NEW YORK (Billboard) - The U.S. Supreme Court is about to play a vital
role in determining the fortunes of the music industry.
Its decision in the so-called Grokster case will finally clarify the
industry's ability to control peer-to-peer technology through existing
law.
In so doing, the court will influence the industry at every level,
including its ability to invest in artists and songwriters,
entertainment industry lawyers say.
The High Court on Dec. 10 gave the nod to record labels, music
publishers, songwriters and major motion picture studios, agreeing to
review the Ninth Circuit Court of Appeals decision that ruled that P2P
operators Grokster and StreamCast were not liable for copyright
infringements by users of their file-sharing technology.
Gregory Garre, a partner with Hogan & Hartson in Washington, D.C.,
highlights the significance of the court's decision to hear the
case. Only about 100 cases out of roughly 8,000 petitions filed each
year are granted review by the court, he says.
Garre, formerly with the Solicitor General's office within the
Department of Justice now heads the firms Supreme Court practice. He
believes the justices will have two concerns as they review this case.
First, they will focus on whether the P2P services facilitate a
blatant way for users to defeat copyright laws, threatening this
important form of intellectual property.
BETAMAX PRECEDENT
While the Supreme Court in 1984 held that Sony Corp of America was not
liable for any copyright infringement by users of its Betamax video
recorder, Garre notes, the evidence in the Grokster case is
different. Most people used the Betamax for lawful reasons -- to watch
recorded TV programs at a later time. In the Grokster case, the record
shows that the substantial majority of P2P users infringe copyrights,
he says.
The court also will be sensitive to the fact that its ruling may have
dramatic effects in the marketplace for technology and entertainment,
Garre says. Its ruling will reflect careful consideration of these
concerns, he predicts.
None of the lawyers Billboard contacted believe the court's decision
will change the 1984 Sony Betamax decision. "It has served the law
well for the last 20 years," Garre says. The justices will most likely
interpret that decision and apply it to current technology.
As the nine justices consider the issues and listen to oral arguments,
expected to be scheduled for March, they will take a common-sense
approach, Garre says. While appellate courts focus on applying legal
precedent, he explains, the Supreme Court tends to be concerned with
the practical dimensions of their decisions.
The justices could explore alternative ways to restrict copyright
infringement on the P2P networks, says Marc Jacobson, of Greenberg
Traurig in New York. The court could send the case back to the
District Court in Los Angeles -- where it is still pending on other
issues -- for that court to explore the alternatives and then apply
rules provided by the Supreme Court.
FRIENDS OR FOES?
The parties to this case won't be the only ones raising issues with
the court, Garre notes. "This is the kind of case that is going to
attract an enormous amount of amicus briefs." Anyone with an interest
in the case may file a "friend of the court" brief with consent of the
parties, which is rarely denied.
This could prove troublesome to the parties, however. While some
organizations may coordinate their efforts with one side, they are not
required to do so, Garre says. Their interests could undermine a
strategy developed by the parties they support.
Amicus briefs will be especially important in educating the court in
how the technology works and why these issues are so important, Garre
adds. The decision is expected before the court adjourns for the
summer. A wild card in the process is whether Chief Justice William
Rehnquist who is ailing, will take part in the decision. Rehnquist
was a dissenter in the Sony Betamax case. In the meantime, the
industry continues to face an uncertain future.
"We're going to have to get a handle on digital piracy in order to get
investors comfortable and to restore stability in the recording and
publishing industry," says Michael Elkin, with Thelen Reid & Priest.
Pending copyright-related legislation is likely to stay on hold
until the court rules. Reuters/Billboard
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Lisa Minter (lisa_minter2001@yahoo.com)