The operators of free music-swapping sites Morpheus, Kazaa, and Grokster had hoped a defunct technology--Betamax--could help them avoid a copyright lawsuit from the music and movie industries. They argued that they couldn't be held responsible if people employed their peer-to-peer file-sharing software for purposes other than "substantial, non-infringing use"--that is, to swap Britney Spears songs rather than the latest numbers from local garage bands. But a federal judge disagreed, and on Monday he refused to throw out their case based on the "Betamax defense," setting a trial date for Oct. 1.

Streamcast Networks Inc., which operates music site Morpheus, had pointed to the outcome of a 1984 case in which Universal Studios sued Sony Corp. over its Betamax machine. Universal charged Sony with contributory copyright infringement, saying it was illegal to tape certain broadcasts on public airwaves, a capability that Sony's technology made possible. But the U.S. Supreme Court ruled that if new technology had substantial, noninfringing uses, it should not be squelched, even though the technology may be used for illegal purposes as well.

While that court case was a victory for Sony and its short-lived Betamax, it hasn't been much help for new technologies since then. Napster Inc.'s lawyer, David Boies, tried unsuccessfully to use the Betamax defense two years ago, and the other free music-swapping sites are encountering similar problems. "It's going to be very challenging to prove 'substantial, noninfringing uses,' " says Leonard Rubin, attorney with Chicago law firm Gordon & Glickson. Sony's defense showed that the Betamax could be used to tape a vast amount of television programming that wouldn't violate copyrights, Rubin says. It won't be easy for the file-sharing services to make a similar case for their peer-to-peer networks. Also, the Betamax ruling was meant to apply to manufacturers of products that didn't have contact with the product users.

The separation of technology manufacturer from technology user helped save the Rio portable MP3 player in the case of Recording Industry Association of America vs. Diamond Multimedia Systems Inc. The major recording companies said Diamond Multimedia's Rio promoted piracy of songs in the popular MP3 digital music format, but the Ninth Circuit ruled against the RIAA in 1999.

Whatever the outcome of the trial for Morpheus, Kazaa, and Grokster, music file sharing isn't going away, Rubin says. "If anything, I think it will be more developed." But he does expect Congress to take action and create legislation that controls royalties associated with file sharing.