The scene was reminiscent of a rock festival, with people camping out overnight for tickets while artists played guitars and sang nearby. On March 29, however, the artists were protesting and those in

WASHINGTON, D.C. -- The scene was reminiscent of a rock festival, with people camping out overnight for tickets while artists played guitars and sang nearby. On March 29, however, the artists were protesting and those in line were hoping to snag a seat in the courtroom of the U.S. Supreme Court.

Two 20-something tech developers of peer-to-peer network Morpheus were among the first in line to hear oral arguments in the case of Metro-Goldwyn-Mayer Studios Inc., et al. v. Grokster Ltd., et al.

"We're here to witness history," Ben Wilken said. "I'm a programmer. This is about the ability to develop technology in a free way, to develop new things without having to watch your back, whether the recording industry or any other copyright holder has the ability to veto what it is that you're doing."

Inside the courtroom, Chief Justice William Rehnquist -- suffering from cancer and speaking in a soft, wheezing voice -- was among the justices who questioned the attorneys arguing for the entertainment industry parties, the federal government and P2P companies Grokster and StreamCast. As is customary, they tossed out questions challenging the parties' positions.

Many of the questions focused on the test the court could devise to protect copyright interests without stifling innovation, using the Gutenberg printing press, Xerox photocopy machine and Apple Computer's iPod as examples of innovative technology that affects copyright.

Donald Verrilli Jr., arguing for the entertainment industry parties, said a company should be liable for secondary infringement when a vast majority of its technology's use is infringing.

Justice David Souter asked him what test would give an inventor confidence to develop technology.

One must look at the company's business plan, Verrilli responded. If the business was built on infringement, then the number of infringing uses should be considered to determine contributory infringement.

While Acting Solicitor General Paul Clement argued in support of the entertainment industry's position, Justice Anthony Kennedy asked him if a company would be liable if it knew its users would abuse the technology, did everything to discourage it but still was aware that 50% of the use would infringe.

Clement responded that it would not be liable. However, if the company targeted infringers to become users, and unlawful use was more than 50% of all uses, then the company would be liable, he argued. "There ought to be room to capture a company [which] is clearly set out as a business model to infringe."

Justice Antonin Scalia asked if a new company could have a couple of years to show what it was doing before becoming liable for infringement. Souter wondered if there should be a flexible doctrine that could ease restrictions for new businesses.

Clement proposed that the standard to avoid liability for new technology could be to show that it is "capable" of substantial non-infringing use. For "mature" businesses, however, "actual" infringing use should determine whether the company is liable.

Richard Taranto, arguing for the P2P companies, said technology companies have relied on the standard in the so-called Sony Betamax decision for 20 years, and the rule should not change.

Responding, Scalia said, "We are not going to decide this case on the basis of 'stare decisis,' " meaning that the court would not simply rely on the past case to decide this case; it would take a fresh look at the issue.

Souter wondered if the P2P companies exhibited "willful ignorance" of the infringements. Taranto said the companies did not; they simply changed the "centralized" software to a "decentralized" version for two reasons: They wanted to comply with the court decision in the Napster case -- which held that a centralized server allowing the company to control uses subjected the company to liability for its users' infringements -- and they wanted to reduce the costs of maintaining central servers.

Outside the courthouse, supporters of both sides gathered en masse after the arguments.

Utah Attorney General Mark Shurtleff made it clear that copyright holders are not the only ones watching P2P software developers. He told Billboard that before the Ninth Circuit Court of Appeals' decision in its Grokster case, his office was "looking very seriously at going forward with criminal charges against some of these companies" for the sharing of child pornography over P2P networks.

"When the decision came out, it really threw cold water on it," he said. Concerned that they could not go forward seeking criminal liability or consumer-protection type of liability, he joined other state attorneys general in an amicus brief urging the court to overturn the decision.

Sony BMG Music Entertainment chairman Andrew Lack told Billboard he has tried to work with executives of the P2P companies, urging them to find an authorized way to use their networks. "They want to stay in the dark shadows," he said, adding that executives at other tech companies have said Grokster is bad and has to be taken down.

Bill Raduchel, chairman/CEO of Ruckus Network, which offers authorized online music services to colleges, said he feels the effect of unauthorized file-sharing. University representatives tell him that their students do not want to pay for services because they can get music for free.

He is not competing with "free," he said. He is competing with theft. "File sharing is like sharing Kleenex," he added. "You don't really want it back, right? 'Sharing' is a pure euphemism here."

Songwriter Lamont Dozier was among the industry voices in the nation's capital. He told Billboard he has seen a tremendous drop in his income because of unauthorized file-sharing-right when his two children are in college.

Dozier said he has been traveling around the past five years to get the message out: "We're losing the battle. We're losing sight of what we love."

The Motown legend said that without drastic steps to curb file sharing, "a lot of people won't get a chance to hear our new creative singers and new creative people."