“Substantial Legitimate Uses”

Jon Healey gives the file swapping services legal case:

The major record companies and Hollywood studios have sued a series of online file-sharing companies, accusing them of fueling rampant piracy of songs and videos on the Internet. In response, the file-sharing networks have relied on the Supreme Court’s 1984 ruling in the Sony Betamax case, which held that Sony Corp. wasn’t liable for copyright infringement because its videocassette recorders had “substantial” legitimate uses as well as illegal ones.

Two file-sharing networks–Napster Inc. and Aimster (later renamed Madster)–sought refuge in the Betamax case with no great success. Now, three popular successors–Morpheus, Kazaa and Grokster–are relying on Betamax in a critical pretrial skirmish.

If the file-sharing companies win, the music and movie companies would be forced to turn their legal guns directly onto consumers who make pirate copies. That’s a step the entertainment industry has been loath to take because it’s expensive and might alienate customers. But if the file-sharing companies lose, some advocates say, the shrinking scope of the Betamax ruling could put a damper on new technology.

“If the Betamax doctrine is eroded, you end up in a situation where innovation generally suffers, and you’re limited to whatever technology Hollywood thinks we deserve,” said Fred von Lohmann of the Electronic Frontier Foundation, which is helping to defend Morpheus. “It’s just an untenable situation if in fact copyright law makes it impossible for innovators to do what they do.”

Matthew J. Oppenheim, senior vice president of business and legal affairs at the Recording Industry Assn. of America, agreed that the file-sharing cases are refining the scope of Betamax. But as the judge in the Madster case ruled, there’s a fundamental difference between a VCR that works in a consumer’s home and an online network that distributes files around the globe.

“There’s nothing in the Sony decision that says it extends to distribution,” Oppenheim said.

The lawsuit against Morpheus, Kazaa and Grokster is being heard by U.S. District Judge Stephen V. Wilson in Los Angeles. Lawyers for the entertainment companies, Morpheus and Grokster filed briefs Monday urging Wilson to decide the case without a trial, but no ruling is expected for several months….

The other side here.