The NewsHour with Jim Lehrer

GWEN IFILL: Good evening. I'm Gwen Ifill. Jim Lehrer is on vacation. On the NewsHour tonight, our summary of the news; then, today's big day at the Supreme Court, with special emphasis on decisions about where it is and is not okay to display the Ten Commandments, and when it is and is not okay to share music and video files over the Internet; plus, a look at the surprise winner of the presidential election in Iran.

NEWS SUMMARY

GWEN IFILL: The Supreme Court offered a split decision today on two cases involving displays of the Ten Commandments on public property. The court allowed a six-foot monument on the Commandments on the grounds of the Texas state Capitol, but it ruled against displaying a framed copy inside courthouses in Kentucky. Both rulings were 5-4. The Justices said some displays, like the one on the Supreme Court building itself, could be allowed as part of U.S. legal history. Writing for the majority in that case, Chief Justice William Rehnquist said, "Simply having religious content does not run afoul of the law." Outside the court, lawyers on both sides claimed partial victory and vowed to fight on.

MATHEW STAVER, Lawyer for Kentucky County: Clearly the Ten Commandments has influenced our American laws our notions of right and wrong and our moral compass in America. And it is clearly in a permissible acknowledgment of religion to display the Ten Commandments in public places. In this very courtroom where I argued this case there are more than 50 depictions of the Ten Commandments and those obviously are constitutional.

BARRY LYNN, Separation of Church & State Supporter: These split decisions just guarantee there will be far more lawsuits and far more confusion about the status of religious symbols on public property. The Supreme Court could and should today have drawn a very clean line, and that is that no government building should be decorated as if it were a church.

GWEN IFILL: In other rulings, the court allowed cable TV companies to prevent rival Internet providers from using their lines. It ruled file-sharing services on the Internet such as Grokster and Streamcast Networks are responsible for illegal downloads of copyrighted material. And it rejected appeals from two journalists who refused to say who leaked the name of a CIA operative. We'll have more on all these cases right after the News Summary.

In Iraq today, two American pilots were killed when their apache helicopter crashed just north of Baghdad. Witnesses reported the craft was hit by a rocket. The U.S. Army spokesman said the incident is still under investigation. Later, a car bomb blew up near a movie theater and a Sunni Arab mosque in eastern Baghdad. At least four people died and sixteen were hurt. On Sunday, suicide bombers killed 33 Iraqis in Mosul. They targeted security forces and a hospital. Al-Qaida claimed responsibility. Elsewhere, separate attacks killed another eighteen people, including a U.S. Soldier.

U.S. Military leaders played down talks with Iraqi insurgents today. A British newspaper reported the contacts over the weekend. Today the U.S. Commander in Iraq, Gen. George Casey, said so far they do not include anyone directly involved with the insurgency.

And at a Pentagon briefing, Defense Secretary Rumsfeld warned against overstating the contacts.

DONALD RUMSFELD: I have been impressed how overblown these quote unquote meetings are. I don't know anything about specific meetings on specific days, nor does Gen. Casey. But there are meetings going on all the time between people in Iraq and other people in Iraq attempting to get them to be supportive of the government, which is obviously the logical thing one does in a political process.

GWEN IFILL: Rumsfeld, who suggested over the weekend that it could take as many as a dozen years to end the insurgency in Iraq, declined to endorse a timeline offered today by Iraqi Prime Minister al-Jaafari. In London, al-Jaafari said making Iraq safe depends on training more troops and making political progress. But overall, he said, "I think two years will be enough, and more than enough, to establish security in our country."

The U.S. Military announced plans today to expand its prisons in Iraq to hold 16,000 detainees. The current capacity is about 10,000. That's about double of what it was just a year ago. The military will expand three existing facilities and add a fourth by next February.

President Bush urged Europe today to stand firm against letting Iran develop nuclear arms. He said building such weapons would be "unacceptable." On Friday, Mahmoud Ahmadinejad was elected president of Iran with hard-line backing. Yesterday, he welcomed further talks with European negotiators, but he insisted Iran will pursue a peaceful nuclear program. We'll have more on Iran later in the program.

The U.S. will resume making a highly radioactive fuel, Plutonium 238, for the first time since the Cold War. The New York Times reported today the Energy Department confirmed the plan. It said Plutonium 238 is typically used to power satellites and devices for espionage. The substance is so radioactive that inhaling even a speck can cause lung cancer.

A Wichita, Kansas, man pleaded guilty today to the so-called BTK serial killings. Dennis Rader admitted murdering ten people between 1974 and 1991. Most were women. He named himself BTK for "Bind, Torture, Kill." In court today, Rader graphically detailed each crime with no hint of emotion. He called them "projects" and told of how he went about deciding on a target.

DENNIS RADER: It's called stalking or trolling.

SPOKESMAN: So were you not working in any form or fashion?

DENNIS RADER: Well, you know, if you read much about serial killers, they go through what they call different phases. That's one of the phases they go through as a trolling stage. You're basically looking for a victim at that time. And you could be trolling for months or years. But once you lock in on a certain person, you become stalking. There might be several of them but you really hone in on that person. They basically become the - that's the victim.

GWEN IFILL: Rader did not apologize for his crimes. A defense lawyer indicated he may do so when he's sentenced on Aug. 17. He is not subject to the death penalty, since Kansas had no such punishment when the murders were committed.

