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Innovation pitted against piracy

The powerful interests of the entertainment and high-tech industries clashed in the US Supreme Court on Tuesday in a case pitting the freedom to innovate against the battle against digital piracy.

The nine justices heard oral arguments in a case which seeks to determine if companies that distribute peer-to-peer (P2P) software can be held liable for copyright infringement if the networks are used for illegal copying of songs, movies and software.

Legal analysts said the case, likely to be decided in June, has broader implications for the battle against rampant online piracy and for whether new technologies can be introduced without fear of litigation.

Activists on both sides of the issue demonstrated outside the court. Some carried signs reading "Hands off my iPod." Others, highlighting the losses for artists, carried banners reading "Feed a Musician."

Donald Verrilli, arguing for plaintiffs including the movie and music industries, said the companies being sued for the file-sharing systems built their businesses on the theft of copyrighted material.

Verrilli said that allowing the defendants, Grokster and Streamcast Networks, to continue unchecked, "gives them a perpetual free pass" to facilitate illegal swapping of music and films.

"The recording industry has lost 25 percent of its revenue since the onslaught of this," Verrilli told the court, saying that the distributors of peer-to-peer software "are draining all the money out of the system."

But Richard Taranto, arguing for the defendants and a broad coalition of technology firms and others, said the court should reaffirm a standard set in a 1984 case involving the Sony Betamax video recorder, when it upheld the use of technology that could be used both legally and illegally.

"Any alternative would be worse," Taranto said, adding that if the Betamax legal standard were overturned, "virtually every business [involved in new technology] would be subject to litigation."

Taranto added that while peer-to-peer networks may be used for illegal copies, this applies to other technology, "including the personal computer, the modem, the Internet service provider. Every piece in this chain is essential."

Verrilli cited studies showing that 90 percent of the use of Grokster and Streamcast were for illegal copies, but said it is "not a numerical question," but a question of what the companies set out to do.

But Justice Stephen Breyer said such a standard could mean a death blow for many types of technology, saying that under the terms proposed by the plaintiffs, "Would we ever have a VCR? Would we have the Xerox machine? Would we have an iPod? Or for that matter the Gutenberg press? ... In each of those cases there would be vast amounts of infringing uses."

Justice David Souter made a similar point, saying, "If a guy is sitting in his garage figuring out whether to invent the next iPod, how do we know in advance anything that would give the inventor the confidence he would not be sued?"
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