U.S. Supreme Court case could adversely impact technology companies

Manufactures of such technologies as DVD and CD burners and other copying and media distribution solutions could be sued for copyright infringement depending on the outcome of case before the U.S. Supreme Court on March 29.

Twenty-eight large entertainment companies have brought a lawsuit against the makers of such peer-to-peer (P2P) file-sharing programs as Morpheus, Grokster and KaZaA in an effort not just to put these technologies out of business, but to challenge any technology present or future that appears to be a threat to copyright.

What makes this case (MGM v. Grokster) troubling for many lawyers and technology analysts and advocates is the plaintiffs’ desire to sue companies for technologies that might be used to facilitate copyright violations, even if those technologies pass the president-setting Betamax case of 1984. In that case, Universal Studios along with the other major Hollywood studios sued Sony Corp. over the VCR that the studios said facilitated copyright violations of the studio’s products. The Supreme Court ruled technologies like the VCR and manufactures of such technologies 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 Betamax ruling allowed for a great deal of technological innovation and opened the door for such technologies as DVD and CD players and burners to be developed, along with a whole host of other media sharing technologies. Such technological innovation could be threatened if the U.S. Supreme Court decided to overturn or substantially revises that ruling.

“The (technology) companies are going to have to charge the consumer to protect themselves in case they are sued,” Newitz said. “The other thing we really worry about is not just established technologies, but all those technologies in the pipeline now and will never come to fruition.”

This means 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 even do further development of that technology because of the treat of getting sued. That threat is not just a possibility, but also a reality. In August of last year, the St. Charles, Mo.-based 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 sued 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 found any other method for effectively collecting those fees from consumers.

Shubha Ghosh, a professor of law at the University at Buffalo Law School, SUNY and someone who follows what happens at the U.S. Supreme Court, 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.

“If I were to predict, there will be some affirmance and they will not overrule their earlier president,” he added. “But things have not necessarily gotten any clearer. Instead, they have gotten more contested in the past 20 years.”

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