...complete article at: http://zdnet.com.com/2100-1104_2-5316570.html? part=rss&tag=feed&subj=zdnet

By John Borland CNET News.com August 19, 2004, 1:27 PM PT

A federal appeals court has upheld a controversial court decision that said file-sharing software programs such as Grokster or Morpheus are legal.

Following the lead of a lower-court decision last year, the Ninth Circuit Court of Appeals in Los Angeles said on Thursday that peer-to-peer software developers were not liable for any copyright infringement committed by people using their products, as long as they had no direct ability to stop the acts. (Download the decision.)

The ruling means that companies that write and distribute peer-to-peer software can't be shut down because of the actions of their customers. It did not say file-trading itself is legal, and lower courts in the United States have said individual computer users are breaking the law when they trade copyrighted files without permission. But the ruling does lift the cloud of potential liability from defendants Grokster and StreamCast Networks, as well as from many of their rivals.

"The (record labels and movie studios) urge a re-examination of the law in the light of what they believe to be proper public policy," the court wrote. "Doubtless, taking that step would satisfy the copyright owners' immediate economic aims. However, it would also alter general copyright law in profound ways with unknown ultimate consequences outside the present context."

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