News & Politics - Movie Studios Lose In Case Against File-Sharing Apps

**ROCKSTAR** · 08-22-2004, 12:58 AM

Quote:

By David Kravets, Associated Press

SAN FRANCISCO (AP) -- In a judicial blow to the entertainment industry, a federal appeals court ruled that makers of two leading file-sharing programs aren't legally liable for the songs, movies, and other copyrighted works their users swap online.
The decision is likely to force the industry to take the more costly and less popular route of going directly after file-swappers.

Jack Valenti, president of the Motion Picture Association of America Inc., said his group is reviewing its next step following Thursday's ruling by the 9th U.S. Circuit Court of Appeals in favor of Grokster Ltd. and StreamCast Networks Inc.

Mitch Bainwol, chairman of the Recording Industry Association of America, said the decision begs the question of whether "digital music will be enjoyed in a fashion that supports the creative process or one that robs it of its future."

Recording companies already have sued more than 3,400 such users; at least 600 of the cases were eventually settled for roughly $3,000 each.

Among other reasons, the three-judge panel unanimously upheld a lower court ruling that dismissed the bulk of the lawsuit brought by movie studios and music labels because Grokster and StreamCast don't have central servers pointing users to copyrighted material, as the original Napster did.

"In the context of this case, the software design is of great import," Judge Sidney R. Thomas wrote.

The panel noted that the software firms simply provide software that lets individual users share information over the Internet, regardless of whether that information was copyrighted.

"History has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player," Thomas wrote. "Thus, it's prudent for courts to exercise caution before restructuring liability theories."

Civil libertarians also had warned that a defeat for Grokster and StreamCast could have forced technology companies such as Microsoft to delay or kill innovative products that give consumers more control.

The decision came nearly two weeks after attorneys general from 45 states sent letters to seven companies that offer online file-sharing software, including Grokster and StreamCast, hinting at possible legal consequences if the networks don't better inform computer users about potential copyright violations from sharing files.

The attorneys general asked the companies to improve how they inform those who use their software about potential legal and security risks associated with file sharing, which include being sued for copyright infringement, identity theft, and unwittingly being exposed to pornography, computer viruses, and spyware.

Napster was shut down after the 9th Circuit ruled that its centralized servers, which contained directories to thousands of copyrighted songs, made it legally liable for contributing to copyright infringement.

But in the wake of that ruling, peer-to-peer technology developed, avoiding the need for a central hub and arguably limiting the liability of the companies involved.

Fred von Lohmann, who represented Los Angeles-based StreamCast, said the ruling follows "the same principle that people who make crowbars aren't responsible for the robberies that may be committed with those crowbars."

Thursday's ruling could influence a separate ongoing entertainment industry case against Sharman Networks Ltd., makers of the Kazaa file-swapping program, which averages more users than any other file-sharing software.

A Sharman attorney, Rod Dorman, said the company now would seek to have a U.S. court declare Kazaa legal. But he noted Thursday's ruling wouldn't directly affect the recording industry's lawsuit against Sharman in Australian courts.

In a different case, the maker of iMesh file-sharing software recently agreed to pay $4.1 million to the recording industry for copyright infringement and to change its Internet service later this year to prevent consumers from illegally distributing music or downloading songs.

Thursday's ruling makes it less likely another company would settle.

The lower court ruling cited the U.S. Supreme Court's 1984 decision in the Sony Betamax case. The court said Sony wasn't liable when people used its Betamax videocassette recorder to copy movies illegally because the technology had significant uses that didn't violate copyrights.

The studios and labels argued that while Sony couldn't control how consumers used their VCRs, Grokster and StreamCast could filter the copyrighted content from their systems, like they do with computer viruses, but refuse to do so, because the free songs and movies are what draw their users and ultimately generate ad profits.

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Wow, this a surprise! I believe the Court made the right desicion. Now let's see how all this will pour over us, the common folk.

This techno-legal war could get nasty!