In New Jersey, a former male nurse pleaded guilty today to killing five more people. Charles Cullen already admitted he murdered 24 patients in hospitals across New Jersey and Pennsylvania. In most cases, he gave them lethal injections of heart medication.

A safety task force concluded that NASA has not met the toughest standards imposed after the Columbia disaster. The report said it is still possible that the foam insulation could break up and ice could break up during launch and damage the shuttle. And it said there is no practical way to repair such damage. The report goes to NASA managers. They will have the final decision on whether to stick with the July 13 launch date.

The price of crude oil closed above $60 for the first time today. In New York, oil futures rose 70 cents to settle at $60.54 a barrel. On Wall Street, the Dow Jones Industrial Average lost seven points to close at 10,290. The NASDAQ fell eight points to close at 2045.

That's it for the News Summary tonight. Now it's on to a big day at the Supreme Court, and Iran's new president.

FOCUS - TEN COMMANDMENTS

GWEN IFILL: The Supreme Court cleared its docket today on this, the final day of its term. Among the decisions issued: Divergent rulings on the right to display the Ten Commandments. As she has been throughout the term, NewsHour regular Jan Crawford Greenburg of the "Chicago Tribune" was in the court today.

Welcome back, Jan.

Split decision. What does that mean?

JAN CRAWFORD GREENBURG: Well, this case - this issue involved two cases: One from Texas and one from Kentucky. They were different displays of the Ten Commandments. The Texas Ten Commandments was a six-foot tall monument that was displayed on public property on the grounds of the state capital. The Kentucky Ten Commandments display was inside two county courthouses, a framed display of the Ten Commandments that contained other things around it.

So we had two very different cases that made their way up to the Supreme Court. And today the court split the difference. It said the Texas monument on the grounds of the Texas statehouse surrounded by all the other monuments there that illustrate the ideals of the Texas settlers -- that was not unconstitutional -- that Texas could keep that monument there.

But it said with a different set of Justices, it said that the Kentucky Ten Commandments display in those two county courthouses were unconstitutional because officials in those Kentucky counties had a purpose of promoting religion. They looked at what was behind the point of putting those displays up.

GWEN IFILL: So it came down to a question of whether they were promoting religion, not a question of whether - where it was physically located.

JAN CRAWFORD GREENBURG: That's exactly right. And in the Texas case, the Justices emphasized the context and the history of that display. Now this case was very bitterly divided. It was 5-4. Both of the cases were decided 5-4.

GWEN IFILL: But you said there were different groups of Justices in each one?

JAN CRAWFORD GREENBURG: That's right. And Justice Breyer saw these cases differently. He was the key vote. He sided with the four more conservative Justices in the Texas case and he stressed he didn't join the reasoning of their opinion because they would have gone much further and allowed Ten Commandments in other context.

But Justice Breyer in the Texas case stressed that the history and the context of this display was so important, it had been there for 40 years without really any complaints. It was surrounded by a host of other monuments, monuments to war veterans and tributes to Texas children and the Alamo. And so an observer would not think the government was promoting religion. That was very different in the Kentucky case.

GWEN IFILL: He didn't see that kind of history and legacy in the Kentucky case?

JAN CRAWFORD GREENBURG: The Kentucky case was written, that decision was written by Justice David Souter, and it said officials in the two counties clearly were trying to promote religion and that violates the Constitution's First Amendment, which prohibits an establishment of religion.

What the officials did there, the Supreme Court ruled today, was to promote religion. They had ordered these displays be hung and prominently displayed and they were hung alone.

There was a lawsuit filed so the county eventually put some other document around it but the court said the taint was still so great because the original purpose was still there and that was to promote religion or to show it was this religious purpose to it.

That produced a very bitter dissent by Justice Scalia who took a rare step of summarizing it ten minutes from the bench. Now on the bench he sits right next to Justice Souter so Justice Souter announced his opinion and Justice Scalia summarized in a passionate and clear voice why he thought the court was so terribly wrong in this case.

GWEN IFILL: What happens inside the courtroom in a moment like that? They're sitting right next to each other; they completely almost violently disagree - if that's not overstating it. Do they look at each other?

JAN CRAWFORD GREENBURG: No. Typically, they just look straight ahead. And that's what happened today. I mean, Justice Souter sat quietly of course. I mean, he didn't sigh loudly or roll his eyes. I mean, he looked straight ahead as Justice Scalia very forcefully said that today the court was wrong and it in fact was ratcheting up the public's -- government's hostility toward religion. And he said religion has always had a place in our nation's heritage, that governments could of course show that religion is, you know, the foundation or part of our country's founding. And he cited numerous examples of God in public life, including the oath of office and the way the court....

GWEN IFILL: Including right in the court's chambers. So this reasoning also covered what had other people say are the displays we've seen everywhere. It's on the money - it's on -- everyplace else.

But the court has often seemed to send kind of mixed messages about where religion is permissible and where it is not in a public square.

JAN CRAWFORD GREENBURG: This area has deeply divided these Justices and the rulings from the court in this area about what the government can say or how it can speak about religion has been very divided. Lower courts have been deeply confused by the court's rulings in this area, so there was great hope that today the Supreme Court would finally provide some clear guidance that they could use in other context about public expressions of religion on public property, but people on both sides of the issue that I spoke with after today's ruling, while they were both disappointed because it wasn't a clear decision said that today's ruling, above all, means that these battles will continue and that lower courts will still lack that clear guidance.

