wake, Morpheus, Kazaa and Grokster don't have central directories. And as a consequence, their lawyers say, they have no way to monitor or control what their users do.

The courts are trying to determine how much a file-sharing company must know about and participate in its users' piracy to be held liable, said attorney Neil J. Rosini, a copyright expert at Franklin Weinrib Rudell & Vassallo in New York.

"Grokster and the like take the position that 'It's not us. We're just dumb pipes through which other people act.' And copyright owners are attempting to take the position that they're more than dumb pipes, that they're encouraging members to infringe ... and they're doing that for the purpose of making money," Rosini said.

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