Tech Industry

Week in review: Download dilemma

File sharing is getting public airtime again, while politicians wrestle with other tech issues. Also: Sprint turmoil may kill WiMax.

The landmark music copyright verdict refocused attention on file sharing, including the record industry's efforts to quell it.

Jammie Thomas, the Minnesota woman who last week was ordered to pay the recording industry $222,000 for copyright violations related to sharing songs, has decided to appeal the verdict. Thomas announced her decision on cable news channel CNN and on her MySpace.com page, saying that the appeal would be based on the federal jury's finding that making songs available online violates copyright.

"This would stop the RIAA dead in their tracks," Thomas wrote on her blog. "Every single suit they have brought has been based on this making-available theory, and if we can win this appeal, they would actually have to prove a file was shared."

But can she actually win against the Recording Industry Association of America? CNET News.com's Declan McCullagh says there's probably a 50-50 chance. On one hand, the RIAA has won some minor victories in the last few years with its "making available" arguments to expand copyright law beyond what it actually seems to say. Now that there's finally going to be some serious public and judicial scrutiny, however, the odds are closer to even.

Some are suggesting that someone may have steered her into taking on the recording industry. Why would a 30-year-old mother of two, who makes $36,000 a year, want to go toe-to-toe with the recording industry, asks Chris Castle, an attorney, former music executive and owner of a small record label. Last week, Castle accused the Electronic Frontier Foundation, a group that advocates for the rights of Internet users, of trying to turn Thomas into the "Joan of Arc of illegal downloading."

Thomas responded by saying "my comment to him is that this was all my decision," she said. "From the get go, my attorney has pointed out to me what could happen. We knew (losing the copyright trial) was a possibility. I am no puppet."

She also got some criticism from one of the jurors in her trial who said the jury did not believe her story that someone spoofed her IP address. In an article on Wired.com, the juror said he had never been on the Internet.

"She should have settled out of court for a few thousand dollars," the juror told Wired.com. "Spoofing? We're thinking, 'Oh my God, you got to be kidding.' She's a liar."

That didn't sit well with Thomas.

"I don't need to say too much, obviously," Thomas told CNET News.com. "They admit that they are computer illiterate. This person has never been on the Internet, so how can he say whether my story is possible?"

Meanwhile, the image of a rich and gargantuan corporate entity steamrolling a woman with limited resources is etched into the minds of many onlookers, say public relations experts. So why, then, if the RIAA is taking a PR beating, is the group continuing to pursue Thomas? Why not target people who tug a little less on the public's heartstrings?

But, according to industry insiders and the RIAA itself, the group has little choice but to continue to file civil complaints against file sharers--bad PR or not.

However, many CNET News.com readers rejected that argument.

"The industry association is not charged with protecting artists. Its goal is to protect the industry and its members," to the News.com TalkBack forum. "For decades the industry has run roughshod over the artists and now it wants to play the 'we're protecting' card?"

Oracle bids for BEA
Oracle grabbed headlines late in the week with its offer to acquire Silicon Valley rival BEA Systems for $17 per share, a total of about $6.67 billion in cash. If consummated, the acquisition could eliminate issues about what BEA will do for future growth while furthering Oracle's years-long effort to consolidate as much of the software industry under its own roof.

Oracle's offer, made in a Tuesday letter to BEA's board of directors, is a 25 percent premium over BEA's closing price Thursday of $13.62. BEA's shares surged 33 percent, or $4.49, to $18.10 in morning trading Friday.

BEA has been under pressure from rivals including IBM, Oracle and a variety of open-source software projects. Despite introducing new product lines, new license revenue has been tepid or declined over the past two years. And investor Carl Icahn, who earlier this month acquired a 13.2 percent stake in the San Jose, Calif.-based company, has been urging the company to put itself up for sale.

BEA rejected the offer Thursday. "It is apparent to our board...that BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter," William Klein, BEA's vice president of business planning and development, said in a letter to Oracle that BEA made public on Friday.

Around the Hill
In addition to weighing in on the Jammie Thomas case, prominent champions of tougher copyright enforcement also took their fight this week to a stately Capitol Hill caucus room, staging an expo aimed at playing up the legal protections' importance to their livelihood. The event was put on by the Copyright Alliance, which formed earlier this year to promote the "vital role" of copyright in the U.S. economy and job market, encourage inclusion of copyright protection requirements in trade agreements, urge tougher civil and criminal penalties for piracy, and dissuade any weakening of copyright law.

