p2pnet.net News View:- Unnerved by imprecise ruling in Grokster vs MGM, venture capitalists are abandoning investments in file sharing technologies for “more sedate arenas,” says the Guardian Unlimited.
P2p application firms can sometimes be held responsible for what users do with company software, ruled the US Supreme Court, saying it was OK for Grokster to stand trial, but failing to give advice on what punishment might be meted out should it be found guilty.
But, Sadly for the copyright owners, while the new ruling might make it difficult for a company to make money from a commercial filesharing application, filesharing itself isn’t affected,” says the story. “Because of the way that modern peer-to-peer networks operate, with no central organisation to shut down, you don’t need a professionally produced or supported application to access them.”
Meanwhile, as veteran investor Joi Ito observes, “All of these laws and possible future laws … increase the risk that someone will decide that the cool, new music distribution technology of the startup you invested in is illegal. I think Grokster, as well as the possibility that Congress will pass new laws, creates a chilling effect by increasing the risk to companies and investors.”
He also said, “Any startup trying to innovate in the online music distribution business will be walking a minefield of unreasonable government legislation and industry patent litigation, which will scare away entrepreneurs and investors alike.”
And to drive the point home, Braden Cox, technology counsel for the Competitive Enterprise Institute, a Washington thinktank, said: `Unfortunately, the verdict will have a chilling effect on innovation and may stifle the next generation of digital multimedia technology`.”
For ‘copyright holders’ read the big four record labels, the seven major movie studios and the giant software corporations, with Microsoft to the fore. They have big legal budgets and, “this means they can afford to pursue a legal remedy for as long as it takes,” the Guardian goes on.
The result is that programmers with a good idea will have to prove to everyone, and specifically their backers, that they are operating entirely without the risk of a lawsuit. This is hard to do: indeed, so hard, that many backers aren’t giving them the chance in the first place.
Furthermore, given that the fundamental point of the internet is the moving of data from one place to another, the area of chilled innovation is greater than you might think. Does advertising a system that allows for large email attachments induce copyright infringement? Could the features of broadband connections, which make large files easier to deal with, make it an inducement to illegal filesharing? When a photo-sharing site or blogging tool proudly proclaims the ease of placing material online, does that make it an inducement to breach copyright?
It doesn’t really matter. The fact that the answers are fuzzy means that small innovators will run out of money for their lawyers long before the record labels do. Venture capitalists might not even take the risk of funding any such startups at all.
But, as the story says, ultimately, US rulings won’t affect the rest of the world:. While, “Europe does sometimes take a lead from US law with respect to copyright issues, much of the developing world does not. They are free from legal restraints – but, more importantly, they are free from legal uncertainty, and there lies the rub. Whether copyright infringement is their business or not, foreign developers now have the advantage.
Most p2p applications are open source, “free to use and without any corporate backing,” says the story, adding:
“There is no one but the individual filesharers themselves to sue – which is already happening in the UK – and no way to put the cat back into the bag. Indeed, by forcing first Napster and then Grokster and the other filesharing entrepreneurs out of business, the record companies have created an enemy they can neither beat nor negotiate with.
“An embrace of Napster at the start might have, in retrospect, made for a better strategy.”
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Guardian Unlimited – Technology feels the chill , August 25, 2005