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Summary:

Given that a lot of people have expressed shock, awe and outrage at the US Supreme Court Decision in the MGM versus Grokster, I decided perhaps it should be a good idea to plough through the 55-page tome. There is a lot of hand-wringing using all […]

Given that a lot of people have expressed shock, awe and outrage at the US Supreme Court Decision in the MGM versus Grokster, I decided perhaps it should be a good idea to plough through the 55-page tome. There is a lot of hand-wringing using all the catch phrases. The 9-0 decision tells me that there were no doubts in courts mind. From what I understand is the folks at Grokster are saying they should not be held responsible for devilish thoughts end users have. Like in case of Sony Betamax, the sale of their software is protected by fair-use.

The courts have decided that there is nothing wrong with the Betamax fair-use ruling, and companies cannot be held responsible for their technology. However their marketing of their product was all wrong. I think the nudge-nudge wink-wink attitude that has been part of Silicon Valley is not going to fly any more.

…the Ninth Circuit misread Sony to mean that when a product is capable of substantial lawful use, the producer cannot be held contributorily liable for third parties infringing use of it, even when an actual purpose to cause infringing use is shown…

The bottom-line is that so far, many digital lifestyle related start-ups have used the Sony Betamax ruling as a crutch, more like an excuse for doing things which fall in the gray area. That’s clearly not going to fly. Chris Nolan succinctly sums it up when she says, “The Wizards of the Web are formally on notice: If tech wants to be in business and stay in business then it better start acting in a business-like manner. No foolin’ around.” I agree – I think in many ways this a very stern warning.

The worrisome aspect of this ruling is that just like their tech counterparts pointing to Sony Betamax fair-use ruling as an excuse for inexcusable behavior, the Hollywood Mafia is going to use the MGM-Grokster ruling to beat down on tiny start-ups. Expect all those VC firms that made a lot of noise about consumer and digital media going back into hiding and rediscovering the joys of enterprise software. (Bill Burnham, how come you are always right?) By the this will equal Microsoft’s presence as a reason not to do a “deal.”

Andrew Parker, the CEO of Cachelogic believes that in the end this ruling will only force the inevitable – the P2P networks will morph from those being identified by a person or a company or a group (such as KaZaA or BitTorrent) to the more general open source projects such as eMule/eDonkey where the networks themselves are complex and distributed and there are a wide range of clients that can make use of these protocols. “Equally it seems that the device vendors are safe so there will still be the proliferation of iPods and similar devices that will always indirectly fuel the need for these P2P networks,” says Parker.

Going ahead, this is good news for folks like Apple, Real and Napster. The music/movie download services which are legal are eventually going to come out ahead, and well we will remember today as a red letter day, when Silicon Valley was forced to grow up. It also means that the Southern California gang will from this point be grappling with overseas malcontents, who unlike US companies/entreprenuers are not going to play by US rules.

David says it best

As media is reduced to an atomic state of bits, it starts to show quantum-like uncertainty, is it a thing like an LP or a transmission like a song on the radio, a particle or a wave? … Just as people have created software that allows people to share things they don’t own, with copy protected digital media nobody owns anything. Everything you buy is actually rented.

I think it is time for consumers to step up and show some clout, and send a message to those in Hollywood. We need to perhaps let them know that if pushed too far, we the people (not the tech industry) will react in the best and the only way we can: not buy their product. Call it “digital disobedience.” What if all of us, and with that I mean simply the blogosphere, decide that for one day in our life, we will not buy any product Hollywood/Record Industry has to offer. Do nothing … just don’t buy music, movies, or watch television! Just an idea. How about July 4th?

By Om Malik

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  1. Charlie Sierra Monday, June 27, 2005

    Bingo!!!

    Om, you’ve nailed it again.

    The only other thing I might add is that all the ruling does is to ALLOW a lawsuit. Winning in court is another thing altogether.

    Basically all the court did is say you can’t abuse the Betamax ruling, BFD. Anything taken to the extreme is troublesome.

    The really big question is just how does the RIAA plan to take our houses in the name of the “greater public good”. vbg, sorry couldn’t resist.

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  2. Very nice article, Om. Especially the phrase ‘Digital Disobediance’! I don’t think many other people besides Indians will get the connection with Mahatma Gandhi’s non-violence movement. Sometimes I wonder how much wisdom of past years we can use in the 21st century. I remember one of his quotes -
    “What is morally wrong, can never be politically right”
    That, of course, has to be remembered by both the users as well as record company executives!

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  3. Charlie Sierra Monday, June 27, 2005

    abhiji,

    Dude, you completely misunderstand the “disobedience” reference.

    A couple of quick points:
    1) Every american familiar with MLK knows that he co-opted Ghandi’s non-violence movement.

    2) The reference is uniquely American in nature. Perhaps you are unfamiliar with two heavyweights of american history, Ralph Waldo Emerson, and his onetime appentice, Henry David Thoreau.

    Please read HDT’s essay “Civil Disobedience” (~1850).

    The point of the ruling is that there is a line between moral “civil disobedience” and outright criminal objectives.

    Nevertheless, Consumers are still in the drivers seat because we can vote where it really counts, the cash register!!!

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  4. Chill Out About Grokster

    Yes, the Supreme Court ruled unanimously against Grokster, but it’s not as bad as you think. Many are stoking a fire, claiming that the justices are shooting the messanger, but that’s not exactly true. Here’s a quote from the Reuters…

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  5. Oops Charlie, I forgot about Thoreau altogether! Haven’t read anything besides ‘Walden’ – he’s the original disobedient. I guess I showed my ignorance there! Give me a couple of decades to catch up!

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  6. Links for June 28, 2005

    Here are your pre-filtered online marketing links for June 28, 2005…

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  7. Keeping with the Grokster Theme

    How VCs may react post Grokster.

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  8. [...] ig tells Business Week Online about the far reaching impact of the MGM vs Grokster ruling. I personally feel that the decision is actually a good thing – it sets a very [...]

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