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File swapping in the legal crosshairs

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Mr Smith:
I still don't think trading music and other media on the internet and then burning it onto a cd or uploading mp3's onto an mp3 player is any different than using an audio cassette tape to record music from the radio or a video cassette tape to record tv programs. Also, read this excerpt about Microsoft's Media Center PCs. Notice:

If a content owner decides to place restrictions on the program "Friends," for example, that program can be played only on the original Media Center PC that recorded it. If there are no restrictions ? and most programs don't have them ? they can be played on other Media Center PCs.

"What we've done is empower the content providers, who really own their own content, to set policy," said Murari Narayan, director of marketing for the Windows eHome division.

I think this means, in normal speak, that if the so called "Content Providers" think they are losing money then they can restrict your access. Access to
programs by the way, that suck, and that YOU ALREADY PAID FOR and should be able to do with as you please. These are the same demons er... people that want to take your rights away when it comes to file sharing and such. They will be able to create the rules, which they will use to their advantage. OK. Enough bitching. Here are the articles.


http://news.com.com/2100-1023-975618.html

File swapping in the legal crosshairs

By John Borland
Staff Writer, CNET News.com
December 2, 2002, 4:00 AM PT

A federal court on Monday will hear arguments that could derail Hollywood and record labels' lawsuit against popular file-swapping companies--or result in an order to shut them down.
The hearing could be the most critical legal skirmish since the closure of Napster, focusing on the Morpheus and Grokster file-swapping networks, and potentially affecting the more popular Kazaa network as well.

Attorneys for movie studios and record labels are asking that their copyright lawsuit against the file-swapping companies be brought to a near-immediate close, and the companies found guilty of massive copyright infringement. The file-trading companies are asking that the case be dismissed and that they be allowed to distribute their software unmolested.

 

If the judge grants none of Monday's motions for "summary judgment" and the case does go to trial, it will be the first time that any of the peer-to-peer companies have progressed that far in the legal proceedings. In the case of Napster and Madster--formerly known as Aimster--a judge granted preliminary injunctions ordering the companies to block copyrighted music trades, and the companies each fell into bankruptcy before a full trial could be held. Madster is still fighting its injunction, while Napster has sold its assets in a bankruptcy auction.

"It's a very critical" part of the case, said Charles Baker, a Brobeck Phleger & Harrison attorney representing Streamcast Networks, which distributes the Morpheus file-swapping software. "Either somebody will win and somebody will lose, or both sides will lose and we'll have a trial."

Any outcome will help shape the future of the file-trading world. The copyright holders' case against Streamcast, Grokster and the successive parent companies of the Kazaa software is widely viewed as potentially even more influential than the suit against the now-defunct Napster, and a full trial could be an important legal milestone for the technology community.

All three services distribute file-swapping software without maintaining the same kind of centralized directory server that Napster, Madster and other previous legal targets had. Connections between people for the purpose of trading songs, movies, software or anything else are made without the intervention of the companies themselves. Supporters say that gives them a better shot at proving they are simply software distributors and are not liable for the copyright infringement of the people who use the software.

The copyright holders say that the technical differences between Napster and these newer, more decentralized software programs are irrelevant. All of the services are aware of the copyright infringement and have built their businesses around its existence and should therefore be held responsible, the plaintiffs say.

The file-swapping companies' "systems were designed and intended first to emulate Napster and then to surpass it," attorneys for the studios and record labels wrote in their latest legal filing. They "have succeeded beyond their wildest dreams."

Indeed, interest in the file-swapping software remains high. According to Download.com, a software aggregation site operated by CNET Networks, publisher of News.com, Morpheus was downloaded nearly 400,000 times in the last week, while Grokster saw more than 112,000 downloads.

Kazaa, which is not part of Monday's hearing, remains the most popular, with more than 3.4 million downloads last week. The copyright holders are seeking to add Kazaa parent Streamcast Networks to the Morpheus and Grokster case, but a judge has not yet made a final ruling on that company's status.

