March 4, 2002 5:55 PM PST

Judge puts file swappers in hot seat

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LOS ANGELES--A federal judge on Monday ordered a trio of popular file-swapping services to stand trial on copyright infringement charges, ending a bid to bring a quick end to their legal troubles with the entertainment industry.

Attorneys for defendants Kazaa, StreamCast Networks and Grokster had hoped to convince the judge that their products demonstrated sufficient legitimate uses to qualify for the "Betamax defense"--a copyright safe harbor set by the U.S. Supreme Court in the 1980s that cleared the way for home videotape recorders.

Instead, Judge Stephen Wilson said a jury would hear the first phase of the case, which would focus on whether defendants StreamCast, Kazaa and Grokster allowed the pirating of movies and music. Later, the owners of the copyrights could try to widen the scope of the case and seek damages, Wilson said.

In issuing the ruling, Wilson sided with the entertainment industry's request for a trial schedule and called the defendant's motion for summary judgment premature.

"You've jumped the gun," Wilson told defense attorneys, who had hoped the judge would narrow the case.

The closely watched case is a successor to the entertainment industry's suit against Napster, and is important because it raises key questions about the legality of new networks that have sprung up that allow people to trade movies and music. The peer-to-peer networks in this case may be harder to control than Napster because people don't have to connect to central servers to trade files--meaning companies have no mechanism to control the activities of their customers. However, recent glitches in the software have raised questions about how much control the companies really have over their networks.

Music companies and movie studios sued StreamCast, Kazaa and Grokster in October, making much the same argument they did in the Napster case: The companies are promoting theft of their copyrighted works by providing the means for rampant file sharing.

Before hearing from the attorneys, the judge joked that he had tried the software. "It works. I got some nice music," he quipped, adding, "There are all sorts of opportunities out there" for using the software.

However, Wilson quickly adopted a no-nonsense approach to the hearing, giving each side a few minutes to argue for and against summary judgment.

Andrew Bridges, an attorney with Wilson Sonsini Goodrich & Rosati who argued for StreamCast, asked the judge to consider that the file-sharing software used by StreamCast had non-infringing uses--a possibility that could protect it against the plaintiff's charges. He said the entertainment industry was merely trying to quash the software in an effort to exert undue control over its material.

"Plaintiffs do want to stop distribution of the software," he said. "It's clear that they want to do that."

Paving the way
However, David Kendall, who argued for the plaintiffs, said the Napster case paved the way for this suit. He said the case must decide how much the defendants know about what's being done on their systems.

"We are not opposed to peer-to-peer technology," said Kendall, of Washington, D.C.-based Williams & Connolly. However, he said, the plaintiffs were using the technology to run a "cybernetic Alice's restaurant, and the menu is our protected content." Kendall said his clients were seeking to shut down the software in the form of an injunction while the case is decided.

After Wilson ruled on the trial date, Keker & Van Nest's Michael Page, who was representing Grokster, argued that allowing the plaintiffs to eventually broaden the case would be unfair. "They want to come in with a tiny baby and throw out all the bath water with it," he said.

StreamCast, Kazaa and Grokster have all licensed FastTrack file-swapping software to allow users to trade works over a loose network of computers. StreamCast's Morpheus software has been among the most popular software of this type.

Lawyers for StreamCast, including attorneys for technology civil liberties group the Electronic Frontier Foundation, argue the case is markedly different from Napster. For one, distributors of FastTrack-based software don't have a central indexing system, as Napster did, making it much more difficult to control the files their users swap.

Legal experts said defense attorneys must convince the judge that services like StreamCast's have "substantial non-infringing uses," a legal notion that protected makers of the home video recorder in the mid-80s. In that case, lawyers for the entertainment industry argued that the Betamax recorder would lead to widespread piracy. However, Betamax prevailed after the U.S. Supreme Court ruled that the recorders could be used in ways that did not violate copyrights.

What's more, they argued in papers asking for summary judgment, StreamCast and its cohorts are no more responsible for illegal activity on their networks than America Online or Microsoft's MSN Internet service would be.

The lawyers say the suit is just one more attempt by copyright holders to control the development of new technology. "It is precisely this radical view, that copyright law somehow conveys a veto power over technology, that the Supreme Court rejected in the Sony-Betamax case," attorneys for StreamCast wrote.

Evoking statements they made repeatedly in the Napster case, entertainment industry lawyers have said the file-swapping network that allows people to trade a variety of works was designed specifically for illegal use.

Lawyers for Kazaa, StreamCast and Grokster can appeal Wilson's ruling.

 

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