GWEN IFILL: Okay. Stay right there, Jan. We have more to talk to you about. Ray Suarez has more on the reaction to today's Ten Commandments rulings.

RAY SUAREZ: Here to explore some of the questions raised by the court's dual decisions are Jay Sekulow, chief counsel of the American Center for Law and Justice, which filed friend-of- the-court briefs in both cases, and Rabbi David Saperstein, director of the Religious Action Center of Reform Judaism, which signed on to a brief in the Texas case.

And I'm wondering, for you both since you are both interested parties, whether a rule of thumb emerges when you take these two decisions together? Is there any guidance of when it is okay and when it is not okay? Jay Sekulow?

JAY SEKULOW: I think the one aspect we would probably agree on this is the court, when it comes to the monuments like the fraternal Order of Eagles Monument in the Texas case, which is -- there are almost 4,000 of them around the country - that is where most of the litigation is actually focused, of the 30 cases that are being litigated - and my office checked on this today -- 28 of them involved these Fraternal Order of Eagles Monuments like in Texas, and the court there, by a thin majority, very thin, because Justice Breyer really was the key vote as Jan just said -- and the court there said those are okay if they're in that kind of context and they're all basically displayed the same way.

So for most of the litigation that's involved in these cases, it's resolved. Where the litigation will continue is cases like the Kentucky case, but for the vast majority of the cases, the Supreme Court has held those Ten Commandment monuments can stay. They almost had to in light of their own Supreme Court building which, of course, has the depiction of Moses with the words of the Ten Commandments emblazoned in the marble in Hebrew.

RAY SUAREZ: Rabbi?

RABBI DAVID SAPERSTEIN: Well, I see it somewhat differently in the sense that while each side had some victory here, the one bright line rule that seemed to have been reaffirmed was the notion, Ray that in the United States, for the government to endorse a religious message is a violation of the establishment clause.

And, therefore, any time that a reasonable observer would see the portrayal of the Ten Commandments as government endorsement of its religious message, it is forbidden. And only in those cases where it has been somewhat muted in its context and represents endorsement of a civil moral message or an historical acknowledgment would it be upheld.

Now, I'm bothered because I don't like to see the Ten Commandments stripped of its religious message but in that sense, I think it was more of a victory for the separationist side than it was for those who want to tear down the law of separating church and state.

RAY SUAREZ: Do you think that's what happened, Jay Sekulow, that the Ten Commandments were stripped somewhat of their religious message?

JAY SEKULOW: No. Here's how I view it, and David knows this and we've talked about this a lot, and I argue this in my brief. I don't think there is anything wrong with the civil religion. And there's a lot of people that would disagree with that but civil religion in the context of what the court meant, which is this acknowledgment that faith and values and God have played a role in the development of American republic and is part of who we are.

You can trace that right into the Declaration of Independence. So this idea that you have the civil acknowledgment of this, whether it's the Ten Commandments or in God we trust, I don't think that causes a constitutional problem.

Now, there are some that would say, well, that trivializes religion. I don't think so. I think it's kind of the American experience really that's at play here. And that's one of the things we argued in our brief.

RAY SUAREZ: Rabbi Saperstein, are these cases and their decisions so specific that you don't derive anything from the way they were decided - that comes in useful if you're supervising a courthouse somewhere in America or getting ready to put up a display inside your high school?

RABBI DAVID SAPERSTEIN: Good question. One of the disappointments was that the court did not use this as an opportunity to set out generic bright lines of what is allowed and what is not allowed.

However, certainly in the Kentucky case, it did make clear that if you go about presenting the Ten Commandments as part of an historical display, not endorsing its message and clearly as Justice Souter said to the freeze on the Supreme Court, where he said there is Moses surrounded by 30 other law givers, clearly what is being portrayed and endorsed are law givers, not the religious message of the Ten Commandments.

So if you set out to clarify what your intent is, acknowledgment of the history of America, the development of law, and you surround it with other portrayals that clarify that that is the case, it would be allowed.

In that sense, it was helpful but the court did find that in the Kentucky case that is exactly what did not happen; it had a clear religious intent and the government cannot endorse religion. And that was an important signal to the country as well.

JAY SEKULOW: And that's going to bring up I think where the litigation is primarily going to focus because, as I said, the 4,000 Fraternal Order of Eagle Monuments that are around the United States, those are fine, they're constitutional; the court said that. But as David said, the issue is going to be: What was the intent of the city council or the county commission when they put that up? And that's always a difficult task.

Although today - and I think we both would agree on this - the court did say we're going to look at what the real intent was and don't play games with it here. We want to know really what they were thinking when they put this up, to the best you can from the record.

RABBI DAVID SAPERSTEIN: And what Souter clarified and the majority agreed with him on was this reaffirmation that separation of church and state is good for religion, as well as for the nation; it prevents religious strife and competition, or whose religious symbol is going to be posted where, and which religious message will be endorsed and it serves to protect religion because the wall that keeps government out of religion has allowed religion to flourish with the diversity and strength in America unmatched anywhere in the democratic world, far more religions, more people going to worship, more people believing in God and holding religious values central to their lives.

It's ironic that there are people on the religious right that want to tear down the wall. And Scalia's message that this country and this country the government can endorse religion was held and supported by only three Justices on the Supreme Court. The rest think that is inappropriate.