Should the copyright holders succeed in persuading the judge to order the companies to block trades of copyrighted works or to shut down their networks altogether, it's still far from clear how this could be implemented.

Grokster and Kazaa both function using proprietary software called FastTrack, which in theory can operate even if the company distributing the software disappears. However, an incident early in the year that simultaneously disconnected all Morpheus users--who were then running their own variation of FastTrack--raised the possibility that the network could somehow be disabled from the inside.

Today's Morpheus would be even harder to shut down. It's now based on the open-source Gnutella technology, which creates networks that operate wholly independent of the various companies that produce Gnutella-based software.

The hearing will be held in Los Angeles federal court, in front of Judge Stephen Wilson, at 1:30 p.m. PST on Monday.

http://seattletimes.nwsource.com/html/businesstechnology/134587593_digitalrights02.html

Hollywood, tech become wary partners against piracy

By Kim Peterson
Seattle Times technology reporter

Peter Chernin joked that he was walking into enemy territory last month at the Comdex computer trade show, but maybe he wasn't far from the truth.

Chernin, the chief executive officer of Fox Group and president of News Corp., came to address an industry that media companies have railed against as purveyors of piracy. The entertainment world has complained for years that tech companies have done little to stem the online trading of music and movies.

But Chernin was not there to chastise or berate. He was hoping to make peace, and, more importantly, to enlist support.

"We have nothing more urgently in common than the escalating theft of our products," he told an audience of thousands at a keynote speech. Chernin brought onstage director George Lucas, who forecast consequences more dire than anything Anakin Skywalker has faced.

"If you cut down the rainforest of entertainment, this ecosystem of media will collapse," Lucas said.

Technology that allows consumers to copy and pass around music, videos and other forms of content has created a cultural phenomenon and given the entertainment industry major heartburn. Record labels and other copyright holders have tried to beat piracy in the courts, with limited success. And still unresolved in the digital-rights debate is how owners of songs and movies should distribute their products.

Now, media companies are adopting a different strategy: beating technology at its own game. Some have made strides, producing copy-protected CDs and subscription-based online music and movie programs. But entertainment executives know the key to this success is the cooperation of the tech world.

The relationship has yet to blossom, although companies such as Microsoft have begun implementing technologies that restrict what people can do with songs, movies and television programs.

Tech companies have other masters, however ? ones more important than anything on the big screen. They must answer to shareholders and satisfy customers. They must sell products and make money in an economy in which PC sales have slowed and tech spending is down.

Still, there is a general feeling that Hollywood and the tech industry are moving from adversaries to potential partners, from combatants to courters.

In the words of one industry insider, "There's all sorts of positioning going on."

Marketing the controversy


It didn't take long for some tech companies to capitalize on the digital-rights debate, at least from a marketing standpoint.

Apple Computer's "Rip. Mix. Burn." slogan ? created to highlight its CD-burning technology ? was publicly criticized by Disney Chief Executive Michael Eisner as encouragement to steal.

Gateway also drew the entertainment industry's ire with television commercials featuring Chief Executive Ted Waitt, a cow and a statement supporting a consumer's right to enjoy digital music legally.

Microsoft has been noticeably absent from the theatrics.

Slogans aside, tech companies are scrambling to figure out how to make the most of this new era of consumer empowerment.

Napster clearly showed that consumers of all ages could quickly adopt new technology, and do so free of moral quandaries about the legality of their actions. The explosion of CD-burner sales showed that people wanted to share music and make it portable.

With this freedom came a resistance ? strong to this day ? to any restrictions that limited what people could do with digital versions of songs and videos.

Tech companies are keenly aware of the consumer mindset, just as they are of the potential gold mine a partnership with the entertainment industry presents.

"The information-technology world needs to advance the ball," said Scott Dinsdale, executive vice president of digital strategy at the Motion Picture Association of America. "That's their gig. We can't do that for them."

Steps toward cooperation


Many of them are taking steps toward the cooperation that Chernin pleaded for at Comdex.

Microsoft has taken large steps, and its employees talk about the "responsible leadership" the company has assumed.

