File-sharing decision quashed by U.S. Supreme Court
Internet file-sharing services can be held accountable for billions in lost revenue if they intend their software to be used to swap songs and movies illegally, the U.S. Supreme Court ruled Monday.
The ruling could open the door for lawsuits from the entertainment industry against file-sharing services for copyright infringement.
The Supreme Court decision sends the case back to the lower court, which had favoured Grokster Ltd. and StreamCast Networks Inc., companies that operate file-sharing services, by saying they could not be sued by entertainment conglomerate MGM.
The lower courts based their judgments on a 1984 Supreme Court decision that Sony could not be sued because consumers used its VCRs to make illegal copies of movies. As well, they said the file-sharing services were not legally responsible because they don’t have central servers pointing users to copyrighted material.
Monday’s ruling directs the lower courts to re-examine the Grokster/StreamCast case. The high court says there is enough evidence of “unlawful intent” for the case to go to trial. It means the services may have to pay out billions to music and movie artists if they are found to have promoted illegal downloading. It will become a test case for the issue of file-sharing.
“We hold that one who distributes a device with the object of promoting its use to infringe copyright … is liable for the resulting acts of infringement by third parties,” Justice David Souter wrote for the court.
Souter directed the lower courts to examine certain factors such as how companies marketed the product or whether they took steps to reduce the use of their software for illegal purposes.
Monday’s judgment gives the entertainment industry an alternative to going after individual online file-swappers. Recording companies have already sued thousands of users, settling about 600 cases for roughly $3,000 each.
However, the problem of piracy is unlikely to go away as software programs created abroad aren’t subject to U.S. copyright laws.
Music and production companies claim as much as 90 per cent of songs and movies copied on the file-sharing networks are downloaded illegally.
Grokster and other similar services contend they do not have direct control over what online users are doing with the software they provide for free.
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