Friday, August 27, 2004

Grokster Ruling Fuels P2P Battle

By Brian Garrity and Susan Butler
NEW YORK (Billboard) - The battle against Internet piracy could shift in earnest to Capitol Hill and further into the homes of individual consumers as the recording industry presses its legal case against peer-to-peer networks.
The industry promises that a U.S. Court of Appeals ruling -- which found that the operators of Grokster and StreamCast are not liable for copyright infringement -- does not mark the end of its litigation against the file-sharing services.
The Aug. 19 decision by the Ninth Circuit Court covers only one part of the case, and an appeal to the U.S. Supreme Court to overturn the ruling may be in the works.

A little more than a week after the decision, the Recording Industry Assn. of America expanded the scope of its litigation strategy against consumers. The RIAA filed 744 new lawsuits against individuals who upload music to file-sharing services.
Meanwhile, label executives and artist groups are stepping up their demand for federal anti-P2P legislation like the proposed "Induce Act."
"This ruling underscores the need for legislative solutions, and it points out the need for enforcement against individuals engaging in file sharing," says an executive on the corporate level at one major label.
In its latest round of lawsuits, the RIAA extended its list of targets to include users of a new generation of networks like eDonkey.
"Just as enforcement strategies for street piracy adapt with changing circumstances, the same goes for combating piracy online," RIAA president Cary Sherman said in a statement. "We are adjusting and expanding our efforts to target illegal file sharing on additional platforms like eDonkey and others."
RIAA general counsel Steve Marks cautions that the ruling does not clear the users of P2P networks to engage in copyright infringement.
"The underlying activity of uploading and downloading files is direct infringement, and we will continue enforcement against individual users," he says.
The ruling potentially casts a long shadow over the recording industry's ability to beat "decentralized" P2P networks in court.
RIAA lawyers say that not only is the decision precedent-setting, it promotes file trading by supporting the argument that there are substantial non-infringing uses of P2P technology.
Carey Ramos, an attorney for many of the music publisher plaintiffs, says a petition will be filed with the U.S. Supreme Court. But still to be decided is whether they will first seek reconsideration by the Ninth Circuit Court. That decision will be made in the next few weeks.
"It's a matter of timing," he says.

Meanwhile, the Induce Act (bill S. 2560) would enable artists and labels to sue P2P networks that profit by "inducing" consumers to share protected copyrighted works illegally.
While members of the electronics and Internet communities oppose the bill, saying it would snare innocent parties and stifle innovation, sentiment for the Induce Act clearly is building among copyright owners.
Evan Medow, CEO of independent publisher Windswept Pacific, says that while the Grokster decision is clearly a setback for the industry, it could "serve as an impetus to pass the legislation."
Not all artist representatives share that enthusiasm.
Attorney Ken Hertz, a partner with Goldring, Hertz & Lichtenstein, says that attempting to thwart P2P technology will only encourage its proliferation.
"The decision is going to force record companies to consider that an arrow is gone from their quiver in their attempt to fight a battle they can't win," he says.


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