On March 29, the entertainment and technology industries will descend upon Washington, D.C. to argue their respective sides before the Supreme Court in the landmark case of MGM v Grokster. At stake: the future of peer-to-peer technology, consumer electronics, software design, and consumer rights in the United States.

In April 2003, a federal judge ruled that Streamcast Networks — the developer and distributor of the Morpheus file-sharing software, and Grokster — the developer and distributor of the Grokster file-sharing software, couldn’t be held liable for how its users interact across peer-to-peer networks. The Ninth Circuit Court of Appeals in California upheld the lower courts ruling in August 2004, setting the stage for the coming showdown.

The movie and music industries, along with their wide-reaching allies from organizations as diverse as the National Football League to the Church Music Publishers Association will make the case that companies offering peer-to-peer software — the technology behind popular networks such as Kazaa, Morpheus, and Grokster — should be legally liable for the activities conducted over their networks.

Their goal is to overturn the Supreme Court’s 1984 Sony-Betamax decision, which holds that as long as “substantial commercial non-infringing uses” are possible with a technology, manufacturers aren’t legally responsible to police over the other, infringing uses.

Ironically, that decision was based, in part, on the court’s belief that since copyright holders such as professional sports leagues and the likes of Fred Rogers (Mr. Roger’s Neighborhood) had no objections to people recording their programming, technology companies shouldn’t be forced to acquiesce to the demands of other copyright holders.

The “substantial commercial non-infringing uses” test, though, has proven a slippery slope in the legal fracas. Hard numbers are difficult to find when it comes to the amount of non-infringing use occurring across P2P networks, but anecdotal evidence suggests that the majority of traffic coursing through the file sharing services is infringing in nature.

What is known, though, is that more software applications and companies are taking advantage of P2P’s decentralized approach to file transfers.

The technology companies and their allies — everyone from the American Civil Liberties Union to the American Conservative Union — see the entertainment industry’s efforts as an attempt to dictate their product design and business model simply for the sake of preserving the entertainment industry’s revenue stream.

From a legal perspective, they are seeking to have the Sony-Betamax decision reaffirmed for a digital age, and will likely argue that peer-to-peer technology itself is not the problem since the technology has many legitimate uses. Because of this, their argument goes, it is not the province of the software firms to police their networks.

And since it’s not too much of a stretch to go from forcing P2P companies to monitor their networks to asking telcos to make sure illicit activities aren’t taking place on their phone lines, the technology industry has come down squarely on the side of Streamcast Networks and Grokster.

More here.