Senate Committee Hearing

p2pnet: Here's a great example of our hard earned tax dollars at work...Yesterday, the full Senate Committee on Commerce, Science & Transportation held a hearing in D.C. on the potential effects of the MGM v. Grokster ruling to impede technological investment and innovation...I applaud their efforts to examine future industry options so quickly after the decision and I hope everyone present now has a better understanding of each other's point of view...(I also found it interesting that they're using Real Networks technology for their streaming playback, which is pretty hip, but unfortunately, I had no luck accessing the video as of this morning...Perhaps they're still editing out the stuff they don't want us to hear?)

Slyck has an excellent post regarding the meeting...'With more questions than answers as a result of the ruling, its become apparent a third party may be able to shed light on the contestaable situation...And while the The Senate Committee has no jurisdictional authority, the meeting may prove useful as a foundation for upcoming legislation...Finding common ground between groups like RIAA/MPAA and P2P United/DCIA has been difficult in the past to say the least, but perhaps the recent Supreme Court decision may have given P2P developers just enough leverage to strike a licensing deal with the copyright industry...The ultimate goal of yesterday's meeting was for the Senate Committee to gauge the ramifications of the MGM vs. Grokster decision. Indeed if the Senate agrees with the testimony provided by P2P United and the DCIA, we could well be on our way to witnessing a licensing agreement between the two sides.'

The witness list included:
Adam Eisgrau - Executive Director, P2P United      
Gregory Kerber - CEO, Wurld Media, Inc.
Mark Heesen - President, National Venture Capital Assoc.
Dave Baker - Vice President Law & Public Policy, Earthlink
Mitch Bainwol - CEO, Recording Industry Association of America
Fritz Attaway - EVP, Motion Picture Industry of America

NY AG Spitzer to Announce Payola Settlement

Reuters: New York State Attorney General Eliot Spitzer's office is currently giving a press conference to announce a settlement in its probe of the way music companies influence which songs get played on the radio...Spitzer served the four major labels - Universal Music Group, Sony BMG, EMI Group and Warner Music Group - with subpoenas demanding information on so-called payola. More on this later today...

Doors Drummer Densmore Wins Injunction

Yahoo: The former drummer for The Doors, John Densmore, has won a permanent injunction preventing his ex-bandmates from using the group's name while touring with "The Doors of the 21st Century." The Court order requires keyboardist Ray Manzarek and guitarist Robby Krieger to turn over all the profits earned by the new combo to the original Doors partnership. Apparently, Densmore is concerned that the band's legacy was being tarnished by its reincarnation as an oldies act...."Densmore estimated that Manzarek and Krieger have earned millions and millions of dollars on the road in recent years, more than the original band ever made."

More Supreme Court...

If you're not tired of reading about Monday's landmark ruling yet, Bill Rosenblatt over at DRM Watch has posted an excellent summary...Below are a few key points that may have gotten lost in all the hoopla that I think are worth sharing...

• 'While the decision was a stunning victory for the media industry and a blow to technology companies, at the same time, it also preserved technologists ability to innovate without fear of legal action for copyright infringement.'

• "The decision creates a new theory of secondary infringement liability based on "intent to induce" infringement, which now extends the existing theory of contributory liability (knowingly aiding and abetting infringement)."

• "Most disturbingly, the ruling implies that technology companies could be held responsible for every marketing message that they put out in the past -- which, of course, is unchangeable."

• "The decision adds a potent weapon to the media industry's arsenal in their war against piracy, which it can use -- and hopefully not abuse -- against large-scale infringement profiteers...But it leaves pure technologists intact in their ability to innovate without any (further) legal restraint, which is as it should be."

Also, as a result of the decision, he expects that the effect on illegal downloading and legitimate, DRM-enabled online content services will be gradual...
 

American Innovation Victimized

Popular Science: Here's another interesting perspective relating to yesterday's Supreme Court decision by Cory Doctorow, writer and Outreach Coordinator for the EFF...Between the lines of his sarcasm, he points out that American entrepreneurs might now be at a disadvantage when competing in the future with foreign firms who don't have to abide by the latest "fuzzy test" of inducement...

"You can be sure that the in-house counsel at a technology company will err on the side of caution - as will the investors in every potential new garage start-up...The second you show a hint of 'inducement', you open your company up to having a court pick over the bones of every e-mail from every engineer, every call and every PowerPoint presentation, looking for evidence of thoughtcrime: Have you had a subversive thought while designing this? Did it ever occur to you that you could have made it a little clunkier and, in so doing, made it less infringing?"

"P2P will outlast today’s generation of technophobic record execs who are steering their companies to slow, spectacular suicide....Both sides went to the Supreme Court hoping for clarity on what is and isn’t legal in P2P, and instead the court tipped a fresh load of grenades into the decade’s most perilous legal minefield..."

