

The recording industry has been mired in a sales slump for most of this decade, and it has blamed song-swapping over the Internet for that decline. The decision was hailed by the major Hollywood studios and global music labels, which had warned that rampant online sharing of content not only harmed their bottom lines, but ultimately could inhibit the creation of new content. Souter wrote for the court in Metro-Goldwyn Mayer Studios v. "We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by the clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties," Justice David H. The justices said there was enough evidence that the Web sites were seeking to profit from their customers' use of the illegally shared files for the case to go back to lower court for trial. The case, which pitted the entertainment industry against technology companies in the continuing battle over the proper balance between protecting copyrights and fostering innovation, overturns lower court decisions that found the file-sharing networks were not liable because their services allowed for substantial legitimate uses. The United States Supreme Court ruled unanimously today that Internet file-sharing services like Grokster and StreamCast Networks could be held responsible if they encouraged users to trade songs, movies and television shows online without paying for them.
