BROOKE GLADSTONE: To share or not to share was the question in two of the Supreme Court decisions handed down this week. One of them involved Grokster and Morpheus, two so-called peer to peer software applications that allow computer users to download files from other users' hard drives. In that case, the court agreed with the entertainment industry that those software makers could be sued if their users infringed copyright, even though the software can also be put to perfectly legal non-copyright infringing uses. In the second case, FCC vs. Brand X, the justices were asked to decide whether cable companies should be required to share their broadband lines with independent internet companies like AOL or Earthlink, the same way phone companies are required to share their lines with their competitors. The court decided that the FCC should decide, and the FCC has argued that no sharing is necessary when it comes to the internet. University of Pittsburgh law professor Michael Madison joins me now to parse the two decisions. Michael, welcome to the show.
MICHAEL MADISON: Hi.
BROOKE GLADSTONE: Hasn't the court basically handed a pretty big win to big media?
MICHAEL MADISON: I don't think so. Let's take the Grokster case first. I think the court has given a specific set of instructions to lower courts going forward on how to distinguish between legitimate businesses using file-sharing technology and illegitimate businesses using file-sharing technology. The court in that case said that file-sharing services can be liable for illegal file-sharing by consumers if the distributors of the technology are actively inducing copyright infringement.
BROOKE GLADSTONE: And what evidence did they have that, say, Grokster was doing that?
MICHAEL MADISON: The things that the court really honed in on were two points. One was the fact that Grokster had actively talked internally and through its marketing about soliciting the former customers of the original Napster service. That was ruled illegal by the 9th Circuit Court of Appeals, so clearly the court thought that it was trying to take advantage of the illegal consumer base that Napster had built. The second piece of evidence was the fact that Grokster was distributing a service that was selling advertising, generating its own revenue, based on the volume of illegal file-sharing activity by its consumers.
BROOKE GLADSTONE: One legal scholar, Tim Woo, said that this is a very peculiar decision, because it seemed to come down to etiquette, in the end. Basically, if you promote in a more polite way and don't do very good business, it sounds like you're protected.
MICHAEL MADISON: I wouldn't use the word etiquette, although I respect Tim's analysis a great deal. I like to use the word genuineness. [LAUGHTER] And, and I use genuineness in the following sense. Grokster or any future peer to peer company can come into court and say we're a legitimate business. Now anybody can say that. The question is, is the evidence actually there to back that up? It's pretty easy, as a lawyer, to dig up evidence to contradict that story. Someone who's a fraud is going to leave a trail around, whether that's a trail of paper, a trail of email, a trail of disgruntled business partners or disgruntled investors or somebody. I have a lot of confidence that firms that are already in mature markets, say for example Google, which is a company that takes advantage of intellectual property rights in a number of complex ways, Google is likely going to be able to innovate without a lot of concern, in my opinion, from this Grokster ruling. What the court is really trying to do in a not particularly elegant way is distinguish good guys from bad guys.
BROOKE GLADSTONE: Okay. So let's move to the Brand X case now. By allowing the FCC, if it chooses, to give the cable companies the opportunity to own their lines exclusively and not offer them to any competitors, what was the court trying to accomplish?
MICHAEL MADISON: I think the court was trying to not have to decide the harder question of what competition policy should be for cable internet providers going forward. The court, I think, was trying to get that substantive issue off of its agenda and put it onto the FCC's agenda.
BROOKE GLADSTONE: And what do you think the impact will be?
MICHAEL MADISON: Depends on what the FCC does. If the FCC going forward is extremely deferential to the cable companies and deferential to the telecommunications companies generally, then you may see litigation by consumer interests arguing that those companies have behaved in an anti-competitive or abusive way, and you'll see the question back in the courts, not as a question of the FCC's authority but as a question of anti-trust law, for example.
BROOKE GLADSTONE: This, like the Grokster case, it seems to me is fundamentally about how to build the information super highway and who gets to travel on it.
MICHAEL MADISON: That's the conceptual connection between the two cases. I think that what the Supreme Court has done in both cases is put off problems to the future. In the Grokster case, the court was really asked to revisit an older Supreme Court opinion called Sony versus Universal City Studios, which declared that the VCR was legal, because even though it could be used for copyright infringement, it also could be used for a lot of legitimate things like taping TV shows at home. In Grokster, the court was basically asked what does the Sony case mean in light of the internet? And in the Grokster opinion, the Supreme Court says we are just not going to decide that today. Brand X is very much in the same vein. Brand X was applying an older statute, the Telecommunications Act to the internet. That 1996 statute was not drafted with today's internet in mind, and the Supreme Court basically says in Brand X, we're going to give the FCC a lot of leeway to figure out what that statute means until Congress gets around to writing a new law.
BROOKE GLADSTONE: All right. Thanks very much.
MICHAEL MADISON: Thank you, Brooke, very much.
BROOKE GLADSTONE: Michael Madison is associate professor of law at the University of Pittsburgh and keeper of the blog Madisonian.net.