Peer-to-Peer companies win in court

A U.S. federal appeals court ruled in favor of peer-to-peer (P-to-P) software makers Thursday, stating that the companies behind the Grokster and Morpheus services are not liable for copyright infringement due to the actions of their users.

A three-judge panel of the 9th U.S. Circuit Court of Appeals unanimously backed a lower court ruling that Grokster, Streamcast Networks, which makes the Morpheus service, and Musiccity.Com are not responsible for users who illegally copy or share content such as music and movies over their services.

"The peer-to-peer file-sharing technology at issue is not simply a tool engineered to get around" previous rulings against the Napster file-sharing service, wrote Judge Sidney R. Thomas in a ruling for the panel. "The technology has numerous other uses, significantly reducing the distribution costs of public domain and permissively shared art and speech, as well as reducing the centralized control of that distribution."

The ruling is a further setback for the plaintiffs, including the Motion Picture Association of America (MPAA), the National Music Publisher's Association of America and the Recording Industry Association of America (RIAA), which were appealing an April 2003 ruling by U.S. District Court Judge Stephen Wilson.

The MPAA and RIAA both said in separate statements that they are reviewing the next legal steps to take, and are widely expected to appeal the ruling to either the full 9th Circuit Court or the U.S. Supreme Court.

Groups supporting the P-to-P networks, such as Electronic Frontier Foundation (EFF) and Public Knowledge hailed the decision.

"This is a victory for innovators of all stripes," said EFF Senior Intellectual Property Attorney Fred von Lohmann in a statement from the group, which had argued on behalf of Streamcast. "The court's ruling makes it clear that innovators need not beg permission from record labels and Hollywood before they deploy exciting new technologies."