A landmark federal court ruling which held that P2P services were not liable for the actions of their users has been appealed by a group of record labels and movie studios.The April ruling by Los Angeles federal court judge Stephen Wilson, was the first big legal challenge to the entertainment industry which has thus far been successful in suing the operators of file trading networks. So it comes as no great surprise that the industry would challenge the decision.Recording Industry Association of America (RIAA) president Cary Sherman claimed in a statement that the P2P networks "were built for the exclusive reason of illegally exchanging copyrighted works, and they make money hand over fist from it. The Court of Appeals should hold them accountable."But the ruling by Judge Wilson made it clear that P2P networks were similar to other efficient new information distribution technologies with many potential uses. He pointed out that the movie industry also attempted to stamp out VCRs when they emerged on the market. "Grokster and Streamcast are not significantly different from companies that sell home video recorders or copy machines, both of which can be and are used to infringe copyrights," Wilson wrote in his ruling.But the entertainment industry argues that Streamcast and Grokster should be compared to Napster, which was shut down by the 9th U.S. Circuit Court of Appeals. The court laid out an argument that Napster was likely liable for the copyright infringement of its users. The dispute never reached trial, but it effectively pulled the plug on the pioneering P2P network.In addition to the RIAA, the appeal is also being supported by the Motion Picture Association of America (MPAA) and the National Music Publishers Association (NMPA). "Comparing Xerox to (Streamcast) and Grokster is like comparing a farmer who sells chickens to a promoter and organizer of cockfights," wrote attorneys for the MPAA in their brief.Attorneys for the file trading networks counter that Judge Wilson's reasoning was sound. But they note that another pending lawsuit against Sharman Networks, which operates the Kazaa file-swapping service, has not yet been settled.\u00a0After the ruling in favor of Streamcast and Grokster, the RIAA began suing individual file traders for alleged copyright infringement. If they lose this appeal, those lawsuits will likely continue. But Judge Wilson's ruling is crucial in defending new P2P technology and preventing the entertainment industry from crushing innovation, which often benefits them in the end.