"However, entertainment executives say expanded grounds for lawsuits are needed to discourage inventors from profiting from cool gadgets of the future that could be used for stealing.


Weeding Out Worst
"This sort of thing is out there now and you can't go -- and I may be wrong about this -- but I don't you think you can go into people's homes and pull [software] out, or that anybody's likely to do that," said Theodore Olsen, the former U.S. solicitor general now working for entertainment companies. "But it would be an important statement; an important point here is to stop the worst of the activity, stop the people who are making money."

Richard Taranto, the lawyer for software-maker Grokster, told the Supreme Court yesterday that modern file-sharing tools like Grokster's are "autonomous communications products," underscoring the evolution of such software since the entertainment industry's landmark victory in July 2001 shutting down the centralized Napster online service.

Taranto said the case presently facing the Supreme Court is "critically different" from the Napster legal fight. He argued that since Grokster isn't directly involved in the activities of its customers illegally swapping music and movies online, it can't be sued for violating copyrights.

Justices Divided
Justices appeared divided on important issues during courtroom arguments. In a lively hourlong debate, the court openly worried that new lawsuits could stunt the next iPod. Justices also wondered aloud whether lawsuits against manufacturers might have discouraged past inventions like copying machines, videocassette recorders and MP3 music players -- which consumers can use to make illegal copies of documents, movies and songs.

Justice Antonin Scalia said a ruling for entertainment companies could mean that if "I'm a new inventor, I'm going to get sued right away." Scalia, 69, referred to the company as "Grokster, whatever this outfit is called."

The chief executive for Sony (NYSE: SNE) BMG Music Entertainment, Andrew Lack, said Grokster "doesn't pass the smell test with a lot of the justices." Lack was in the courtroom yesterday.

"There were some concerns that they don't want to see technology or innovation stifled," Lack said. "Grokster is wrong from a variety of perspectives."

Defending Customers
The entertainment industry's lawyer, Donald Verrilli Jr., maintained that, unlike Grokster's customers, most iPod buyers are honest consumers who pay for their digital music, effectively shielding Apple Computer (Nasdaq: AAPL) from such copyright lawsuits.

But Justice David H. Souter said even iPod users will steal music if they believe they can. Souter questioned why the entertainment industry wants to sue Grokster but under the same legal theory wouldn't also sue Apple so aggressively the iPod's developer would "lose his shirt."

"I know perfectly well if I can get music on my iPod without paying that's what I'm going to do," said Souter.

Yet the court appeared deeply troubled by Grokster's efforts to encourage rampant Internet piracy and profit from it. Verrilli called its software "a gigantic engine of infringement" thieves use to steal 2.6 billion songs, movies and other digital files each month.

Frustrating Thieves
Justice Anthony M. Kennedy pressed Grokster's lawyer on whether profits from trafficking in stolen property can rightfully be used to help finance a young technology business . "That seems wrong to me," Kennedy said.

Regardless of the outcome, it still won't be legal to download copyrighted materials over the Internet without permission, though tens of millions of computer users do it each day. A ruling won't affect thousands of copyright lawsuits filed against Internet users caught sharing music and movies online."

From http://www.technewsworld.com/story/news/41868.html

"Justice Anthony M. Kennedy pressed Grokster's lawyer on whether profits from trafficking in stolen property can rightfully be used to help finance a young technology business . "That seems wrong to me," Kennedy said."

So what. It didn't have to be that way. Grokster and every P2P company before them and after them wants to license RIAA music. They just want to do it THEIR WAY, not the RIAA's. Which is why the RIAA says no. The RIAA has literally turned DOWN BILLIONS of dollars, and then want to complain about the P2P company making money off of their work. It's quite clear that this stance of NOT licensing their work to the P2P networks is a violation of the principle of copyright law, and shows their real motives; CONTROL. Tell me why else would you turn down BILLIONS of dollars?

"Justice Anthony M. Kennedy pressed Grokster's lawyer on whether profits from trafficking in stolen property can rightfully be used to help finance a young technology business . "That seems wrong to me," Kennedy said."

Grokster is just making money off of ads they get from the content from users...they have no control over the content being shared...it might be shady to make money from copyrighted files without permission but so what, the MPAA has done lots of shady things that seem wrong to me.

"But it would be an important statement; an important point here is to stop the worst of the activity, stop the people who are making money."

So if their looking to stop the people who are making money, then they are only stopping themselves from making money. Why would they want to do that, for the reasons INeedAlover mentioned, Control.

It is disturbing that Sony and BMG merged without a peep from the EU or DOJ.

Andrew Lack is only one of the Dickens characters who cried that this industry needed special considerations because it was being destroyed by file-sharing. Even in the face of the truth, that movies and music are shattering expectations of profit, Mr. Lack has to "poor-mouth" in order to avoid restraint-of-trade investigations regarding the relentless mergers.

Some of our academic and lawyer friends are starting to look at the institution of copyright not only as a government granted "tax," but further, as "welfare.' That is, Andrew Lack is asking for a government bailout, as surely as any other dinosaur industry, such as railroads or steel manufacturing.