UnsilentMajorty · 08-22-2004, 02:13 PM

The whole issue of piracy and downloading movies off the internet via P2P networks makes me laugh for one simple reason:

Most of the actual source material (movies, music, games, etc.) that people download are actually put on the net BY the creators (studios, record labels, game publishers, etc) and those within their own companies.

If they don't want people to download stuff they shouldn't, then they need to really look at where the true lapses in security are.

A perfect example of this is that video games (PC Games) often hit the net months before their retail street date.

Why?

Because someone INSIDE the company lends it to a friend; their uncle's kid who wants to play it first; it's stolen, and voila! It's on the net...

And this is precisley why this ruling makes absolute sense.

It is NOT the P2P sotware makers fault that Developer John Doe was dumb enough to take the finished copy of the game he's been working on and loan it his friend's kid who then puts in on the web for all of his (the kids) friends to download too.

The same thing goes for movies.

Normally, everyone only thinks of the kid who sneaks into a dark theater and tapes the movie with his video camera and then puts it on the net for everyone to download...

But most of the movies you can get off the net are in fact high quality (picture and sound) studio DVD copies (press screeners; finished work prints; foriegn market copies that include just different language subtitles for eventual VCD and SVCD release that actually hit retailers BEFORE the theater in some places like Thailand) that come directly from the studio themselves... Even if they didn't intend for it to be leaked to the public.

Again, the same argument applies:

It's not the P2P networks fault that someone smart enough managed to grab a pristine copy of "Troy" before it hits (or is currently showing) the theaters.

Also... The one thing that made me laugh was the line about how if they shut down P2P... It will make it difficult for Microsoft to develop their own software -

I say this because MS is already has enough monopoly on things -- and they produce CRAPPY products -- That if alternative P2P clients were really to shut down, NO ONE WHO IS SAVY ABOUT COMPUTERS WOULD USE AN MS PRODUCT IF GIVEN THE CHOICE (OR FORCED TO)... Especially, some "Napster" clone that good old Bill Gates would try and pass off as "quality software"

(That's just a personal perspective from someone who is a PC enthusiast like myself).

Anyway...

The big factor in all of this is two fold:

1) No one controls the internet. You can try and control access TO the internet like the record lables and studios are trying, but you'll never actually control the net like some tangible internal LAN that you set up only between a few computers.

2) Laws regarding copyright and consumer protection actually vary from Country to Country.

This complicates matters as some countries have a big loophole when it comes to distributing copyrighted material because it can be argued that, for example, it may be illegal for me to distrubute copies of copyrighted material directly to the public...

But if I am only distributing COPIES of that (original) copywrited material then it is perfectly fine because my rights as a consumer (in certain countries) are in fact being protected as I have the right to make a backup copy of anything I buy and do with it as I please. Therefore, and I am not violating any copyright laws in the strictest sense in this scenario and that is where the loophole comes into play.

Like I said, it's complicated to the Nth degree and is only going to get more complicated as technology evolves.

**ROCKSTAR** · 08-22-2004, 05:39 PM

Good post.

The companies know it and they're "lawsuits" are just a way of:

1. Scaring people into stopping their downloads.
2. Buying time to create new software or "catch" the traitors.

Because once they're stuff is on the Net they know it's no man's land.

Long time ago a guy said best, that the companies can't win a technological war. Now the Law gives them some hope of liability but only to catch the smaller fish while the big one gets away and continues creating the software.

It's a virtual no win situation for them but at least they don't look so impotent if they "do something" about it.

---

About MS. Monopoly laws haven't gotten to their core yet, so they can continue to copy cat their way into intangible fortune but one thing is clear. The economy as a factor plays an important card:

MS is the leading brand/company right now and as long as people can afford it no one will take them down, no matter how crappy their stuff is.

They have a very good situation here, too bad for us because their security is not top notch.

mh67511 · 08-22-2004, 06:49 PM

I absolutely HATE Windows Media Player and this new license crap!

I tried to LEGALLY download a song and burn it onto a CD. My CD player plays MP3's yet of all my songs, the ONE SONG I downloaded legally did not play.

