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The war over file-sharing may be moving into a new phase. For years, the music and film industries have waged a crusade against Internet-based file-sharing systems, such as Napster, which have allowed people around the world illegally to download copies of songs and movies. But that effort recently ran into trouble. On April 25, a federal district court judge in California upheld the legality of two of the most commonly used peer-to-peer file-sharing systems, Grokster and Morpheus. Judge Stephen Wilson dismissed the copyright infringement claims that Hollywood had brought against the two companies that distributed the file-sharing software for these systems, StreamCast Networks Inc. (which distributes Morpheus software) and Grokster Ltd. Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., No. 01-08541-SVW. The music and film industries are seeking an expedited appeal of this decision, but it may be months before the ruling is overturned — if it is overturned at all. So Hollywood is turning to new tactics to fight copyright infringement on file-sharing systems. And these new tactics seem likely to place users of file-sharing systems directly in the cross hairs. In his April 25 ruling, Wilson distinguished StreamCast and Grokster from Napster, which the 9th U.S. Circuit Court of Appeals found was guilty of contributory infringement. Napster users could locate desired files only by going through a central data registry that was owned and operated by Napster. StreamCast and Grokster users, by contrast, connect and share files directly with one another; there is no entity that supervises and controls the peer-to-peer network. Wilson concluded that “Grokster and StreamCast are not significantly different from companies that sell home video recorders or copy machines, both of which can be and are used to infringe copyrights. … Absent evidence of active and substantial contribution to the infringement itself, [these] Defendants cannot be liable.” But the judge warned that users of file-sharing systems could well face liability if they download unauthorized copies of movies and music. STRIKING BACK Just four days after Wilson issued his ruling, the Recording Industry Association of America (RIAA) struck back. It launched a novel campaign aimed at turning the Grokster and Kazaa file-sharing systems against their users. The RIAA hired an undisclosed company to search though a list of several hundred popular songs and automatically send a “copyright infringement warning” to those users of Grokster and Kazaa who appear to be sharing any of these songs on the system. The warnings arrive via Grokster’s and Kazaa’s instant messaging service and say, in part: “It appears that you are offering copyrighted music to others from your computer. Distributing or downloading copyrighted music on the Internet without permission from the copyright owner is ILLEGAL. … When you break the law, you risk legal penalties. … When you offer music on these [file-sharing] systems, you are not anonymous and you can easily be identified.” The message then instructs the user to “Disable the share feature or uninstall your ‘file-sharing’ software.” It does not inform users about a third alternative: alter the software’s settings so that only selected, noncopyrighted files are shared. The first 200,000 messages went out on April 29. Approximately 1 million of these warnings will be sent out each week, according to the RIAA. However, it is unclear how many of these messages will be read. Users often leave their file-sharing programs running unattended for hours and rarely read their IM messages. Moreover, the file-sharing programs themselves allow users to limit or completely turn off incoming instant messages. Even when the messages are read, they may have relatively little effect. “Most people who do this [sharing of copyrighted files] already kind of know what they are doing, and I’m not sure that sending them an IM will stop them from doing it,” said Mark Radcliffe, an IP partner at Palo Alto, Calif.’s Gray Cary Ware & Freidenrich. There is also some question about the legality of the RIAA tactic. Sending millions of IM messages might violate some state anti-spam laws, according to Jonathan Band, an IP partner in the Washington office of San Francisco-based Morrison & Foerster. But Band noted that “in most states … [an e-mail] has to be deceptive or misleading in some way to violate the anti-spam law.” Internet service providers or users who get lots of these messages could conceivably sue for trespass to chattels. However, prior to granting any injunction, a court will weigh the equities, and in that balance, Band said, it may be difficult for a court to find against “the content folks [who] are being ripped off on a massive scale.” Grokster and Sharman might also have grounds to sue the RIAA. “I see a danger of misuse,” said Michael Page, a partner in San Francisco’s Keker & Van Nest and one of Grokster’s lead attorneys in the copyright infringement suit. “It is conceivable [the RIAA] could so totally flood the system with multiple notices, that it could affect people’s ability to use the tools.” Such misuse could breach Grokster’s software end-user agreement, exposing the RIAA to liability for breach of contract. The RIAA’s IM warnings are only the latest in a series of actions against individuals who share copyrighted files. Early in April, the RIAA sued four students who ran file-sharing networks in their colleges. And on April 24, the RIAA won a major victory before a federal district court in Washington. The court upheld the legality of a provision of the Digital Millennium Copyright Act that makes it easier for copyright owners to subpoena Internet service providers for information on users who may have committed copyright infringement. This ruling is being appealed. If it is upheld, it would make it quicker, cheaper and easier to locate and sue individuals who download infringing files. “We are considering all our options,” said David Kendall, a partner at Williams & Connolly of Washington. D.C., who is representing six movie companies in a suit against Grokster, StreamCast and Kazaa. “If I were a downloader, I wouldn’t rest easy.”

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