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3/30/2006
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Fear Of Lawsuits Is Killing Digital Content Innovation: Entertainment Pros

Most garage entrepreneurs are worried about getting hit with lawsuits from the big studios or other patent holders, speakers said at a conference this week.

Fear, marketing and spin are killing innovation in the digital content arena, according to entertainment industry executives speaking on several panels at Digital Hollywood Spring conference Wednesday in Santa Monica, Calif.

The startup entrepreneur creating new product in his garage lives under "incredible fear" that some large company will hit him with a lawsuit because his ideas "threaten existing business models," said Jeff Joseph, vice president of communications and strategic relationships at the Consumer Electronics Association.

"The guy in the garage is very concerned about getting sued, I known because I talk to these startups every day, and they are just trying to facilitate what the consumer wants," said Jamie Perlman, manager of business development at Snocap Inc., during a discussion on Piracy and Digital Rights Management (DRM). The Snocap registry, created by Napster founder Shawn Fanning, allows those who own music rights to place them onto online peer-to-peer (P2P) networks and retail sites.

Yes, agreed Fritz Attaway, executive vice president and special policy advisor at the Motion Picture Association of America (MPAA). "The poor guy in the garage who's trying to innovate new technologies does live with the fear of litigation, but not from content owners, rather litigation from patent holders," he said. "There are very few and most are cases like Grokster where the defendants clearly intended to facilitate piracy."

In the trial initiated by Metro-Goldwyn-Mayer Studios Inc. against Grokster Ltd, the United States Supreme Court ruled on June 27, 2005, based on intent, it's illegal to trade copyrighted material using the site.

The piracy ruling plugged a loophole that allowed companies to take a "see no evil, hear no evil approach," by claiming to not know the file the video games, movies and music being shared through the peer-to-peer (p2p) network, Ian Ballon, intellectual property attorney at law firm Greenberg Traurig LLC, explained in an earlier panel on rights-holder options.

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