Lawyers for the peer-to-peer networks countered that using filters would effectively shut them down, and it was up to lawmakers, not the federal courts, to extend copyright law to cover the Web.
The arguments heard in a packed court room revisited a key ruling by a lower court in April 2003 in which a federal judge rejected a bid by the film studios and record labels to shutter Grokster and Morpheus.
Revisiting Sony BetaMax case, the judge ruled the file-sharing services enjoy the same protection as makers of videocassette and DVD recorders. He relied on a 1984 U.S. Supreme Court decision holding Sony was not liable for copyright infringement by selling VCRs that allowed users to tape TV shows -- a legal finding known as the "Betamax Doctrine."
In the Sony case, the Supreme Court said VCRs had substantial uses besides the taping of copyrighted material and that those uses outweighed the copying function in question.
Similarly in April, U.S. District Court Judge Stephen Wilson ruled Grokster and Morpheus simply provide software for song and movie swapping, but do not govern how it is used. The software had other substantial, non-infringing uses, he said.
Music companies claim song swapping has caused lower sales of CDs because customers copy their free digital music files onto blank CDs, which violates U.S. copyright law. Film studios believe if they do not stop piracy now, it will hurt them in the future as downloading digital movies gets more common with the growth of broadband Internet connections.
Until Wilson's ruling, record and movie companies had success in lawsuits to shut down file-sharing sites -- most notably, Napster. After the ruling the companies shifted tactics and filed suits against thousands of individuals for copyright infringement -- a move that risked alienating fans.
Appellate Judge John Noonan sharply questioned Frackman on how this suit differed from Sony. Frackman said Sony had no way to prevent unauthorised copying on VCRs once the machines were sold, whereas Morpheus and Grokster could apply the filters.
Various types of filters have been used before, and in some cases -- especially for Napster -- did not work. Although, new technology has improved filtering.