File-Sharing Heads to the Supreme Court

The Supreme Court today is hearing arguments in Metro-Goldwyn-Mayer Studios v. Grokster, which pits the entertainment industry against the makers of software that allows users to trade copyrighted materials like movies and songs. Lower courts have consistently rejected the entertainment industry’s attempts to sue the software makers on the grounds that the software has many legitimate uses, and that it is unfair to curb a new technology simply because some people use it for illegal purposes. The legal precedent the lower courts cite is a 1984 Supreme Court decision rejecting the movie industry’s attempt to outlaw the VCR, a case in which the movie studios essentially made the same case they are making now.

To date the entertainment industry has been limited to suing individual file traders, which has not only failed to curb the practice, but has led to some disastrous PR, as when the Recording Industry Association of America sued a 12 year old girl. If it wins this case, the entertainment industry could go after the makers of the file-trading software, effectively stopping the practice or at least driving it deep underground. But as this Boston Globe article makes clear, critics fear that the power to sue could give the entertainment industry broad authority to a shut down related innovations, and leave entertainment companies with a de facto monopoly on innovation:

But computer industry specialists and civil liberties groups warn that making file-swapping software illegal might give the media companies veto power over any new technology that could cut into their profits. Critics say that popular new technologies, such as Apple Computer Inc.’s iPod music players, could fall under suspicion, because some people use them to listen to illegally copied music. “If I build the next digital gadget, like an iPod, am I going to get sued?” said Art Brodsky, communications director for Public Knowledge, an Internet civil liberties group that has filed a brief in support of Grokster and StreamCast.

My own (not wildly original) take is that the entertainment industry has been off-base all along. Rather than resisting new technologies it should be looking for ways to take advantage of them. It learned how to do it with the VCR, and the success of products like iTunes suggests it is learning to do so with electronic distribution. Trying to stop or slow down innovation strikes me as reactionary and not being in anyone’s long-term interest.

As a side note (and because it isn’t very often that I get to actually use my film degree these days) I’ll point out that in 1948 the Supreme Court ruled that the Hollywood movie studios were an illegal monopoly because they owned the production, distribution and exhibition channels for their films (at the time the studios owned most movie theaters). If the entertainment industry is allowed to shut down whatever distribution and exhibition technology it doesn’t like, it isn’t hard to imagine a scenario where it will once again own or control every cog in the process.

Update: The arguments are in. The Washington Post has a neat two and a half minute audio report on its website (no story yet). The National Journal’s Tech Daily (subscription only) says that the court appeared torn between enforcing copyright laws and stifling innovation. “Scalia, Souter and Justice Stephen Breyer appeared particularly troubled about the case’s impact on innovation,” the article says. “At one point, after repeated questioning, Souter asked entertainment industry attorney Donald Verrilli for evidence that inventors would not lose their investments if the entertainment industry’s view is upheld. Verrilli said judges would have to look at company business models to answer the question.”