It beggars credulity to query our conservative friends (such as Cato Institute) how this inefficient rent-seeking fits into free market theory. Particularly so when you consider that the entire monopoly rests upon wasteful payola practices at radio.

Music is only a pathetic small part of giant corporations. It may mean much more to you or I, who have dedicated our lives and careers to it; it may be priceless in terms of millions of people who have bought iPods, and I may go so far as to say that political, cultural, religious and free speech issues are at a point of critical meltdown. All for squeezing every last penny out of Wall Street.

Lowest circle of hell for you, Mr. Lack. You hate artists. You hate music.

I couldn't agree more. The Established Media and entertainment conglomerates are missing opportunities to expand and grow because they are either afraid of or dislike digital media.

In a rather telling anecdote one of my frieds was drawing up a schematic for his ideal entertainment/media center (as in the piece of furniture that houses your TV & VCR) and his schematic included space for a PC tower.

There is every indication that people are moving towards a model of media consumption that cetners around computers, internet, and portability. Sure CD's probably aren't going to disappear but they are not going to be the preferred format for listening much longer. Why is it that the big four recording companies cannot seem to grasp this?

Food product and personal care producers give away free samples by the thousands. Car Dealers allow you to test drive. Big recording companies allow you to hear one song on the radio and then require you to buy that plus 11-15 more you've never heard and and tell you you can't have a refund if you've opened the cellophane cover on the disc. Sure the recording companies have some money tied up in production equipment and a bit more in distribution networks, but the continued cost of maintianing set equipment could be easily offset over a few years by moving to a digital distribution model based on single songs. Of course that would force them to invalidate lots of long term contracts (which don't make any sense in a lot of cases) and admit that their business model is obsolete, a massive blow to some corporate ego who has spent the better part of a career developing and championing the old model.

The bottom line is that the big recording companies created the "market" for unauthorized digital duplicates of their songs by being unresponsive to customer demands. This market has hopped from technology to technology as faster and more secure ways of locating what is desired emerge. The Industry's claim that Grokster and Kazaa and whomever else got together and decided to create a business based on generating ad revenue by distributing copyrighted material is absurd. Copyrighted material was driven to those networks because they sucessfully attacked the hosted download sites. The flooding of the P2P networks with false and degraded copies caused the market to move to bit torrent tech. When the Industry tries to sabotage that, the market will find a new outlet which once again will be targeted. Until the Industry realizes that it is it's own marketing, distribution, and pricing models which cause the illicit sharing of "their" material combined with a distinct lack of value in the vast majority of their product, then unauthorized duplication and sharing will continue.

"The bottom line is that the big recording companies created the "market" for unauthorized digital duplicates of their songs by being unresponsive to customer demands. "

RIGHT ON!! This couldn't be a truer statement. The RIAA stopped making singles, and demanded from it's customers that they purchase the entire CD to get that one song the consumer actually wanted. Guess what? As is the case in business, since the RIAA wasn't meeting the demands of its customers, it sought other ways to fulfill the demand, that is, the demand for singles. Thus, P2P was born. The RIAA did this to themselves, then try to PRETEND it is killing their business. Then, they sue 12-year-old girls and dead people for listening to but not buying their music, even though the single version of those tunes wasn't available. Shows you how greedy they are.

"most iPod buyers are honest consumers who pay for their digital music, effectively shielding Apple Computer (Nasdaq: AAPL) from such copyright lawsuits."

Uh yeah... most Ipod users are forced to buy Itunes music due to DRM... not because they're good lawful people. Apple created the Ipod and then paired it with their Itunes player/service/store... it's not like Ipod users had a CHOICE in the matter. Using the Ipod as a model of emerging technologies is a waste of grey matter. Lets take it to the street and look at the standard mp3 player. Is the generic mp3 player somehow unworthy because it gives consumers a choice? Itunes is a sham... it's not innovative. It's eye-candy (or ear-candy), but it's certainly not a model that should be used as the basis of technological success. Comparing the Ipod or Itunes for that matter to the garage inventor is a travisty. The garage inventor is rough, brain-storming innovation. It's someone who often doesn't have the funds get their product to market before the corporations steal it from him/her. Comparing a highly-controlled mega-corporation like Apple to "the little guy" is utter rubbish. And saying Itunes is protected because people buy their music won't fly for long.

First, there is no music theft to hinder. Second, the RIAA knows this. Third, their whole trip is to regulate commercial innovation to their liking.

...and to steal the usefulness of the Internet/digital technology from the people.

"I may go so far as to say that political, cultural, religious and free speech issues are at a point of critical meltdown."

Awesome insight/perspective!

"The RIAA's whole [crusade] is to regulate commercial innovation to their liking."

"...and to steal the usefulness of the Internet/digital technology from the people."

. . . including intent to curtail the internet opportunities of independent musicians who choose not to be shackled to unfair RIAA contracts.