Grokster Decision

Today, the Supreme Court, in its *infinite wisdom*, handed down its decision reversing the 9th Circuit’s dismissal of claims for contributory and vicarious infringement in MGM v. Grokster (and Streamcast – aka Morpheus).

Distinguishing the case from Universal v. Sony where the court recognized “the substantial non-infringing uses” of VCR’s as a defense to liability, today’s court held that, “where evidence goes beyond a product’s characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions directed to promoting infringement, Sony’s staple-article rule will not preclude liability.”

This evidence centered on an advertisement and marketing scheme, whereby both Grokster and Streamcast sought to capture Napster’s former audience by promising access to more copyrighted work than ever, through a new sort of decentralized/unmonitored network which would not be vunlnerable to liability under the Napster decision.

Grokster has been remanded to the lower court for a final decision, but the legs of the defense have been kicked right out. The court has stated that, “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” The court concludes by ordering consideration of summary judgement for MGM. In my novice eyes, the situation does not look good for Grokster and Streamcast.

On the bright side, I suppose it’s only a matter of time before some new corporation puts this standard to the test by promoting its filesharing software *as intended solely for the sharing of non-infringing files*, taking every step to warn against copying, and no steps to actually prevent it – because monitoring would just be too expensive right? Grokster and Streamcast piggy-backed on Napster just like that and got away with it for a couple of good years before this decision, making tons of money through advertising revenue targeted at a user base of 100 million.

The question is not if, but when someone will take the small steps necessary to escape the reach of this decision and fill the market gap left by the collapse of Grokster and Morpheus. They just can’t document the plan to be the next big thing like Grokster did. (locating the company in international waters or in a 3rd world nation which doesn’t follow TRIPS might also be good thinking.)

Limewire seems to be the hot stuff these days – I imagine we’ll soon see if they’ve been careful enough to withstand the fallout of this decision.

Link to Grokster Decision