Morpheus Loses in Court, May Appeal

By Ed Oswald, BetaNews

September 29, 2006, 12:40 PM

File sharing network Morpheus lost a crucial case earlier this week, calling into question the service's future and handing the entertainment industry a major victory. A U.S. District Judge ruled that StreamCast, the service's parent company, had aided copyright infringement on a massive scale.

Judge Stephen Wilson also said the company did little to block the trading of copyrighted material, and built its business on the trading of such files. StreamCast had been fighting the entertainment industry since 2001, and was the only P2P service to continue litigation after the Supreme Court's Grokster ruling.

"The court's ruling is disappointing," the company said in a statement. "StreamCast will consider its options, including appealing the decision. In the meantime, Morpheus will continue to discourage users from infringing upon copyrighted works."

The Recording Industry Association of America lauded the ruling, saying the court's ruling clearly indicates that P2P networks are responsible for the actions of their members. However, RIAA CEO Mitch Bainwol said the ruling does not make up for years of illegal activity.

"When decisions like this one make clear that businesses based on theft won't be tolerated, the winners are the music industry, who can invest more in bringing great music to the public, and fans who will have access to a wider array of exciting legal options," Bainwol said.

Only one major P2P network still exists from the heyday of the technology back in the early part of this decade, LimeWire. However, it may be in danger of closing too: it was sued by the RIAA in August.

However, in an interesting twist, LimeWire has countersued, claiming the RIAA was using its copyrights to bully companies it does not approve of out of the Internet distribution business.