Hollywood studios and unions praised Monday's Supreme Court decision that file-sharing networks Grokster Inc. and Los Angeles-based StreamCast Networks Inc. could be held liable for copyright infringement if users illegally trade movies, music and other copyrighted material.


The ruling was a victory for Metro-Goldwyn-Mayer Inc. and other studios that had sued Grokster and Streamcast. It also recharged the battle between the motion picture industry, which wants users to pay for copyrighted content, and Internet firms that help users to download it for free.


"This decision will be of utmost importance as we continue developing innovative and legitimate ways to marry content and technology so consumers can access entertainment on a variety of devices," said Motion Picture Association of America President and Chief Executive Dan Glickman.


Five entertainment unions representing a broad range of artists issued a joint press release praising the court's ruling, stating, "Unauthorized file-swapping of copyrighted material is property theft, plain and simple, and this theft destroys the very protections that allow our members to sustain a career and provide for their families." The unions were the American Federation of Musicians, the American Federation of Television and Radio Artists, the Directors Guild of America, the Screen Actors Guild and the Writers Guild of America, West.


In its decision, the Supreme Court found that Grokster and StreamCast "are not merely passive recipients of information" and they "took active steps to encourage infringement."


The Supreme Court relied on its 1984 ruling in the "Betamax case" that allowed Sony Corp. of America to distribute video cassette recorders without claims of copyright infringement because the company was not aware that consumers were using them to copy and distribute movies from the television.


That ruling opened the door for manufacturers of other technologies, such as CD burners, to sell their products and avoid copyright infringement claims. But Grokster and StreamCast were not protected by that ruling because they derived 90 percent of their business from illegally downloaded songs, according to the ruling.


The case will now go back to the District Court for trial.


Michael Weiss, chief executive of StreamCast, said the ruling was not based on the facts of the case, which would end in favor of the peer-to-peer networks. "We believe that what we were doing was 100 percent legal. We still do. At the end of the day, that will be proven," he said.

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