Will the Supreme Court justices see the light in Grokster?

The big news of the past day, of course, was Tuesday's Supreme Court hearing in MGM v. Grokster.

In past months, I've expressed alarm at the Supreme Court's willingness to wade into these waters, possibly upsetting the 1984 Betamax ruling -- called the Magna Carta of the digital age -- that set the table for a generation of technological innovation.

Perhaps I was too harsh in my expectation that the Court would almost automatically side with the large entertainment industry interests at the expense of millions of users at the grassroots level. We'll see -- a decision is expected around June. Here's some press coverage:

Wired News: File Sharing Has Supreme Moment.

San Jose Mercury News: Justices wary of barring tools for file-sharing.

EFF docs in the case.

Seth Finkelstein's Infothought: meta-Grokster.

Ernest Miller: Remind Me of the Reason for the DMCA Again?

And here: New York Times Editorial Board Blows It on Grokster.

And here: More Editorial Board Takes on Grokster.

And all throughout Copyfight. Plus lots more.

Because this is the most important digital rights case to come before the Supreme Court, I'll reprint the Mercury News' article here for posterity:

WASHINGTON - In the most important copyright case in two decades, the U.S. Supreme Court appeared skeptical of letting entertainment companies sue distributors of file-sharing software that allows people to illegally download copyrighted songs and movies for free over the Internet.

The closely watched case, MGM vs. Grokster, pits the titans of Hollywood against Silicon Valley and the high-tech industry.

Four of the nine justices expressed specific concerns during oral arguments Tuesday that such lawsuits could stifle technological innovation. Technology industry lawyers have made the same arguments and were encouraged by the court's reaction.

Justice Stephen Breyer cited the printing press, the Xerox copying machine and the videocassette recorder as once-controversial technologies whose later revolutionary impacts might never have been realized if inventors had faced lawsuits over possible illegal uses. Justices Anthony Kennedy, Antonin Scalia and David Souter worried about a chilling effect on innovators if the court allowed companies like Grokster to be sued for how others used their inventions.

``Why isn't it a foregone conclusion . . . the iPod developer is going to lose his shirt?'' Souter asked the attorney representing the entertainment industry, Donald Verrilli Jr.

The court's decision, which probably won't come until June, could have broad implications for the entertainment and technology industries.

Hollywood's losses

The entertainment industry argued it is losing billions of dollars as sites like Grokster surge in popularity and technological advances allow thousands of songs to be stored on portable players such as Apple Computer's iPod. Grokster's software allows computer users to find and trade songs, TV shows, movies and video games.

Lawyers for Hollywood said at least 90 percent of Grokster's downloads -- approximately 2.6 billion a month -- are of copyrighted songs and movies, which users obtain illegally for free. Verrilli called the software ``an intentionally built infringement machine.''

Several justices Tuesday questioned the entertainment industry's arguments and five specifically raised the possibility of sending the case back to a lower court.

The companies -- Grokster and StreamCast Networks -- dispute Hollywood's statistics and also argue that there is enough legal use of their services to allow them to continue operating. Their attorney, Richard Taranto, asked the justices why peer-to-peer file sharing should be singled out when personal computers, modems and other technology also facilitate the illegal duplication and distribution of copyrighted songs and movies. The entertainment industry is backed in the case by the federal government and the attorneys general of 39 states.

Tech firms such as Intel, their trade associations and groups of computer scientists, venture capitalists and intellectual-property experts have weighed in on the side of Grokster and StreamCast, saying suits against file-sharing software distributors would discourage inventors.

They warned the court against altering guidelines it set in a narrowly decided 1984 case about liability developers have for potential misuse of their products. In that case, the court found that Sony, maker of the Betamax VCR, was not liable if people used its product to violate copyrights if the product was also ``capable of substantial non-infringing uses.'' Those rules have become known as ``the Magna Carta of the technology age'' because they laid the legal groundwork for the technology boom that began in the 1990s. Grokster and StreamCast have based their defense on that ruling.

Lower courts in California, relying on the Betamax case, have absolved Grokster and StreamCast, which features the Morpheus file-sharing software, of liability when people use the software to find and download copyrighted music or movies from other people's computers.

Those courts said Grokster and StreamCast were different from services offered by Napster, which was effectively shut down in 2001 for copyright infringement.

A federal judge ruled that Napster, the pioneering file-sharing service, controlled a central index of songs available for downloading and knew that copyrighted material was available for free downloading. Grokster and StreamCast provide software that simply connects people and their computers, lower courts have ruled.

Those courts found that unlike Napster, neither Grokster nor StreamCast had any involvement in the search and transfer of files among users of its software. They found that the makers of the file-sharing technology could not be held liable for acts of infringement by those who use the software, because it, like the Betamax, is capable of other significant legitimate uses.

Breyer suggested Tuesday the 1984 Betamax ruling was a good one. ``The country seems to have survived that standard,'' he said. ``This is innovation.''

But Justice Ruth Bader Ginsburg said the 1984 decision was not as clear as Grokster said it was. And Scalia said the court would not decide the case based on precedent.

Souter asked Taranto, the attorney for Grokster and StreamCast: ``Why isn't this a case of willful ignorance'' when the companies argue they don't know what files are being shared by its users?

Pioneering technology

Still, Scalia echoed Souter's worries about the impact of allowing copyright-infringement suits on new technologies.

``What I worry about is the suit that just comes right out of the box as soon as a company starts,'' Scalia said.

Gary Shapiro, president of the Consumer Electronics Association, said after the hearing that he found it ``exhilarating'' that the justices were concerned about the potential stifling of innovation.

Shapiro was among about two dozen supporters of Grokster marching outside the court building Tuesday, carrying signs with slogans such as ``Don't Stop Innovation'' and ``Keep Your Hands off My iPod.'' Nearby, about two dozen musicians and songwriters jammed on guitars or carried signs that read, ``Feed a Musician. Download Legally'' and ``Thou Shalt Not Steal -- God.''