Two significant developments in music industry litigation with file-sharing
companies took place last week. A federal judge
ruled last Wednesday in favor of the media industry in finding that
Streamcast, developers of Morpheus software, profits from large-scale copyright
infringement. Meanwhile, LimeWire filed a
counterclaim against the major music companies, alleging conspiracy under
antitrust laws to constrain trade in online music retail.
The judgment against Streamcast is the latest chapter in the Grokster
litigation saga. The Supreme Court's
opinion in the
case, over a year ago, established a set of principles for liability to "induce
copyright infringement" -- essentially that a business must depend on
infringement for its own gain and that it must actively market itself as an
infringement vehicle. Judge Stephen Wilson took this principle into
consideration and stated that Streamcast met the criteria. Judge Wilson
decided this as a matter of law, so the case will not go to trial.
Streamcast is looking into appealing the case.
Streamcast has been one of two defendants in the Grokster case.
The other, Grokster itself, settled the case by selling its assets -- primarily
its list of subscribers' email addresses and other information -- to Mashboxx, a
"copyright respecting P2P" music service that uses acoustic fingerprint
filtering and is still in test mode. Mashboxx's chairman is Wayne Rosso,
the former CEO of Grokster. Michael Weiss, Streamcast's CEO, has dug in
his heels against the media industry for several years now.
The LimeWire case
is really a test of the boundaries of what the music industry considers to be
acceptable DRM. After the Supreme Court's Grokster decision,
several file-sharing companies -- including LimeWire -- got cease-and-desist
letters from the RIAA. LimeWire is one of the few that did not
shut down.
Instead, it offered a hashing mechanism for filtering copyrighted works out of
its network. This is different from the acoustic fingerprinting technology
used by iMesh -- which is now fully operational with licenses from the majors --
and by Mashboxx.
Acoustic fingerprinting (a/k/a perceptual hashing) analyzes the actual bits
of the content and deduces its identity, while LimeWire's proposed solution
merely involves reading a fixed identifier in the file. It is similar to a
scheme proposed by AltNet a few years ago, which was roundly rejected by the
music industry as being trivially easy to hack. Thus, LimeWire's decision
to intensify its litigation with the music industry is clearly more about
principle than about technology.
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