But it took too large of a step earlier this year with its Media Center PC, and had to change its policies as a result. The Media Center PC is an entertainment-focused computer that people can use to watch movies, record television shows and listen to music, and it comes with a remote control.

Microsoft originally decided that recorded television programs should be played back only on the Media Center PC that originally made the recordings. That meant a program recorded on the PC's personal video recorder could not be burned onto a DVD and viewed on a separate DVD player.

The news caused a stir among Microsoft watchers, and the controversy seemed at times to overshadow the news about Media Center's release. Microsoft later changed the policy so that TV networks and other content owners can decide how programs should be restricted.

If a content owner decides to place restrictions on the program "Friends," for example, that program can be played only on the original Media Center PC that recorded it. If there are no restrictions ? and most programs don't have them ? they can be played on other Media Center PCs.

"What we've done is empower the content providers, who really own their own content, to set policy," said Murari Narayan, director of marketing for the Windows eHome division.

Microsoft plans to revise the policy this month so that unprotected programs can be played on other computers and on separate DVD players.

Microsoft has reached out to the entertainment industry in other ways. Chairman Bill Gates even dedicated a portion of his Comdex keynote speech to the subject, mentioning the company's partnerships with Disney, NBC and Fox.

Hollywood comes courting


With its dominant operating system and nascent foray into mobile devices such as cellphones and handheld computers ? future hubs of digital-content delivery ? it's clear Microsoft is a big fish that Hollywood wants to catch.

"Microsoft is someone that the content companies hate but they really want to fall in love with," said Jonathan Potter, executive director of the Digital Media Association, a trade association of companies, including Microsoft, focused on developing digital content.

Microsoft ? and other tech companies ? has enabled consumers to do things like download songs and burn them onto discs, Potter said. But entertainment companies know that Microsoft could be invaluable in tracking and controlling what people do with content in the future.

That gives the company a clear advantage. Add to that the $40 billion in cash Microsoft has stashed away.

"They don't need the record industry's money in the short term," Potter said. "They can afford to play hard to get."

There is another consideration for AOL Time Warner, Sony and other media companies that compete with Microsoft in various ways. Their concern, say some analysts, is simple: Once you get in bed with Microsoft, do you have to stay there?

"They don't want to be dependent on Microsoft," said Matt Rosoff, an analyst with Directions on Microsoft.

Sony, for example, may not want Microsoft software running in its future devices. Philips Electronics may not be pleased if Microsoft's Windows Media replaces MP3 as the dominant format for digital music.

Dinsdale at the motion-picture association downplayed this possibility.

"That's not the attitude that's taken by the executives on the media side and the content side," he said. "Their charge is to make sure that their products are distributed as widely as possible."

Still, media companies are exploring alternatives to Microsoft.

Last month, Sony acquired the assets of InterTrust Technologies, a company developing digital-rights technology, from Philips Electronics for $453 million. InterTrust and Microsoft have been battling in court over patents related to security and digital rights.

Sony's popular Playstation 2 video-game console uses music and video player software from RealNetworks, a Microsoft competitor.

Urgency for a solution


Hollywood executives such as Dinsdale realize that it will be years before the technology and entertainment industries work out a good solution to piracy.

Still, there is a sense of urgency to develop that solution as quickly as possible.

A common thought in both industries is that people will pay for online songs and movies only when it is easier and more convenient to get them legally. That hasn't happened yet.

Movielink, a new online movie-rental service developed by Hollywood studios, has been panned by critics as overly restrictive in its rules and technically buggy. The popular file-trading program KaZaA is a constant reminder to Hollywood that this technology is what consumers want, said Phil Leigh, a digital-media analyst with Raymond James.

"It's going to be hard to take that away from them if you don't offer them an alternative," he said.

For entertainment executives, the tech industry may hold the power to bring about change. There is motivation on the tech side as well: PC sales have slowed, and many executives are banking on digital music and movies to rejuvenate the flagging industry.

"We're going to be using future computers to do new things," Leigh said, "and there's not a shadow of a doubt that digital media is what it's going to be all about."

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