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CONTACT: Patrick Ross
March 25, 2005
(202) 289-8928
Supreme Court Can Protect IP and Innovation
Balance Needed in Grokster Case

WASHINGTON D.C. - When the Supreme Court hears oral argument in MGM Studios v. Grokster next Tuesday, it "will have an excellent opportunity to reaffirm the critical role intellectual property plays in encouraging creativity, lubricating markets, and promoting consumer welfare and choice," says Progress and Freedom Foundation Senior Fellow James V. DeLong, director of PFF's Center for the Study of Digital Property, a.k.a.

But his views are complicated, because he also hopes the high court reaffirms the protections for technological innovation that it set forth 20 years ago in the Betamax case.

Finding the balance between protecting creativity in content and innovation in technology is not simple, he notes, but it is absolutely necessary. Ironically, neither contending interest could afford to win complete victory over the other. "Technological devices are useless without content, and content is pointless without means of delivery," says DeLong. The 9th Circuit Court of Appeals focused totally on protecting technological innovation, he says, by ruling that a mere capability of noninfringing use immunized commercial P2P networks, such as Grokster and Streamcast, from liability for IP infringement by their users. "The circuit court lost sight of the equally vital consumer interest in protecting content," says DeLong.

The Supreme Court needn't rule against P2P or any technology, he adds. No one argues that P2P should be outlawed. "At issue here is the defendants' business model. They profit through sales of advertising, and to attract eyeballs for those ads, they encourage unauthorized transfers of copyrighted works. The Court should focus on this infringement-dependent business model, not on the technology."

For consumers, the situation is an example of the Prisoner's Dilemma: "Each consumer is better off if he or she has total access to unauthorized file-sharing while every other consumer pays for music; but if everyone responds to this short-term, self-centered calculus, then the whole system collapses and everyone loses, as content creators are forced to take other jobs to support themselves."

In January, DeLong was joined by PFF Senior Adjunct Fellow Solveig Singleton in filing an amicus brief in favor of overturning Grokster, and they also filed a previous amicus brief encouraging the Supreme Court to hear the case. DeLong has also written extensively on the Grokster case on the IPcentral Weblog.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation