In, the nation's top court found that file-swapping companies Grokster and StreamCast Networks should be held liable for the widespread copyright infringement their technologies enable.
The decision casts uncertainty on the fate of Grokster and other file-swapping companies, but not on the viability of file swapping itself, an activity that has only flourished under legal attacks, observers said. That's because the software that underlies peer-to-peer networks, used now by more than 8 million people simultaneously around the world, is designed to function and evolve without the aid of any particular commercial venture.
"It operates in a decentralized way," said Wendy Seltzer, an attorney at the Electronic Frontier Foundation, which has represented Streamcast Networks. "It doesn't need to call into a home base; it doesn't need product updates from anyplace. What's out there continues to function and can continue to work on a completely distributed basis."
One need only look at Napster for an indication of how persistent file swapping has become and will continue to become, she said. The courts shut the peer-to-peer pioneer down in 2001, sidelining file swapping on the network because Napster computers were central to the system. But other software developers, many of them working independently, soon developed next-generation software that's now more sophisticated and more popular than ever.
As a result, illegal file swapping has only skyrocketed in recent years. In the United States, the average number of people swapping media files simultaneously on major peer-to-peer networks rose from nearly 3 million in 2003 to more than 6 million this year, according to BigChampagne, the Nielsen/NetRatings of file sharing. The vast majority are sharing unauthorized MP3 music files, said Eric Garland, head of BigChampagne.
Recent surveys indicate, however, that growth of unauthorized file swapping hasas online music stores, such as Apple Computer's iTunes and RealNetworks' Rhapsody, have taken off. The slowdown may also be tied to the fact that the Recording Industry Association of America has sued hundreds of file swappers over the past year or so.
Yet file swapping is bound to be a Pandora's box for some time to come, observers said. For one thing, people will always be tempted by free things. For another, iTunes and other authorized music stores lack some of the features and flexibility of the file-swapping networks, EFF's Seltzer said. For instance, Apple restricts the number of computers on which customers can store songs purchased through iTunes. It also limits the types of devices that can play them.
And while file swapping may prove to be a poor business venture, many peer-to-peer software developers and users aren't in it for money. They're young and smart, and they do it because they can.
"There is going to be an incentive to not associate visibly with the software, to offer support for it or advertise it," Seltzer said. "But there will always be people interested in tinkering and making it better. I don't think software development itself will stop."
What Monday's ruling may stop--or at least delay--are further innovations in peer-to-peer technology, said Adam Eisgrau, a lobbyist for P2P United, a trade association. "The reality is, if you've got the next best (peer to peer) mousetrap on your blackboard, you may well have used your eraser defensively today because those plans could be used against you in court."
In the meantime, the Grokster case will go to a lower court, which will decide its fate in light of the Supreme Court's ruling. Even that ruling won't to be the last word on the subject.
"The only thing we can say for certain is that there will be more confusion, more litigation, more and more copyright infringement online and a long road ahead," BigChampagne's Garland said.