The court ruled that the Morpheus software was no different from a VCR or photocopier, relying on a 1984 Supreme Court decision determining that Sony could not be held responsible for copyright infringement by users of the Betamax VCR.
The entertainment companies have appealed the case to the federal Ninth Circuit Court of Appeals in San Francisco.
"MGM v. Grokster is about whether copyright owners have the right to veto new technologies and stifle innovation," said Electronic Frontier Foundation (EFF) Senior Staff Attorney Fred von Lohmann. "All innovators have a great deal at stake in the conflict over P2P software."
EFF, along with co-counsel Charles Baker of the Austin, TX firm of Munsch, Hardt, Kopf & Harr, and StreamCast in-house General Counsel Matthew A. Neco, represent StreamCast in the MGM v. Grokster case.
The court has not yet scheduled oral argument on the case.