JAY SEKULOW: But there was an important part of this also. Not only did Justice Scalia say that the religious values should be acknowledged when appropriate by government and there were two other Justices that agreed with him, but Justice Breyer said something very important in his concurring opinion. He said the idea that we would order through this court's decision the removal of these monuments around the country would show not neutrality towards religion but hostility towards that which is prohibited also by the establishment clause.

And having Justice Breyer make that analysis that the removal across-the-board, literally 4,000 of these monuments, would show that kind of hostility towards religion I think was a step forward.

No one can sit here today and claim complete victory in either one of these cases because you have got very thin majorities on both sides, I mean, very thin, as thin as they can be, five to four cases, I mean, one Justice viewing the case a little bit differently, and it goes the other way. So in a case like this, the principle I think we draw out of this is it is probably very good forthe lawyers because there's going to be a lot more litigation going on, on this.

RAY SUAREZ: Well, where does the action shift now, now that the court has spoken on the Texas case and specifically on the kind of things that were done in Kentucky, that association between religious and public space, where is the action now?

RABBI DAVID SAPERSTEIN: It's likely to move from the Ten Commandments for a while probably to other religious symbols. There's likely to be more of about clarifying the Allegheny, the question of cr ches and menorahs and exactly where they can be placed under what circumstances.

But I think the rule enacted today is a rule that would be followed in all, Ray. If to a reasonable observer, this is endorsement of religion, it will not be allowed. If it is endorsement of the history of our country and the role that religion played, it will be allowed. That links all those cases together.

RAY SUAREZ: That endorsement of religion question, in whose eyes, in the eyes of a minority religionist, in the eyes of an atheist?

JAY SEKULOW: Ray, it's a good question. The courts talked about the idea of the reasonable observer. What would the reasonable observer say viewing this, although today in the court's opinion you don't have a whole lot of discussion, a little bit, about the reasonable observer, not a lot.

But I think here's what we've learned from this. When the court looked at the nativity scene cases, there were a lot of those in the past, menorah cases. Now they're haven't been so many. Why is that? Well, the court said that if a private organization sponsors a nativity scene, a menorah, even on public property, it's constitutional; the court voted in that case seven to two. That kind of ended the litigation there.

Now, I don't think this case is going to cause that to be re-looked at, but I'll tell you where I do think this is going to go. I think you're going to see cities and counties around the country reevaluating how they can best describe it, as David correctly said, the religious influences on America's legal development, and I think that's where this is going to go.

RAY SUAREZ: Gentlemen, thanks a lot.

JAY SEKULOW: Thank you.

RABBI DAVID SAPERSTEIN: Thank you, Ray.

FOCUS - DAY OF DECISIONS

GWEN IFILL: The court also weighed in today on Internet file sharing, press freedoms, and restraining orders. But perhaps the most highly anticipated decision failed to materialize.

For more, we go back to Jan Crawford Greenburg. The story that didn't happen: The anticipated retirement of Justice William Rehnquist.

JAN CRAWFORD GREENBURG: That's right. As you said, today was the last day the Justices took their seats on the bench before wrapping things up and going away for their summer. Chief Justice, who is 80 years old and suffering from thyroid cancer, if he were going to announce publicly from the bench that he was going to retire, we would have heard that today, so there was great anticipation in the courtroom and throughout Washington; the scene outside the court was packed, television cameras, and tourists and people just curious about what was going on. There was great anxiety in the courtroom rate waiting to see if the Chief Justice at the end of announcing all of the opinions would reveal his plans for the future.

GWEN IFILL: You have been doing a lot of the reporting on this in the last week or so and people in the White House and other places around town have told you what the preparations have been. What is the latest intelligence on where everybody stands?

JAN CRAWFORD GREENBURG: The White House has completed its background work on potential nominees. It has interviewed leading candidates who would take or could take the Chief Justice place should he retire. It is not formally ranked or narrowed that dramatically down because, as I was told by an administration official, it is serious about being respectful to the Chief Justice. He has had a long and distinguished career, 33 years on the court, 19 is of them as Chief Justice.

So the White House now is waiting for word, like everyone is, on what the Chief Justice plans are. I was told last week that it had not gotten word last week from the Chief Justice about whether he was going to retire but many people who know the Chief Justice and who I've spoken weapon with in recent days caution me that I should not accept an announcement from the Chief Justice today. They said that is just not his style; he is not going to make this a dramatic an announcement. You know, just wait a day or two; and we may get a written statement from him announcing that he is retiring, so everyone is still waiting.

GWEN IFILL: It certainly would have overshadowed everything else that happened at the on court today. Let's talk about some of the other things that did happen.

There was a ruling in the Miller-Cooper news source protection case, I guess --

JAN CRAWFORD GREENBURG: That's right.

GWEN IFILL: -- is the way to put it.

JAN CRAWFORD GREENBURG: It's a very important case, very important case for the press, freedom of the press and these two reporters had asked the Supreme Court to take up their case, to step in and review a federal appeals court ruling that said that they did have to testify before a grand jury and reveal their sources as part of a federal investigation into the leak of a CIA operative. So they had lost in the appeals court and the appeals court declined to find that they had any kind of privilege, that they were protected and didn't have to conceal their sources.

They then turned to the Supreme Court and the Supreme Court, without explanation, said it would not take up their case, paving the way now for the two reporters possibly to be jailed.

GWEN IFILL: Do they go right to jail? Is there another avenue of appeal for them?

JAN CRAWFORD GREENBURG: They'll go back to the lower courts; lawyers for Matthew Cooper, the Time Magazine reporter, had several other arguments that they planned to make this week, but the federal prosecutor who is handling this has said that he expects this case to move forward pretty quickly.