MPAA/RIAA Press Conference

I just hung up from the RIAA and MPAA's teleconference regarding the Supreme Court's decision released earlier today. I was a little stunned with the decision because the lead opinion was unanimous...without dissent and all the justices concurred to send the case back to lower courts, finding that Grokster and Streamcast were deliberately and openly facilitating extensive copyright infringement by their technologies. At first glance, the decision seems to favor the entertainment industry, but I'm only half way through the 24 page Court Opinion...To be honest, I didn't catch all of the call, but there was lots of talk about "clarity" in the decision and in the trajectory that online music business models of the future need to embark on. Companies operating in the space will need to use a "common sense standard" as to what's right and wrong as they move forward and we all (the media included) need to help integrate the message of following the letter of the law for everyone's benefit into everyday culture. In other words, teachers, parents, members of congress, etc. all have a responsibility to educate the younger generation. Unfortunately, the ubiquity of the internet has confused a lot of younger people, but the High Court's decision speaks with such clarity and should have a disincentive at least for file-sharers in the U.S...The case will certainly go back to the District Court Level, but I doubt anything will change...Some speakers speculated that the ruling could have a chilling effect on new technolgies and innovation while others felt just the opposite - that it is the foundation of new technology on the creative side....because now there is a powerful new incentive to be creative and be protected by the law....Read more HERE on the Scotus Blog and Corante has a plethora of postings that will keep me up late tonight :)

Related:
--Supreme Court Rules Against P2P Companies!
--Supreme Court Rules Against File Swapping
--Court: File-Sharing Services May Be Sued
--New Challenge to File-Sharing Designers - "One notable legal point about the decision is that the Court’s most significant prior ruling on copyright and new technology remains intact, despite the urging of the copyright owners.."Therefore the Sony decision from 1984 stands, unrevised.

U.S. Supreme Court: P2P Nets Liable For Illegal Use

paidContent.org: In the Grokster vs MGM case, the court set aside an appellate decision and unanimously ruled that P2P nets can be held liable for illegal use. Our extended coverage on paidContent.org, here...

MGM v. Grokster

Slyck: The Supreme Court did not issue its decision yesterday as many expected...Some say it will happen next Monday morning, but with only one week left in term, many are beginning to wonder if the Supreme Court will actually release the decision this month at all...According to Fred von Lohmann of the Electronic Frontier Foundation, "in all likelihood we will receive a decision next week." (FYI - The Supreme Court releases decisions every Monday, viewable through the SCOTUS blog...)

Leveling The Playing Field With Taxing Downloads

MTV: A number of states are now starting to target digitally transferred products (including website subscriptions, streaming and music downloads) as future taxable items to try and generate some additional revenues...Also, the current tax laws put brick-and-mortar businesses at somewhat of a disadvantage because they are obligated to charge state sales tax on physical digital media purchases while the virtual stores are not...

In New Jersey, Governor Richard J. Codey has called for an amendment to the state's sales-tax laws that makes downloads (including songs, movies and books) taxable items subject to the state's 6 percent sales tax. So, it's very possible that in the near future, every $.99 cent song purchased from iTunes will cost $1.05.  I think the concept is valid, but what a headache this will be for each online music stores (i.e., iTunes, Napster, Rhapsody, Yahoo) to implement, since most states have different percentage rates...Most likely sales tax on purchases will based on the bill-to address and the sales tax rate in effect at the time of download.

Governor's Codey's budget has already been approved by New Jersey's budget committee and will take effect when the state's fiscal year comes to an end on June 30. At least 16 states currently apply sales tax to digital downloads and according to New Jersey Treasury Department spokesperson Tom Vincz, "As technology continues to outpace tax laws, more and more states will soon be added to that list."

Related:
--Measure to Extend Sales Tax Approved
--State Taxes Planned for iTunes and Other Purchased Downloads

Fair Use For Wireless Too

Forbes: While text messaging is already considerd passe' by many, the newest emerging trend is sending and receiving ringtones and music/video clips to/from your friends via your mobile phone. However, like many areas in tech, this practice has outpaced our legal system and has some rightsholders in a 'tizzy'...

San Diego-based SMS.ac is a wireless communications company that is taking the bull by the horns - sending its executives to Capitol Hill to start briefing legislators on the looming copyright conflict as the global mobile data market prepares to exceed $200 billion by 2010, according to technology analysts at Frost & Sullivan....What could slow down this type of explosive growth? According to the article, "A legal crackdown on the mobile phone user who, say, points his camera phone at a concert and sends a five-second video clip to his buddies' phones--particularly if his buddies happen to be 18,000 fellow fans in an SMS.ac group."  Uh oh, is this foreshadowing that soon we're going to see the formation of a new industry trade group called the Cellular Content Industry of America (CCIA) that sues its customers too?

"If fair use [of digital media] continues to be a gray area," says Greg Wilfahrt, co-founder and executive vice president of SMS.ac, "then the mobile phone content space will become wholly litigious." The article points out that Washington doesn't move as fast as mobile phone technology, but it's started to consider the issue...Rep. Rick Boucher (D-Va.), has proposed the Digital Media Consumers' Rights Act, favored by SMS.ac, which would "protect the 'Fair Use' rights of the users of copyrighted material and thereby enable consumers of digital media to make use of it in ways which would enhance their personal convenience." Scott Ellison, program director of IDC's Wireless and Mobile Communications practice also states, "Wireless is a tightly controlled environment, but the issue of fair use seems to be migrating from other areas of policy to wireless."