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"These boxes have the potential to kill prime time," says industry analyst P.J. McNealy of GartnerG2, a market-research firm. McNealy notes the obvious: TV networks make their money from commercials and syndication rights. "We're not the police," counters Sonicblue CEO Steve Griffin. "We can't tell people who it's O.K. to send shows to and who it isn't O.K. to send them to."
A number of court decisions support Griffin's argument. In the famous Sony Betamax case in 1984, the Supreme Court refused to block the sale of vcrs even though they might be used in some instances to make illegal copies of shows. And in the 1999 Rio lawsuit, Diamond Multimedia (whose corporate name, perhaps not coincidentally, happens to be Sonicblue) won the right to continue marketing the first portable MP3 music player, the Rio, even though many people used it to play pirated copies of copyrighted music. As long as Sonicblue and Morpheus can demonstrate just two legitimate uses of their products--such as the trading of TV shows that are not copyrighted or simply saving a show onto the device for personal use--they could win their lawsuits, says Stanford law professor and cyberlaw expert Lawrence Lessig. "In order to innovate, you shouldn't have to fund a new lawsuit," he says.
In the case of Napster, while a circuit judge found that the service did have legitimate uses, she nonetheless forced the service to block the trading of copyrighted songs on the grounds that Napster had the ability to police the activities of its users and profited by failing to do so. The owners of Morpheus, Grokster and Kazaa, on the other hand, are expected to argue that since they don't use a Napster-like central server--even the indexing software is distributed among users--it is impossible for them to monitor the activities of the millions of people who use their programs.
And if the industry tries to go after individuals like Chaplin, it will probably be an uphill battle. According to Forrester Research, personal video recorders will be in 40% of all U.S. households by 2006. Until better encryption or industry-ordained alternatives give consumers legitimate ways to watch any show, anytime--without bothering to set the VCR--pirating and trading are bound to flourish. Even then, concedes TiVo president Morgan Gunther, "nothing is unhackable." While soap operas and sitcoms may not be getting any smarter, our ways of watching them almost certainly will.