GWEN IFILL: Let's talk about another case you and I have actually talked about in the studio, which is the case of a woman who had taken out a restraining order against her husband. It was violated; he kidnapped his daughters and ultimately killed them. And she was bringing a case basically saying her constitutional rights have been violated.

JAN CRAWFORD GREENBURG: Yes. I mean, the facts of this case, as you said, are just, just horrendous. She spent an entire night begging the police to find her husband and return her children back to her because she had this order of protection against him. The police did nothing. She sued, arguing that she had a constitutional right to the enforcement of that order and that the police should be liable for violating her constitutional rights. But in a 7-2 decision today written by Justice Scalia, the Supreme Court said she did not have a federal constitutional right to the enforcement of that restraining order.

Two of the Justices dissented: Justice Stevens and Justice Ginsberg; they said that this callous behavior on the part of the police surely gave grounds for her to have a constitutional violation but the majority said it wasn't a federal issue. It said that she could look to the states and that other states would be free to pass laws, that people would have this kind of state law, that it just was not in the federal Constitution.

GWEN IFILL: Unlike these very narrow five- to-four decisions we've been talking about or unlike a case that was just turned down without comment, there is actually some record of w hat the individual Justices thought about this case. What are they saying about why this is not a constitutional issue?

JAN CRAWFORD GREENBURG: Well, in this case today Justice Scalia simply said that the federal Constitution doesn't provide this kind of cause of action. She knew that she had due process interest, a property interest in the enforcement of this restraining order. And the court just rejected those arguments by a seven-to-two decision so this one was not a close call.

GWEN IFILL: Another one that was perhaps not as close a call as one would have thought, Grokster, which is most -- grownups don't know what Grokster is. But teenagers understand that how you share and video and music files on the Internet or using the Internet. And the court ruled in favor of the entertainment industry?

JAN CRAWFORD GREENBURG: Yes. This was a big victory for the entertainment industry, which has long argued that file sharing services like Grokster and Streamcast, the other company at the center of t his litigation, have cost them, you know, billions of dollars because people steal their songs and movies, instead of having to go out and buy it, by using these file-sharing services.

They had sued Grokster and Streamcast; a lower court sided with the software companies. It said that they could not be held liable. But today the Supreme Court in a unanimous decision set that ruling aside and said, in fact, that Grokster and Streamcast could, in fact, be held liable. And they sent the issue back down to the lower courts for a trial on whether or not there should be liability.

This was a big win for the entertainment industry, which contends that this issue has cost it untold amounts of money. And the court today in its opinion recognized that the violations here, that the copyright violations that people have done have been staggering. The issue here and why this was also such a significant case was that the industry is trying to hold Grokster and Streamcast liable for copyright infringement for the actions of third parties, the teenager sitting at home, the college student in their down, who download and use their software to download these files, which violates copyright.

The companies argued that they had done nothing wrong. They weren't violating copyrights; they weren't even -- they didn't have any centralized server and that there were many other legitimate uses for their product.

GWEN IFILL: But this wasn't even close. When was the last time you saw a unanimous court decision?

JAN CRAWFORD GREENBURG: Well, on the last day of the term, you don't see them often because it's the last day of the term and as things progress, those are always the most controversial, contentious decisions, the ones that so bitterly divide the court, the ones that have all the dissenting opinions and the concurring opinions.

For example, in the Ten Commandments case that we just talked about, those two cases produced ten separate opinions from the Justices. So you don't often see it on the last day. And of course the court will not have -this isn't the last word -- this goes back now to the lower courts to decide if these companies will be liable.

GWEN IFILL: And it was the last day, but we may still be hearing more from the court -

JAN CRAWFORD GREENBURG: That's right.

GWEN IFILL: So we'll be keeping our ear to the ground. Thanks a lot, Jan.

JAN CRAWFORD GREENBURG: You're welcome.

GWEN IFILL: For more on the battle between Hollywood and the technology companies, we turn to Terence Smith.

TERENCE SMITH: Joining us to discuss the implications of today's decision in the MGM-Grokster case is Fred Von Lohmann, co- counsel for Streamcast Networks, a co-defendant with Grokster, and Don Verrilli, counsel to both the Motion Picture Association of America and the Recording Industry Association of America.

Welcome to you both.

Don Verrilli, as Jan was just making a point, this unanimous decision, tell us in favor of your clients, tell us what your fundamental argument was.

DON VERRILLI: Well, there are three critical points that we took to the court and the court accepted all the three of them and accepted them unanimously.

The first one is this: That the downloading of songs and movies from services like Grokster, and Morpheus, Dreamcast, Kazaa is illegal and wrong, plain and simple.

Justice Breyer, in his concurring opinion, described it as garden variety theft. That's really important because as these industries have shown, there is really a devastating impact here from the billions and billions of unlawful downloads that occur every month. The royalties for songwriters are drying up. There have been thousands of layoffs in the record industry, the motion picture industry and recording companies are forced to slash their roster of artists because their revenues have taken such a hit from this. So it's a really important message from the court that this is unlawful activity.

The second important point is what the court said, is that if you go out and build a business based on promoting that unlawful activity, then you are going to be on the hook. You are going to be responsible for the unlawful actions and the harms that your promoting activity cause.

TERENCE SMITH: Promoting beak the key word.

