from: http://www.azcentral.com/arizonarepublic/news/articles/0426files26.html

File-sharing software firms ruled not liable in copying
Alex Veiga
Associated Press
Apr. 26, 2003 12:00 AM

LOS ANGELES - A federal judge ruled Friday that the companies behind two popular file-sharing services are not liable for the illegal copying of music and movies by their users.

The 34-page ruling by U.S. District Judge Stephen Wilson was a blow to recording companies and movie studios who had sought to stem the illegal copying and distribution of their copyright works.

Through the Internet, virtually any copyrighted song or movie can be freely, but illegally, downloaded using dozens of Internet file-sharing programs.

Friday's decision, if it survives appeal, essentially absolves Grokster Ltd. and StreamCast Networks Inc. of liability. Grokster distributes software by that name, and StreamCast distributes Morpheus. The ruling does not apply to a third service, Kazaa, from Sharman Networks Ltd.

In his ruling, Wilson cited a 1984 case in which the movie industry sued Sony Corp., arguing Sony was liable for the use of its videocassette recorders to make illegal copies of copyright works. Courts in that case sided with Sony and ruled that the sale of copying equipment did not constitute copyright infringement.

Unlike Napster, Grokster and Morpheus provide to users only software and assistance using the software. Napster actually hosted users' files on its server.

"It's a vindication. We are not pirates," said Wayne Rosso, president of Grokster, based in Nevis, West Indies.

A spokeswoman for the Recording Industry Association of America said the organization intends to appeal.

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