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From Outlook

The Battle Between Tinseltown and Techville

By Drew Clark
Sunday, April 10, 2005; Page B04

Creativity and innovation aren't qualities you'd ordinarily expect to be at war with one another. Both involve a type of inventiveness, a vision of something new, a stepping outside of mental boundaries. Yet in America's courts, the companies that rely most on creativity and innovation are at each other's throats.

It's a battle of culture as much as law. It's Tinseltown vs. Techville, the glamour people vs. the geeks, those who admire their finished products and those who never finish tinkering. And for each one, an important principle is at stake.

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The latest round of this fight features two small software firms, Grokster and Streamcast, vs. the entertainment giants, led by MGM and other studios, recording labels and artists' groups. In a case just argued before the Supreme Court, the entertainment firms say that Grokster and Streamcast, which help individuals copy movie as well as music files, must be shut down. The future of creativity is in jeopardy, they say. How will artists live if they don't receive copyright royalties?

The technology industry, some of which holds its nose at Grokster and Streamcast's failure to obtain licenses for copying recorded materials, has united to defend their principal arguments in court. The high-tech industry says the future of innovation is at stake. How can engineers prosper if they're constantly looking over their shoulders for approval from Hollywood?

Both sides in this clash have legitimate concerns. As with the original Napster, the music file-sharing service that taught the world to love free downloads, Grokster and its ilk don't pay licensing fees on the vast majority of songs and movies traded by their users. The musicians and recording labels are essentially being ripped off. But by whom? That's the essence of the question currently before the Supreme Court. And the overarching issue is: How far can the scope for digital copyright expand without threatening innovation?

This isn't the first time that Hollywood and tech titans have duked it out. Napster awakened the motion picture studios to the danger posed by piracy on the Internet. The recording industry then vanquished Napster in court -- and Napster now sells music under license agreements with major recording labels. But Walt Disney and Fox Entertainment strong-armed their fellow motion picture studios into taking on even bigger adversaries: Apple, Microsoft, Intel, Dell and Hewlett-Packard.

These computer and software companies were just as guilty as Napster because they refused to cooperate in the studios' efforts to lock down personal computers, according to the argument made at the time by motion picture lobbyist Jack Valenti. He and Disney CEO Michael Eisner enlisted the support of the then-chairman of the Senate Commerce Committee, Ernest "Fritz" Hollings (D-S.C.), who introduced legislation in March 2002 to force Silicon Valley to cooperate.

If high-tech didn't come up with some anti-copying "policeware" within one year, the draft bill said, federal government would require that every digital device include technology to stop the copying of digital movies and music. Such a mandate would be absurd and impractical, the high-tech companies countered. They lined up congressional supporters of their own, and the Hollings bill died without even a committee vote.

The entertainment executives are no longer fingering Apple or Microsoft. Instead, entertainment companies are suing Grokster for releasing "peer-to-peer" software that enables someone on the Internet to search millions of other computers for the digital songs and movies "shared" by other users.

Grokster doesn't copy anything itself, but the entertainment lawyers say it is guilty because its users abuse copyrights. By contrast, legitimate online services, like Apple's iTunes and Real Network's Rhapsody, negotiate royalties and licensing fees so that artists get their cuts. Hollywood and the recording industry are essentially saying to Grokster: It's our creative property and you need to shut down your brand of thievery.

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