The US Supreme Court yesterday handed an important victory to entertainment companies fighting online piracy, while also giving technology companies a powerful tool to defend themselves against copyright lawsuits.
In what legal experts said was the most important case of the internet age, the justices unanimously ruled that internet file-sharing services can be held legally responsible if they distribute products that permit illegal downloads.
But, the court added, they will be held liable only if their intent is to encourage lawbreaking.
The court stressed that "peer-to-peer" file-sharing, which permits millions of people around the globe to exchange music, films and other forms of digital information, can be legal if the intent of the distributor is not to encourage illegality.
"We hold that one who distributes a device with the object of promoting its use to infringe copyright... is liable for the resulting acts of infringement by third parties," Justice David Souter wrote for the court.
The unanimous ruling sends the closely watched case of MGM v Grokster back to the lower court, which had ruled in favour of file-sharing services Grokster and StreamCast.
The lower court based its decision on the 1984 Supreme Court ruling that Sony could not be sued over consumers who used its video recorders to make illegal copies of films, because video recorders could also be used for lawful purposes.
At issue in the Grokster case was whether the file-sharing services should be held liable even if they have no direct control over what millions of online users are doing with the software they provide for free.
The entertainment industry immediately welcomed the ruling, while acknowledging the mixed message it contained.
Alex Yemenidjian, the former chairman and chief executive of MGM, the studio, described it as a major victory for Hollywood in its battle against piracy.
The court ruling, , would make it "easier to shut down Grokster in the way the music industry shut down Napster", he said. - (Financial Times Service)
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