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Grokster
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Grokster (and its relatives) involved an important technologicalchange from that of Napster–
Napster worked from a central server– Grokster used a “node” approach to finding music (and other) filesonline, so once the program was installed and working, the makers ofthe software had no control over who was copying what – they could noteven monitor such copying– Grokster was also not limited to MP3 files but could be used to copy anyfile in the appropriate directory of the host computer
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Grokster too argued that its software had a substantial noninfringinguse, namely P2P copying of copyright-unprotected files
Grokster
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Relying on
Sony
the Ninth Circuit agreed with Grokster:
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For contributory infringement, the key distinction from Napster was that,at the time of the illegal copying, Grokster had no knowledge of whowas copying nor any ability to stop it
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For vicarious liability, too, Grokster was not in a position to stop orcontrol the copying activity once the software (which all agreed had anoninfringing use, although there was a big debate over the degreesuch use was noninfringing in practice)
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The Ninth Circuit therefore refused to hold Grokster liable forsecondary copyright infringement, and the recording studiosappealed to the Supreme Court
MGM v. Grokster
The quantitative evidence of infringement was disputed, but theCourt concluded (probably correctly) that the scope of infringementwas “staggering” (p.923) Grokster admitted that most downloads using its software wereinfringing and that it was aware that its software was used forinfringement (and even provided guidance for playing music thatwas downloaded when asked) Most important, Grokster made it clear to everyone that its softwarecould be used to download protected music and took active steps toencourage such infringement–
One of the defendants openly tried to take advantage of the Napsteruser base– That same defendant also sought to have a larger number of protectedsongs available on its network
MGM v. Grokster
What were the business models for these defendants?–
They gave their software away for free– They sold advertising space, for which they could charge more if therewere more users– There would be more users if there were more “free” music availablethat users would otherwise have to pay for None of the defendants did anything to try to stop copyrightinfringement using its network The Court poses the problem as balancing the protection of artisticcreativity through copyright and allowing keeping courts out of thebusiness of interfering with technological innovation
MGM v. Grokster
What was the evidence of intent to encourage infringement here?–
Each defendant sought to entice former Napster users, who wereknown to be major infringers– Neither party developed any filtering tools to diminish infringement– Their business models involved making money by selling advertisingspace, and the more users there are, the greater the advertisingrevenues can be The Court says that neither failure to develop filters nor a businessmodel based on advertising is, in itself, sufficient for liability So, lower courts are now seeking to work out the basis for“inducement” liability when the encouragement of infringement is notso blatant as it was in
Grokster
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So far, none has been found although reported litigation is sparse
MGM v. Grokster
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In concurring, Justice Ginsburg argues that even under the
Sony
rule the Ninth Circuit erred in granting summary judgment–
She believed that a fully developed trial record might show that the“overwhelming source of revenue” from the P2P software products wasthe ability to infringe (p.948)– In her mind, this would mean that noninfringing uses were not“commercially significant,” and she believes that
Sony
does not protect
commercially insignificant uses
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Note that she would also look to whether a substantial noninfringing usewas “likely to develop over time”•
Is a court capable of predicting how technology will develop over time?• Would the video rental market have developed if Justice Ginsburg’sapproach had been used in
Sony
itself?
MGM v. Grokster
Justice Breyer believes the real issue is whether the
Sony
rule
should be interpreted more strictly (p.956) In addressing this issue, he asks three questions–
Has the
Sony
rule worked to protect new technology?
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Would a stricter interpretation weaken that protection?
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If so, would the loss be compensated by copyright-related benefits (e.g.,new creativity that more copyright protection would induce) As to the first question, he finds that the
Sony
rule is clear, it
protects technology if it has a substantial legitimate use, it is forwardlooking in that it looks only to “capability” and not only at today’sactual markets, and it leaves the decisions about regulatingtechnology where they belong – in Congress
