Second of all, the larger issue is what concerns me most.

From the ruling:

Respondents are not merely passive recipients of information about infringement. The record is replete with evidence that when they began to distribute their free software, each of them clearly voiced the objective that recipients use the software to download copyrighted works and took active steps to encourage infringement. After the notorious filesharing service, Napster, was sued by copyright holders for facilitating copyright infringement, both respondents promoted and marketed themselves as Napster alternatives.

…

In this case, the Ninth Circuit misread Sony to mean that when a product is capable of substantial lawful use, the producer cannot be held contributorily liable for third parties’ infringing use of it, even when an actual purpose to cause infringing use is shown, unless the distributors had specific knowledge of infringement at a time when they contributed to the infringement and failed to act upon that information. Sony did not displace other secondary liability theories.

-end quote

This is a valid argument on the case, I feel. This ruling explicity does not make VCRs or DVDRs illegal.

Basically they are requiring a test. If the product has substantial non-infringing use and substantial infringing use, the producers of the product can be liable for contributing to copyright infringement if they actively promote or encourage the infringing use. That seems pretty fair.

If a company was selling lockpicks with a slogan ‘Break into your neighbor’s house and steal there stuff’ I would consider them contributing to burglery even if they demonstrated that there was a legal use for the lockpicks (opening your own house when you lost your keys.) Intent can, and should matter in a case like this.

I do share the worry that this will chill innovation. However, I do not think that the fault of this is the Court, but of Congress which has not properly addressed this issue and updated and clarified copyright legislation to deal with that.