In what is sure to be hailed a landmark decision, the 9th Circuit U.S. Court of Appeals has upheld the legitimacy of peer-to-peer file-sharing application Morpheus™. The decision deals a crushing blow to twenty-eight of the world’s largest entertainment companies’ litigious attempt to curb the creation of new technologies for digital content delivery and distribution in a ruling that confirms that development and distribution of the Morpheus software does not violate copyright law.

“We value the role that copyright has played in our society, however it is innovation that has been the foundation of America and what has made our country great. As CEO, I am proud that Morpheus has become the first American P2P company to successfully win its fight for the right to continue to develop innovative new distributed communications technologies. The 9th Circuit Court has affirmed our strong conviction from day one that developing Morpheus was not just legally our right, but morally was the right thing to do,” Michael Weiss, CEO of StreamCast Networks, Inc.(TM), which produces the Morpheus software, stated. “The timing of this decision could not be better as Morpheus is about to release the 3rd generation of peer-to-peer technology called NEOnet™—a technology that has been under development since 2001. I predict this new version scheduled for release in September will become the most talked about advancement in P2P for the coming years.”

“For over a century, the entertainment industry has fought new technologies, and they have been wrong every single time. We have always known that, like the VCR or the photocopier, there are a wide range of legitimate uses for our software, and the legal precedents, as well as history itself, have always been in our favor. In the end, it will be the plaintiffs themselves that stand to benefit most from our victory. I hope that with today’s decision, the entertainment industry will seize the opportunity to embrace innovative technologies, like Morpheus, and begin to view us as the primary channel for the distribution of digital media to reach the masses,” said Weiss.

“We feel the decision by the 9th Circuit is correct and well-supported by legal precedent and copyright law,” Matthew Neco, General Counsel/VP Business Affairs, added. “The ruling will ultimately be shown to benefit copyright holders as well as society at large, which is the purpose of copyright law in the first place, and also allows innovation to advance without being hobbled by the entertainment industries. A huge amount of gratitude goes to our legal team of Fred Von Lohmann and Cindy Cohn from the Electronic Frontier Foundation and Charles Baker with the law firm of Porter & Hedges, LLP.”

“This is a landmark decision in the still-evolving arena of software copyright law. Our foes characterized us as ‘Napster, Jr.’; we proved them wrong,” states Charles S. Baker, litigation partner with the law firm of Porter & Hedges, LLP, and lead counsel for StreamCast. “You buy a car; you can drive the speed limit or push down on the accelerator and go 90 mph. It’s the consumer’s choice—the car manufacturer can’t be held responsible if you break the law,” explains Baker. “This case is about the consumer’s freedom of choice.”

“Today’s ruling will ultimately be viewed as a victory for copyright owners. As the court recognized today, the entertainment industry has been fighting new technologies for a century, only to learn again and again that these new technologies create new markets and opportunities,” said EFF Senior Intellectual Property Attorney Fred von Lohmann, who argued the appeal before the Ninth Circuit. “There is no reason to think that file sharing will be any different.”

The ruling asserts Judge Wilson’s well-written decision, essentially confirming that distribution of the software is legal because the product is capable of substantial non-infringing uses and because StreamCast cannot control the various uses of the software. StreamCast is no more liable for copyright infringement for Morpheus than Sony was for distributing its Betamax VCR. Major entertainment companies have unsuccessfully argued they could sue the technology company behind the Morpheus, and other P2P software companies, claiming developers should be responsible for the public’s use of the software to infringe copyrights.

“I only hope that members of Congress will heed the advice of the judges in their warning to consider the grave consequences of satisfying the economic aims of the entertainment industry by expanding exponentially the reach of the doctrines of contributory and vicarious copyright infringement,” continued Weiss.

In the court’s decision written by Judge Thomas, the justices go on record stating, “The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well established distribution mechanisms. Yet, history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine, or an MP3 player. Thus, it is prudent for courts to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude.”

“Perhaps the strong recommendations of the justices will empower members of Congress to stand up for the right of innovation even in the face of unprecedented lobbying efforts of the entertainment industry to thwart it,” added Weiss. “With this phase of litigation behind us, we’re looking forward to getting back to what we do best: continuing to develop technologies that enable the most robust, efficient and cost-effective means of delivering the widest array of content to the widest possible audience in the shortest amount of time,” StreamCast’s Weiss concluded.