Related Litigation

While Congress and the regulators continue to be stymied on these matters, several lawsuits of note continue their way through the judicial system and may well have eventual repercussions on Capitol Hill:

* Eldred v Ashcroft - In a 7-2 decision, the Supreme Court on January 15, 2003 upheld the Sonny Bono Copyright Term Extension Act. That 1998 measure extended the term of both existing and future copyrights by twenty years. While indicating considerable unease over Congress' policy decision, the Court nevertheless held that the Act did not violate the Constitutional requirement that copyrights be for "limited terms". Critics of the Act argued that it effectively set the stage for perpetual copyright terms, as there would be nothing to prevent Congress from again extending terms for additional periods in the future and thereby keep works from ever entering the public domain. The Court decision prompted calls for review of the Act, focusing on ways to make works that were not being commercially exploited available to the public.

* MGM v. Grokster — In this Ninth Circuit case, currently being heard in Federal District Court in Los Angeles, record and movie industry plaintiffs are suing a number of distributors of second-generation P2P software. Plaintiffs argue that the defendants are guilty of vicarious and contributory copyright infringement as was held in the Napster case. Defendants argue that the Napster court did not find P2P to be illegal per se but held against that particular company because of its actual knowledge of what copyrighted works were being shared over its network and its control over the central server that facilitated that activity. Their software, to the contrary, connects end point users without any intervening action or monitoring by a central server, and they argue that they should therefore bear no more liability than providers of other types of software - such as e-mail and instant messaging applications - that can facilitate the transmittal of copyrighted works. They further contend that their P2P software is capable of substantial non-infringing uses and is thereby sheltered by the Supreme Court's "Betamax standard" for determining whether new technologies can be held liable for facilitating copyright infringement. On January 10, 2003 the Court held that Vanuatu-registered and Australian-based defendant Sharman Networks, owner of the popular Kazaa.com website, was subject to its jurisdiction despite its lack of employees or facilities in California. This decision is at odds with the November 2002 decision of the California Supreme Court in DVD Copy Control Association v. Pavlovich, where jurisdiction was denied in regard to a Texas resident who had made software capable of breaking DVD encryption available at his website because he had not targeted California for its distribution. (9) Sharman vowed to appeal the jurisdiction decision. In addition, on January 28, 2003 Sharman filed a counterclaim alleging that the plaintiffs had violated the antitrust laws and engaged in misuse of copyright. If Sharman is victorious in its counterclaim plaintiffs would be prevented from enforcing their copyrights. If plaintiffs prevail against Sharman they will likely have to seek enforcement of the U.S. judgment in one or more foreign jurisdictions, and such enforcement is not assured; for example, in 2002 the Amsterdam Court of Appeals held that distribution of the Kazaa software did not create copyright liability, and several U.S. courts have refused to uphold foreign judgments against U.S. residents for Internet activities.