P2P faces new legal scrutiny from states

State attorneys general are focusing on file swapping. But are powerful Hollywood lobbyists in the director's chair?

Peer-to-peer companies are facing new and unwelcome scrutiny from state prosecutors, in a recent development powerful Hollywood lobbyists are backing.

A Feb. 25 draft letter that appears to have been edited for California Attorney General Bill Lockyer's office, places the controversial networks in the center of a set of legal crosshairs. It demands that peer-to-peer companies do a better job of protecting customers from numerous "known risks" of their products and warns them against developing features that would hinder police from pursuing criminals such as copyright infringers.

Lockyer spokesman Tom Dresslar did not directly confirm or deny the authorship of the document, which was apparently leaked to file-swapping companies last week. Lockyer and other state attorneys general are gathering in Washington, D.C., this week for their spring meeting.

But Dresslar acknowledged that his boss is investigating peer-to-peer networks. "The attorney general has several concerns related to peer-to-peer file sharing, including exposure of kids to pornography, identity theft, viruses and copyright infringement. He's asked for ideas and suggestions on how to address those concerns and is working with his colleagues in other states to address the concerns."

The Motion Picture Association of America (MPAA) said it had discussed the matter with Lockyer's office and agreed with the views of the letter. MPAA spokesman Rich Taylor said, "They did approach us, and we provided some background."

Included in the "metadata," or electronic history, of the Microsoft Word draft letter was a reference to , the MPAA's vice president for state legislative affairs.

Stevenson said in an interview Monday that it should "come as no surprise to anybody that we talked to attorneys general, particularly the chief law enforcement officer in California, because of the impact that illegal file copying and stealing has on motion pictures and sound-recording industries, the lifeblood of California."

File-swapping companies have come under increasing pressure from federal lawmakers to implement filters and other measures blocking copyright infringement and access to pornographic material, even as they continue to fight in courts for their legal right to exist. The creation of new state legislative or legal fronts would make this battle even more difficult.

Stevenson would not say how many other states he had contacted. But he added that "you would expect us at one time or another to try to get to every one of them."

Lockyer's office would not elaborate on what the attorney general might be planning in terms of legislative or legal pressure.

The draft letter is deeply critical of companies for failing to warn consumers of the legal dangers of sharing copyrighted works using the software or of the widespread availability of pornography. Those omissions could trigger state legal action, the letter warns. "A failure to prominently and adequately warn consumers, particularly when you advertise and sell paid versions of your software, could constitute, at the very least, a deceptive trade practice," according to the letter.

Fred von Lohman, a staff attorney at the Electronic Frontier Foundation, said the draft letter suggests a questionable interpretation of product liability law akin to requiring car manufacturers to provide warnings on new vehicles instructing drivers that they could face jail time, if they use the car for holding up a bank.

Others said they believe that peer-to-peer companies could face legal headaches from states, if they aren't careful. "There's potential liability, if peer-to-peer providers have not adequately disclosed to users the operations of their systems," said Chris Kelly, a Palo Alto, Calif., attorney who represents technology companies.

The P2P United group, which represents companies such as StreamCast Networks, Grokster and eDonkey, on Monday replied with its own letter to Lockyer, asking for a meeting with the attorney general, if he planned to take action against peer-to-peer companies.

"The letter contains...many factual errors concerning peer-to-peer technology and the allegedly disproportionate 'danger' that it poses to the public," the group told Lockyer. "We...respectfully request that you defer circulating or sending your letter until such a meeting can be arranged and our input and materials deliberately considered."

Microsoft Word document metadata has exposed other private internal dialogs in recent weeks.

Earlier this month, CNET News.com discovered that the SCO Group, a company that has filed several high-profile lawsuits alleging that part of the Linux operating system infringes on its copyrights, had planned to sue the Bank of America before ultimately settling on DaimlerChrysler instead. Evidence of the last-minute change of target was exposed by metadata in a Word version of the SCO Group lawsuit.

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