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Overturning the judgments of the lower courts, in a test case the Supreme Court found that Grokster had deliberately planned to infringe the copyright of material owned by MGM for the movie industry.

At issue was whether the landmark case of Sony vs Universal Studios could be extended to companies marketing and facilitating file sharing. In the Sony case, which concerned whether VCRs were tools to infringe copyright, it was held by the Court to have 'other uses' such as recording programmes to view later. Therefore it was decided that while the device could be used to avoid copyright, it has 'other uses' which outweighed the illegal ones.

The lower courts took the view that the blanket immunity extended to p2p. The Supreme Court disagreed, saying that 'Nothing in Sony requires courts to ignore evidence of intent to promote infringement if such evidence exists.'

In its judgement, the Court said that while Sony had not promoted the use of the VCR to infringe

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copyright, this was not the case with Grokster and others in the p2p movement.

It declared, 'One who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, going beyond mere distribution with knowledge of third-party action, is liable for the resulting acts of infringement by third parties using the device, regardless of the devices lawful uses.'

In other words, while the Sony judgement still stands, the courts must decide whether on balance a new technology is being deliberately designed or marketed to evade royalty payments.

The RIAA is understandably cock-a-hoop 'The Supreme Court has helped to power the digital future for legitimate online businesses - including legal file sharing networks - by holding accountable those who promote and profit from theft. This decision lays the groundwork for the dawn of a new day - an opportunity that will bring the entertainment and technology communities even closer together, with music fans reaping the rewards'.

What p2p networks and filesharers now fear is that the music and movie industries will close in for the kill with a 'flurry of lawsuits'.

Already the networks are moving to protect themselves. Grokster now has a notice on its home page warning users not to exchange copyright material saying that 'infringement can result in significant monetary damages, fines and even criminal penalties.' If the music and movie industry lawyers have their way, they can say that again.