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Court: Grokster, StreamCast Not Liable

Grokster Ltd. and StreamCast Networks Inc. are not legally responsible for the swapping of copyright content through their file-sharing software, a federal appeals court ruled Thursday in a blow to movie studios and record labels.

Among other things, the San Francisco-based 9th U.S. Circuit Court of Appeals said the suppliers of the free peer-to-peer software, unlike Napster, were not liable for copyright infringement because they don’t have central servers where computer users can access copyrighted material.

“In the context of this case, the software design is of great import,” Judge Sidney R. Thomas wrote for the unanimous three-judge panel, which upheld a lower court ruling that dismissed the bulk of the lawsuit brought by movie studios and record labels.

The panel noted that the software companies simply provided software for individual users to share information over the Internet, regardless of whether that shared information was copyrighted.

“The technology has numerous other uses, significantly reducing the distribution costs of public domain and permissively shared art and speech, as well as reducing the centralized control of that distribution,” Thomas wrote.

Napster was shut down after the 9th Circuit ruled that its centralized servers, which contained thousands of copyrighted songs, made it legally liable for contributing to copyright infringement.

The case is Metro-Goldwyn-Mayer v. Grokster, 03-55894.

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