In what could be seen as another landmark ruling in the history of P2P file sharing, a US federal judge yesterday ruled against P2P firm StreamCast, one of only two file sharing firms to challenge copyright violation litigation issued against them by the Recording Industry Association Of America since the Supreme Court's MGM v Grokster ruling last year.
District Judge Stephen Wilson yesterday granted the entertainment companies' motion for a summary judgment (ie ruling without full trial) against StreamCast, the company behind the Morpheus P2P software, because, he said, there was more than enough evidence of "massive infringement" on StreamCast's network. Wilson didn't accept StreamCast's claims that they should not be liable for violations their software enabled because they did not deliberately instruct or encourage users to use their network to share copyright content - writing in his 60 page ruling "in the record before the court, evidence of StreamCast's unlawful intent is overwhelming" and "StreamCast's legal theory is plainly contrary to the Supreme Court's holding in Grokster".
The case is important because it demonstrates that US courts intend to interpret the MGM v Grokster ruling in relatively wide terms - not allowing P2Ps to distinguish themselves from Grokster because of the way they communicate with their users (crucial to the Grokster ruling was the fact that not only did they enable users to illegally share content, but they also encouraged users to do so). Wilson also stated that evidence of StreamCast's liabilities came from the fact that they made no efforts to introduce filters to stop the sharing of copyrighted material - ie, it wasn't enough for StreamCast to just not encourage illegal file sharing, but they needed to demonstrate they were proactively taking steps to discourage it.
The ruling is also symbolically important because Morpheus is one of the original P2P networks, that quickly followed the original Napster and which, because it was essentially built on the back of the original Napster software, was for many the P2P application of choice once Napster began to collapse under a barrage of litigation. In fact papers revealed in this case reveal StreamCast bosses specifically saw the collapse of the original Napster as an opportunity to grow their business, with a memo from the company's CEO, Michael Weiss, quoted in Wilson's ruling, reading: "When Napster pulls the plug on their free service (or if the court orders them to shut down prior to that), we will be able to capture the flood of their 32 million users that will be actively looking for an alternative".
But more important than all that is the impact the ruling might have on LimeWire who, as previously reported, issued their own countersuit against the RIAA this week. It's been a long time since Morpheus has been the P2P tool of choice among the masses, but LimeWire still enjoys considerable popularity. Their countersuit dwells not so much on whether or not they encourage their users to share copyrighted music illegally, and more on allegations that the major record companies are guilty of collusion and anti-competitive practices which stop the P2Ps from pursuing a legitimate model that compensates rights holders (ie "the labels won't licence us, so its impossible for us to be legal"). Crucially StreamCast made similar claims in their response to the RIAA's action against them, and Wilson said their argument was "unpersuasive", adding that copyright owners were within their rights to collectively refuse to licence their content - concluding "The right to exclude is inherent in the grant of a copyright". Nothing is certain, but that ruling won't help LimeWire, that's for sure.
StreamCast are yet to comment on the ruling, but RIAA CEO Mitch Bainwol welcomed it, obviously, saying: "No single court ruling solves piracy or can make up for several challenging years for the music community, but there's no doubt that that rules of the road for online music are better today than they were yesterday".