WASHINGTON — The Supreme Court gave the entertainment industry a new legal weapon against Internet piracy Monday, ruling that companies that actively encourage people to download free copies of music or movies can be held liable for their users' illegal acts.
The unanimous ruling sets a new standard for distinguishing legitimate innovators from those who deliberately profit from online bootlegging. This guideline is a landmark for copyrights in the Internet era. But its practical effect on Internet piracy is likely to be limited because large online sources of illegal music and movies remain unscathed.
Central to the case was how to balance the interests of two of California's signature industries: entertainment and technology. The studios and major record companies that brought the case against two file-sharing networks had asked for a list of changes to copyright law that could have altered how consumer electronics, computer and high-tech companies develop and market their products.
Although some companies and consumer advocates said Monday's decision gave Hollywood too much power, others praised the court for protecting copyrights without stifling technological innovation.
"The green light to develop cool and new technologies is still there," said Markham Erickson, executive director of a high-tech trade group.
The justices did not actually decide the entertainment industry's claims against two file-sharing companies, StreamCast Networks Inc. of Woodland Hills and Grokster Ltd. of the Caribbean island of Nevis. Instead, they sent the case back to U.S. District Court in Los Angeles.
Still, by declaring that unauthorized downloading is illegal, the court buttressed the entertainment industry's campaign to stop people from bootlegging music and movies online. That campaign has included educational programs and advertisements about the illegality of piracy as well as more than 11,000 copyright infringement lawsuits against individual users of file-sharing software.
"This decision [Monday] was meant to underscore ... what is right and what is wrong, what is legal and what is illegal by all of society's basic norms. And the court did that today," said Andrew Lack, chief executive of Sony BMG Music Entertainment.
Added former Grokster President Wayne Rosso: "This is a huge PR win for the record industry in the fight for hearts and minds. If I'm running the [Recording Industry Assn. of America], I'm filing a huge number of consumer lawsuits this week just to drive that point home."
