My first contribution to the IP Memes newsletter went out yesterday, featuring current developments on the file sharing front. It is reproduced below. This and many other email newsletters are available free from TechnoLawyer. IP Memes is published each Monday, with Dennis Kennedy, Kevin Grierson, Gail Standish, Kurt Calia and I taking turns at the oar.

I. Ninth Circuit To Decide Legality Of P2P Networks

Lawyers for Grokster and StreamCast squared off against the RIAA and MPAA on February 3, 2004, in a case that may extend to P2P networks the sort of protection from copyright lawsuits enjoyed by VCRs. In MGM v. Grokster (Ninth Circuit Case Nos. 03-55894 and 03-56236), the Ninth U.S. Circuit Court of Appeals will decide whether U.S. District Court Judge Stephen Wilson was correct in concluding last April that file sharing software provided by Grokster and Morpheus does not violate copyright law.

While it is impossible to predict the outcome of a federal appellate case from oral argument proceedings, the Ninth Circuit reserved its toughest questions, and its most evident skepticism, for the appellants MGM, et. al. As did Judge Wilson's decision below, the Ninth Circuit's determination will turn on whether, under Sony v. Universal City Studios case (the Supreme Court's 1984 "Betamax" decision), the software underlying P2P networks has "substantial noninfringing uses" that should be preserved as a matter of policy, even though there is no question the technology also may be used to infringe copyrights. Along these lines, questions at oral argument suggested the Court may think the considerable amount of authorized or public domain materials being traded on the networks — perhaps 750,000 files, according to the record before the Court — comprises a substantial noninfringing use. The Court also seemed to reject the argument that the Sony case requires a "primary" legal use for the technology, and did not appear to agree its own Napster precedent dictates that infringement assisting technologies must be shut down if the infringement is preventable. Fred von Lohmann, Senior Staff Attorney for the Electronic Frontier Foundation and counsel on appeal for StreamCast, has observed that "[t]he legal doctrine tested in this case is the same one that protects companies like Hewlett-Packard and Microsoft from being held liable when someone uses HP CD burners or Internet Explorer to commit copyright infringement." Questions at oral argument about whether Xerox should be liable when a student makes infringing copies on a campus photocopier demonstrated the Court's understanding of the broad ramifications of a reversal.

More reading:

EFF document library, including links to oral argument audio
File-sharing issue lands in court again
P-to-P Appeal Calls on History
Lawyers call for filters in P2P piracy case
Grokster, Morpheus face MPAA in appeals court
Court to Hear Landmark P2P Case

II. If You Can't Beat 'Em...

As the Ninth Circuit is poised to perhaps endorse the legality of P2P networks, several recent developments illustrate their potential business value to copyright holders:

Artemis Records will make its works available for purchase on Kazaa, Grokster, and two other P2P networks. Artemis Records to license songs to file sharing network

Lightweight DRM (digital rights management) promises ease of personal copying yet protection from widespread distribution. Is the mood changing towards the legitimate use of P2P networks?

i2 Telecom will use Morpheus to sell its VOIP service. I2 Telecom to sell through Morpheus; Morpheus maker to launch Net phone service

Trevor George Hunsberger Bechtel credits file sharing as the cause of the belated success of a Gary Jules single from the Donnie Darko soundtrack, currently on the "most played" lists of many U.S. alternative rock stations. Mad World; KROQ most played list; Donnie Darko (Score)

III. If You Don't Join 'Em...

It used to be the complexity or expense of creating back-ups of encrypted DVDs or video games would limit the copying of these media. Such barriers are rapidly disappearing. Dark Tip: Free DVD Backup; Dark Tip: Back Up Your Games

The latest version of the Morpheus P2P client allows users to connect to all the major P2P networks — e.g., Kazaa, iMesh, eDonkey, Overnet, Grokster, Gnutella, LimeWire, G2 (read: greater decentralization, less ability to monitor or control users) — and offers enhanced user privacy (read: enhanced protection against lawsuits). Morpheus upgrade goes multi-network

The latest version of the Blubster P2P client promises privacy protection in the form of full network encryption and file disassembly/reassembly techniques. Morpheus Crosses P2P Boundaries, Blubster Boosts Privacy