Oral arguments were presented to the Supreme Court on Tuesday in MGM v. Grokster, the landmark copyright infringement case pitting the music and motion picture industries against makers of peer-to-peer file-sharing software.

You have already read reports that the entertainment industry argued that popular online services such as Grokster should be held responsible for the unlawful acts of their users. On the other hand, defenders of file-sharing argue -- and this concern was expressed by several of the justices yesterday -- that making these P2P file sharing services illegal could chill the incentive of inventors to develop new technologies, for fear they would face lawsuits if their products or services were used for illegal purposes. The Associated Press reported that justices "wondered aloud whether such lawsuits might have discouraged past inventions like copy machines, videocassette recorders and iPod portable music players." On the other hand, C|Net reported that while the justices "were critical of the entertainment industry's proposal, which would hold companies 'predominantly' supported by piracy liable for copyright infringement," they also "showed little sympathy for the file-swapping companies' business model."

Lower federal courts including the Ninth Circuit, have dismissed claims against Grokster and Streamcast Networks, citing the Supreme Court ruling in the Sony Betamax case. In that 1984 landmark case, the Court ruled 5 to 4 that providers of devices or services cannot be held responsible for the acts of users if the product or service is "merely capable" of substantial legal use. Three current justices participated in that case: Justice John Paul Stevens wrote the majority opinion, joined by Sandra Day O'Connor. Chief Justice William H. Rehnquist dissented.

If I were to offer a prediction, I would hesitate to be hopeful if I were the RIAA or MPAA. If the Court ruled Grokster illegal, that decision would substantially diverge from the reasoning in the Sony Betamax case. The Court also has to consider the reality that file sharing of copyrighted files would continue anyway. Just because you close down Grokster, its file sharing software as well as that of KaZaa and eDonkey and others are already being used. The only way to get rid of it is to shut down the Internet itself. As Joe Fleischer of Big Champagne said on a radio show this morning “The Internet is in itself is a file sharing protocol."

Moreover companies such as Yahoo and Google, through their new, enhanced email services are allowing consumers to share files including copyrighted works. Seems to me that P2P is here to stay. If the Supreme Court decided against Grokster, therefore, it would only confirm its own irrelevance. As I have argued before, to me the only sensible solution that would benefit technology, copyright and the music loving public, is for the copyright holders to go back to Congress and ask that those who are truly profiting from illicit file sharing – the ISPs and the electronics industries – pay a tax on the high speed Internet connections and machines including computers and MP3 players which facilitate sharing of music and other copyrighted files, to compensate the copyright owners and end the war against consumers who are already paying good money for Internet access and computers before downloading "free" music.