What does it mean that the Supreme Court has ruled against the file-sharing networks Grokster and StreamCast? Fears of a big win for Hollywood studio MGM have kept the technology industry on edge since the case was argued in the spring. Last week, the court released its unanimous decision in favor of MGM–but that doesn’t mean file sharing lost. Early commentary on the decision has been positive all around, from Apple and Intel to the Recording Industry Association of America. Even many supporters of file sharing are relieved by the verdict.

“Monday’s decision should give techies reason to breathe again,” San Jose Mercury News, because the court found a good balance between protecting intellectual property and upholding the 1984 Supreme Court decision in Sony v. Universal City Studios. The Betamax decision, as it’s known, ruled that the maker of a technology (in that case, the VCR) is not responsible when that technology is used to steal intellectual property, particularly when that technology has “substantial non-infringing uses.” Just as VCRs have lots of legitimate legal uses, file sharing technology is used to transmit free music, public domain works, academic research, government documents and other material. The court had a big problem with Grokster’s business model, so it found a way to punish theft while protecting technology.

Advocacy groups Public Knowledge and the Future of Music Coalition both released statements of support for the verdict, saying it upheld the core principle of Betamax. “Today’s court decision in the Grokster case underscores a principle Public Knowledge has long promoted: Punish infringers, not technology,” writes PK president Gigi Sohn.

“And there’s an added bonus too,” says the Merc. “With the decision seen, at least partly, as a victory for Hollywood, Congress is less likely to embrace the draconian, anti-innovation copyright legislation being pushed by lobbyists for the music and movie industry.” Let’s hope.

A tricky question: What does it mean to “induce” customers to violate copyright? Grokster was pretty flagrant about actively encouraging theft, the court said. Internal documents show them going after users of the old Napster and basing their business model on ad revenue alone, which means they make money by encouraging users to swap everything they can get their hands on. It is “purposeful, culpable expression and conduct” that counts as inducement, says the court; knowing that a product could potentially be used to break the law, or even knowing that it is being used that way doesn’t qualify.

But the fact that Grokster and StreamCast (which makes the Morpheus software) never developed filters to sift out copyrighted content underscores their intention to encourage users to steal, the court said, while stopping short of requiring file sharing networks to put those filters in place.

So do you have to put in filters or what? No. But if a court decides you’re “inducing,” not having filters counts extra against you.

As with much of copyright and fair use law, this makes it difficult to know ahead of time if you’re breaking it or not. You have to duke it out in court to find out for sure, or you could just be hyper-cautious and run everything through your lawyers. This lack of clarity is enough to stifle innovation, some say.

Putting the smackdown on Big Bird
By now you’ve probably signed a petition to save PBS funding from the chopping block. And it worked, at least for the moment. But the ongoing battle for the soul of public broadcasting is rough and ugly, and it’s not going to end anytime soon.

“I think this is a more serious effort than some in the past to actually cut federal funding to public broadcasting,” says Steve Volstad, director of communications for UNC-TV. “Whether it’s the most serious effort we’ll see, I don’t know. It’s kind of a warning shot.”

Panic spread after the House subcommittee proposed a budget that slashed $200 million–about half–from the budget for the Corporation for Public Broadcasting, which supports the Public Broadcasting Service and National Public Radio.

Volstad says the proposed cuts would have hit UNC-TV hard. “It would have cut at a minimum $750,000 from our community service grant, potentially more.” Another $60,000 would be eliminated from the Ready to Learn program, which locally funds training for day-care workers on how to use public television programs to teach reading, numbers and other skills.

Then the full House voted to restore $100 million of funding for community service grants, but not for Ready to Learn.

“It’s still a pretty fluid situation right now,” Volstad says. “If history is a guide, it’s possible that the Senate will want to restore some of this other funding.”

More menacing than the budget cuts is the specter of CPB’s new leadership. Board chair and White House buddy Kenneth Tomlinson has been loudly accusing PBS and NPR of “liberal advocacy journalism.” Tomlinson recently ousted the old president and hired Patricia Harrison, a former co-chair of the Republican National Committee, to replace her. Though Harrison has no real broadcasting experience (and I’d be surprised if she had one of those fund-drive coffee mugs in her kitchen, either), she’ll oversee the distribution of federal money to thousands of public radio and television stations and to program producers. Tomlinson hired a consultant to monitor the political messages of PBS’s Now with Bill Moyers, who’s since been hounded off the show, and with the help of the White House, Tomlinson set up an ombudsman position to judge the political balance of all shows on PBS and NPR.

Remember the Postcards from Buster episode that included a visit with a lesbian household? UNC-TV aired that episode when many affiliates chose not to. “We have always exercised, and most stations do, a lot of independent judgement in the creation of our schedule,” Volstad says.

The new regime has created new programs to make things, you know, more “fair and balanced,” including Journal Editorial Report, a weekly roundtable of the Wall Street Journal editorial board. “We don’t run that program,” Volstad says. “We really don’t want to be in the position of running programs that are essentially platforms for one political viewpoint or another. We would prefer to run programs that in themselves present a variety of points of view.” The NewsHour with Jim Lehrer, Frontline, Washington Week and the BBC News are good examples, he says. “All of those are what I would describe as really in-depth analyses of the issues, but they’re not advocacy programs.”

Volstad is confident about two things: While UNC-TV might take a budget hit, it will retain its independence; and that the new captain isn’t trying to sink the ship. “Some people have wanted to suggest there’s a connection between what’s happening in the House and the new leadership at the CPB,” Volstad says. “Our own view is we don’t think there’s a direct link. It’s one thing to have differences of philosophy over programming and another thing to say, ‘Let’s get rid of it.’ Whatever political differences there might be, I don’t think this translates into a desire to eliminate the agency or eliminate public broadcasting.”

The Senate is expected to vote on the CPB budget in mid-July. Now would be the time to contact Sen. Elizabeth Dole (202) 224-6342 and Sen. Richard Burr (202) 224-3154.