State bill could cripple P2P

The proposal, introduced by Los Angeles Sen. Kevin Murray, takes direct aim at companies that distribute software such as Kazaa, eDonkey or Morpheus. If passed and signed into law, it could expose file-swapping software developers to fines of up to $2,500 per charge, or a year in jail, if they don't take "reasonable care" in preventing the use of their software to swap copyrighted music or movies--or child pornography.

Peer-to-peer software companies and their allies immediately criticized the bill as a danger to technological innovation, and as potentially unconstitutional.

"State Sen. Murray did not choose to seek out the facts before introducing misguided legislation that effectively would make criminals out of many companies that bring jobs and economic growth to California," Mike Weiss, CEO of Morpheus parent StreamCast Networks, said in a statement. "This bill is an attack on innovation itself and tax-paying California-based businesses like StreamCast depend on that freedom to innovate."

The bill comes as much of the technology world is waiting for the Supreme Court to rule on the legal status of file-swapping technology.

Federal courts have twice ruled that peer-to-peer software companies are not legally responsible for the illegal actions of people using their products. Hollywood studios and record companies appealed those decisions to the nation's top court, which is expected to rule on the issue this summer.

In the meantime, entertainment companies' push for federal legislation on file-swapping issue has been put temporarily on the back burner. A controversial bill that would have put more legal responsibility on the peer-to-peer developers failed to pass at the end of last year's congressional session.

California has taken a lead among states in putting pressure on the file-swapping world. Attorney General Bill Lockyer was a key figure last year in pushing for more state-level legal scrutiny of the companies' actions, and Gov. Arnold Schwarzenegger has sought to ban illegal downloading on any state computers, including those owned by the state university systems.

Murray himself sponsored a bill last year--later signed by the governor--that requires file sharers who send a copyrighted work to at least 10 people to provide a valid e-mail address or risk jail time. He has also authored bills on spyware and spam.

The senator said his bill was intended only to encourage companies to take advantage of existing technology for filtering networks, not to impose requirements impossible to meet.

"To the extent that they agree that they can filter, we think it's reasonable to require filters for peer to peer activity," Murray said. "We're only asking for reasonable controls. We're not asking for people to create new technology or recreate the wheel."

Several companies, including Audible Magic and Shawn Fanning's Snocap , have demonstrated technology that could be used to block trades of copyrighted music, although no such tool has yet been publicly shown for Hollywood movies. Some file-swapping companies say these tools would be impractical to use on a widespread basis.

Murray has worked closely with the entertainment companies on this type of issue, but has also been a staunch critic of record labels' accounting practices and the way they treat their artists. He said he did not work with the MPAA or other groups in drafting the new bill.