Today the U.S. Supreme Court will hear arguments in this case. It's a pivotal case for copyright law, and even more pivotal for the future of technology.
You've all heard of filesharing. Napster was the first to popularize it as a way of sharing songs, pioneering a new kind of technology called "peer-to-peer," or P2P. There's nothing, however, about the technology that limits it to songs. P2P is a technology that lets any kind of file be hosted and accessed by computers on a network (like the Internet). It's particularly efficient for large or popular files, because instead of every computer that wants a copy having to ask a centralized server for it, any computer that has the file can provide it to any other, without any of them needing to go back to a central server to get it.
Except with Napster a central server was still involved. While the files being shared were stored on individual computers, computers who wanted a copy had to ask the central Napster server to direct them to a computer where they could get it.
When the recording industry (meaning a group of major record labels, songwriters, and other stakeholders in the business) got upset with filesharing, it sued Napster for copyright infringement. The complexities of copyright law aside, the appeals court for the 9th Circuit (adjudicating for a portion of the United States, primarily the Western states) found liability for Napster in large part because of the active role the Napster service played in brokering the connection between these computers.
In the wake of that decision other P2P services sprang up to replace Napster, but with a fundamental difference: the connections between the computers happened without the help of a central service. Napster got in trouble because it facilitated the connections, so the developers of the new software made it have nothing to do with the connections being made between filesharing computers.
But the recording industry was still upset: files were still being shared. So they sued again, this time targeting the new services like Morpheus and Grokster. But this time they lost.
They lost in part because these services did not facilitate the connections like Napster did. And they also lost because of how the court (again in the 9th Circuit) applied an old U.S. Supreme Court decision from 1984: Sony v. Universal, commonly referred to as the Betamax case.
As the VCR began to enter more and more homes, the movie industry panicked. "People will be able to make unauthorized copies of our movies!" they worried. Jack Valenti, then head of the MPAA (the Motion Picture Association of America), was famously quoted as saying, "VCR's are to Hollywood as Jack the Ripper is to women," suggesting that the rampant copying now possible with this technology would decimate the movie industry. So the movie industry sued and the case went up to the Supreme Court, where the movie industry lost.
They lost because the court refused to prohibit a technology that could have "substantial non-infringing uses" even if it also potentially enabled infringing copying as well. With that decision the VCR lived on, and we all know what happened: the videotape business has made the movie industry billions of dollars.
Now the Supreme Court is faced with a similar dilemma. (Unhappy with the lower court's decision allowing these P2P technologies to go forward the recording industry appealed. And lost again. So it appealed to the Supreme Court to reconsider the case, which is what will happen today.) Assuming music filetrading amounts to copyright infringement (I suggest this isn't yet a fully settled area of law, but presume for the moment that it is), should the technologies that enable it be prohibited because of it? Remember, ANYTHING can be fileshared. Documents, pictures, music, movies... And not all of these things are copyrighted. Moreover, of those that are, many copyright holders would prefer to have their work distributed this way. Chuck D., as an example, plus other new and independent artists who lack, either by choice or by circumstance, the publicity or distribution resources of a major record label. They use P2P as a way to make sure their work reaches as wide an audience as possible.
In any case, it's clear that there are substantial non-infringing uses for P2P technology. The Betamax decision said that technology couldn't be prohibited if that were the case. The Supreme Court will now decide whether that rule holds true for Internet technology as well.
The stakes are extremely high. If the Supreme Court decides that it doesn't, it sends the message that creators of a tool can be held liable for the harm users might cause with it. That's like saying that hammer-makers can be sued if someone uses one to hit someone over the head. Harm would certainly be caused, but would we want to effectively ban hammers just because they can be used for bad ends? What about the productive uses we'd like to make sure hammers are available for?
If the people who make tools can be sued for the harm the tools' users might cause using them, no one will make any tools, regardless of how much good those tools could also enable. Imagine if in 1984 the Court had decided that Sony could be sued for their device that let people make copies of movies, including at times those copies that they weren't legally entitled to make. Would we like the world we live in now if it didn't have the VCR? Because that would have been the result. No manufacturer could have afforded to make the VCR if it could be held liable for users' actions it couldn't control. Think of how much money would have been lost if we hadn't let that innovation take flight and ultimately create new markets for the copyright holders.
We're at the same kind of crossroads now: if the Court finds liability here for the P2P technology makers, it's the equivalent of erasing the VCR from the landscape. All sorts of beneficial innovation will be stifled for fear of a lawsuit. And if that happens, who knows what else will be lost.