DON VERRILLI: Promoting being the key word. And that's the key reason why the court held and held unanimously that companies like Grokster and Streamcast can be on the hook for the activity of the users who use that software.

And the third point that is critical is that what the court did here was accept our call for balance. The right answer in the law here is one that achieves a balance, protecting the rights of copyright owners and providing real, effective protection and providing real breathing space for legitimate innovation.

And what the court said is if you are out there running a legitimate business like the Apple iPod and I-Tunes business, you have nothing to worry about. But if you are out there building a business based on the promotion of infringement, then you are on hook for the consequences of your actions.

TERENCE SMITH: Fred von Lohmann, what is your reaction to this decision?

FRED VON LOHMANN: Well, as you might imagine, I have a slightly different view than Mr. Verrilli does. I think what the Supreme Court has done here is really open a new era of uncertainty for not just companies involved in peer-to-peer file sharing but, in fact, for all of America's technology industry.

So all of the parties went to the Supreme Court asking the court to clarify the existing doctrine around copyright law, which addressed a central question: When will a technology company be held responsible for what its end users, what the customers, what the person sitting in the dorm room, to use the earlier phrase, might be up to?

Now, that's obviously not important just to the file sharing companies; it's also important to people that make CD burners, personal computers, people who provide broadband Internet service. All of these technology companies depend on a clear answer to that question.

Unfortunately, the Supreme Court really declined to give us a clear answer. Instead of clarifying the existing law, they instead created a new form of liability, the so-called "inducement liability," as you pointed out, premised on a notion of promoting infringement.

In that we think the Supreme Court really missed a crucial opportunity here. In the wake of this ruling, I think peer-to-peer file sharing will continue unabated. There are obviously hundreds of millions of people around the world who are using file sharing applications.

I don't think this ruling is going to magically change that. What it is going to do is make America's technology companies have to look over their shoulder and ask: well, what is this new promotion liability?

If I say the wrong thing in a marketing meeting or if a company like Apple, for example, says rip, mix, burn in its ad campaign as it did a few years ago, will that be the kind of thing that gives rise to liability? Or will I have to redesign my product, which is something that was always a serious threat for the technology industry here.

So the Supreme Court frankly, I think, has opened more questions than they've answered today.

TERENCE SMITH: All right. Don Verrilli, what about Fred von Lohmann's point that peer-to-peer sharing of files is not going to go away and it is universally spread, or so widely spread that as function it is not going to go away, how does the industry deal with that?

DON VERRILLI: You know, I think that - you know, it may not go away entirely, but I think this is an important step to changing the dynamic from this sphere from the unlawful, illegal downloading where you take without paying the artists, and the creators there do, and shifting to a legal model of downloading where you get on I-Tunes, you pay the modest price to get what you want in a lawful legitimate way, so I guess I disagree with that.

I think that this is going to be a really important moment to move the center of gravity from the unlawful activity to the lawful activity and the court has sent a powerful signal that it is unlawful here but if you build a lawful business model over here, you are going to be just fine.

That's what we want. That's what my clients are aiming to do. We think that there is enormous potential in the digital area for efficient, positive, user-friendly distribution of songs and movies but in a lawful way that respects copyrights.

And we think that we're going to migrate from the unlawful universe to a lawful universe. Will we squelch this entirely? No but I think we'll make a major migration in the right direction.

TERENCE SMITH: Fred von Lohmann, what happens now with your case? Do you have to go back to the lower courts and argue particularly this point about whether or not you promoted - or your clients, rather, promoted an illegal use?

FRED VON LOHMANN: That's right. That's at least part of what we will have to address.

Unfortunately, there are other theories of liability that are still at issue in the case. So, for example, Mr. Verrilli's clients have argued from the beginning that my clients, maker of Morpheus, the maker of Grokster, they should be held responsible based on a so-called "contributory infringement" theory, which is really sort of an aiding and abetting kind of theory.

And, unfortunately, the Supreme Court today has told us nothing about how the court is going have to deem with that claim. There is also another claim that Mr. Verrilli's clients have made from the beginning that there should be liability because this software could have been designed differently in a manner that would have satisfied the entertainment industries more than the way it was in fact designed.

So the district court will have to look at all these theories and frankly isn't going to have very much guidance in the Supreme Court ruling regarding the two other theories I mentioned or, for that matter, a clear road map even as to this new theory of inducement.

Now, the court has really left a lot of questions open and I predict not just in this case but in other cases, lawyers will have to go through expensive litigation before we have the clear line that I mentioned at the beginning our technology industry needs so that they can understand: what can they build; when do they have to spend money on lawyers; when can they spend money on engineers?

DON VERRILLI: Can I just make a -- say a word about that? I really think with all due respect, Fred, that that's fear mongering. It is not hard to see the commonsense difference between running a legitimate business where you tell people when they buy your product, don't steal music and running a business like Grokster and Streamcast where they help you find top 40 hits.

And the court was drawing a commonsense distinction. That's been in the law for a century, Justice Souter recognized in his opinion. So I really think that the uncertainty that you are talking about is really an overblown fear; it's not a concern at all.

TERENCE SMITH: Okay. Just a final word quickly if you will, Fred von Lohmann.

FRED VON LOHMANN: Well, frankly, I wish I could rely on Mr. Verrilli's assurance that my concerns are just fear mongering. We've seen the entertainment industry sue every new technology for a century, starting with the player piano, the VCR, the first MP3 player, replay TV, PBR's, these are companies that are perfectly legitimate, not bad actors, as Mr. Verrilli suggests, and in an environment where entertainment companies have this track record of suing a whole variety of technology companies for making technologies they disapprove of, I think it is more than just fear mongering.

