Peer-to-peer file-sharing sites not liable for copyright infringement

In a significant setback for the nation’s largest music and motion picture content owners, a federal appeals court has ruled that the distributors of software used by millions of people to exchange digital entertainment files over the Internet cannot be held liable for aiding copyright infringement.

The decision, by a three-judge panel of the United States Court of Appeals for the Ninth Circuit, upheld a ruling issued in April 2003 by a federal judge in Los Angeles. The decision gives distributors of peer-to-peer file-sharing software a significant victory in their long battle with the record and movie industries, legal experts said.

Judge Sidney R. Thomas, writing for the panel, found that the two distributors, Grokster and StreamCast Networks, which offers the Morpheus file-sharing service, are not liable for aiding copyright infringement because they do not have the ability to monitor or control how users of their software exchange files.

The plaintiffs in the case, the music and movie industries, have argued that file-sharing networks are forums for mass copyright piracy. The software of both companies, which can be downloaded over the Internet, allows users to share music, video and other digital files that they store on their computers. Ninety percent of the files shared, according to music and movie industry executives, include copyrighted material.

The appellate court said it is not up to the courts to adopt copyright law to the effects created by new technologies.

The appellate court decision also pointed out that file-sharing services, like Grokster, could be used for legitimate purposes. The court noted that even if only 10 percent of the files exchanged were done so with permission of copyright holders, it would mean that there were hundreds of thousands of legitimate file exchanges.

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