Grokster Supreme Court Battle Set

"The U.S. Supreme Court will hold a landmark hearing Tuesday in MGM v. Grokster, an intellectual property case that will help set the legal boundaries for copying files from the Internet.

The case pits the entertainment industry against companies that offer file-sharing services. A group of 28 movie and record companies are fighting StreamCast (the distributor of Morpheus) and Grokster, the peer-to-peer software firms.

Tuesday's hearing is part of an appeal by the entertainment industry of a federal judge's ruling last year in the case against the file-sharing firms. The judge found that the defendants shouldn't be held liable for end users committing copyright infringement, citing the 1984 Sony Betamax case, where Sony won the right to sell its home video tape recorder while the movie industry fought to ban VCR sales.

The stakes are high. The most famous file-sharing company, Napster, nearly collapsed as a result of protracted battles with the entertainment industry. Judges found that because Napster maintained centralized servers and facilitated searches for individual songs, the company was liable for policing content.

The companies involved in Tuesday's hearing offer a decentralized network and are therefore blind to users' activities. The case will likely be determined by the summer."

Read more in this RED HERRING article.