Under US law, "the Betamax decision" case holds that copying
"technologies" are not inherently illegal, if substantial non-infringing
use can be made of them. This decision, predating the widespread
use of the Internet applies to most data networks, including
peer-to-peer networks, since distribution of correctly licensed
files can be performed. These non-infringing uses include sending
open source software, public domain files and out of copyright
works. Other jurisdictions tend to view the situation in somewhat
In practice, many, often most, of the files shared on peer-to-peer
networks are copies of copyrighted popular music and movies
in wide variety of formats (MP3, MPEG, RM, etc.) Sharing of
these copies among strangers is illegal in most jurisdictions.
This has led many observers, including most media companies
and some peer-to-peer advocates, to conclude that the networks
themselves pose grave threats to the established distribution
The research that attempts to measure actual monetary loss has
been somewhat equivocal. Whilst on paper the existence of these
networks results in large losses, the actual income does not
seem to have changed much since these networks started up. Whether
the threat is real or not, both the RIAA and the MPAA now spend
large amounts of money attempting to lobby lawmakers for the
creation of new laws, and some copyright owners pay companies
to help legally challenge users engaging in illegal sharing
of their material.
In spite of the Betamax decision, peer-to-peer networks themselves
have been targeted by the representatives of those artists and
organizations who license their creative works, including industry
trade organizations such as the RIAA and MPAA as a potential
threat. The Napster service was shut down by an RIAA lawsuit.
In this case, Napster had been deliberately marketed as a way
to distribute audio files without permission from the copyright
owners. In Grokster the U.S. Supreme Court again held illegal
the services of Grokster which included allowing users to illegally
share copyrighted music.
As actions to defend copyright infringement by media companies
expand, the networks have quickly adapted and constantly become
both technologically and legally more difficult to dismantle.
This has caused the users that are actually breaking the law
to become targets, because whilst the underlying technology
may be legal, the abuse of it by individuals redistributing
content in a copyright infringing way is clearly not.
Anonymous peer-to-peer networks allow for distribution of material
- legal or not - with little or no legal accountability across
a wide variety of jurisdictions. Many profess that this will
lead to greater or easier trading of illegal material and even
(as some suggest) facilitate terrorism, and call for its regulation
on those grounds.
Others counter that the potential for illegal uses should not
prevent the technology from being used for legal purposes, that
the presumption of innocence must apply, and that non peer-to-peer
technologies like e-mail, which also possess anonymizing services,
have similar capabilities.