File-sharing under threat after landmark US ruling

The entertainment industry has won a landmark victory against the illegal downloading of music, films and copyrighted work in a ruling expected to pave the way to a string of lawsuits against software companies.

The entertainment industry has won a landmark victory against the illegal downloading of music, films and copyrighted work in a ruling expected to pave the way to a string of lawsuits against software companies.

To the delight of the music and film industry, the US Supreme Court unanimously ruled that network providers whose software facilitated the downloading of copyrighted material could be sued.

The ruling, which could mark the end of the so-called "peer to peer" networks, was brought by a consortium of 28 entertainment industry giants, including MGM, Walt Disney, EMI, Time Warner and News Corporation, against StreamCast Networks, which makes the software behind two such peer-to-peer networks, Grokster and Morpheus.

The companies alleged that StreamCast was profiting on the back of unfettered piracy taking place on file-sharing networks, the likes of which are used by tens of millions of internet users worldwide.

The ruling was a surprise for many observers, who expected the court to find in StreamCast's favour, and marks the end of a four-year battle by the 28 companies. Previous rulings in lower courts had ruled that companies such as StreamCast could not be held liable for copyright infringement because the networks can be used for legitimate purposes as well.

The case has been watched closely by the entertainment and technology industries as a test of internet copyright law. The industry has seen a 25 per cent drop in CD sales since 1999, when file-sharing technology began to emerge.

Dan Glickman, the president of the Motion Picture Association of America, said: "Today's unanimous ruling is a historic victory for intellectual property in the digital age, and is good news for consumers, artists, innovation and lawful internet businesses."

The court said there was "substantial evidence" that StreamCast had "induced" people to use its software to illegally share copyrighted files.

It is unclear yet what action the ruling will prompt from film studios and music producers who brought the original case, but it could mean claims for damages from StreamCast or moves to get the file-sharing networks shut down.

Wayne Rosso, a former Grokster president and now the head of the legal file-sharing system Mashboxx, said: "If I'm running the RIAA [Recording Industry Association of America], you're going to see lawsuits coming down like a Texas hailstorm. Don't be surprised to see an unusually large number filed immediately." He added that users would have to get used to paying for music.

The ruling comes as the British Phonographic Industry continues its own clampdown in illegal file sharing, targeting internet account holders, many of whom are unsuspecting parents of teenagers downloading music on their computers.

The industry's regulatory body has already issued substantial fines which could lead to legal proceedings on 90 such account holders."