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File-swapping case may break new ground
By John Borland
Staff Writer, CNET
November 6, 2001, 4:45 p.m. PT

A prominent civil liberties group is jumping to the aid of MusicCity, a popular file-swapping company confronting a lawsuit from the Hollywood and record industry that could blaze new, influential legal ground.

The Electronic Frontier Foundation (EFF), which has represented hackers, cryptographers and computer scientists in its push for digital rights, agreed to defend MusicCity against copyright infringement charges by movie studios and record labels. It's helping build a high-powered team of lawyers to show that this case is different than Napster.

On its face, this lawsuit resembles the one that has silenced Napster since July. But the EFF and other supporters argue that the suit, aimed at the popular MusicCity, Grokster and Kazaa networks, represents a clear instance of the entertainment industry trying to shut down a technology that has many uses--something the U.S. Supreme Court has stopped before.

"This case is about the freedom of technologists to innovate and the public's right to communicate," said Fred von Lohmann, senior intellectual property attorney for the EFF. The group announced its entry into the case at a peer-to-peer software industry conference being held in Washington, D.C., indicating that start-up MusicCity will have the legal backing to make its case in court.

Indeed, software developers are watching the MusicCity suit with more trepidation than shown at the higher-profile Napster case. It does not operate a network in the same way that Napster did before it stopped file-swapping in July. But MusicCity distributes advertisement-supported software that helps people create the network on their own. Thus, the suit raises a question of software distributors' liability.

The legal issues are far from clear, despite a year-and-a-half of litigation by Napster and the record industry. Federal judges have deemed Napster potentially liable for copyright infringement damages largely because it ran a central indexing server that allowed people to swap files, and e-mails showed that executives knew massive amounts of copyrighted music were being traded.

It's difficult to argue that executives at MusicCity don't know the software is used by millions of people to trade copyrighted movies, music and software. But they are slightly more removed from the process than was Napster, their defenders argue.

"This is getting closer and closer to a case where they're just making software," said Kelly Truelove, an independent peer-to-peer industry analyst. "To a technologist, this (case) is quite significant."

Movie studios and record labels sued in early October to shut down the popular MusicCity, Grokster and Kazaa networks, which use software distributed by the Netherlands-based FastTrack. Those services, which collectively have been downloaded tens of millions of times, all tap into a single file-swapping network.

Representatives of the Recording Industry Association of America (RIAA) sent letters to most of the major file-trading services after winning an appeals court verdict against Napster, asking them to stop unauthorized file trades. Some, including Audiogalaxy, have moved slowly to add filters into their networks. But the FastTrack-based services, in which trades do not flow through a central point, are difficult or impossible to filter in this way.

The RIAA and Motion Picture Association of America argue that this case differs little from those against Napster, Scour and Aimster, other file-swapping services that have been sued or shut down. All three companies are profiting from the trades of copyrighted works, or "building a business on the back of piracy" as the trade group executives are fond of saying.

RIAA Chief Executive Hilary Rosen has tried to reach out to the technology community to quell fears that copyright holders are looking to shut down development of peer-to-peer software itself. At a speech in Washington, D.C., she told software developers that it was only the specific illegal use of the software that the group is trying to stop, asking them to help develop applications that respected artists' rights to be paid.

"The question isn't whether peer-to-peer or any other particular technology is good or bad," Rosen said. "The question is...whether they'll respect what artists create just like we in the recording business respect what the business sponsors and software developers in this audience create."

But critics of the RIAA--most specifically MusicCity's new legal team--say copyright holders can't hold software developers and distributors responsible for how consumers use their software. MusicCity, because it doesn't operate a central indexing server as did Napster, is basically a software distributor, they say.

"This case shows more clearly (than Napster) that what the plaintiffs are most concerned about is control of technology," said Andrew Bridges, a Wilson Sonsini Goodrich & Rosati attorney representing MusicCity. "This is all about whether they can leverage copyrights into control over software development."

Bridges already has a history with the record industry, as one of the attorneys who successfully defended Diamond Multimedia against RIAA claims that its original Rio MP3 player violated copyright law.

Now he's relying on a similar case, the 1984 Supreme Court decision that the Sony Betamax video recorder was a legal technology, because it had "substantial noninfringing uses" other than illegally copying movies. As in that case, MusicCity's Morpheus software is used for trading many legal files, and so MusicCity should share the legal protections that protected Sony and the VCR, Bridges argues.

MusicCity does profit from advertisements served on the software as people trade files. But that amounts to the same thing as Web browser software maker Opera, which lets people use its software for free in return for seeing banner ads, Bridges argues. Neither has any control of what consumers are doing and should not have any liability for their actions, he says.

If MusicCity's argument gains ground in court, it could force the record and movie industries into targeting individual file swappers, rather than the networks they use. Courts have leaned toward saying that trading files is copyright infringement, even if the liability attached to it is still hazy.

The suit against MusicCity was filed in Los Angeles federal court. No court dates have yet been set for the case.

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