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Why the Supreme Court is Irrelevant on P2P

Earlier this week the US Supreme Court heard the MGM v. Grokster case concerning the legality of Peer-2-Peer (P2P) software. Lower courts have found the software developers not liable for user activity, and some in the movie, music and software industries are anxious to overturn their findings. Many have billed this case as pivotal for the Internet along the lines of the Betamax case, which legalized VCRs despite copyright concerns. Observers on both sides of the issue have argued in the most widesweeping terms that their future will be irreparably damaged if the ruling were to be adverse, but I'm not sure it matters one bit in the grand scheme what the justices finally decide.

On one side of the aisle, media companies are wailing that their businesses will wither away and die if P2P is permitted to remain legal. It's undisputable that a significant attraction to P2P today is the download of copyrighted materials. As
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the principal in a software company (Linspire) and an online music store (MP3tunes), I want people to pay for intellectual property such as music, movies and software. But it's hard to have sympathy for an industry that has attacked every new technology in court from the piano roll, to the VCR, to the cassette deck, to portable MP3 player with the same rhetoric that "poor artists will starve" and asking courts to ban it. Thankfully, the courts have allowed these technologies. And our society and businesses are better each time the industry morphs to take advantage of these new opportunities to generate even more money.

On the other side, technology companies and civil libertarians are pleading that innovation will grind to a halt if every inventor has a death sentence of potential copyright violations hanging over their heads. Here I have somewhat more sympathy given my experience with MP3.com. In our case, one judge ruled against us and the penalties were so severe due to harsh copyright laws that have been pushed through Congress, that we could not even put up a bond to appeal. No other judge or appellate court ever heard our case and we were forced to settle. (It should be noted that it's often that the higher courts reverse lower courts just as in the Betamax case, where lower court ruled the VCR illegal and higher courts found otherwise.) Noted legal scholar Lawrence Lessig cited the MP3.com dilemma in his brief in the Grokster case
.

In spite of these strongly voiced arguments and seemingly big stakes for both sides, I'm not sure it matters what the nine justices finally rule. Technology moves so rapidly that often times by the time courts rule, technology is already deeply entrenched as to be unmovable. When the final ruling on VCRs was handed down, about 50 percent of U.S. homes had a VCR. It would have been impractical for the Supreme Court to find them illegal devices and send police to half of American houses. I believe P2P is in a similar state with widespread usage and applications.

Hundreds of millions of software programs have been downloaded and the technology has been implemented in many purely legal applications. Linspire uses P2P to distribute many terabytes of our software in a cost effective manner


to paying customers when our own servers are overloaded. Our newest version, Linspire Five-0 has BitTorrent P2P technology built in it to help people easily access authorized materials such as legaltorrents.com. Unquestionably, P2P is firmly rooted in many software products and companies, making it impossible to put the toothpaste back in the tube. And perhaps in response to the legal uncertainty around the Grokster, the next generation of P2P programs such as BitTorrent and emule are completely open source with no corporate backing, making a legal target non-existent.

Even if the Supreme Court outlawed P2P, this is one time when an American unilateral decision will not be effective. The U.S. may be a world power in the global political theater able to enforce its will through sheer military might, but we hold no such dominance on the Internet. It is the great equalizer with around 150 countries connecting to it and able to implement their own laws. A ban on P2P in the U.S. might slow things down, but it would not halt developments elsewhere and would simply hand the economic opportunities to other countries. Online gambling is a good example. The U.S. allows gambling in state lotteries, riverboats, Las Vegas, Indian reservations, Atlantic City, and elsewhere, but clings to the absurd position that online gambling is illegal. Rather than prevent Americans from gambling, they have simply pushed it off-shore where the U.S. generates no tax revenues and has no policing ability. New non-U.S. companies are not only providing traditional betting options online to Americans, but innovative new approaches such as Betfair - a sort of eBay for betting - are emerging. U.S. policies against online gambling do not meaningfully impede online gambling, but simply give the economic benefit to other countries. The same will be true for P2P- the only lasting impact will be to block the U.S. from enjoying the economic benefits.

The Supreme Court is expected to hand down its ruling in Grokster in July.

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Undoubtedly, it will receive incredible attention whatever the ruling. But the decentralized nature of P2P, and the global nature of the Internet, and widespread usage means it will have minimal impact on P2P adoption or usage. We've made a version of LinspireLive! available for free via P2P so people can experience Linspire directly from a CD without installing the OS to see how well it would work on their computer. One snazzy new feature we've added is that you can also try CNR (click and run) while running from a CD with no registration or payment required. With this one free download you can experience Linspire Five-0 and CNR. I hope you'll give it a try while P2P is still legal in the U.S.

-- Michael

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