P2P can still thrive after Grokster

My view of the Grokster decision mirrors fairly closely that of BusinessWeek Online. Key passages:

True, much remains to be hammered out by the courts. But the content industry might not like the results. There was little subtlety when it came to Grokster and StreamCast's behavior, making them easy targets for Hollywood & Co. However, the entertainment industry might find itself in an uphill fight should it decide to go the next step and take on companies that operate in a gray area by giving lip service to copyright protection and urging their customers -- with a wink and a nudge -- not to steal. For Hollywood, "this is a pyrrhic victory at best," says Gigi Sohn, president of Public Knowledge, a group that supported Grokster's side. "P2P will live on." ...

The worst didn't come to pass. Notably absent from the Grokster opinion is any condemnation of file-swapping networks at all. In fact, the court took pains to point out the technology has legitimate uses, including distribution efficiencies for libraries, universities, and governments.

That's great news for the tech sector. The Supreme Court left Betamax intact -- no technology can be held liable for infringing just because it can -- and set a fairly low bar for innovators to clear if they want to keep on the copyright straight and narrow. Companies simply have to play by some basic rules to keep copyright lawyers at bay, such as not advertising their products' capability to infringe.

"They struck a good balance," says Michael A. Malcolm, chairman and CEO of Kaleidescape, a Mountain View (Calif.) company that builds home-viewing systems for DVDs. "The situation with Grokster and StreamCast was pretty egregious. We've always done everything the right way to be a good actor."

I agree -- and have written about the absurdity of the legal assault on innovative tech companies like Kaleidescape. Hollywood's case against such companies just got tougher.