File swapping in the legal crosshairs

A federal court is set to hear arguments that could derail Hollywood and record labels' lawsuit against popular song-swapping companies--or point to their demise.

John Borland Staff Writer, CNET News.com
John Borland
covers the intersection of digital entertainment and broadband.
John Borland
3 min read
A federal court on Monday will hear arguments that could derail Hollywood and record labels' lawsuit against popular file-swapping companies--or result in an order to shut them down.

The hearing could be the most critical legal skirmish since the closure of Napster, focusing on the Morpheus and Grokster file-swapping networks, and potentially affecting the more popular Kazaa network as well.

Attorneys for movie studios and record labels are asking that their copyright lawsuit against the file-swapping companies be brought to a near-immediate close, and the companies found guilty of massive copyright infringement. The file-trading companies are asking that the case be dismissed and that they be allowed to distribute their software unmolested.

If the judge grants none of Monday's motions for "summary judgment" and the case does go to trial, it will be the first time that any of the peer-to-peer companies have progressed that far in the legal proceedings. In the case of Napster and Madster--formerly known as Aimster--a judge granted preliminary injunctions ordering the companies to block copyrighted music trades, and the companies each fell into bankruptcy before a full trial could be held. Madster is still fighting its injunction, while Napster has sold its assets in a bankruptcy auction.

"It's a very critical" part of the case, said Charles Baker, a Brobeck Phleger & Harrison attorney representing Streamcast Networks, which distributes the Morpheus file-swapping software. "Either somebody will win and somebody will lose, or both sides will lose and we'll have a trial."

Any outcome will help shape the future of the file-trading world. The copyright holders' case against Streamcast, Grokster and the successive parent companies of the Kazaa software is widely viewed as potentially even more influential than the suit against the now-defunct Napster, and a full trial could be an important legal milestone for the technology community.

All three services distribute file-swapping software without maintaining the same kind of centralized directory server that Napster, Madster and other previous legal targets had. Connections between people for the purpose of trading songs, movies, software or anything else are made without the intervention of the companies themselves. Supporters say that gives them a better shot at proving they are simply software distributors and are not liable for the copyright infringement of the people who use the software.

The copyright holders say that the technical differences between Napster and these newer, more decentralized software programs are irrelevant. All of the services are aware of the copyright infringement and have built their businesses around its existence and should therefore be held responsible, the plaintiffs say.

The file-swapping companies' "systems were designed and intended first to emulate Napster and then to surpass it," attorneys for the studios and record labels wrote in their latest legal filing. They "have succeeded beyond their wildest dreams."

Indeed, interest in the file-swapping software remains high. According to Download.com, a software aggregation site operated by CNET Networks, publisher of News.com, Morpheus was downloaded nearly 400,000 times in the last week, while Grokster saw more than 112,000 downloads.

Kazaa, which is not part of Monday's hearing, remains the most popular, with more than 3.4 million downloads last week. The copyright holders are seeking to add Kazaa parent Streamcast Networks to the Morpheus and Grokster case, but a judge has not yet made a final ruling on that company's status.

Should the copyright holders succeed in persuading the judge to order the companies to block trades of copyrighted works or to shut down their networks altogether, it's still far from clear how this could be implemented.

Grokster and Kazaa both function using proprietary software called FastTrack, which in theory can operate even if the company distributing the software disappears. However, an incident early in the year that simultaneously disconnected all Morpheus users--who were then running their own variation of FastTrack--raised the possibility that the network could somehow be disabled from the inside.

Today's Morpheus would be even harder to shut down. It's now based on the open-source Gnutella technology, which creates networks that operate wholly independently of the various companies that produce Gnutella-based software.

The hearing will be held in Los Angeles federal court, in front of Judge Stephen Wilson, at 1:30 p.m. PST on Monday.