In a case with broad implications for the future of copyright law and the use of intellectual property in America’s schools and colleges, the U.S. Supreme Court heard arguments March 29 in a lawsuit pitting the music and movie industries against makers of software for swapping digital files online.

Entertainment companies want the court to let them sue the manufacturers of file-sharing software that allows computer users to download music and movies from each other’s computers. The companies say such downloads violate copyright protections and amount to stealing.

Lower courts have sided with the software makers, Grokster Ltd. and StreamCast Networks, which say their technology should be looked at no differently than a videocassette recorder.

The issue cuts two ways for schools, which increasingly find their computer networks are being used for illegal file sharing. A ruling in favor of movie studios could curb the use of school networks to download and distribute movies and music in violation of copyright law.

On the other hand, how the High Court rules could redefine how consumers can watch television shows and films and listen to songs that increasingly are delivered in digital formats. Supporters of file-sharing technology say a ruling against the software companies could effectively give the entertainment industry a legal veto over up-and-coming gadgets; they fear the threat of expensive lawsuits could hamper development of new devices.

That seems to be the early thinking of the justices, who openly worried that allowing lawsuits to protect internet movie and music rights could stunt development of the next iPod or other cool high-tech gadget.

During a lively, hour-long argument, the court puzzled over the repercussions of granting the entertainment industry authority to sue technology manufacturers over consumers who use their products to steal music and movies online.

Justices wondered aloud whether lawsuits against manufacturers might have discouraged past inventions like copy machines and VCRs, as well as newer innovations like iPod music players. All can be used to make illegal copies of documents, films, and songs.

Justice Antonin Scalia said a ruling against Grokster, a developer of leading file-sharing software, could mean that if “I’m a new inventor, I’m going to get sued right away.”

Scalia, 69, referred to the company as “Grakster, whatever this outfit is called,” eliciting chuckles from the packed courtroom.

The entertainment industry’s lawyer, Donald Verrilli Jr., said his clients have no interest in suing inventors who take steps to block customers from stealing. But Grokster and other file-sharing services actively encourage consumers to steal, Verrilli said.

Verrilli called Grokster’s software “a gigantic engine of infringement” that thieves use to steal 2.6 billion songs, movies, and other digital files each month.

“The scale of the whole thing is mind-boggling,” Verrilli said.

The case has star power on both sides.

Don Henley, Sheryl Crow, the Dixie Chicks, and other musicians are backing the major recording labels, saying their livelihoods are threatened if millions of people can obtain their songs for nothing.

About 20 independent recording artists, including musician and producer Brian Eno, rockers Heart, and rapper-activist Chuck D, support the file-sharing technology. They say it allows greater distribution of their music and limits the power of huge record companies.

The entertainment industry is eager to use the internet to sell more music and movies, and it points to the stunning popularity of Apple Computer’s iPod, which can be used to play songs purchased online.

But Justice David H. Souter noted that even iPod users can play music downloaded illegally.

“I know perfectly well if I can get music on my iPod without paying, that’s what I’m going to do,” said Souter, 65.

Souter questioned why the industry wouldn’t also sue Apple on the same grounds as Grokster. Verrilli said that, unlike Grokster, Apple took reasonable steps to discourage piracy.

Justice Anthony M. Kennedy, 68, pressed Grokster’s lawyer, Richard Taranto, on whether profits from trafficking in stolen property can rightfully be used to help finance a young technology business. “That seems wrong to me,” Kennedy said.

The court was expected to rule before July. Regardless of the outcome, it still won’t be legal to download copyrighted materials over the internet without permission. And any ruling won’t affect thousands of copyright lawsuits filed against internet users–including many students–caught sharing music and movies online.

Besides the lawsuits against music fans, the Associated Press reported, the entertainment industry has deliberately polluted file-sharing networks with poor-quality copies of songs and falsely named files, among other tactics, to frustrate internet thieves.

Two lower courts previously sided with Grokster. A trial judge and a U.S. appeals court in California each based their decisions on the 1984 Supreme Court ruling that Sony Corp. could not be sued over consumers who used its VCRs to make illegal copies of movies.

The lower courts ruled that, like VCRs, the file-sharing software can be used for “substantial” legal purposes, such as giving away free songs, free software, or government documents. The lower courts reasoned that the legitimate uses for such software gave companies like Grokster protection from copyright lawsuits based on acts by their customers.

Justice John Paul Stevens, 84, who was among the justices hearing arguments March 29, wrote the 5-4 Sony decision. Only two other justices from 1984 remain on the court: Sandra Day O’Connor, 75, who sided with Stevens, and Chief Justice William H. Rehnquist, 80, who dissented.

The case is Metro-Goldwyn-Mayer Studios v. Grokster, 04-480.

Links:

U.S. Supreme Court
http://www.supremecourtus.gov