Most of the major players had booths at Thursday's shindig, and some of their messages were hardly subtle. The RIAA hung wrinkled T-shirts that read in bold print: "feed a musician, download legally."

The Entertainment Software Association, which represents video game and console makers, had a Nintendo Wii on hand for passers-by to test and decorated its booth with a huge poster that screamed in menacing capital letters: "Game Over Pirates Game Over."

While not being educated about copyrights, politicians debated whether telecommunications companies that may have illegally opened their networks to intelligence agencies should be immunized from lawsuits. A new proposal from House Democrats would impose some additional privacy safeguards and oversight on a shadowy court that meets behind closed doors to approve foreign surveillance requests. The current version of the Restore Act does not immunize either telephone or Internet providers.

In remarks to reporters at the White House, President Bush stressed that the immunization requirement was non-negotiable. "It must grant liability protection," he said, "to companies who are facing multibillion-dollar lawsuits only because they are believed to have assisted in the efforts to defend our nation following the 9/11 attacks."

Without that requirement, Bush said, he would not sign a bill into law.

After news reports said AT&T and other major telecommunications carriers opened their networks to the National Security Agency after September 11, 2001, dozens of civil lawsuits have been filed against them.

Meanwhile, a key U.S. House of Representatives panel unanimously agreed to extend a ban on Internet access taxes for another four years--but not before rejecting proposals to make the tax permanent or extend it for a lengthier stretch of time. The committee almost approved an amendment proposing an eight-year extension. But after several minutes of political gymnastics, all that changed.

At issue is a law dating back to 1998 that generally prohibits state and local governments from taxing Internet access, including DSL (digital subscriber line), cable modem and BlackBerry-type wireless transmission services. It also prohibits "discriminatory" taxes that treat products sold on the Internet differently than those in brick-and-mortar stores, but it does not deal with the separate issue of imposing sales taxes on goods bought online.

The current law is set to expire November 1, and Republicans have complained that their Democratic colleagues are moving too sluggishly to renew the expiring rules.

Sprint's trouble on the line
Sprint Nextel said CEO Gary Forsee has stepped down as chairman and chief executive officer, effective immediately. Forsee's departure comes as investors, upset over the company's poor performance, have put pressure on the board of directors to make a change at the top.

Pressure has been building for months to replace Forsee as investors are becoming increasingly more agitated at Sprint's poor performance. Since Sprint acquired Nextel in 2005, making it the third largest cell phone provider in the U.S., the company's stock has declined roughly 27 percent.

And if Wall Street pundits get their way, Sprint Nextel's next CEO will put the brakes on plans for a new, high-speed wireless network. But such a move, while no doubt cutting costs, could condemn the struggling company to also-ran status.

Among investors' biggest concerns is Sprint's plan to build a next-generation wireless network using a technology called WiMax. The company has committed itself to spending $5 billion in the next three years to build the network, with about $2 billion of that money earmarked to be spent in the next year to get WiMax coverage to about 100 million people by the end of 2008.

Wall Street analysts and investors say Sprint's WiMax dreams are an unnecessary and dangerous diversion for the company, which is still struggling two years after the $36 billion Nextel merger to realize any of the cost savings that had been promised when the merger was announced.

Meanwhile, Internet telephony provider Vonage settled its patent dispute with Sprint Nextel. The two companies have entered into a licensing arrangement that allows Vonage to use patents for voice over Internet Protocol, or VoIP, technology that are held by Sprint.

Vonage has agreed to pay Sprint a total of $80 million, according to the company. This includes $35 million for past use of the license, $40 million for a fully paid future license and $5 million in prepayment for services.

In September, a Kansas jury found that Vonage had infringed six Sprint patents. And it ordered Vonage to pay $69.5 million in damages, plus 5 percent for future damages.

Also of note
Electronic Arts has agreed to acquire VG Holdings, the parent company of two game development companies, BioWare and Pandemic Studios, for $860 million...Google is expanding its AdSense program so that Web site publishers can display and make money off embedded video clips from YouTube content partners that have targeted banner or text ads, in addition to the traditional text ads that Google offers...Internet2 has boosted its network speeds to 100 gigabits per second.