StreamCast Reports Failure of Talks With Film and Music Firms

StreamCast Networks Inc., the company behind the Morpheus online file-swapping software, said Friday that negotiations to settle a five-year copyright battle with the entertainment industry had failed and that it would now fight the case in court.

“I am really disappointed that we weren’t able to reach settlement terms with the plaintiffs,” said StreamCast Chief Executive Michael Weiss said. “Now we want our day in court.”

The company planned to file a motion with U.S. District Judge Stephen Wilson in Los Angeles seeking a jury trial and responding to a demand for summary judgment by the movie and recording industry plaintiffs, Weiss said.

The entertainment industry’s motion was filed under court seal.

Weiss would not provide details on what caused the breakdown in negotiations but said both sides were “really quite close” before that.

A spokeswoman for the Recording Industry Assn. of America, which represents major recording companies, did not have an immediate comment Friday.

The move by StreamCast represents a turnaround from only a few weeks ago, when StreamCast and representatives for the film studios and music companies began talks to settle the case.

The entertainment companies in 2001 sued StreamCast, Grokster Ltd., the company behind the Grokster file-swapping service, and Sharman Networks Ltd., which distributes Kazaa.

Wilson ruled in 2003 that the file-sharing service operators were not liable for any illegal copying of music, movies and other works conducted by the services’ users. The ruling was later upheld by an appeals court in California.

But last June, the U.S. Supreme Court opened the file-sharing companies to potential judgments, ruling that companies that actively encouraged people to download free copies of music or movies could be held liable for their users’ illegal acts.

After the high court’s decision, the entertainment industry sent notices last fall to seven file-sharing software companies, warning them to shut down or prepare to face lawsuits.

Some companies behind services such as i2Hub and WinMX shut down. Others, including Grokster and iMesh, settled with the entertainment industry as a precursor to launching licensed versions of their services.

Companies behind popular file-sharing services eDonkey, LimeWire, BearShare and others have also reportedly been pursuing settlement talks.

In December, Weiss said the company was focused on settling the case, if it could find acceptable terms to continue operating. The company has spent some $4 million over the last five years defending itself from entertainment industry litigation.