In its ruling today against peer-to-peer file-sharing software makers Grokster Ltd. and StreamCast Networks Inc., the U.S. Supreme Court said companies may be liable for copyright infringement conducted by their customers.

"We hold that 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, is liable for the resulting acts of infringement by third parties," Justice David Souter wrote in the unanimous decision.

The decision suggests that honesty may not be the best policy for companies that make hardware and software capable of copying copyrighted content. The court specifically condemns Grokster and StreamCast for promoting their products as a means to share of copyrighted files.

"The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement," Justice Souter wrote.

Holding technology companies liable for truthful marketing will only encourage disingenuousness. Business models based on customers' vices may be cynical, but they won't go away because the law frowns on them. Consider the effectiveness of alcohol prohibition in the United States.

The Supreme Court's decision is understandable, given the law's reliance on precedent. But it fails to account for the unprecedented development of the Internet and computer technology in recent years. Computers are designed to copy and manipulate digital content. Remove that ability and they're no better than televisions. The right to copy needs to be thoroughly reevaluated in light of what technology has made possible and what market demand suggests could be profitable for all involved--if only content owners weren't intent overvaluing their assets.

What would a better system look like? Apple's iTunes, at a price point that makes sense in an era of instantaneous global distribution, with micropayment-based peer-to-peer file sharing. Users would get, say, 5% of the $0.50 sale price of every song downloaded from their computer. Content owners and artists would get paid, as would marketing and infrastructure providers like Apple.

When everyone gets paid, everyone is happy. Just look at Google. It has violated the copyright of every Web site out there by copying its content. But in return, it offers traffic, which can be monetized. The entertainment industry would do well to realize that sharing could be more profitable than suing.