Update: Hollywood, P-to-P companies back in court

Questions about two copyright cases and two technologies, separated by almost 20 years of technological innovation, dominated an appeals court hearing Tuesday that is pitting peer to peer (P-to-P) file sharing software companies against leading entertainment industry groups.

Speaking before a packed courtroom, a three-judge panel of the Ninth U.S. Circuit Court of Appeals focused on two precedent-setting cases: a 1984 Supreme Court ruling in Sony Corp. vs. Universal City Studios and a 2001 ruling by the Ninth Circuit in A&M Records vs. Napster in questions to attorneys in the case, which tests whether technology companies can be held liable for the misuse of their products, according to those involved in the case.

"It's anybody's game. It's impossible to predict how they might rule," said Jonathan Lamy, a spokesman for the Recording Industry Association of America (RIAA) who was at the hearing.

The RIAA is one of the plaintiffs along with the Motion Picture Association of America Inc. (MPAA) and the National Music Publisher's Association of America (NMPA). The groups are suing P-to-P software companies Grokster Inc. and Streamcast Networks Inc., which makes the Morpheus P-to-P software.

At the heart of the legal debate, participants agree, is a precedent set in the 1984 Sony Corp. case, commonly referred to as the "Betamax case", after Sony's home video recording technology.

In that case, the Supreme Court ruled against Universal City Studios, deciding that Sony could not be held liable for violating the copyright of media companies because the Betamax technology had "substantial noninfringing uses" that did not result in copyrights being violated.

In the hearing Tuesday, lawyers for Grokster and Streamcast cast their clients' software as a latter-day Betamax: technology that can be used for illegal infringement of copyrighted material, but which has many other, legal applications.

"It was clear that the court understood the parallels between this case and the Sony Betamax case," said Fred von Lohmann, senior intellectual property attorney at the Electronic Frontier Foundation, who represented Streamcast before the court.

The majority of the judges' questions were about the Sony case at the hearing, he said.

Von Lohmann and others see the case against P-to-P companies as an effort by the entertainment industry to overturn the precedent set in the Betamax case, which would give copyright holders far greater authority to impose restrictions on the use and development of new technology.

The RIAA's Lamy acknowledged that there were "thoughtful exchanges" between the judges and lawyers on both sides about the applicability of the Sony Betamax case.

However, contrary to the claims of the defendants, he denied that the plaintiffs are trying to stamp out new technology.

"We're not trying to shut down these (file sharing) services or halt P-to-P. We just want them to respect the copyrights of our members," he said.

The entertainment companies see software like Grokster and Kazaa in the same light as Napster, the first file-sharing network that, in a 2001 ruling, was found to violate the rights of copyright owners.