WASHINGTON – Holding the makers of popular Internet file-sharing software responsible for copyright violations could have a chilling effect on the creation of the next generation of photocopiers and iPod music players, Supreme Court justices worried yesterday.

Twenty-eight major movie studios and record labels are asking the court to shut down access to so-called peer-to-peer software programs that allow users to exchange copies of songs, movies, or documents at an alleged cost to the industry of billions of dollars each year.

In a closely watched case that could reshape copyright law and reverberate across industries and around the world, the film and music industry is targeting Grokster and StreamCast Networks Inc., the maker of Morpheus software.

More than 90% of the files exchanged using the freely distributed software are pirated copies of copyright protected works, lawyers for the film and music makers claimed yesterday during the oral arguments before the justices.

“The scale of the whole thing is mind-boggling,” argued a lawyer for Metro-Goldwyn-Mayer Studios and other film and music companies, Donald Verrilli.

The dispute has drawn 54 friend-of-the-court briefs from groups ranging from venture capitalists and entertainers to the Christian Coalition and the American Civil Liberties Union. The attorneys general of 39 states filed briefs in support of the movie studios. New York’s Eliot Spitzer was not among them.

The software systems are “intentionally built-up infringement machines” that make money by selling advertisements that target users who are drawn by the ability to illegally download millions of copyrighted files each day, Mr. Verrilli argued.

The movie studios asked the justices to impose a rule that would make software makers liable for copyright infringement, unless they can demonstrate that their business is “substantially unrelated” to infringement activity.

But Justice Breyer asked the attorney whether such a rule would have discouraged the inventors of other commonplace technologies that can also be used to make copies, such as the Xerox machine, the VCR, Apple’s iPod digital music players, “and, for that matter, the Gutenberg press?”

“You see the problem?” the justice asked. “The problem, of course, is that in each of those cases there could well be large numbers of infringing uses.”

Justice Souter also worried that such a test could have discouraged the creation of the iPod because it can be used to store copies of pirated music files.

“Why isn’t it a foregone conclusion that the iPod developer is going to lose his shirt?” asked Justice Souter.

Justice Scalia worried that a rigid rule would make inventors of nascent technologies vulnerable to lawsuits for other people’s abusive uses before the inventions had found widespread commercial applications in the marketplace.

“I’m about to start a business. How much time do you give me?” he asked.

The acting federal solicitor general, Paul Clement, argued in support of the film and music producers that the law should be “very forgiving” of new technologies, but it should not encourage new inventions whose “business plan from day one” is to draw users and advertisers through the exchange of copyrighted material.

“With a mature product like this, it is fair to point out how it is actually used in the marketplace,” Mr. Clement said.

A lawyer for Grokster and Stream-Cast, Richard Taranto, argued that there is a “large and growing” variety of legitimate uses for the software.

He also stressed that the software makers have no knowledge or control over what users do with it.

Justice Souter questioned whether the case was not one of “willful ignorance,” in which the software makers ought to know how their products are being used.

The software companies asked that the studios and labels be required to sue for damages only in cases where it could be proven that the software makers knew or encouraged the piracy.

Justice O’Connor suggested Grokster could still be held liable if it was shown to have actively “induced” users to infringe on copyrights.

To date, courts have favored the software makers.

Without holding a trial, a federal district court in California ruled that the software makers were not liable for contributing to copyright infringement because they had not been involved in the users’ conduct and had no way to control it.

The U.S. Court of Appeals for the 9th Circuit affirmed that decision.

Allowing the 9th Circuit ruling to stand “destroys innovation” by the creators of copyrighted material and “undercuts” the companies that are attempting to make the songs and movies available through legal means, Mr. Verrilli argued.

He asked the court to strengthen a rule it enunciated in a 1984 case in which Universal City Studios and Walt Disney Productions sued Sony Corporation over its Betamax videocassette recorder, which allowed users to tape television programs. The Supreme Court ruled in favor of Sony, reasoning that while the VCR could be used to violate copyrights, the technology had other potential uses that were legitimate.

In that case, Justice Stevens set out a rule that a company is not liable if the technology allows for substantial, commercially significant uses that do not infringe copyrights.

Justices dissenting in the case argued that liability should depend not on the theoretical capabilities of the technology, but on how it is used in practice.

Of the current members of the court, Justice O’Connor was in the majority, while Chief Justice Rehnquist joined the dissent.

Justice Ginsburg called the Sony rule confusing, while Justice Scalia suggested that yesterday’s case would not be decided solely based on the Sony rule.

The justices also discussed a 2001 decision from the 9th Circuit that shut down the distributors of the file-sharing software known as Napster for contributing to illegal copyright infringement. Lawyers for Grokster stressed that the new-generation of P2P software differs significantly from Napster. While Napster maintained an index of downloadable files and facilitated illegal downloads, the new technologies allow users to operate with complete independence.

As the arguments unfolded, crowds of demonstrators from both sides of the dispute faced off outside the court building.

“Hands off my iPod!” and “Don’t touch myTiVo!” read signs held by supporters of Grokster.

“Feed a musician, download legally,” countered signs held aloft by songwriters.

“What is at stake is the chilling effect on other technologies that will be developed, and what public uses will be compromised,” said a student at St. John’s University School of Law in Queens, Thad Anderson. He has used Grokster to share government documents ranging from the September 11 commission’s report to documents about the White House energy task force, and to distribute legal briefs in yesterday’s case to 200 people, he said.

A songwriter who demonstrated with the Nashville Songwriters Association, Lori Kelly, took a different view of the case.

“We want to be paid for the songs we wrote. That’s the bottom line,” she said.