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The US Supreme Court has ruled that the software maker behind file-sharing technologies, Grokster and Morpheus will be held responsible for what users do with their software.

Siding with 28 movie and music makers, the US Supreme Courts decision to open the doors for lawsuits


against the companies came as a surprise.

The ruling overturned a lower court ruling made in October 2001, where the judges cited a ruling made in 1984 over Sony’s Betamax video recorder. In that case, the Supreme Court said that the majority of people using a video recorder for legal uses outweighed any illegal use of the technology.

However in the latest ruling Justice David Souter wrote “the question is under what circumstances the distributor of a product capable of both lawful and unlawful use is liable for acts of copyright infringement by third parties using the product.” Chief Souter also stated “we hold that one who distributes a device with the object of promoting its use to infringe copyright … is liable for the resulting acts of infringement by third parties.”

According to comments made by the Consumer Federation of America, Consumers Union and Free Press on the Supreme Court’s Decision, although it makes little impact on consumers immediately, it could pose a significant challenge for consumers, innovators and the economy. “Based on today’s decision, new innovators would be subject to review of the courts to assess their marketing activities and business models. Meanwhile, the anti-competitive business models of the current copyright owners are shielded from competitive innovation in the market place.”

However Hollywood and the music industry couldn’t be happier about the decision. It estimates piracy costs the industry of one billion dollars US a year. On the Nine.Msn news site, Andrew Lack, chief executive for Sony BMG Music Entertainment was quoted as saying “we will no longer have to compete with thieves in the night whose businesses are built on larceny.”

 

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