9th Circuit

It's been a bumpy ride on the information super-highway for many file-sharers in the past few years. The tug-of-war between individuals who download music, movies and TV shows and those who create the copyright material seemed endless--not only for those involved, but also for the many courts that have struggled to provide a semblance of balance and fairness for each side.

In June the Supreme Court finally had its say--dealing a blow to the makers of file-sharing software by unanimously deciding in MGM v. Grokster that companies that encourage Internet users to illegally download copyright material should be held liable for their actions. It sent the case back to district court for trial.

And it could put small technology companies that don't have the budget to finance such litigation out of business completely.

"This decision is somewhat Orwellian in that it seems the entertainment industries have now become the thought police," says Matthew Neco, general counsel of StreamCast. "The guy in the garage [creating a new technology] and the girl in the executive suite [marketing it for him] better be very sophisticated about what they think, let alone what they communicate to each other and their customers, because their every thought and their every action will now be subject to discovery and expensive litigation."

"The court found an appropriate balance between the values of protecting creative pursuits through copyright and promoting innovation through technologies," Aldisert says.

While the Supreme Court may have made it more difficult--not to mention costly--for technology companies to create, promote and defend their products against this new theory of liability, Grokster and StreamCast are confident they will prevail at trial.

staff Writer

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