WATPA: FW: Supreme Court shows wisdom in guarding intellectual property +

Silicon Valley can breathe a huge sigh of relief. The Supreme Court of the United States really does understand how technology is changing the world, and delivered two well-reasoned decisions Monday in the closely watched Grokster and Brand X cases.

The Grokster decision holds two file-sharing companies liable for rampant Internet piracy, saying they can't wrap themselves in the magic cloak of innovation to defend blatantly illegal behavior. And contrary to the valley's worst fears, this ruling won't discourage new technologies to move forward.

The Brand X decision says companies that build high-speed Internet services don't have to open their lines to competitors. While some may view this as a blow to small Internet service providers up against telecom heavyweights, the court's ruling makes it more likely consumers in the long run will get service from additional networks.

Both decisions underline the importance of intellectual property, a fancy way of saying inventors in the Internet era have the right to profit from creative endeavors without pirates stealing their ideas. Writing a song, acting in a movie or building a new type of broadband wireless system are all deserving of protection.

Silicon Valley's most precious products are ideas, so protection of intellectual property is crucial.

What's more, the valley's growth comes from start-ups that are much like the small prehistoric mammals that scurried beneath lumbering dinosaurs.

The Supreme Court decisions, on the surface, look pro-dinosaur. But dig a little deeper, and you can see the nine justices are also looking after the speedy little mammals.

Justice David Souter delivered a literate and informed majority opinion in the Grokster case. It revolves around peer-to-peer Internet file-swapping, specifically two services -- Grokster and StreamCast Networks' Morpheus -- that existed almost entirely to profit from music piracy.

Technology companies were concerned, with good reason, that an overly broad ruling against Grokster and Morpheus would inhibit legitimate products just because they could potentially be used in part for illegal swapping. Even something as basic as the CD burner in a personal computer could create liabilities for the manufacturer if misused by consumers.

``The more artistic protection is favored, the more technological innovation may be discouraged,'' Souter wrote. ``The administration of copyright law is an exercise in managing the trade-off.''

Walking a fine line, Souter said a company selling a technology product or service should only be liable if it deliberately promotes copyright violation ``as shown by clear expression or other affirmative steps.''

This means the record labels can't get judges to stop the sale of digital MP3 music players -- as the industry once tried to do -- just because MP3 players can be used to play back pirated music. Only if the manufacturer were so clueless as to advertise players as ``your best choice for illegally downloaded files'' would the Grokster ruling apply.

Brand X, the second ruling Monday, relates to painfully esoteric regulatory issues. Boiled down, the Supreme Court upheld a decision by the Federal Communications Commission that cable companies aren't obligated to let competing Internet service providers, or ISPs, have access to their networks.

Most parts of the nation have only two choices for broadband, a cable modem line or DSL from the local phone company. This cozy duopoly isn't doing the best job for consumers, lacking sufficient incentive to improve service or cut prices.

But getting more competitors on the existing networks isn't the answer. Instead, we need more networks.

Intel, for example, is investing heavily in a new technology called WiMax for providing inexpensive wireless broadband over wide areas.

ISPs using WiMax could become a powerful third source of fast Internet connections to the home. But investors might have been reluctant to support WiMax if regulators could force the new WiMax networks to provide service to competitors. At the same time, it's not fair to keep DSL and cable modem service heavily regulated if newcomers get a free hand.

Brand X is only the first step in a long process of change, with many issues that must still be resolved in favor of consumers rather than entrenched industry interests.

``Today's decision makes the climb much steeper,'' said FCC Commissioner Michael J. Copps in a statement Monday. ``But this country just has to find ways to promote innovation, enhance competition, protect the openness of the Internet, and return the United States to a position of leadership in broadband penetration.''

The United States is sometimes faster to invent new technologies than to adopt them widely. But after a period of chaos and dispute, we often end up in a better place than other nations with a top-down approach. Monday's Supreme Court rulings keep us moving along this contentious but worthwhile path.