TERENCE SMITH: Okay. Thank you both. Obviously it's going to be argued further in the lower courts. But thank you both very much.

FOCUS - THE WINNER

GWEN IFILL: Iran's voters pick a new president. Margaret Warner has that story.

MARGARET WARNER: Mahmoud Ahmadinejad's presidential election win, announced Saturday, was as decisive as it was surprising. The 49-year-old former Tehran mayor won 62 percent of the vote in a runoff election against Ali Akbar Hashemi Rafsanjani, a prominent, wealthy cleric who'd been president twice before.

Rafsanjani had campaigned as a reformer after the most prominent reformist candidates were knocked off in the first round of voting. Ahmadinejad is a religious conservative who's espoused hard-line social views. He campaigned as a man of the people fighting corruption, and he appealed to Iran's poor and struggling middle class with promises of more jobs, better wages and lower prices.

Yesterday, at his first news conference since winning, Ahmadinejad said "Moderation will be the policy" of his government on domestic matters. On the international front, he said he wanted good relations with any country that wasn't hostile to Iran, but he saw no need to pay special attention to relations with the United States.

MAHMOUD AHMADINEJAD (Translated): The Iranian nation is taking the path of progress based on self-reliance. It doesn't need the United States significantly on this path.

MARGARET WARNER: The president-elect also asserted Iran's right to pursue a nuclear energy program.

MAHMOUD AHMADINEJAD (Translated): Iran's peaceful technology is the outcome of the scientific achievements of Iran's youth. We need peaceful nuclear technology for energy, medical and agricultural purposes and scientific progress. We will continue this, the nuclear program.

MARGARET WARNER: But he promised to continue talks with France, Germany and Britain over their demand that Iran not use the energy program as a cover to pursue nuclear weapons. British Prime Minister Tony Blair today said he expects Ahmadinejad to honor Iran's pledge to suspend its nuclear program while talks are under way.

TONY BLAIR: Those obligations that Iran has entered into have to be upheld. And he would be making a serious mistake if he thought that we were going to go soft on him, because we are not.

MARGARET WARNER: President Bush today again dismissed the election as unfair because so many reformers weren't allowed to run. But he encouraged the diplomatic approach to the nuclear issue.

PRESIDENT GEORGE W. BUSH: My message is to... to the chancellor is that we continue working with Great Britain, France and Germany to send a focused, concerted, unified message that says the development of a nuclear weapon is unacceptable and a process which would enable Iran to develop a nuclear weapon is unacceptable.

MARGARET WARNER: Ahmadinejad will take office on Aug. 3.

MARGARET WARNER: And for more on Mahmoud Ahmadinejad and what kind of president he'll be, we turn to two people born and raised in Iran. Mahnaz Afkhami is president of the Women's Learning Partnership, which promotes women's issues worldwide. She was minister of state for women's affairs in the Iranian government during the time of the shah. And Ray Takeyh is a senior fellow at the Council on Foreign Relations. A former professor at National Defense University, he's written extensively about Iranian politics. Welcome to you both.

Answer the number one question, Mr. Takeyh. Who is Ahmed Ahmedinejad in terms of what Americans need to know about him and what kind of leader he will be?

RAY TAKEYH: As president, Ahmadinejad is actually part of a new generation of conservatives. For him and for many people of his cohorts, the formative experience they had was not so much the Iranian revolution but it was the war with Iraq.

They tend to have been isolated from the international community so he is suspicious of international community and international treaties as a means of preserving Iran's national security interest.

In terms of his personal life, he is, of course, very uncorrupt unlike most people in the Iranian clerical elite but also very religiously inclined and imposing sort of the Islamic strictures on the society.

He talks about going to the roots of the revolution, so in a sense he is the younger candidate in this election race but he wants to go back as opposed to forward.

MARGARET WARNER: What would you add to that?

MAHNAZ AFKHAMI: We have to remember his past. He was a founder of the student association that took the American diplomats hostage. He was in the militia, in the guard during the war and he has had very little experience in government and he has held no national elective office.

So he comes really to this position almost unexpectedly. Very few people in Iran know very much about him, especially outside of the city.

MARGARET WARNER: So what does it say about the Iranian public that he was elected and so decisively, at least in this runoff?

MAHNAZ AFKHAMI: One could say there are a number of causes for that -- partly the reaction to Mr. Rafsanjani declaring his candidacy and Mr. Rafsanjani is known as one of the focal points and focal points of power in Iran during the entire course of the revolution and also he's known as someone who has a reputation for corruption and cronyism.

So some of it is reaction to Rafsanjani; some of it is a small group of people who are worried about the loosening of social restrictions during Khatami's regime and want to, in fact, keep the revolutionary fiber; that's also another part of it.

And of course the economic problems: Poverty and the discrepancy between the rich and the poor which is growing.

MARGARET WARNER: Do you see it that way that it was a vote against the establishment and for a more conservative at least social policy?

RAY TAKEYH: Well, it does reflect a transition in Iranian public opinion in a sense. In 1977, Iranians voted for an agent of political change -- again an unknown person, President Khatami, who promised greater degree of liberalization, civil society, rule of law.

