March 28, 2005 4:00 AM PST

Top court to hear landmark P2P case Tuesday

Ken Fuhrman's Colorado-based start-up company is a television junkie's dream, making powerful home media servers to hold digitized versions of television shows, movies and music.

But Fuhrman is worried. On Tuesday morning, the Supreme Court will hear arguments on whether file-swapping software companies Grokster and StreamCast Networks should be held responsible for the widespread copyright infringement on their networks, and he's afraid his company, Interact-TV, could be affected too.

Like many other technology entrepreneurs, he owes his business to a 20-year-old court ruling that said the Sony Betamax VCR was legal to sell, even though it could make copies of television shows. Tuesday's file-swapping case is the first time in 20 years that the Supreme Court has revisited that landmark ruling in a substantial way.

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What's new:
On Tuesday, the Supreme Court will hear arguments on whether file-swapping software companies Grokster and StreamCast should be held responsible for the copyright infringement on their networks.

Bottom line:
Tech companies are worried, while Hollywood is pushing for revisions on how copyright law affects products. All court watchers agree that the outcome could set new ground rules for two of the most dynamic industries in the United States.

More stories on this topic

If not for Betamax, "we wouldn't have done the products we're doing now," Fuhrman said. "Trying to repeal or modify those rules would strangle innovation on the digital media front."

Furman isn't alone in his anxiety. From the smallest start-up to the executive offices of Intel, the technology world sees Tuesday's Supreme Court review of file swapping as potentially one of the most critical moments in the industry's history. At stake is nothing less than the future of innovation, executives say.

The record companies and Hollywood studios that have brought the case don't exactly disagree--but they say it's artists' ability to earn a living by their work, and therefore artistic innovation itself, that's at stake. Uncontrolled file swapping has led to piracy of music and movies on an unprecedented scale, and must be controlled if copyright-based industries are to survive, they say.

Virtually all court watchers agree that the outcome could set new ground rules for two of the most dynamic industries in the United States.

"This is the most important copyright case to come in front of the Supreme Court, from the perspective of its effect on the economy, since the Sony (VCR) case," said Annette Hurst, a San Francisco copyright attorney with Howard Rice Nemerovski Canady Falk & Rabkin.

Related FAQ
Betamax--tech's favorite ruling
The 1984 Supreme Court decision
legalizing the VCR is foundation
of much of today's tech.

The case itself focuses on just two file-swapping companies, Grokster and StreamCast. Hollywood studios and record labels say they, like other Napster successors, have built their business by encouraging millions of people to use their software to trade files illegally online.

Unlike Napster, each company distributes software that lets computer users search for and download files from one another's hard drives without any data going through a central company-controlled point

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8 comments

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music market lost only 12 percent since 1999?
> ... the music market in the United States has lost
> more than 12 percent of its value since 1999 ...

Only 12%? So why do they claim they lost it to file sharing? In those years new ways to spend time were created, and the public learned to use them. Peple spend a lot of time on the web, and that's enough to explain spending a bit less on music. After all, if you spend less time listening to music (because you're doing something else, or consumuing some other kind of entertainment) then you also buy less music.

I know file sharing has nothing to do with my buying less music than 20 years ago. I didn't do much downloading of music from P2P networks, but when I did a few years ago, it was a project of recreating an old cassete with songs from the seventies, and I ended up buying several CDs just for the one or two tracks on them that I couldn't find online. Most of what I ever downloaded was stuff I already had on analog media that I couldn't listen to because I had no working hardware for them (i.e., my two turntables need fixing!)

The main reason I don't buy as much as in the vynil days is that I am disillusioned from the dream of forming my own media library: there's no point in collecting music if eventually the formats change and you end up with a worthless collection that cost you a little fortune... They should expect to lose much more than 12% in the future if they plan on using DRM to force people to repurchase their libraries whenever they get a new player. Those things might be cool today, but people would be disillusioned after they find they have to repurchase their collections.
Posted by hadaso (468 comments )
Reply Link Flag
music market lost only 12 percent since 1999?
> ... the music market in the United States has lost
> more than 12 percent of its value since 1999 ...

Only 12%? So why do they claim they lost it to file sharing? In those years new ways to spend time were created, and the public learned to use them. Peple spend a lot of time on the web, and that's enough to explain spending a bit less on music. After all, if you spend less time listening to music (because you're doing something else, or consumuing some other kind of entertainment) then you also buy less music.

I know file sharing has nothing to do with my buying less music than 20 years ago. I didn't do much downloading of music from P2P networks, but when I did a few years ago, it was a project of recreating an old cassete with songs from the seventies, and I ended up buying several CDs just for the one or two tracks on them that I couldn't find online. Most of what I ever downloaded was stuff I already had on analog media that I couldn't listen to because I had no working hardware for them (i.e., my two turntables need fixing!)

