In April 2003, Judge Stephen Wilson threw out the case against Streamcase Networks Inc., the company behind the Morpheus file-sharing software, and Grokster Ltd, saying they "are not significantly different from companies that sell home video recorders or copy machines, both of which can be and are used to infringe copyrights."
There was much reference to a 1980s decision on Sony's Betamax video recorder which, at the time, had been accused of infringing TV and movie studios' copyrights. Sony won that case because the machine had significant non-infringing uses.
The argument of the entertainment industry in the 9th US Circuit Court of Appeals yesterday was that the Betamax analogy was flawed because Sony could not control the way in which consumers used its video recorders.
According to Associated Press, Russ Frackman, representing the music and movie companies in their appeal, argued that unlike VCR-makers in the 1980s, Grokster and Morpheus can filter the copyright content from their systems, but choose not to. He said the reason for this is that it's the free songs and movies that attract millions of users – and that's what generates the ad revenues to feed the companies.
The Electronic Frontier Foundation is supporting Grokster and Morpheus in the appeal.