Court Creates Uncertainty for the High-Tech Industry

File Under: 2005, Copyright

Jun 27, 2005

The US Supreme Court has introduced yet another layer of uncertainty to America’s high-tech economy, the Computer & Communications Industry Association said today.

Justices in a 9-0 [and a 3-3-3] decision this morning ruled that high-tech companies can be sued for copyright infringement any time they distribute a device "with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps." The Court also rejected pleas to introduce a "balancing test" that would ban technologies simply because many people used them to infringe. CCIA, was an amicus in the case, MGM vs. Grokster, together with the Consumer Electronics Association and the Home Recording Rights Coalition.

Such a ruling sounds reasonable. Unfortunately for America’s innovators, while sounding somewhat reasonable, in the real world of modern litigious America, it will be lawyers and the courts that determine just what the Court meant.

By failing to give clear guidance as to what constitutes "clear expression or other affirmative steps," the Court, which has previously favored innovation over outdated business models, has tipped the balance in favor of litigation and content claimants. Content companies now have the right to question the motivations of high-tech companies anywhere in the United States. Indeed, content companies are now well positioned to engage in legal fishing expeditions in search of internal emails, memos and voice mail logs that might support assertions of intent to infringe.

Experience teaches that content companies will go after high-tech less because they fear infringement, and more because the emergence of new competitors means an end to the market power held by a handful of entrenched conglomerates. The Betamax standard has greatly benefited innovation and consumers. The protection it provided is now in question.

"Today’s ruling is worrisome," CCIA President and CEO Ed Black said. "The Court has set the stage for less innovation, not more. If Hollywood and other content companies follow past pattern of behavior, they may soon be dictating the terms of digital distribution. This ruling muddies the meaning of the Supreme Court’s own Betamax standard, which for decades has assured innovators that they were free to invent as long as their goods and services were ‘merely capable of substantial non-infringing uses.’

"The time has come for content companies to embrace new technology, not fight it, to work with high-tech companies, not sue us. We want a world in which we can respect each other’s rights, not try to legislate them away. We call o­n content and Congress alike to support innovation."

To view CCIA's filing in the case, click here.