The main reason I don't buy as much as in the vynil days is that I am disillusioned from the dream of forming my own media library: there's no point in collecting music if eventually the formats change and you end up with a worthless collection that cost you a little fortune... They should expect to lose much more than 12% in the future if they plan on using DRM to force people to repurchase their libraries whenever they get a new player. Those things might be cool today, but people would be disillusioned after they find they have to repurchase their collections.
Posted by hadaso (468 comments )
Reply Link Flag
What if...
Grokster looses. I think if software companies are held accountable of the actions of their users then think of the impact it will have on every company. I not a lawyer, but I can see lawsuits fly at software company that has a flaw in their software. Microsoft will get sued everytime a virus hits Windows. Linux will be the same way. Macromedia and Adobe will be sued because their program crashes and looses what you have been working on.

I may be hittin the extreme here, but can you imagine what life will be like when only companies like Microsoft can afford to make software. Even then how long could Microsoft survive when they are getting sued for every bug in their OS or other Application. Even if you don't like Microsoft and think this would be funny to watch happen to them, remember it will effect more than just them.
Posted by System Tyrant (1453 comments )
Reply Link Flag
Perhaps Open Source
Perhaps this will push open source, get it for free and no warrantee software will become more viable. Most file sharing networks are run through open source means. It is only the blockhead business personnel who start such companies to make money on the software that are targeted.

I'm sure the international media corporations will start sueing individuals or dair I say countries for using an infrastructure they can not control.

This just means that more an more software will be developed open source. Or will it? I'm sure more an more corporations will get software patents that would invalidate the ability to make software. I'm sorry but we (major corporation with 100,000 software patents) is going to sue you into the group small software developer. Because you are using our patented "for loop" and our patented "XML schema".

This is just plain stupidity and will put a strangle hold of humanity for the gains a the few trillion dollar corporations.

This must be stopped! Before such a think can happen human being have to learn to not be so greedy. Sadly, I am not sure this will ever happen, not in the good ole USA.

Sighs.
Posted by zeroplane (286 comments )
Link Flag
What if...
Grokster looses. I think if software companies are held accountable of the actions of their users then think of the impact it will have on every company. I not a lawyer, but I can see lawsuits fly at software company that has a flaw in their software. Microsoft will get sued everytime a virus hits Windows. Linux will be the same way. Macromedia and Adobe will be sued because their program crashes and looses what you have been working on.

I may be hittin the extreme here, but can you imagine what life will be like when only companies like Microsoft can afford to make software. Even then how long could Microsoft survive when they are getting sued for every bug in their OS or other Application. Even if you don't like Microsoft and think this would be funny to watch happen to them, remember it will effect more than just them.
Posted by System Tyrant (1453 comments )
Reply Link Flag
Perhaps Open Source
Perhaps this will push open source, get it for free and no warrantee software will become more viable. Most file sharing networks are run through open source means. It is only the blockhead business personnel who start such companies to make money on the software that are targeted.

I'm sure the international media corporations will start sueing individuals or dair I say countries for using an infrastructure they can not control.

This just means that more an more software will be developed open source. Or will it? I'm sure more an more corporations will get software patents that would invalidate the ability to make software. I'm sorry but we (major corporation with 100,000 software patents) is going to sue you into the group small software developer. Because you are using our patented "for loop" and our patented "XML schema".

This is just plain stupidity and will put a strangle hold of humanity for the gains a the few trillion dollar corporations.

This must be stopped! Before such a think can happen human being have to learn to not be so greedy. Sadly, I am not sure this will ever happen, not in the good ole USA.

Sighs.
Posted by zeroplane (286 comments )
Link Flag
Open Source - Kill an Industry
Plain and simple. The problem is that Hollywood and the RIAA have business models that are based on obsolete methods of distribution. If they force this down our throats, then technology will be forced to go completely open source, killing both industries while trying to protect a dinosaur.

I buy less music today from the major labels not because of P2P, but because the music sucks. Radio sucks. Bring back more variety and choice in music and films, and maybe we'll return.

Kill P2P, and you won't get a dime of my business ever again.
Posted by (274 comments )
Reply Link Flag
Open Source - Kill an Industry
Plain and simple. The problem is that Hollywood and the RIAA have business models that are based on obsolete methods of distribution. If they force this down our throats, then technology will be forced to go completely open source, killing both industries while trying to protect a dinosaur.

I buy less music today from the major labels not because of P2P, but because the music sucks. Radio sucks. Bring back more variety and choice in music and films, and maybe we'll return.

Kill P2P, and you won't get a dime of my business ever again.
Posted by (274 comments )
Reply Link Flag
 

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