Courting trouble: Technology innovation on trial

Imagine a world where researchers don’t research and innovators don’t innovate for fear of being prosecuted.

Or one in which CD/DVD burner manufacturers are hauled to court because some Joe Blow used their products to illegally duplicate music or movie discs. And imagine that manufacturers then jack up the price of these devices…to cover their legal costs in case of lengthy legal battles.

Whether this Orwellian-like state of affairs becomes the new grim reality confronting tech companies largely depends on the outcome of a case currently before the U.S. Supreme Court.

It’s a lawsuit filed by twenty-eight large entertainment companies against makers of such peer-to-peer (P2P) file-sharing programs as Morpheus, Grokster and KaZaA.

The suit doesn’t just aim to put the companies offering these programs out of business.

According to some legal experts, it also represents a challenge to any technology – present or future – that appears to threaten copyright.

What makes this case (MGM v. Grokster) troubling for many lawyers, technology analysts and advocates, is the plaintiffs’ desire to sue companies for technologies that may be used to facilitate copyright violations, even if those technologies pass the precedent-setting Betamax case of 1984.

In that case, Universal Studios along with the other major Hollywood studios sued Sony Corp. over a VCR that the studios claimed facilitated copyright violations of the studio’s products.

The Supreme Court ruled that technologies such as VCRs, and their manufacturers are not liable for the actions of customers who may engage in copyright infringement, as long as the technologies have substantial non-infringement uses as well.

Annalee Newitz, policy analyst with the Electronic Frontier Foundation in San Francisco, Calif. said the case and its possible challenge to the Betamax ruling should not be underestimated.

The ruling allowed for a great deal of innovation and paved the way for such technologies as DVD and CD players and burners, along with a whole host of other media sharing technology.

Such technological innovation could be threatened if the U.S. Supreme Court overturns or substantially revises that ruling, she said. “The (technology) companies are going to have to charge the consumer to protect themselves in case they are sued. The other thing we really worry about is not just established technologies, but all those in the pipeline now will never come to fruition.”

The implications are troubling to say the least. For instance, a small company that comes up with a new way of copying or distributing media of various kinds may not even try to make the technology public or develop it further out for fear of getting sued.

And that threat is not hypothetical, but very real.

Last August, 321 Studios, makers of DVD-X Copy which allowed consumers to make copies of their DVD movies for home use, was forced to shutter its doors after being hauled to court by the major Hollywood studios.

Charles King, principle analyst with Pund-IT Research in Hayward Calif. said the MGM v. Grokster case is another example of the entertainment industry going after the technology industry in an effort to collect copyright-related fees because the entertainment industry has not yet found a way of collecting those fees from consumers.

Shubha Ghosh, a professor of law at the University at Buffalo Law School said it is not easy to say which way the court will rule on this case.

The Betamax case was close 5-4 ruling in 1984, and there is no reason to suspect that this case won’t be the same, said Ghosh who follows U.S. Supreme Court proceedings closely. “If I were to predict, there [would] be some affirmance and they [would] not overrule their earlier precedent. But things have not necessarily got any clearer. Instead, they have got more contested in the past 20 years.”

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