March 27, 2005 2:30 PM PST

Mark Cuban to finance Grokster defense

Billionaire Mark Cuban has announced that he will finance Grokster's defense against MGM's peer-to-peer lawsuit, which is expected to be argued before the U.S. Supreme Court on Tuesday.

Cuban, the entrepreneur who sold Broadcast.com to Yahoo for $5.7 billion and who's now president of HDNet, a provider of high-definition TV programming, wrote in a blog entry Saturday that he had agreed to fund the software company's defense after he was approached by the Electronic Frontier Foundation and others.


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The case centers on whether file-sharing software companies could be held legally responsible for copyright infringement on their networks.

Cuban, who's also the owner of the Dallas Mavericks basketball team, said a Grokster loss would create a stifling legal environment that would virtually eliminate technological innovation in the United States.

"If Grokster loses, technological innovation might not die, but it will have such a significant price tag associated with it, it will be the domain of the big corporations only," Cuban wrote. "It will be a sad day when American corporations start to hold their U.S. digital innovations and inventions overseas to protect them from the RIAA (Recording Industry Association of America), moving important jobs overseas with them."

Cuban said his decision was also motivated by the fact that lengthy court cases have prohibitively high legal costs.

"It doesn't matter that the RIAA has been wrong about innovations and the perceived threat to their industry every single time," Cuban wrote. "It just matters that they can spend more (than) everyone else on lawyers."

The case focuses on Grokster and StreamCast Networks' Morpheus, popular file-swapping applications that are widely used to trade movies, music and software.

Studios and labels sued the companies in 2001, following successful legal campaigns against peer-to-peer trailblazer Napster. Attorneys for the entertainment conglomerates said the newer file-swapping services were, like Napster, building businesses based on copyright infringement.

But Grokster and StreamCast were built around a different technology than Napster. Their services involved a highly decentralized network of individual computers trading files among themselves, rather than a network controlled from a central location.

Lower-court judges said that the companies do not directly control what happens on their networks, that their software could be used for legal purposes and that the companies themselves aren't legally responsible for the actions of their users. The entertainment companies' appeal of that judgment led to the Supreme Court's planned hearing of the case on Tuesday.

 

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