BEIJING, March. 29 (Xinhuanet) -- The U.S. Supreme Court will hear a highly anticipated case on Tuesday that could have far-reaching consequences for both copyright holders and the technology industry.

    MGM Studios vs. Grokster has wound its way through lower courts and a US circuit court of appeals.

    In each case, the courts have ruled that P2P services are not responsible for the illegal activities of the people who use them.

    Both file-sharing companies contend that P2P (peer-to-peer) networks can be used to share legal content and that they cannot control, and thus are not liable for, any piracy going on. Sharman Networks, owner of Kazaa, has mounted a similar defense in a case brought by the record industry in Australia.

    The case has attracted widespread interest, with over 50 supporting briefs filed on behalf of prominent firms including Intel, Yahoo! and Apple; the US government; groups as diverse as Consumers Union, the National Basketball Association and Business Software Alliance; and musicians such as Elvis Costello and Avril Lavigne.

    Some 28 Hollywood studios and music firms that sued file-swapping services Grokster and Morpheus argue that they need to be able to shut down the networks to crack down on rampant piracy that threatens the music and cinema industries and creators of virtually any creative work that can be illegally copied over digital networks.

    But on the other side, the technology proponents warn that stifling P2P services would slow down a great deal of technology growth; the impact would not be confined to illegal file sharing. "There are plenty of legitimate reasons to use P2P networks," says Yankee Group's Nitin Gupta.

    Up to now, courts have ruled in favour of the technology industry, relying on a 1984 Supreme Court precedent known as the Betamax case - resulting from a similar dispute over the liability for copyright infringement of Sony's videocassette recorder.

    The question, though, is exactly what would constitute "better." Chasing the pirates certainly presents one option. But the makers of copyrighted material tend to oppose new technology rather than see the opportunities it provides, Gupta explains.

    "The recording and movie industries need to have a willingness to explore different business models," he suggests.

    Joe Tasker, general counsel for Information Technology Association of America, which is part of the coalition, said the court may try to find a middle ground.

    (Agencies)