I even did what MS said about turning off copy protection or whatever and it still didn't work.

Enigma, I.C. · 08-22-2004, 07:29 PM

I just love how for years and years the movie and music industries have been shamelessly gouging consumers through heavily inflated shelf prices and when we finally find a way to strike back they race to court and tell sob stories about how broke they are. I have no sympathy whatsoever for the MPAA or RIAA.

UnsilentMajorty · 08-23-2004, 01:03 AM

Exactly.

I posted something similar on the Movies board since we were (coincidentally) talking about pirating and downloading movies as well...

And my stance is the same on this thread:

I hate when the MPAA makes those "feel sorry for me" commercials with the likes of James Cameron talking about how downloading movies "takes money out of his pocket".

That is complete bull***** for so many reasons.

One, James Cameron (and other top-teir Hollywood personnel like him) has made more money in his career than most of us will ever see our entire lives...

AND two, the money directors and others are paid does NOT come from boxoffice reciepts, or foreign distribution (including cable TV royalties) most of the time. It comes from a bonded contract that producers make with directors (they form a legal corporation for the duration the movie is being shot) and other talent and the actual salaries they are paid out come from investors -- NOT the studios; Studios are just distributors in every sense of the word. These salaries (lower ones) also pay the crafts people, electricians, set designers, costumes, etc, etc.

In addition, those salaries are "static". Meaning, they exist as long as the movie is in production and once the film is done shooting, the contracts and corporatoion(s) dissolve.

In other words, people like James Cameron were already paid MONTHS ago when the movie was being shot. It doesn't matter if the movie is a blockbuster, or not. They received their money months ago.

This is how Hollywood really works.

Yet the MPAA and studios know the average person doesn't know this, so they try and paint a "9-to-5" job picture to get people to empathize with them, which, again, is completely foolish if you KNOW how the real system operates.

In addition, the other part I hate about these commercials is that they then have some actor play some kid who works at a movie theater who says, "Don't take money out of my pocket and my future".

Please

Those kids, while minimum wage earners, their salaries are guranteed to be paid BY THE MULTIPLEX they work for and are NOT reliant on whether a movie does well or not... But again, the industry is trying to paint a sympathy ploy by equating pirating = low boxoffice performance, and thus, these kids salaries are effected by it.

What horse*****

Same thing with music.

You have the top-teir performers like Metallica come on with a "don't download from Napster" commercial... Yet they shoot the stupid thing in the middle of Lars Ulrich's multi-million dollar studio that is in his house.

Yeah. I really feal "sorry" these guys after seeing that, don't you?

And the reality is that the record labels are the greediest of them all in the recording industry. Those stories about artists being left with almost nothing once they pay the recording and licensing fees, studio engineering fees, etc, etc. are true and it is because of the greed and arrogance of the record lables charging almsot $20 a CD that has maybe one or two good songs and the rest is filler.

However, some successful artists have realized this IS a problem and have opened their own lables with recording studios in their own homes to bi-pass the lables and help undiscovered talent actually have a chance to not only display their talent, but to actually MAKE MONEY at the end of the deal.

It's all greed on the part of the MPAA and music industry. Plain and simple.

**ROCKSTAR** · 08-23-2004, 02:27 AM

...Which is the bottom point.

Those companies make millions, MILLIONS in probably months. Why should we care when we make small thousands a year (if even!!!!!) and we get robbed every day by their greed.

And not only that but we get treated daily by tv parading their success in shows like "its good to be...", "Mtv cribs", etc, please!

This is just laughable! They're criminalizing us? That's cute!

Who are they kidding? Because it certainly isn't us.

pacifierrocks · 08-23-2004, 02:49 PM

Yeah, i also think its funny how they're saying, your taking money away from us, blah blah blah. These people own cars that are worth more than everything i own put together. if i am downloading something, its only because i do not currently have the money to pay all that money for a disc. If CDs abd DVDs didn't cost so much then this probably wouldn't be as much of an issue as it is now.


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