In 2005, they also vote for an agent of change, an agent of economic change. Ahmadinejad ran a very successful campaign talking about economic justice, talking about economic equality; talking about the fact that this society has to be on a greater degree of not just personal freedoms or social freedoms but a degree of economic opportunity being expanded.

He was uniquely capable of making that case because he personally lived a very simple life. And during the time as mayor, he also exhibited that simplicity. So that message of anti-corruption, economic justice, egalitarianism did resonate with Iranian people who are tired of lofty promises of Islamic democracy and just are tired of living in such an impoverished economic situation.

MARGARET WARNER: So what are the most significant promises he made on the economic front and can he deliver on them?

RAY TAKEYH: I don't think he can deliver on them. He essentially has promised that going back again to the roots of the revolution, which means his economic program, emphasizes first and foremost the concept of social justice which means a command economy which means further nationalization of private industries, which means essentially further confiscation of policies that the regime enacted in the early 1980s.

So in that sense, that is not the solution to Iran's economic problems. That doesn't necessarily integrate Iran into the global economy and usher in a more privatized economy. He doesn't talk about transparency rule of law or accountability.

MARGARET WARNER: He does not?

RAY TAKEYH: He can't because some of the corruption charge that he is making, some of the conservative clerics who supported his candidacy are the most corrupt individuals so now there will be a challenge to Ahmedinejad but not so much from the left but from the clerical right who are implicated in this corrupt economic system that he campaigned against.

MARGARET WARNER: If he wants to move aggressively on that front. Now what do you think it is going to mean in social policy? Do you think he will roll back some of the modest liberalization steps we've seen in recent years? If so which ones?

MAHNAZ AFKHAMI: I think he most likely will, although we have to also remember that the participation in this election was rather limited, that he really basically had 35 percent of the voters who were eligible to vote, something like 17 million so he doesn't have the kind of mandate that Khatami had and even though Khatami had the mandate, he still was unable to do much.

MARGARET WARNER: But what do you think he will do - I mean, was this just really scare tactics that he was going to roll back the clock say for women, or do you think there are really going to be changes?

MAHNAZ AFKHAMI: I think he will try to bring changes. How much he will succeed I don't know.

MARGARET WARNER: Like what?

MAHNAZ AFKHAMI: In the mayor's office, for instance, he segregated the elevators. He ordered to have --

MARGARET WARNER: Men and women had separate elevators.

MAHNAZ AFKHAMI: Separate elevators. And he ordered the cafeterias closed. And he ordered the cultural centers turned into prayer rooms. He also ordered the pictures of the international soccer star, Beckham off of the advertising boards -- I mean, these sort of token but signs of more and more limitation on people's cultural and social movements and freedoms.

MARGARET WARNER: Do you have the same expectation?

RAY TAKEYH: I think during his limited time as mayor, he attempted some of these social measures but when he faced resistance to them, he did actually retreat. He might be mentally in 1982 but Iran is in 2005.

And it would be very difficult to re-impose that sort of Islamic cultural restrictions on this particular society and his history is he is willing to retreat from it.

Some of the things said against him - the new Taliban and so on -- were really somewhat of a scare tactic designed to mobilize a constituency against him. They were not entirely inaccurate, given some of those things that he said and some of the way he's behaved, but I wouldn't necessarily say Iran is going to go the way of Taliban. I think if he meets resistance which he inevitably will, I begin to see some degree of retreat from some of these onerous Islamic restrictions that he's been talking about.

MARGARET WARNER: And finally what do you think it's going to mean about his relations with the West? We heard him say he didn't really think he had to do much vis- -vis the United States and on the nuclear issue.

RAY TAKEYH: That potentially in the area of foreign policy, Iran can experience a significant of change because Ahmedinejad, as well as many younger conservatives, talk about an eastern orientation, talk about relationship with emerging industrial giants such as China, such as India, and such relationships will obviate the necessity of accommodating the Europeans or much less Americans.

MARGARET WARNER: In the name of getting European investment.

RAY TAKEYH: Yeah. On the issue of EU-Iran negotiations on the nuclear issue, the principal assumption of those negotiations is that Iran is willing to make concessions for foreign investments. That argument has very limited utility to Ahmedinejad who is actually very suspicious of foreign investments.

MARGARET WARNER: So you think he is going to take a hard line in these negotiations?

MAHNAZ AFKHAMI: I think he well' I think he will because for the first time also, all

of the basic structures of power in the Islamic republic are uniformly in conservative hands. So it's easier for him to actually implement some of these policies even though the office of the president itself is not powerful butthe coalition of all these forces make it more likely for him to succeed in some of these areas.

MARGARET WARNER: In other words, the president and the Ayatollah Khomeini being in sync.

MAHNAZ AFKHAMI: Exactly.

MARGARET WARNER: All right. Thank you both very much.

RECAP

GWEN IFILL: Again, the major developments of the day: The Supreme Court agreed to allow some displays of the Ten Commandments on government property, but not others. The high court also said Internet file-sharing networks can be held liable for downloads of copyrighted material. And U.S. Military leaders played down reports of talks with Iraqi insurgents.

GWEN IFILL: And again to our honor roll of American service personnel killed in Iraq. We add them as their deaths are made official and photographs become available. Here, in silence, are 11 more.

GWEN IFILL: We'll see you online and again here tomorrow evening at our regular time and at 8 PM Eastern Time with live coverage and analysis of President Bush's address to the nation. I'm Gwen Ifill. Thank you and good night.