Supreme Court Delivers Mixed News for Tech Sector

Supreme Court Delivers Mixed News for Tech Sector

Cable Wins Big; File Sharing Faces Liability
June 27, 2005


Richard Morrison, 202.331.2273

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Washington, D.C., June 27, 2005 – The Supreme Court today handed down decisions in two key cases for the U.S. technology sector: FCC v. Brand X, which freed cable companies from being forced to share their networks with competitors, and Grokster v. M.G.M., which decreed that makers of file sharing software can be held financially liable for copyright infringement by customers using their products.


“The Brand X verdict, while officially hinging on a technical distinction between different categories of network services, could have a dramatic effect on broadband growth and the future of the U.S. economy as a whole,” said Braden Cox, Technology Counsel at the Competitive Enterprise Institute. “When telecommunications companies can be assured that they will control access to their own networks and are able to set prices accordingly, we can expect to see a significant increase in funds invested in broadband deployment.”


While both cases have been followed by legal and industry watchers for some time, the Grokster case has had a much higher public profile, generating protests and demonstrations outside the Supreme Court this week.


“The Court faced a difficult decision with Grokster, both because intellectual property law has again had to confront the advent of a new technology and because a case like this challenges our society’s definition of ownership and fair use,” said Cox. “The net result in the short term will likely be a new round of lawsuits against existing file sharing firms, with song swappers moving quickly to non-U.S. peer-to-peer software. Unfortunately, the verdict will likely also have a chilling effect on innovation and may stifle the next generation of digital multimedia technology.”


Read more on possible solutions to the legal and technological challenges of the file sharing debate in James Plummer’s recent study, Expanding the Market’s Role in Advancing Intellectual Property.